Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd and Another

JurisdictionSingapore
JudgeJudith Prakash J
Judgment Date10 May 2006
Neutral Citation[2006] SGHC 78
Citation[2006] SGHC 78
Defendant CounselQuentin Loh SC, Kirindeep Singh and Edwin Lee (Rajah & Tann)
Published date12 February 2014
Plaintiff CounselDinesh Dhillon and Rachel Chong (Wong & Leow LLC)
Date10 May 2006
Docket NumberOriginating Summons No 762 of 2004
CourtHigh Court (Singapore)
Subject MatterWhether enforcement process mechanistic or substantive,Foreign award,Sections 29, 30 International Arbitration Act (Cap 143A, 2002 Rev Ed), O 69A r 6 Rules of Court (Cap 322, R 5, 2004 Rev Ed),Enforcement,Arbitration,Second defendant objecting to enforcement of foreign award in Singapore on ground that no arbitration agreement existing between plaintiff and second defendant,Sections 31(2)(b), 31(2)(d), 31(4)(a), 31(4)(b) International Arbitration Act (Cap 143A, 2002 Rev Ed),Procedure for enforcing foreign arbitral award,Definition,Principles applicable in determining whether "arbitration agreement" existing,Whether court having residual discretion to refuse enforcement,Application to set aside Singapore court order granting leave to enforce arbitration award in Singapore,Whether second defendant satisfying one or more grounds set out in s 31(2) or s 31(4) International Arbitration Act,Agreement,Whether court should refuse enforcement of foreign award on such grounds

10 May 2006

Judgment reserved.

Judith Prakash J:

Introduction

1 The plaintiff, Aloe Vera of America, Inc (“AVA”), took out this originating summons in June 2004 in order to obtain leave to enforce the Final Arbitration Award No 50 T 199 0092 03 issued on 15 October 2003 (“the Award”) against Asianic Food (S) Pte Ltd (“Asianic”), the first defendant named in the summons and Chiew Chee Boon (also known as Steven Chiew), the second defendant. The application proceeded on an ex parte basis, as usual, and an order in terms was made against both defendants on 25 June 2004. They were subsequently served with the order and the supporting papers.

2 On 23 July 2004, Mr Chiew applied to set aside the order. After several hearings before Assistant Registrar David Lee, his application was dismissed on 9 November 2005. Mr Chiew’s appeal against that decision is now before me.

Background

3 AVA, a company incorporated and existing under the laws of Texas, USA, is a manufacturer and distributor of aloe vera products (“the products”). Its relationship with Mr Chiew goes back to 1987 when he became an independent distributor of the products. Subsequently, Mr Chiew was employed by AVA.

4 In 1997, AVA decided to close its Singapore office. Mr Chiew persuaded it not to shut down the Singapore operations completely but to let him take them over. He then established Asianic for this purpose. On 1 August 1998, an Exclusive Supply, Distributorship and License Agreement (“the Agreement”) was entered into between AVA and Asianic. By the Agreement, AVA granted Asianic exclusive rights to sell, market and distribute the products. Mr Chiew signed the Agreement on behalf of Asianic.

5 The Agreement provided for disputes between the parties to be mediated, and if mediation was unsuccessful, to be arbitrated. It also provided that the Agreement was to be governed by the law of Arizona, USA. The relevant provisions, cll 13.7 and 13.9, read as follows:

13.7 Mediation/Arbitration. If a dispute arises relating to any relationship among any of the Forever Living Products Companies (“FLP”), their officers, employees, distributors or vendors or arising out of any products sold by FLP, it is expected that the parties will attempt in good faith to resolve any such dispute in an amicable and mutually satisfactory manner.

In the event such efforts are unsuccessful, either Party may serve a notice of mediation/arbitration (“Notice of Mediation/ Arbitration”) on the other Party.

If differences cannot be resolved by mediation, the Parties agree that in order to promote to the fullest extent reasonably possible a mutually amicable resolution of the dispute in a timely, efficient and cost-effective manner, they will waive their respective rights to a trial by jury and settle their dispute by submitting the controversy to arbitration in accordance with the rules of American Arbitration Association (“AAA”) except that all Parties shall be entitled to all discovery rights allowed under the federal rules of civil procedure as those rules exist in the United States Federal Court for the District of Arizona.

The Arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Sec 1 et.seq., and the judgment upon the award rendered by the arbitration may be entered by any court having jurisdiction thereof. Either party may elect to participate in the arbitration telephonically. Any substantive or procedural rights other than the enforceability of the arbitration agreement shall be governed by Arizona law, without regard to Arizona’s conflict of laws principles.

13.9 Choice of Law. It is the intention of the parties hereto that this Agreement and the performance hereunder and all suits and special proceedings hereunder be construed in accordance with and under and pursuant to the laws of the State of Arizona, U.S.A., and that in any action, special proceeding or their proceeding that may be brought arising out of, in connection with, or by reason of this Agreement, the Laws of the State of Arizona, U.S.A., shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which any action or special proceeding may be instituted.

