DWL v DWM [2026] SGHC 179
Introduction
In a decision dated 2 September 2026, the General Division of the High Court of the Republic of Singapore in Originating Application No 1311 of 2025 (DWL v DWM [2026] SGHC 179) rendered a judgment on an application to set aside an award arising from a sanctions-affected energy equipment contract. The dispute arose out of a clause obliging the Supplier to modify the equipment and/or apply for export licenses in order to secure fulfilment of the contract. The Tribunal held that the Supplier had not taken sufficient measures to modify the equipment and/or seek licenses for the export. The Supplier had first terminated the contract and demanded return of a performance bond and a parent company guarantee, the Buyer demanded return of the advance payments made and sought a declaration that the Supplier’s termination was invalid. The Tribunal (with a majority vote of two against one) found in favour of the Buyer and held that (i) the Suppliers’ termination was invalid, whereas the Buyers’ termination was valid and thus, the performance bond and guarantee had to remain in place to secure return of the advance payments.
The Supplier (in the following: Claimant) applied to set-aside the award for breach of natural justice and excess of jurisdiction.
The Court dismissed the application. It held that the tribunal did not exceed its jurisdiction or breach natural justice when it interpreted the contract as a whole, referred to provisions not expressly cited by the parties, and rejected the claimant’s challenges to the tribunal’s treatment of the sanctions clause, post-termination conduct, and the performance bond and parent company guarantee.
Factual Background
The parties were companies in the energy production industry. The claimant, DWL, was an energy technology and equipment supplier, while the respondent, DWM, was an energy producer based in the anonymised Country X. Based on the additional facts supplied for this article, DWL was an EU-based party and DWM was a Russian party. The contract concerned equipment for an energy production plant in Russia.
The parties entered into the contract on 10 December 2021. The respondent was to make staged payments for work performed. In connection with the first payment milestone, the claimant provided a performance bond and a parent company guarantee. The parties were already aware of sanctions affecting Russia since 2014, and their contract included Article 27B, a detailed mechanism intended to address sanctioned components and preserve performance where possible.
After further international sanctions were imposed on Russia in February 2022, several of the claimant’s subcontractors refused to supply key components. In April 2022, the respondent deliberately withheld the third milestone payment for commercial reasons because it feared that payment would increase its losses if performance could not continue.
The claimant submitted up to ten export-licence applications by late April 2022 and raised the possibility of modifying the equipment package. The parties agreed that Article 27B required the claimant, depending on the respondent’s election, either to alter the equipment so that it complied with the sanctions regime or to apply for the necessary governmental permits and use reasonable endeavours to obtain them.
ARTICLE 27B
…
(b) If EQUIPMENT PACKAGE is considered to be SANCTIONED COMPONENT or contemplates the use of SANCTIONED COMPONENTS, SUPPLIER shall, at the option of COMPANY in consultation with SUPPLIER and acting reasonably, either (A) subject to Article 15.5 and Article 22, ensure that such EQUIPMENT PACKAGE (as applicable) shall be altered (at COMPANY’s cost), to the extent possible and to the extent SUPPLIER is satisfied with the quality of any relevant alternative items, in such a manner so as provide for the use of any relevant alternative items having substantially the same or better technical characteristics and/or capabilities and not being SANCTIONED COMPONENTS, or (B) subject to Article 15.5 and Article 22 immediately apply for a prior permit or authorization of the relevant SANCTIONS AUTHORITY before executing relevant WORKS and/or actions and use reasonable endeavours to obtain such prior authorization_and in case such relevant permit or authorization can be issued only after fabrication of the EQUIPMENT PACKAGE, SUPPLIER undertakes to apply for all necessary permits or authorizations prior to exportation of EQUIPMENT PACKAGE for delivery to COMPANY …
On 27 May 2022, relying on the sanctions, the loss of subcontractors and the respondent’s non-payment, the claimant gave notice suspending the contract with effect from 1 June 2022. The respondent challenged the suspension and maintained that the claimant’s obligations under Article 27B continued. The claimant took the opposite view and ceased further mitigation efforts.
On 11 July 2022, the licensing authority issued a preliminary decision refusing the applications because of further sanctions. Four days later, the respondent terminated the contract for material breach. The claimant rejected that termination on 4 August 2022, pointing in particular to the respondent’s continuing failure to pay the third milestone, then 120 days overdue. On 25 August 2022, the claimant issued its own termination notice.
The Arbitration and Award
The respondent commenced arbitration before a three-member tribunal. It alleged that the claimant had materially breached Article 27B by failing to make effective licensing applications or to pursue compliant alternatives, both before and after suspension. The claimant denied any material breach, argued that its Article 27B duties had been suspended, and counterclaimed for declarations supporting its own termination and for the return of the bond and guarantee.
The award was issued on 19 August 2025. Two arbitrators formed the majority and largely found for the respondent; the third arbitrator dissented in favour of the claimant. The tribunal accepted that the claimant could suspend for non-payment, but held that its Article 27B obligations survived suspension. In reaching that conclusion, it referred to Articles 45.6 and 54, although neither party had relied on those provisions during the arbitration.
