Beijing Sinozonto Mining Investment Company Ltd v Goldenray Consortium (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 14 November 2013
• Date: 14 November 2013
• Docket Number: Originating Summons No 708 of 2012 (Registrar's Appeal No 33 of 2013)
• Court: High Court (Singapore)

Beijing Sinozonto Mining Investment Co Ltd

Plaintiff

and

Goldenray Consortium (Singapore) Pte Ltd

Defendant

[2013] SGHC 248

Belinda Ang Saw Ean J

Originating Summons No 708 of 2012 (Registrar's Appeal No 33 of 2013)

High Court

Arbitration—Enforcement—Foreign award—Use of affidavit evidence in leave hearing—Standard of proof—Section 31 (4) (b) International Arbitration Act (Cap 143 A, 2002 Rev Ed)

Arbitration—New York Convention—Grounds for refusal—Public policy—Allegations of fraud and corruption in obtaining of award—Article V (2) (b) 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Sometime in April 2011, the appellant (‘Goldenray’) and the respondent (‘BSM’) entered into a joint investment to develop a crocodile farm in Beijing, People's Republic of China (‘PRC’). Goldenray and BSM each held 45% of the shares in the company involved in the project (‘Beijing Goldenray’), while the remaining 10% was held by a local cooperative. There was a loan agreement between BSM and Goldenray, under which BSM granted a secured loan of RMB50.2m to Goldenray. Of this amount BSM agreed to disburse RMB 35.2 m to Beijing Goldenray before 18 April 2011, and RMB 15 m to Beijing Goldenray before 29 June 2011. Only the first sum of RMB 35.2 m was disbursed.

Differences arose between BSM and Goldenray under the loan agreement, and on 3 August 2011, BSM submitted a request for arbitration to the China International Economic and Trade Arbitration Commission (‘CIETAC’), claiming repayment of the loan of RMB 35.2 m together with interest and legal fees. Goldenray filed a counterclaim. On 8 October 2011, a copy of the notice of formation of the arbitral tribunal was sent to the parties. BSM and Goldenray appointed one arbitrator each, with the presiding arbitrator appointed by the Chairman of CIETAC. On 28 November 2011, CIETAC notified the parties that the arbitration was fixed for hearing on 18 January 2012.

Even though BSM submitted its request for arbitration on 3 August 2011, the parties nevertheless held settlement discussions without suspending the arbitral process put in motion by BSM. These did not result in a settlement agreement.

At the arbitration hearing on 18 January 2012, both BSM and Goldenray were represented by their PRC lawyers. In the course of the hearing, the tribunal purportedly asked the PRC lawyers whether they could reach a settlement. The PRC lawyers agreed to try; negotiations on this front then began, and on the same day (viz, 18 January 2012) the PRC lawyers managed to arrive at an in-principle agreement on a settlement which they brought back to their respective clients. On 20 January 2012, a settlement agreement was signed by the PRC lawyers on behalf of their clients (‘the January 2012 Settlement Agreement’). Slightly less than four weeks later, on 15 February 2012, the tribunal issued an arbitral award ‘in accordance with the terms of the ... [January 2012] Settlement Agreement’ (‘the Award’).

BSM sought leave to enforce the Award in Singapore. Following an ex parte hearing, leave was granted on 17 August 2012. Goldenray applied to set aside the order, claiming that the Award was tainted by fraud or corruption such that its enforcement would be contrary to the public policy of Singapore, under s 31 (4) (b) of the International Arbitration Act (Cap 143 A, 2002 Rev Ed) (‘s 31 (4) (b) ’). Relying on the evidence of certain e-mails (‘the E-mails’), Goldenray argued that BSM, through its representatives or intermediaries, had unilaterally entered into an improper arrangement with the tribunal to get the tribunal to issue an award that supported BSM's claim as soon as possible (‘the improper arrangement argument’).

The assistant registrar dismissed Goldenray's application to set aside, holding that there was no evidence that BSM's alleged intermediary, Mr Mu Zili (‘Mr Mu’), had communicated with the tribunal. Goldenray appealed from this decision.

Held, dismissing the appeal:

(1) The phrase ‘if it finds’ in the opening sentence of s 31 (4) (b) connoted satisfaction on a balance of probabilities. This view was reinforced so far as the standard of proof was concerned by the fact that the issues in s 31 (4) (b) had to be decided once and for all in the present proceedings, and as such, the preliminary facts making out the grounds relied upon had to be proved to the satisfaction of the court on a balance of probabilities: at [48] .

