Btn v Btp

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 16 September 2019
• Date: 16 September 2019
• Docket Number: Originating Summons No 683 of 2018 and Summons No 2611 of 2018

[2019] SGHC 212

High Court

Belinda Ang Saw Ean J

Originating Summons No 683 of 2018 and Summons No 2611 of 2018

BTN and another

and

BTP and another

Philip Jeyaretnam SC (instructed) and Liew Wey-Ren Colin (Colin Liew LLC) for the plaintiffs;

Michael Hwang SC (instructed) and Chew Kei-Jin, Yeo Chuan Tat and Tan Silin, Stephanie (Ascendant Legal LLC) for the defendants.

Case(s) referred to

AJU v AJT [2011] 4 SLR 739 (folld)

AKN v ALC [2015] 3 SLR 488 (folld)

AMCO Asia Corp v Republic of Indonesia ICSID Case No ARB/81/1 (10 May 1988) (refd)

AQZ v ARA [2015] 2 SLR 972 (folld)

BAZ v BBA [2020] 5 SLR 266 (folld)

BLC v BLB [2014] 4 SLR 79 (folld)

BNX v BOE [2017] SGHC 289 (refd)

Chiron Corp v Ortho Diagnostic Systems 207 F 3d 1126 (9th Cir, 2000) (refd)

Coal & Oil Co LLC v GHCL Ltd [2015] 3 SLR 154 (folld)

CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK [2011] 4 SLR 305 (distd)

Henderson v Henderson (1843) 3 Hare 100 (refd)

International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2014] 1 SLR 130 (refd)

Kingdom of Lesotho v Swissbourgh Diamond Mines (Pty) Ltd [2019] 3 SLR 12 (refd)

Marriott International Hotels, Inc v JNAH Development SA No 09/13550 (9 September 2010) (Court of Appeal, Paris) (refd)

Marty Ltd v Hualon Corp (Malaysia) Sdn Bhd [2018] 2 SLR 1207 (refd)

Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (refd)

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

Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd [2019] 2 SLR 131 (folld)

Rotoaira Forest Trust v AG [1999] 2 NZLR 452 (refd)

Royal Bank of Scotland NV, The v TT International Ltd [2015] 5 SLR 1104 (folld)

SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 (folld)

Sinolanka Hotels & Spa (Pte) Ltd v Interna Contract SpA [2018] SGHC 157 (refd)

Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86; [2007] 3 SLR 86 (folld)

Swissbourgh Diamond Mines (Pty) Ltd v Kingdom of Lesotho [2019] 1 SLR 263 (refd)

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

Turner v London Transport Executive [1977] ICR 952 (refd)

WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka [2002] 1 SLR(R) 1088; [2002] 3 SLR 603 (distd)

Legislation referred to

International Arbitration Act (Cap 143A, 2002 Rev Ed) ss 10(3)(b), 24(b) (consd); ss 2, 10(3)

Industrial Relations Act 1967 (No 177 of 1967) (M'sia) ss 20, 29(g), 56

Arbitration — Arbitral tribunal — Jurisdiction — Respondents in arbitration seeking declaration that tribunal had jurisdiction — Whether tribunal's decision in holding prior court's factual finding to be binding was negative jurisdiction ruling — Section 10(3)(b) International Arbitration Act (Cap 143A, 2002 Rev Ed)

Arbitration — Award — Recourse against award — Setting aside — Respondents in arbitration seeking to set aside arbitral award — Whether breach of natural justice occurred in making of arbitral award — Whether arbitral award contrary to public policy — Whether arbitral tribunal failed to decide matters — Article 34(2) UNCITRAL Model Law on International Commercial Arbitration — Section 24(b) International Arbitration Act (Cap 143A, 2002 Rev Ed)

Facts

This case arose from the sale and purchase of shares in a group of companies (“the Group”), of which the second plaintiff, BTO, was the holding company. BTO was an online travel agency incorporated in Malaysia. The defendants – BTP and BTQ – were two individuals who were the owners of the Group. On 26 September 2012, the defendants, along with two other owners of the Group, entered into a share and purchase agreement (“the SPA”) with the first plaintiff, BTN, a publicly listed company incorporated in Mauritius. Pursuant to the SPA, BTN acquired 100% ownership and control of the Group on both the shareholder and board level.

The consideration for the acquisition was made up of two elements: the “Guaranteed Minimum Consideration” of US$25m and the “Earn Out Consideration”. The SPA also stated that the defendants (“the Employees”) had to be employed by BTO. Their employment was governed by the respective “Promoter Employment Agreements” (“PEAs”), which were annexed to the SPA. Pursuant to the PEAs signed in November 2012, BTP was employed as the chief executive officer while BTQ was employed as the chief technical officer. Both the SPA and PEAs contained materially identical provisions as to the Employees' “with cause” and “without cause” terminations. The grounds for “with cause” termination were stated in cl 12.9.1 of the SPA and cl 15.2.1 of the PEAs.

