Ajt v Aju

• Jurisdiction: Singapore
• Judgment Date: 16 July 2010
• Date: 16 July 2010
• Docket Number: Originating Summons No 230 of 2010
• Court: High Court (Singapore)

AJT

Plaintiff

and

AJU

Defendant

[2010] SGHC 201

Chan Seng Onn J

Originating Summons No 230 of 2010

High Court

Arbitration–Award–Recourse against award–Setting aside–Application to set aside arbitral award–Whether agreement governed by Singapore law and to stifle prosecution in foreign jurisdiction contrary to public policy–Article 34 (2) First Schedule International Arbitration Act (Cap 143A, 2002 Rev Ed)

Arbitration–Award–Recourse against award–Setting aside–Rules of natural justice–Whether arbitral tribunal ignored evidence in deciding agreement was not illegal–Whether arbitral tribunal ignored evidence in deciding no bribery of Thai public officials when defendant performed its contractual obligations–Section 24 International Arbitration Act (Cap 143A, 2002 Rev Ed)

The plaintiff, [AJT], applied to set aside the Interim Award ( the Award ) issued in SIAC Arbitration ARB No 86 of 2006 ( the Arbitration ) on the grounds that the Award was contrary to the public policy of Singapore under Art 34 (2) (b) (ii) of the UNCITRAL Model Law on International Commercial Arbitration set out in the First Schedule of the International Arbitration Act (Cap 143A, 2002 Rev Ed) ( the IAA ), and/or that the Award was contrary to the principles of natural justice under s 24 (b) of the IAA. The Award related to an agreement between [AJT] and the defendant, [AJU], to terminate the Arbitration ( the Concluding Agreement ).

[AJT] was a company incorporated under the laws of the British Virgins Island and [AJU] was a public company incorporated under the laws of Thailand whose principal business was that of production of television programmes and the promotion of shows and events. [AJT] instituted the Arbitration against [AJU] in relation to an agreement between [P] (a related company of [AJT]) and [AJU]. [AJT] was the assignee of [P] under the agreement. After commencement of the Arbitration, [AJU] made a complaint of fraud, forgery and the use of a forged document to the Thai police against [AJT]'s sole director and shareholder [O], [P] and [Q], another related company of [AJT] ( the Complaint ). Under Thai law, fraud was a compoundable offence whilst forgery and the use of a forged document were non-compoundable offences.

When police investigations were ongoing, the parties negotiated and entered into the Concluding Agreement under which [AJU] had to withdraw the Complaint and obtain evidence of the termination of all criminal proceedings against [O], [P] and [Q], and also to pay [AJT] US$470,000. In return, all claims existing between the parties would be deemed to have been fully settled. The Concluding Agreement was governed by Singapore law. After [AJU] withdrew the Complaint and paid US$470,000 to [AJT], the Thai Prosecution confirmed that a non-prosecution order had been issued with respect to all the charges against [O], [P] and [Q] because of insufficient evidence. However, [AJT] claimed that [AJU] had failed to comply with the terms of the Concluding Agreement and refused to terminate the Arbitration.

[AJU] applied to the Tribunal to terminate the Arbitration on the ground that the parties had reached a full and final settlement of all claims between themselves. [AJT] challenged the validity of the Concluding Agreement on the grounds of duress, undue influence and illegality. The parties agreed that if the Concluding Agreement was valid, the Arbitration would terminate automatically but if the Concluding Agreement was void, the Arbitration would continue.

After a five-day hearing, the Tribunal decided that the Concluding Agreement was not illegal and that there was insufficient evidence to support [AJT]'s allegations of undue influence or duress or that [AJU] had bribed the Thai authorities in order to obtain the non-prosecution order.

Held, allowing the application:

(1) Although the Tribunal determined that the Concluding Agreement was not illegal, this was not conclusive. In an appropriate case, the court might in the exercise of its supervisory jurisdiction, examine the facts and decide on the illegality issue. While there was a need to uphold the public interest in ensuring the finality of arbitral awards, the court had to also safeguard the countervailing public interest in ensuring that its processes were not abused by litigants: at [24].

(2) Agreements which expressly or impliedly sought to stifle the prosecution of non-compoundable offences were illegal and contradicted the public policy of Singapore as they undermined the public interest in the maintenance of justice. Even though a complainant was powerless to withdraw the complaint for a non-compoundable offence once it had been taken cognisance of, an agreement to do anything directed towards its withdrawal was void and unenforceable. Allowing such agreements might expose an innocent accused person to extortion or allow a guilty person to escape punishments by offering reparations to the victim, thus defeating the basic purpose of criminal law and the entire administration of justice: at [28], [32]and [33].

(3) An agreement whose object to be attained was a breach of international comity would be regarded as against public policy and void. While the fact that an agreement in which performance would be contrary to the public policy of its country of performance could not of itself constitute a bar to the enforcement of the agreement, it was a relevant factor in considering whether the court ought to refuse to enforce the agreement under principles of public policy of its own law: at [36]to [38].

