Cip v Ciq

• Jurisdiction: Singapore
• Judge: Patricia Bergin IJ
• Judgment Date: 19 November 2021
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 4 of 2021

CIP

and

CIQ

[2021] SGHC(I) 13

Patricia Bergin IJ

Originating Summons No 4 of 2021

Singapore International Commercial Court

Arbitration — Award — Recourse against award — Setting aside — Whether award contained decision that was beyond scope of parties' submission to arbitration — What sources court had regard to in order to determine scope of parties' submission to arbitration

Arbitration — Award — Recourse against award — Setting aside — Whether rules of natural justice were breached by arbitral tribunal

Held, dismissing the application:

(1) In determining what was within the scope of the parties' submission to arbitration, the court would have regard to five sources, being the pleadings, the agreed list of issues, opening statements, the evidence that was adduced in the arbitration and closing submissions: at [158].

Ground 1

(2) The Majority had not found that both parties were in breach of the MOA: at [240].

(3) The fact that the articles in the Civil Code of the Philippines 1949 (Republic Act No 386) (The Philippines) (“the Civil Code”), to which the parties limited their cases in the arbitration, referred to one party breaching and the counterparty being in a position to act upon the breach, did not prevent the Tribunal from considering all the circumstances surrounding each party's conduct and consequences of that conduct: at [231] and [232].

(4) In its List of Issues, the applicant had identified the issue of whether, if the Tribunal were to find that the respondent breached the MOA, it should allow the respondent to be “rewarded” with rescission. The applicant also counterclaimed that the respondent was in breach of the MOA. Any consideration of whether rescission would be “rewarded” would be in the context of the applicant having committed a breach of the MOA and thus the Tribunal would be considering whether both parties were in breach of the MOA. This was not a disjunctive case. It was clearly a claim that both parties were “equally” in breach and the remedy should not be permitted: at [235] to [237].

(5) In its Written Opening Submissions in the arbitration, the applicant had also identified a provision in the Civil Code, Art 1192, which provided for consequences if both parties breached their obligations. By not pursuing this article in the remainder of the arbitration, the applicant ran the risk of the Tribunal accepting its submission that the respondent was in breach but deciding that notwithstanding such breach the remedy of rescission was still available: at [238].

(6) The Tribunal did not stray into issues that were not submitted to it for determination. Nor did it deny the applicant the opportunity to make submissions on the relevant issue: at [242].

Ground 2

(7) The order in which the Majority had decided the issues which arose in the arbitration did not dictate the conclusions it reached. A reasonable reading of the Award as a whole demonstrated that the Majority did not cocoon itself in each separate issue or fail to give proper and global consideration to all the matters before it for determination: at [251] and [252].

(8) The Majority had not applied some “deeming principle” that because the applicant had breached the MOA, the respondent could not itself have been in breach. The Majority's conclusion that the respondent had not breached the MOA by failing to reflect the applicant's 42% shareholding in the respondent followed from its earlier reasoning that because the applicant had breached its obligations in “Stage 1” of the MOA and the respondent had not, the former was not entitled to rely on its rights in “Stage 2” of the MOA: at [255] and [256].

(9) Ground 2 of the applicant's challenge failed: at [258].

Ground 3

(10) The applicant had been given a full opportunity to make an application to tender the Surface Rights E-mail and ample opportunity to make submissions in support of that tender. The Tribunal was not satisfied that the applicant had properly explained its failure to disclose the Surface Rights E-mail before the oral hearing in the arbitration. The applicant had explicitly acknowledged that it had control and possession of the Surface Rights E-mail before the hearing. The Tribunal also concluded that the prejudice that might be caused to the respondent could not be cured at the advanced stage of the proceedings. In this regard, it was not possible to know whether further investigation needed to be made in respect of the provenance of the information in documents annexed to the Surface Rights E-mail: at [284] to [286].

(11) In any event, the documents within the Surface Rights E-mail could not reasonably have made a difference to the Majority's deliberations: at [289].

(12) Further, the Tribunal had not breached the rules of natural justice by allowing the respondent to amend its Memorial. The Tribunal had provided each party with the opportunity to put its arguments as to whether the amendment should be permitted. Both parties took up those opportunities and neither before nor after the amendment was allowed did the applicant raise with the Tribunal that it had been prejudiced by the amendment or disadvantaged in arguing its case before the Tribunal: at [303].

(13) There was no breach of natural justice by the Tribunal's admission of three new exhibits by the respondent before the oral hearing commenced. The applicant had not opposed the admission of these new exhibits and the Tribunal had applied itself appropriately to the respondent's application: at [312] and [314].

(14) Further, the Tribunal's decision to hold a further oral hearing did not breach the rules of natural justice as both parties were given a full opportunity to make submissions as to whether a further hearing should take place. At the further oral hearing, both parties were given a full opportunity to make every submission they wished to make: at [321].

(15) That the Tribunal acceded to 48 of the respondent's 129 requests for document production but none of the applicant's 93 requests did not evidence a breach of natural justice. Although the respondent was clearly more successful than the applicant in its applications for the production of documents, that fact alone could not be equated to a finding that equality of treatment was lacking: at [47] and [333].

(16) Ground 3 of the applicant's challenge failed: at [290], [306], [315], [323] and [335].

Ground 4

(17) The Surface Rights Order was a matter that was submitted to the Tribunal for determination. It was an order that was sought by the respondent at the outset of the arbitration and was the subject of evidence and submission: at [354].

(18) The Majority concluded that the applicant had breached not only the JVA but also its fiduciary and trustee duties to act in the interests of the JV and to act in good faith. It then crafted the remedy that it concluded flowed from those breaches which included the Surface Rights Order: at [355].

(19) