Cbx v Cbz

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeAnselmo Reyes IJ
Judgment Date16 July 2020
Docket NumberOriginating Summons No 1 of 2020
Date16 July 2020

[2020] SGHC(I) 17

Singapore International Commercial Court

Anselmo Reyes IJ

Originating Summons No 1 of 2020

CBX and another
and
CBZ and others

Alvin Yeo SC, Lin Weiqi Wendy, Chong Wan Yee Monica, Huang Meizhen Margaret, Kara Quek Tze-Min (WongPartnership LLP) for the plaintiff;

Francis Xavier SC, Disa Sim, David Isidore Tan Huang Loong, Kristin Ng (Rajah & Tann LLP) for the defendants.

Case(s) referred to

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

AKN v ALC [2016] 1 SLR 966 (refd)

Amaltal Corp Ltd v Maruha (NZ) Corp Ltd [2004] 2 NZLR 614 (refd)

Co A v Co D [2019] HKCFI 367 (refd)

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

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

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

Lesotho Highlands Development Authority v Impregilo SpA [2006] 1 AC 221 (folld)

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

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

Soleimany v Soleimany [1999] QB 785 (distd)

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

Legislation referred to

International Arbitration Act (Cap 143A, 2002 Rev Ed) ss 12(5)(b), 20 (consd)

Agricultural Land Reform Act BE 2518 (1975) (Thailand)

National Council for Peace and Order Order No 31/2560 (Thailand)

Arbitration — Award — Recourse against award — Setting aside — Tribunal awarding costs of arbitrations — Whether costs award should be set aside

Arbitration — Award — Recourse against award — Setting aside — Tribunal ordering payment of compound interest on sums found due under contract — Contract governed by foreign law — Compound interest illegal under foreign law — Whether tribunal made error of fact or law — Whether tribunal exceeded its jurisdiction — Whether tribunal failed to give reasonable opportunity to present case — Whether tribunal award contravened Singapore public policy

Arbitration — Award — Recourse against award — Setting aside — Tribunal ordering payments under contract — Whether tribunal exceeded its jurisdiction — Whether plaintiffs suffered unfair prejudice — Whether tribunal failed to give reasonable opportunity to present case

Facts

Under a sale and purchase agreement (“CBX SPA”) dated 19 June 2015, the first defendant (“CBZ”) agreed to sell, and the first Plaintiff (“CBX”) agreed to buy, 49% of the share capital of a company. Under another sale and purchase agreement (“CBY SPA”) dated 19 June 2015, the second and third defendants (respectively, “CCA” and “CCB”) agreed to sell, and the second plaintiff (“CBY”) agreed to buy, 48.94% of the share capital of the same company. An individual, “CC”, controlled the plaintiffs (collectively, “the Plaintiffs”), and another individual, “DD”, controlled the defendants (“collectively, “the Defendants”).

CBX was to pay a first instalment to CBZ by 23 October 2015 under the CBX SPA. CBY was to pay a first instalment to CCA and CCB by 25 September 2014 under the CBY SPA. Under the SPAs, subject to a certain proviso, the balance of the consideration under the SPAs (“the Remaining Amounts”) was to be paid in tranches within 45 business days of each of the milestone dates identified in Schedule 5 (“Schedule 5”) of the SPAs.

The parties discussed the postponement of the original deadlines for the first instalments. However, CBX did not pay the first instalment under the CBX SPA. CBY paid the first instalment under the CBY SPA, partly on 30 November 2015 and partly on 29 December 2015. It did not pay interest for late payment. The Defendants contended that the Plaintiffs were in default due to non-payment or late payment. The Defendants maintained that, in consequence, they could treat the CBX SPA as rescinded. The Defendants further alleged that, not only were the outstanding principal and interest of the first instalments due, but the Remaining Amounts had additionally become accelerated and so immediately payable in full. The Plaintiffs denied that the Defendants were entitled to treat the CBX SPA as rescinded. They argued that the payment dates for the first instalments had been postponed and that the Remaining Amounts had not been accelerated. The Plaintiffs also raised set-offs and counterclaims which it submitted had the effect of reducing or extinguishing any amounts (including the Remaining Amounts) payable to the Defendants.

CBZ commenced arbitration (“the CBX arbitration”) against CBX on 26 January 2016, while CCA and CCB instituted proceedings (“the CBY arbitration”) against CBY on 25 March 2016. The same arbitral tribunal (“Tribunal”) heard the references together, and divided the procedural timetable into a “Phase I” on liability and a “Phase II” on damages.