(4) Under the Concluding Agreement, [AJU] had to withdraw the Complaint in its entirety, including the allegations against [O], [P] and [Q] for the non-compoundable offences of forgery and the use of a forged document. Even if [AJU] had no power to withdraw the prosecution for such offences, the Concluding Agreement was still contrary to public policy as it amounted to a stifling of the prosecution process in Thailand. By upholding the Concluding Agreement, the Tribunal validated an illegal agreement entered into by the parties with the intention and purpose of doing an act which undermined the administration of justice in Thailand. To uphold the Award would thus constitute a breach of international comity: at [50] and [51].

(5) The Concluding Agreement was illegal under both its governing law, ie, Singapore law and the law of the place of performance,ie, Thai law. Further, it would be void under Thai law as it was contrary to public order or good morals. Accordingly, the Award ought to be set aside on the ground that it was in conflict with the public policy of Singapore: at [53].

(6) There was no ground for the argument that there had been a breach of the rules of natural justice on the part of the Tribunal as the records showed that it had adequately dealt with and disposed of [AJT]'s submissions: at [54].

Bhowanipur Banking Corp Ltd v Sreemati Durgesh Nandini DasiAIR 1941 PC 95 (folld)

Corvetina Technology Ltd v Clough Engineering Ltd (2004) 183 FLR 317 (refd)

Denmark Skibstekniske Konsulenter A/S I Likvidation v Ultrapolis 3000 Investments Ltd [2010] 3 SLR 661 (refd)

Foster v Driscoll [1929] 1 KB 470 (folld)

Kamini Kumar Basu v Birendra Nath BasuAIR 1930 PC 100 (folld)

Kaufman v Gerson [1904] 1 KB 591 (distd)

Lemenda Trading Co Ltd v African Middle East Petroleum Co Ltd [1988] QB 448 (folld)

Ooi Kiah Inn Charles v Kukuh Maju Industries Sdn Bhd (formerly known as Pembinaan Muncul Hebat Sdn Bhd) [1993] 2 MLJ 224 (folld)

Ouseph Poulo v Catholic Union Bank LtdAIR 1965 SC 166 (folld)

Peh Teck Quee v Bayerische Landesbank Girozentrale [1999] 3 SLR (R) 842; [2000] 1 SLR 148 (folld)

PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR (R) 597; [2007] 1 SLR 597 (refd)

Regazzoni v K C Sethia (1944) Ltd [1958] AC 301 (refd)

Shirpad v Sanikatta Co-Operative Sale Sale SocietyAIR 1945 Bombay 82 (folld)

Soleimany v Soleimany [1999] QB 785 (folld)

Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd [2010] 3 SLR 1 (refd)

Teo Yong Seng v Lim Bweng Tuck [1998] SGHC 70 (folld)

VV v VW [2008] 2 SLR (R) 929; [2008] 2 SLR 929 (refd)

Westacre Investments Inc v Jugoimport-SDPR Holding Co Ltd [2000] QB 288 (refd)

Windhill Local Board of Health v Vint (1890) 45 Ch D 351 (refd)

International Arbitration Act (Cap 143A, 2002 Rev Ed) First ScheduleArt 34 (2) (b) (ii) (consd) ;s 24

Dinesh Dhillon, Felicia Tan and Emmanuel Duncan Chua (Allen & Gledhill LLP) for the plaintiff

Chua Sui Tong, Edwin Cheng and Daniel Tan (Wong Partnership LLP) for the defendant

.

Judgment reserved.

Chan Seng Onn J

1 The plaintiff, [AJT], took out Originating Summons No 230 of 2010 to set aside the Interim Award issued on 1 December 2009 ( the Award ) in SIAC Arbitration ARB No 86 of 2006 ( the Arbitration ), on the grounds that the Award is contrary to:

(a) the public policy of Singapore; and/or

(b) the principles of natural justice.

2 The Award relates to the validity of an agreement entered into between [AJT] and the defendant, [AJU], to terminate the Arbitration ( the Concluding Agreement ).

Background facts

3 [AJT] is a company incorporated under the laws of the British Virgin Islands and [AJU] is a public company incorporated under the laws of Thailand whose principal business is that of production of television programmes and the promotion of shows and events. The Arbitration relates to claims brought by [AJT] against [AJU] under an agreement between [P] (a related company of [AJT]) and [AJU]. Consequent to disputes arising under the agreement, [AJT], as the assignee of [P] under the agreement, initiated the Arbitration against [AJU] by serving a Notice of Arbitration on [AJU] on 21 August 2006.

4 On 21 November 2006, [AJU] made a complaint of fraud, forgery and the use of a forged document to the Thai police ( the Complaint ) against [AJT]'s sole director and shareholder, Mr...