Asiana Airlines, Inc. v Gate Gourmet Korea Company, Ltd

• Judge: Simon Thorley IJ
• Judgment Date: 27 May 2022
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 11 of 2021

Asiana Airlines, Inc

and

Gate Gourmet Korea Co, Ltd

[2022] SGHC(I) 8

Simon Thorley IJ

Originating Summons No 11 of 2021

Singapore International Commercial Court

Arbitration — Award — Recourse against award — Setting aside — Setting aside on basis of breach of natural justice, inability to present one's case, and failure of tribunal to consider all issues placed before it — Whether award should be set aside — Articles 34(2)(a)(ii) and 34(2)(a)(iii) UNCITRAL Model Law on International Commercial Arbitration

Held, dismissing the application:

Principles for setting aside

(1) Whilst the jurisdiction of a tribunal was determined by its terms of reference and by the relief sought by the parties in their pleadings, it was always open to a party to plead its case in the alternative and, in appropriate circumstances, to amend its claim for relief during the proceedings so as to raise new issues. However, as the judgment in CKH v CKG[2022] SGCA(I) 4 made clear, the way in which an arbitration developed might lead to a widening of its scope explicitly by an amendment of the pleadings or by the consent of the parties but, equally, it might arise implicitly in circumstances where the point in issue was clearly raised and there was an adequate opportunity to address it. In these circumstances it would become apparent, objectively, that the parties had accepted that the point necessarily fell to be determined as though it was a pleaded issue and/or the subject of requested relief: at [33].

(2) The question of what matters were within the scope of the parties' submission to arbitration was answerable by reference to five sources: the parties' pleadings, the agreed list of issues, opening statements, evidence adduced, and closing submissions at the arbitration: at [31].

The Kwon Report

(3) Prof Kwon did not suggest that the principle of effective interpretation had overriding effect or was required to be taken into account where the objective meaning of the words used was clear, such that the principle became a mechanism for rewriting a contract where the clear objective meaning of the words used could lead to a conclusion that the contract was void. Where the intention was clear from the wording and that wording could not mean anything else, then the parties were left with the consequences of the wording they had chosen: at [86].

(4) The Tribunal concluded that in all contested respects the objective meaning of the wording used in the Agreement was clear on its face. The Tribunal went on to consider various subsidiary means of interpretation in the event that its primary conclusion on the clarity of meaning was wrong, not because it felt obliged to do so when the wording was clear. In reaching those conclusions, the Tribunal did not expressly refer to the Kwon Report. This might be due either to the fact that it did consider the Kwon Report but concluded that it added nothing or that it overlooked the need to consider it having reached the conclusion from reading the pleadings that the principles of interpretation under Korean law were common ground. Regardless, even if the Tribunal had overlooked the need to review the Kwon Report, no prejudice had been caused to Asiana by this failure as it would not have caused the Tribunal to alter its conclusions on the applicable principles of interpretation: at [89] to [92].

(5) It formed no part of Asiana's case at the Arbitration that the factual matrix was such that an interpretation which favoured GGK would render the Agreement void. Asiana's case had to be that it was valid, regardless of the interpretation, in order to support its counterclaim. The first time that Asiana contended that there should be a finding of invalidity was in this application. Asiana also did not seek relief, in the alternative, in the form of a declaration that on the basis of GGK's preferred interpretation the Agreement would be null and void. The issue of invalidity was thus not expressly raised: at [97].

(6) Upon consideration of the pleadings, agreed list of issues, opening statements, evidence adduced and closing submissions of the parties, it could not be said that the parties accepted between themselves and before the Tribunal that the issue of invalidity fell to be decided: at [99].

C-333

(7) C-333 was irrelevant having regard to the way the Tribunal interpreted the relevant clauses in the Agreement. Further, in so far as it might be said that there was relevance in assessing the commercial common sense of the Agreement, such a consideration was irrelevant to interpretation when the objective meaning of the words used was clear: at [110] and [111].

Case(s) referred to

Arjowiggins HKK2 Ltd v X Co [2022] HKCFI 128 (refd)

BNP Paribas SA v Jacob Agam [2018] 3 SLR 1 (refd)

BRS v BRQ [2021] 1 SLR 390 (refd)

CDM v CDP [2021] 2 SLR 235 (refd)

CKG v CKH [2021] 5 SLR 84 (refd)

CKH v CKG [2022] SGCA(I) 4 (folld)

GD Midea Air Conditioning Equipment Co Ltd v Tornado Consumer Goods Ltd [2018] 4 SLR 271 (refd)

Lao Holdings NV v Government of the Lao People's Democratic Republic [2022] SGHC(I) 6 (refd)

TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (refd)

Facts

The applicant, Asiana Airlines, Inc (“Asiana”) was the respondent and counterclaimant in an arbitration (“the Arbitration”). The respondent, Gate Gourmet Korea Co, Ltd (“GGK”) was the claimant. A contractual dispute in relation to a catering agreement (“the Agreement”) arose between the parties and GGK commenced the Arbitration against Asiana.