On 22 September 2017, the Tribunal issued its “Phase I Partial Awards” in the two arbitrations. On 5 June 2019, the Tribunal issued its “Phase II Partial Awards”, ordering, inter alia, that the Plaintiffs pay (a) the Remaining Amounts to the Defendants in accordance with Schedule 5 (“Remaining Amounts Orders”); and (b) 15% interest compounded annually from the date of the Phase II Partial Awards (“Compound Interest Orders”). On 9 August 2019, the Tribunal issued its Final Award (Costs) (“Costs Award”) covering the costs of Phases I and II of both arbitrations. The Tribunal ordered the Plaintiffs to pay 66% of the Defendants' costs of the two arbitrations, together with simple interest of 7.5% per annum from the date of the Costs Award.

The Plaintiffs then filed the present originating summons, and applied to set aside the Remaining Amounts Orders and Compound Interest Orders on the ground that, in coming to its decisions, the Tribunal exceeded its jurisdiction, failed to afford the Plaintiffs a reasonable opportunity to present their case, and contravened Singapore public policy. The Plaintiffs also argued that the Costs Award was consequent upon the Remaining Amounts and the Compound Interest Orders, and should thus be set aside if the said Orders are set aside. The Plaintiffs additionally submitted that, in substitution for the Costs Award, the court should order that the Defendants pay 100% of the Plaintiffs' costs of the entire arbitration proceedings.

Held, dismissing the application:

(1) The Plaintiffs complained that, in making the Remaining Amounts Orders, the Tribunal exceeded its jurisdiction. However, the payment of the Remaining Amounts pursuant to Schedule 5 was squarely in issue in Phases I and II of the arbitrations. The Defendants' reply submissions in Phase II made it plain that the Defendants were seeking payment of the Remaining Amounts pursuant to Schedule 5, albeit as a “very subsidiary claim” or bottom-line position. Based on the Plaintiffs' conduct during the CBX and CBY arbitrations, the Tribunal would reasonably have understood that, subject only to their case on set-offs and counterclaims in Phase II, the Plaintiffs intended to comply with their obligations under the SPAs and to pay the Remaining Amounts within 45 business days of the Schedule 5 milestones: at [14] and [19] to [22].

(2) The court was not persuaded that the Plaintiffs had suffered unfair prejudice by the Remaining Amounts Orders, or that there had been a denial of natural justice. There was nothing to suggest to the Tribunal that, despite CC's re-examination evidence, by the time of the closing exchange on the last day of the Phase II hearing and the post-hearing briefs, the Plaintiffs actually had no intention of paying the Remaining Amounts in any circumstance. By the Remaining Amounts Orders, the Tribunal was merely acting on its understanding of CC's re-examination evidence during the closing exchange. The Plaintiffs had ample opportunity before then to disabuse the Tribunal of this understanding, but did not do so: at [23], [35] and [38].

(3) The Plaintiffs' challenge to the Remaining Amounts Orders therefore failed: at [39].

(4) As to the Compound Interest Orders, the court did not agree that the Tribunal lacked power to award compound interest or exceeded its jurisdiction in so doing. The Tribunal had the power to award compound interest under s 12 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”). Article 12.9 in the CBX and CBY SPAs permitted 15% compound interest to be imposed on overdue amounts. The validity of this article was plainly a live dispute at the outset of Phase II. It seemed that the Tribunal did not appreciate that the Defendants' expert had accepted the Plaintiffs' expert's view that, under Thai law, stipulations for compound interest in agreements of the nature of the SPAs were invalid. As a result of these misapprehensions, the Tribunal came to a wrong conclusion on Thai law. The court did not think that such error could be characterised as the Tribunal acting beyond its jurisdiction. The situation here was one where, due to its mistake as to the parties' positions and the thrust of the Thai law evidence, the Tribunal wrongly exercised its undoubted power to award compound interest. The risk that a tribunal make an error of that sort was a routine hazard of arbitration. Parties to an arbitration nonetheless agreed to be bound by a tribunal's decision, whether right or wrong. The Tribunal's error on Thai law was thus not of itself a ground for setting aside the Compound Interest Orders: at [47] to [49].

(5) Further, the court did not accept that the Plaintiffs were denied a reasonable opportunity to present their case on compound interest under Thai law. The problem was not so much a lack of due process, as of the Tribunal misapprehending the parties' stances and the thrust of Thai law evidence presented to it: at [50].

(6) The court also disagreed that...

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