The SPA was governed by Mauritius law while the PEAs were governed by Malaysian law. Both the SPA and the PEAs contained an arbitration clause that provided for arbitration in Singapore (“Arbitration Agreements”).

In January 2014, BTO gave notices to the Employees to summarily dismiss them pursuant to cl 15.2.1 of the PEAs and cl 12.9.1 of the SPA. In response, the Employees commenced proceedings under s 20 of the Industrial Relations Act 1967 (No 177 of 1967) (M'sia) (the “IRA”). Both cases were referred to the Malaysian Industrial Court (“MIC”). The Employees sought a declaration that their terminations of employment were without just cause and excuse and sought to be reinstated to their former positions. BTO failed to turn up to the hearing of the cases, which was adjourned multiple times due to its absence. BTO also failed to respond to the Employees' claims with a reply.

The MIC proceeded to hear the Employees' claims in the absence of BTO. The MIC gave judgment in the Employees' favour on 6 April 2015 and 29 July 2015 respectively (“the MIC Awards”). The MIC found that the Employees' dismissals were without just cause or excuse. The MIC declined to order reinstatement but awarded compensation for lost salary. BTO made full compensation to the Employees.

In July 2016, the Employees commenced arbitration proceedings under the SPA, claiming that they had been dismissed without cause and were therefore entitled to receive US$35m. In the arbitration, BTN and BTO (“the Companies”) asserted that the dismissals were with cause. The Employees claimed that the dismissals, whether with cause or without cause, were res judicata by virtue of the MIC Awards (the “Res Judicata Issue”) and that, as a matter of construction of the SPA and the PEAs, a determination under the PEAs that the dismissals were without cause was binding for the purposes of the SPA (the “Construction Issue”).

With the parties' consent, the arbitral tribunal adjourned the hearing on evidentiary issues and proceeded with the hearing on legal issues. The tribunal issued Procedural Order No 5, setting out the agreed list of legal issues to be determined, including whether the findings of the MIC were binding on the tribunal.

Before the tribunal, counsel for the Employees submitted that issue estoppel applied because the same issues were raised before the MIC. Counsel for the Employees further argued that the MIC's findings were binding as a matter of contract for the purposes of the SPA because the parties had agreed, by their contractual terms, to be bound by events that affected both the SPA and the PEAs. On the other hand, counsel for the Companies submitted that the MIC's findings did not bind the tribunal.

The tribunal released the “Partial Award”, which held unanimously that the MIC's determinations that the Employees were terminated without just cause or excuse was binding and conclusive for the purposes of termination “without cause” under the SPA and the PEAs. The tribunal also held that the Companies were prevented from arguing that the Employees were terminated “with cause” by the doctrine of issue estoppel under Singapore law.

The Companies filed Originating Summons No 683 of 2018 (“OS 683”) in relation to the Partial Award. They sought a declaration under s 10(3)(b) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) that the tribunal had jurisdiction to determine whether the Employees were terminated “without cause” for the purposes of the SPA. They argued that the Partial Award was in substance a negative jurisdiction ruling. In the alternative, they sought to set aside the Partial Award pursuant to s 24(b) of the IAA and Art 34(2) of the UNCITRAL Model Law on International Commercial Arbitration.

Held, dismissing the application in OS 683:

(1) The Partial Award was not a ruling on jurisdiction. This was because neither the Construction Issue nor the Res Judicata Issue was a jurisdictional issue. The tribunal's decisions on both issues were decisions on the merits of the parties' legal questions submitted to the tribunal for determination. As for the Construction Issue, the tribunal had exercised its jurisdiction to construe the parties' contracts; it was not a case of the tribunal abdicating its jurisdiction. As for the Res Judicata Issue, the Partial Award had answered the substantive merits of the issues submitted by the parties for determination, namely, res judicata. Thus, the decisions could not be reviewed de novo by the court: at [45], [46], [52], [57] and [78].

(2) There was a distinction between the admissibility of a claim and the jurisdiction of the tribunal. Jurisdiction referred to the power of the tribunal to hear a case, whereas admissibility referred to whether it was appropriate for the tribunal to hear it. The doctrine of res judicata fell within the concept of admissibility of a claim, and not the concept of jurisdiction, because the doctrine of res judicata took aim at the claim and not at the defect of the improper forum: at [62] to [64].

(3) In the context of commercial arbitration, the concept of admissibility was useful as a foil to better...