In its recent decision in DZD v DZE [2026] SGHC 199, the Singapore High Court examined whether a forged charterparty and the subsequent payment of freight could establish a valid arbitration agreement. The judgment highlights the fundamental importance of contractual consent in international arbitration and provides valuable guidance on the legal consequences of forged shipping documents and non-participation in arbitral proceedings.
I. Introduction
In its recent judgment in DZD v DZE [2026] SGHC 199, the Singapore High Court addressed fundamental questions concerning the validity of arbitration agreements in maritime disputes, particularly where the underlying charterparty documentation contains forged signatures and where a party has made freight payments without having expressly agreed to the charterparty terms.
The Court set aside an arbitral award for demurrage, holding that no valid arbitration agreement existed between the shipowner and the commodity trader against whom the award had been rendered.
The decision highlights the distinction between contractual consent and commercial conduct, the legal consequences of forged contractual documents, and the rights of parties who choose not to participate in arbitration proceedings on jurisdictional grounds.
II. The Facts
The dispute arose from the maritime transportation of goods purchased and subsequently resold by a commodity trader (the “Trader”). Following the carriage, the shipowner (the “Shipowner”) commenced ad hoc arbitration proceedings against the Trader, claiming demurrage allegedly incurred in connection with the voyage.
The Shipowner relied on a document described as a “Clean Recap”, which purported to record the terms of a charterparty, including an arbitration agreement. The document identified the Trader as the head charterer and its supplier as the sub-charterer. It also contained what appeared to be the signature of the Trader’s director, the Trader’s company stamp and a handwritten date.
The Trader denied having entered into the charterparty or authorised anyone to execute the Clean Recap on its behalf. Expert evidence established that the signature, company stamp and date had been electronically inserted into the PDF document as separate elements.
Although the Trader had paid freight directly to the Shipowner, it maintained that the payment had been made at its supplier’s request, as part of the payment arrangements for the goods, rather than pursuant to any charterparty obligations.
The Trader did not participate in the arbitration proceedings. The Shipowner nevertheless obtained an arbitral award in its favour and subsequently secured permission to enforce the award in Singapore, including an order attaching funds held in the Trader’s bank account.
The Trader challenged the award under Article 34 (2)(a)(i) of the UNCITRAL Model Law on International Commercial Arbitration, as incorporated into Singapore law by the International Arbitration Act 1994, arguing that no valid arbitration agreement existed between the parties.
III. The Legal Issues
1. Does non-participation in arbitration establish consent to arbitrate?
One of the central questions was whether the Trader’s failure to participate in the arbitration proceedings prevented it from subsequently challenging the tribunal’s jurisdiction.
The Shipowner relied on section 2A(6) of Singapore’s International Arbitration Act, which provides for an arbitration agreement to be deemed effective in certain circumstances where its existence is asserted in proceedings and not denied.
The High Court rejected this argument.
Referring to the Singapore Court of Appeal’s decision in Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd [2019] 2 SLR 131, the Court reaffirmed that a party disputing an arbitral tribunal’s jurisdiction is not obliged to participate in the arbitration merely to preserve its jurisdictional objections.
Furthermore, the Court clarified that section 2A(6) cannot create an arbitration agreement where none otherwise exists. The provision may address formal requirements concerning an independently established agreement, but it does not dispense with the fundamental requirement of contractual consent.
Accordingly, the Trader’s non-participation did not constitute acceptance of the arbitration agreement or prevent it from seeking to set aside the award.
2. Can a forged charterparty bind a party to arbitration?
The Court then examined whether the Clean Recap had been executed by the Trader or by someone authorised to act on its behalf.
The evidence showed that the director’s signature, company stamp and handwritten date had been electronically pasted into the document. The identity of the person responsible remained uncertain, and there was no sufficient evidence establishing that the Trader had authorised the execution.
The Court accepted that the document had not been executed by the Trader or with its authority.
Particularly significant was the distinction between an unauthorised act performed by someone purporting to act as an agent and the forgery of another person’s signature.
Under the principles of agency law applied by the Court, an unauthorised act undertaken on behalf of a principal may, in appropriate circumstances, subsequently be ratified. A forged signature, however, is treated as a nullity and cannot be ratified in that manner.
The Shipowner’s position as an innocent recipient of the document did not alter the conclusion. Even without any involvement in the forgery, the Shipowner could not establish an arbitration agreement against the Trader on the basis of the forged document.
3. Does payment of freight establish a charterparty or amount to ratification?
The Shipowner further argued that the Trader’s direct payment of freight demonstrated that it was the charterer, or alternatively that the payment constituted ratification of the charterparty.
The High Court rejected both arguments.
The Court emphasised that the payment of freight by a cargo owner does not necessarily establish that the payer is a party to the charterparty. In commercial transactions involving several parties, freight may be paid by an entity other than the contractual charterer, including to facilitate the release of goods.
The Court also declined to infer the Trader’s status as charterer from the Shipowner’s suggestion that the underlying sale contract was concluded on FOB terms. Even if an FOB arrangement had existed, that would not, without more, establish that the Trader had personally chartered the vessel.
As regards ratification, the Court observed that the Trader had not been aware of the purported charterparty or its terms when making the freight payment. Even if ratification had been legally possible, the necessary knowledge of the material circumstances was absent.
The payment therefore neither ratified the forged charterparty nor independently established a contractual relationship between the Trader and the Shipowner.
4. Can an arbitration agreement arise through commercial conduct?
Finally, the Court considered whether the Trader’s payment of freight could itself have resulted in the formation of a charterparty incorporating an arbitration agreement.
The Court reiterated the principle of separability: an arbitration agreement is legally distinct from the underlying commercial contract.
Consequently, even where a party’s conduct may establish consent to a contract for the carriage of goods, it does not automatically establish consent to resolve disputes through arbitration.
In the present case, the freight invoice contained no reference to arbitration or to the relevant charterparty terms. There was no evidence that the Trader knew of, or had agreed to, any arbitration clause.
The Court therefore concluded that no valid arbitration agreement had arisen through the Trader’s conduct.
The absence of such an agreement constituted a jurisdictional defect under Article 34(2)(a)(i) of the Model Law, justifying the setting aside of the arbitral award.
IV. Conclusion
The Singapore High Court’s decision in DZD v DZE [2026] SGHC 199 reinforces the fundamental principle that arbitration is based on consent. Neither the existence of apparently executed charterparty documents nor the payment of freight necessarily establishes that a party has agreed to arbitrate.
The judgment highlights the need to verify the authenticity and authority underlying contractual documentation, the distinction between freight payments and contractual obligations under a charterparty, and the requirement to establish consent to arbitration independently of the underlying commercial relationship.
The Court ultimately set aside the arbitral award under Article 34(2)(a)(i) of the Model Law. Consequently, it also set aside the order attaching the Trader’s bank account funds and ordered the release of those funds. Having resolved the matter on the basis of the absence of a valid arbitration agreement, the Court did not need to determine the Trader’s alternative public policy objection.
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