In the award issued (“the Award”) by the arbitral tribunal (“the Tribunal”), GGK's claims were allowed, and Asiana's counterclaims were dismissed. Asiana applied to set aside the Award on the basis that there was a breach of natural justice, inability to present one's case, and failure of the Tribunal to consider all issues placed before it.

Asiana contended that the Tribunal failed to give any or any proper consideration to the expert report of a Korean law expert, Prof Young-Joon Kwon (“Prof Kwon” and “the Kwon Report”), and therefore applied the wrong principles when interpreting the terms of the Agreement. The Tribunal also allegedly failed to properly address the aspects of the Kwon Report which apparently supported the assertion by Asiana that GGK's interpretation of the Agreement might render the Agreement null and void under Korean law. It also contended that the Tribunal failed to consider a document adduced by GGK as an exhibit in the arbitration, Exh C-333 (“C-333”), which might have impacted the interpretation of the relevant contractual provisions.

Underlying all Asiana's contentions was the assertion that the Tribunal erred in identifying the principles of Korean law that it applied when reaching its conclusion on the proper meaning of the contractual provisions which were in dispute. Specifically, Asiana contended that not only was the Tribunal wrong in its analysis of Korean law, which it accepted was not a ground for setting the Award aside, but that the reason the Tribunal erred was due to its failure to consider fully or at all the unchallenged expert evidence of Prof Kwon. Had the Tribunal done so, it would have appreciated that Korean law mandated a more nuanced approach to interpretation which did not afford primacy to the wording of the Agreement but required the intention of the parties to be discerned by reference to other factors including the avoidance of invalidity.

Legislation referred to

International Arbitration Act (Cap 143A, 2002 Rev Ed) ss 24, 24(b), First Schedule Art 34(2)(a)(ii), First Schedule Art 34(2)(a)(iii)

Rules of Court (2014 Rev Ed) O 59, O 110 r 46

Thio Shen Yi SC and Nanthini d/o Vijayakumar (TSMP Law Corporation) for the plaintiff;

Liew Wey-Ren Colin (Colin Liew LLC) for the defendant.

27 May 2022

Judgment reserved.

Simon Thorley IJ:

Introduction

1 By this originating summons (“the OS”) the plaintiff seeks to set aside the Final Award (“the Award”) dated 18 February 2021 in an arbitration (ICC Arbitration No 24544/HTG) (“the Arbitration”), together with an addendum thereto (“the Addendum”) dated 2 April 2021 pursuant to s 24(b) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) and Arts 34(2)(a)(ii) and 34(2)(a)(iii) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). The plaintiff, Asiana Airlines, Inc (“Asiana”) was the respondent and counterclaimant in the arbitration and the defendant, Gate Gourmet Korea Co, Ltd (“GGK”) was the claimant.

2 The OS was filed in the General Division of the High Court (HC/OS 580/2021) on 11 June 2021 and was transferred to the Singapore International Commercial Court (“SICC”) on 24 August 2021. Following the filing of affidavits and written submissions, there was an oral hearing before me on 23 and 24 March 2022 where Mr Thio Shen Yi SC (“Mr Thio SC”) and Ms Nanthini d/o Vijayakumar appeared on behalf of Asiana and Mr Liew Wey-Ren Colin (“Mr Colin Liew”) appeared on behalf of GGK.

Background

3 Asiana is a company (organised and existing under the laws of the Republic of Korea) that is engaged in the business of air travel. It is part of a group of companies, the Kumho Asiana Group (“the Kumho Group”).

4 GGK is a company (also incorporated under the laws of the Republic of Korea) that is engaged in the business of providing catering and other services to the airline industry. GGK is a joint venture between Gate Gourmet Switzerland GmbH (“GGS”) and Asiana. GGS is a subsidiary of the Gate Gourmet group of companies (“Gategroup”).

5 Since April 2003, catering services had been provided to Asiana by LSG Sky Chefs Korea Co Ltd (“LSGK”), a joint venture between Asiana and a German company. Asiana's agreement with LSGK was due to expire in June 2018 and, being dissatisfied with the pricing structure adopted by LSGK, Asiana sought to negotiate a replacement agreement with GGK and the Kumho Group. These negotiations...