The majority found that the claimant had not taken reasonable steps either to alter the equipment or to pursue effective licensing applications. It therefore held that the claimant was in material breach and that the respondent’s termination on 15 July 2022 was lawful. The claimant was not entitled to the return of the bond and guarantee because the contractual return mechanism applied where the claimant had validly terminated, not where the respondent had done so.
Legal Considerations
The Scope of Review
The claimant relied on section 24 of the International Arbitration Act 1994 and Article 34 of the UNCITRAL Model Law. The Court emphasised that a setting-aside application is not an appeal on the merits. For excess of jurisdiction, the question is whether the disputed point was a live issue in the arbitration, assessed in the round by reference to the pleadings, lists of issues, opening statements, evidence and closing submissions. For a fair-hearing complaint, the court asks whether the tribunal’s reasoning had a sufficient nexus to the parties’ cases and whether a reasonable litigant could have foreseen reasoning of that type.
Reliance on Articles 45.6 and 54
The claimant argued that the tribunal had exceeded its jurisdiction and denied it a fair hearing by relying on Articles 45.6 and 54 without inviting submissions. It said Article 45.6 concerned suspension or termination by the respondent under Article 45, while the case involved suspension by the claimant. It also argued that Article 54 referred to Article 27 but not specifically to Article 27B.
The Court rejected both objections. Whether Article 27B survived suspension had been squarely placed before the tribunal. The complete contract was in evidence, and the respondent had invited the tribunal to consider Article 27B’s role within the contract as a whole. In a contractual interpretation dispute, it was natural and foreseeable for a tribunal to read the entire contract and find support in provisions not expressly cited by either side.
The Court also found that the tribunal’s references to Articles 45.6 and 54 were not its only reason. The award accepted the respondent’s broader case that Article 27B was intended as a sanctions-response roadmap designed to preserve the parties’ relationship. The claimant had an adequate opportunity to argue that its Article 27B duties ended on suspension. Although good practice might have favoured inviting specific submissions on Articles 45.6 and 54, the omission did not amount to excess of jurisdiction or a breach of natural justice.
Interpretation and Application of Article 27B of the Contract
The claimant also alleged that the majority had converted the disjunctive obligations in Article 27B into cumulative obligations. It relied on the award’s description of the parties as proceeding on a ‘dual track basis’ and on the statement that the licensing findings were ‘subject to’ the findings on alternative equipment.
The Court read those passages in context. The ‘dual track’ wording was a factual description of what the parties had actually done, not a reinterpretation of their legal obligations. The record showed that both alternative equipment and licence applications had been addressed in the pleadings and evidence. The majority separately found material breach in relation to each route; it had not impermissibly accumulated two insufficient breaches into one material breach.
Post Termination Conduct and Cumulative Natural Justice
The claimant submitted that the majority had relied on conduct after 15 July 2022 to justify the respondent’s earlier termination and that the award was therefore manifestly incoherent. The Court held that the majority’s limited references to later conduct were contextual. It had not treated post-termination events as new breaches establishing the validity of the earlier termination.
The Court also rejected the argument that the alleged defects, viewed cumulatively, showed that the majority had closed its mind to the claimant’s case. None of the individual natural-justice complaints was established. The test required a clear and virtually inescapable inference that the tribunal had entirely neglected essential submissions; disagreement with the tribunal’s reasoning, even if it were wrong or inadequate, did not meet that threshold.
The Bond and Parent Company Guarantee
As an alternative, the claimant sought to set aside the parts of the award dealing with the bond and guarantee. It argued that the majority went beyond the parties’ all-or-nothing cases by discussing the instruments as security for sums awarded to the respondent and future completion costs, even though the executed guarantee had not been put in evidence.
The Court held that the decisive finding was independent: because the respondent had validly terminated the contract, Article 45A.3 did not entitle the claimant to the return of the bond or guarantee. The additional observations about the instruments’ scope were effectively obiter dicta and had no bearing on the dismissal of the counterclaim. The Court declined to set them aside, noting that a court does not ordinarily edit an award merely to remove unnecessary observations.
Outcome
The Court dismissed the application to set aside the award in whole or in part. It held that none of the tribunal’s or majority’s findings exceeded jurisdiction and that no finding, individually or cumulatively, breached natural justice. Costs were awarded to the respondent on the standard basis rather than the indemnity basis sought by the respondent.
This case has to be distinguished from the matter reported under the following linK Singapore Court Sets Aside a SIAC Award Which a Russian Court Had Already Recognised. That decisioned concerns Vietnam Oil and Gas Group v Joint Stock Company (Power Machines) [2025] SGCA 50, where part of an award was set aside because the tribunal’s reasoning lacked a sufficient nexus to the parties’ pleaded cases, submissions and expert evidence. In DWL v DWM, by contrast, the High Court found that the tribunal’s contractual reasoning remained sufficiently connected to a live issue and to the material placed before it.
