Aju v Ajt

• Jurisdiction: Singapore
• Judgment Date: 22 August 2011
• Date: 22 August 2011
• Docket Number: Civil Appeal No 125 of 2010
• Court: Court of Appeal (Singapore)

AJU

Plaintiff

and

AJT

Defendant

[2011] SGCA 41

Chan Sek Keong CJ

,

Andrew Phang Boon Leong JA

and

VK Rajah JA

Civil Appeal No 125 of 2010

Court of Appeal

Arbitration—Award—Recourse against award—Alleged illegality of contract on which award was based—Whether court entitled to reopen findings of fact and/or law made by arbitral tribunal—International Arbitration Act (Cap 143 A, 2002 Rev Ed)

Arbitration—Award—Recourse against award—Setting aside—Whether award in conflict with public policy of Singapore under Art 34 (2) (b) (ii) UNCITRAL Model Law on International Commercial Arbitration—International Arbitration Act (Cap 143 A, 2002 Rev Ed)

In 2006, the respondent (‘the Respondent’) commenced arbitration proceedings (‘the Arbitration’) under the auspices of the Singapore International Arbitration Centre (‘the SIAC’) against the appellant (‘the Appellant’) in connection with a dispute arising under a contract made in 2003 between the Appellant and a party associated with the Respondent. About three months after the notice of arbitration was served on the Appellant, the Appellant made a complaint (‘the Complaint’) to the Special Prosecutor's Office of Thailand (‘the Thai prosecution authority’) alleging that several parties associated with the Respondent had induced the Appellant to sign the 2003 contract through fraud. The Complaint led to the Thai prosecution authority commencing investigations against the relevant parties on charges of joint fraud, joint forgery and the use of a forged document (‘the Thai criminal proceedings’) .

While the Thai criminal proceedings were underway, the Appellant and the Respondent signed an agreement on 4 February 2008 (‘the Concluding Agreement’) whereby the parties agreed that upon the withdrawal and/or discontinuation and/or termination of the Thai criminal proceedings, the Appellant would pay the Respondent the sum of US$470,000 whereupon each of them would take steps to terminate and withdraw, inter alia, all claims against each other in the Arbitration. A few days after the Concluding Agreement was signed, the Appellant withdrew the Complaint which it had made to the Thai prosecution authority. This led the Thai prosecution authority to issue, inter alia, a non-prosecution notice with reference to the charges of joint forgery and using a forged document (‘the Forgery Charges’) .

Subsequently, the Respondent refused to terminate the Arbitration on the ground that the Appellant had not complied with the terms of the Concluding Agreement in that the Appellant had failed to have the Forgery Charges terminated or withdrawn. Upon the Appellant applying to the arbitral tribunal (‘the Tribunal’) in the Arbitration to terminate the Arbitration on the ground that the parties had reached a full and final settlement of all the claims which they had against each other, the Respondent alleged that the Concluding Agreement was null and void on the grounds of duress, undue influence and illegality. The illegality was based on the allegation that the Appellant had agreed to take steps to terminate and withdraw the Forgery Charges which were non-compoundable offences under Thai law. This resulted in the Tribunal issuing an order directing the Respondent to apply to the Singapore High Court to set aside the Concluding Agreement on these alleged grounds. Although the Respondent failed to comply with that direction, both parties eventually agreed to refer the issue of ‘ [w] hether ... the Concluding Agreement ... should be set aside/declared void on the basis of duress, undue influence and/or illegality’ to the Tribunal for determination.

After a five-day hearing, the Tribunal decided by way of an interim award (‘the Interim Award’) that the Concluding Agreement was valid and enforceable in that it was not entered into under duress or undue influence, and it was not illegal as it did not require the Appellant to take steps to stifle the prosecution of the Forgery Charges.

The Respondent applied to the High Court to set aside the Interim Award under, inter alia, Art 34 (2) (b) (ii) of the UNCITRAL Model Law on International Commercial Arbitration (‘the Model Law’) read with ss 3 (1) and 19 B (4) of the International Arbitration Act (Cap 143 A, 2002 Rev Ed) (‘the IAA’) , on the ground that the Interim Award was against the public policy of Singapore in that the Concluding Agreement required the Appellant to take steps to stifle the prosecution in Thailand of the Forgery Charges against the Respondent and its associated parties, and was therefore illegal under both its governing law (viz, Singapore law) and the law of the place of performance (viz, Thailand) .