6 Disputes arose subsequently and the Agreement was terminated. In February 2003, AVA commenced arbitration proceedings. It submitted an arbitration complaint to the American Arbitration Association (“AAA”) and served a notice of arbitration on both Asianic and Mr Chiew. Both of them were named as parties to the arbitration complaint. By a letter dated 27 February 2003 to both defendants, the International Centre for Dispute Resolution (“ICDR”) of the AAA acknowledged receipt of AVA’s demand for arbitration and set out various instructions in relation to the procedural steps for the arbitration to which it gave the case number 50 T 199 00092 03. By a letter dated 7 May 2003, the ICDR formally informed parties that one Richard N Goldsmith had been appointed as arbitrator for the arbitration (“the Arbitrator”).

7 Mr Chiew was upset to be named a party to the arbitration. He took the position that he was not a party to the Agreement and had not agreed to arbitration or to the laws of Arizona applying to him personally. He appointed a law firm called Sullivan Law Group to act on his behalf to object to the arbitration. On 21 July 2003, Sullivan Law Group sent a position statement to the Arbitrator in which it was made clear that Mr Chiew was not submitting to the jurisdiction of the Arbitrator and that he was not a party to the arbitration agreement. AVA’s lawyers responded and submitted that Mr Chiew was a party to the arbitration agreement pursuant to cl 13.7 of the Agreement and/or that he was the alter ego of Asianic. On 1 August 2003, the Arbitrator made a preliminary order. He found that he had jurisdiction over Mr Chiew pursuant to cl 13.7 of the Agreement because Mr Chiew was properly a party to the arbitration under the broad definition found in cl 13.7 of the Agreement. He also stated that he had reached that result without deciding whether Mr Chiew was also properly before the tribunal under the alter ego claim.

8 In a letter to the Arbitrator dated 10 September 2003, Sullivan Law Group stated that Mr Chiew disagreed with the Arbitrator’s order. Thereafter, Mr Chiew took no further part in the arbitration proceedings.

9 On 15 September 2003, the Arbitrator conducted a hearing. Prior notice of this hearing was given to all parties and they were asked to attend with their witnesses and to be prepared to present their proofs of evidence. Mr Chiew and Asianic did not attend.

10 The Arbitrator issued the Award on 15 October 2003. Pursuant to the Award, the Arbitrator ordered Asianic and Mr Chiew to pay to AVA inter alia:

(a) US$548,461.68 as special and compensatory damages;

(b) US$1,958.31 as the Arbitrator’s compensation and expenses and US$21,598 as costs; and

(c) US$8,000 as the AAA’s administrative fees and expenses.

It should also be noted that in the final award, the Arbitrator made a finding that Mr Chiew was at all material times the president, a director and shareholder of Asianic and that Asianic was undercapitalised, failed to honour corporate formalities and was the alter ego of Mr Chiew. He further found that all acts and obligations of Asianic were the acts and obligations of Mr Chiew.

11 In September 2003, Mr Chiew filed an originating summons in this court (Originating Summons No 1276 of 2003) in which he sought a declaration that he was not a party to the Agreement. He obtained leave to serve these proceedings on AVA out of jurisdiction but AVA subsequently made a successful application for that order to be set aside. On appeal, Mr Chiew failed to have the order reinstated.

The appeal

12 Before I go on to set out and discuss the issues that arise in this appeal, it is worth emphasising two facts. The first is that the Agreement was, in terms, expressed to be made between “Aloe Vera of America Inc., a Texas Corporation” and “Asianic Food (S) Pte. Ltd., a Singaporean Corporation”. Mr Chiew was not expressly stated to be a contracting party. The second is that Mr Chiew’s signature appeared at the execution part of the Agreement under Asianic’s name in the following manner:

LICENSEE: ASIANIC FOOD (S) PTE. LTD.,

a Singaporean corporation

[Mr Chiew’s signature]

By: STEVEN CHIEW

Its: MANAGER

13 Counsel for Mr Chiew, Mr Quentin Loh SC, took a two-pronged approach when putting forward his contention that AVA should not have been given leave to enforce the Award. First, he argued that AVA had not crossed the preliminary hurdle of establishing that there was an arbitration agreement between the parties. In this regard, he cited O 69A r 6 of the Rules of Court (Cap 322, R 5, 2004 Rev Ed) (“the Rules”) which sets out the procedure to be followed by a party seeking to enforce an arbitration award governed by the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the Act”). He argued that AVA had been unable to comply with the requirement that such an application be supported by an affidavit exhibiting the arbitration agreement because there had been no such agreement between AVA and Mr Chiew. His second ground was that, in any case, the court should refuse enforcement because Mr Chiew was able to satisfy one or more of the grounds set out in s 31(2) of the Act as a basis for refusing to enforce a foreign arbitration award.

Definition of “arbitration agreement”

14 The parties were agreed that the legal regime governing the recognition and enforcement of foreign arbitration awards is set out in the Act. They were not, however, agreed on exactly which sections of the Act applied. Mr Loh submitted that I should apply s 19, which is a section in Part II of the Act. If that were the case then I would also have had to consider the definition of “arbitration agreement” which appears in s 2(1) of the Act. On the other hand, Mr Dhillon,...

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