(2) As far as s 31 (4) (b) was concerned, there were two levels of inquiry in this case. At the first level, the court had to determine whether the allegation of BSM's PRC lawyer (s) improperly influencing the tribunal was more likely than not to be true. It was the court's finding on this first question that enabled it to then embark on the second-level inquiry: whether it should exercise its discretion to make a final order refusing the applicant leave to enforce its arbitral award: at [67] .

(3) The improper arrangement argument in itself required Goldenray to show a necessary causative link between the E-mails (assuming them to be authentic), the corruption of the tribunal, the bad faith that permeated the arbitration hearing, and the conclusions made in the Award. Those elements were not present since the alleged improper arrangement was purely an argument; it was an assertion unsubstantiated by the E-mails or other evidence that was available. The allegation of dishonesty on the part of BSM's legal advisor, Mr Zhao Pan, Mr Mu, and the tribunal was also improbable on the facts. Reading all the E-mails carefully and objectively, they could not be said to have evidenced a plot on the part of BSM and/or its PRC lawyers to influence the tribunal or the arbitration through Mr Mu: at [70] , [72] - [79] and [88] .

(4) Goldenray's case that BSM had hatched a fraudulent or corrupt plan to influence the tribunal was undermined by the sequence of events which actually took place. Goldenray did not explain why BSM would have picked Mr Mu in particular to ‘influence’ the arbitral tribunal when its exact membership had not been made known yet at the time. There was no evidence at all to show that BSM had somehow been privy to Goldenray's choice of arbitrator before CIETAC's notice of 8 October 2011, not to mention the identity of the presiding arbitrator who was nominated by the Chairman of CIETAC: at [89] and [90] .

[Observation: In specific situations where the mode of commencement by originating summons was obligatory (like in this case), and the statutory threshold of proof was whether an event ‘more likely than not’ happened, the applicant had to meet this threshold test before the court embarked on the exercise of its discretion to make a final order duly taking into account the statutory purpose and affidavit evidence alone. From this perspective, the threshold test was workable in practice where the court, guided by the rules of evidence, made a final order based on affidavit evidence applying the civil standard of proof: at [55] .]

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B, Re [2009] 1 AC 11 (refd)

Chua Kwee Chen v Koh Choon Chin [2006] 3 SLR (R) 469; [2006] 3 SLR 469 (refd)

D, Re [2008] 1 WLR 1499 (refd)

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

Dallah Real Estate and Tourism Holding Co v The Ministry of Religious Affairs, Government of Pakistan [2008] 2 Lloyd's Rep 535 (refd)

Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763 (refd)

Dardana Ltd v Yukos Oil Co [2002] 2 Lloyd's Rep 326 (refd)

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

Gater Assets Ltd v Nak Naftogaz Ukrainiy [2008] Bus LR 388 (refd)

H, Re [1996] AC 563 (refd)

IMC Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 282 ALR 717 (refd)

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

Quek Tiong Kheng v Chang Choong Khoon Mark [2012] SGDC 76 (refd)

R v Exall (1866) 4 F & F 922; 176 ER 850 (refd)

R (N) v Mental Health Review Tribunal (Northern Region) [2006] QB 468 (refd)

Secretary of State for the Home Department v Rehman [2003] 1 AC 153 (refd)

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)

Sumitomo Bank Ltd v Thahir Kartika Ratna [1992] 3 SLR (R) 638; [1993] 1 SLR 735 (refd)

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

Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 WLR 413 (refd)

International Arbitration Act (Cap 143 A, 2002 Rev Ed) s 31 (4) (b) (consd) ;ss 31 (2) , 31 (4)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 28 r 3, O 28 r 4, O 28 r 4 (3) , O 28 r 4 (4) , O 28 r 8, O 38 r 1, O 38 r 2, O 38 r 2 (2) , O 38 r 2 (5) , O 41 r 5 (1) , O 41 r 5 (2) , O 69 A r 3 (2) , O 69 A r 6

Arbitration Act 1996 (c 23) (UK) s 103 (2)

International Arbitration Act 1974 (Cth) s 8 (7)

Sim Chong and Yip Wei Yen (JLC Advisors LLP) for the appellant

Christopher Tan, Marcus Foong and Jacqueline Chua (Lee & Lee) for the respondent.

Belinda Ang Saw Ean J

Introduction

1 Beijing Sinozonto Mining Investment Co Ltd...