Singapore court sets aside US$307.8 million award in Vietnam state firm’s dispute with US-sanctioned Russian contractor
Source: Business Times
Article Date: 14 Oct 2025
Author: Tessa Oh
The Court of Appeal finds an arbitration tribunal had failed to give the parties a fair hearing in the case of a failed power plant project.
The Court of Appeal has set aside a key portion of a Singapore arbitration award that favoured a United States-sanctioned Russian power equipment manufacturer in a US$307.8 million dispute with Vietnam’s state-owned oil giant.
The case involved Russian manufacturing conglomerate Power Machines, which had entered into an agreement with Vietnam Oil and Gas Group (PVN) in 2013, in relation to a power plant project in Vietnam.
The project collapsed when Power Machines was placed on a US sanctions list in January 2018.
The sanctions, imposed by the United States Office of Foreign Assets Control, prohibited US companies from doing business with Power Machines. This caused many of the firm’s subcontractors to suspend work on the power plant, as they feared violating the sanctions.
Power Machines issued two separate termination notices to PVN in early 2019: the first claimed that the sanctions constituted force majeure, and the second cited non-payment. PVN contested both notices, forcing the matter into Singapore-seated arbitration as stipulated in the 2013 agreement.
In November 2023, the arbitration tribunal ruled largely in favour of Power Machines, awarding over US$307 million in damages.
The tribunal ruled that although the Russian firm could not establish force majeure, a notice of termination issued without basis still ends the contract under Vietnamese law. Further, it found that the second notice must have been intended to override the first, terminating the contract on Feb 22, 2019.
PVN challenged the award in the High Court, which found grounds to set it aside but ordered the matter to be sent back to the same tribunal for reconsideration. PVN then appealed the matter to the Court of Appeal.
“Contrary to factual position”
In its ruling, the Court of Appeal said the tribunal had made findings “contrary to the factual position that Power Machines had advanced”, as it was “neither party’s case that the second notice was capable of overriding, superseding or amending the wrongfully issued first notice”.
PVN could not reasonably have anticipated these arguments and thus did not have an opportunity to address these issues, said Chief Justice Sundaresh Menon, delivering the judgments.
Further, Power Machines did not provide any evidence to show it intended to replace or supplement the first notice, and instead consistently stated the opposite throughout the arbitration proceedings.
While arbitral tribunals are normally allowed to reach their own conclusions independently of the parties’ arguments, CJ Menon noted this may not extend to contradicting agreed facts.
The Court of Appeal also rejected the High Court’s decision to send the matter back to the same tribunal, finding that concerns about prejudgment made remission inappropriate in this case.
The Court of Appeal thus set aside the High Court’s remission order, as well as the US$307.8 million award, as this was consequential to other parts of the final award being set aside. The court also ordered costs of S$140,000 to PVN for both appeals.
PVN was represented by lawyers from Eldan Law, while Power Machines was represented by Braddell Brothers.
Source: The Business Times © SPH Media Limited. Permission required for reproduction.
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