The High Court judge (‘the Judge’) reopened the findings of the Tribunal and held that the Concluding Agreement was an agreement to stifle the prosecution of the Forgery Charges and was contrary to the public policy of Singapore under Art 34 (2) (b) (ii) of the Model Law. He accordingly set aside the Interim Award.

The Appellant appealed. The issues on appeal were: (a) whether the Judge was correct in going behind the Interim Award and reopening the Tribunal's finding that the Concluding Agreement was valid and enforceable; and (b) in any event, whether the Judge was correct in finding that the Concluding Agreement was illegal.

Held, allowing the appeal:

(1) The Judge was not entitled to reject the Tribunal's findings and substitute his own findings for them. On the facts of this case, s 19 B (1) of the IAA called for the court to give deference to the factual findings of the Tribunal. The policy of the IAA was to treat IAA awards in the same way as it treated foreign arbitral awards where public policy objections to arbitral awards were concerned, even though, in the case of IAA awards, the seat of the arbitration was Singapore and the governing law of the arbitration was Singapore law. Arbitration under the IAA was international arbitration, and not domestic arbitration. That was why s 19 B (1) provided that an IAA award was final and binding on the parties, subject only to narrow grounds for curial intervention. This meant that findings of fact made in an IAA award were binding on the parties and could not be reopened except where there was fraud, breach of natural justice or some other recognised vitiating factor: at [65].

(2) In PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR (R) 597 at [53]- [57], it was held that even if an arbitral tribunal's findings of law and/or fact were wrong, such errors would not per se engage the public policy of Singapore. In the present case, the public policy of Singapore was not engaged by the findings of fact of the Tribunal: at [66] to [70].

(3) In any case, the Judge was incorrect in finding that the Concluding Agreement was illegal because, on the face of it, none of the provisions of the Concluding Agreement required the Appellant to take any unlawful action to stop the Thai criminal proceedings and, further, the Judge had affirmed the Tribunal's rejection of the Respondent's allegation that the Appellant had procured the issue of the non-prosecution ordervis-à-vis the Forgery Charges by bribery: at [73] and [74].

AJU v AJT [2010] 4 SLR 649 (refd)

Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd [2006] 3 SLR (R) 174; [2006] 3 SLR 174 (refd)

Bhowanipur Banking Corp Ltd v Sreemati Durgesh Nandini Dassi AIR 1941 PC 95 (refd)

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

Dallah Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2010] 2 WLR 805 (refd)

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

Dongwoo Mann+Hummel Co Ltd v Mann+Hummel Gmb H [2008] 3 SLR (R) 871; [2008] 3 SLR 871 (refd)

ED & F Man (Sugar) Ltd v Yani Haryanto (No 2) [1991] 1 Lloyd's Rep 429 (refd)

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

Galsworthy Ltd of the Republic of Liberia v Glory Wealth Shipping Pte Ltd [2011] 1 SLR 727 (refd)

Hainan Machinery Import and Export Corp and Donald & Mc Arthy Pte Ltd, Re An Arbitration Between [1995] 3 SLR (R) 354; [1996] 1 SLR 34 (refd)

Hebei Import & Export Corp v Polytek Engineering Co Ltd [1999] 2 HKC 205 (refd)

John Holland Pty Ltd v Toyo Engineering Corp (Japan) [2001] 1 SLR (R) 443; [2001] 2 SLR 262 (refd)

Kamini Kumar Basu v Birendra Nath Basu AIR 1930 PC 100 (refd)

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

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

Omnium de Traitement et de Valorisation SA v Hilmarton Ltd [1999] 2 Lloyd's Rep 222 (folld)

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

Ouseph Poulo (since deceased) and after him his legal representatives v The Catholic Union Bank Ltd Head Office, Mala Angadi Vadama Village, Mukundapuram Taluk AIR 1965 SC 166 (refd)

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

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

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

Rockeby biomed Ltd v Alpha Advisory Pte Ltd [2011] SGHC 155 (refd)

Shripad v Sanikatta Co-operative Salt Sale Society AIR 1945 Bombay 82 (refd)

Soleimany v Soleimany [1999] QB 785 (not folld)

Strandore Invest A/S v Soh Kim Wat [2010] SGHC 151 (refd)

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

Swiss Singapore Overseas Enterprises Pte Ltd v Exim Rajathi India Pvt Ltd [2010] 1 SLR 573 (refd)

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

Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [1999] QB 740, HC (folld)

Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [2000] 1 QB 288, CA (refd)

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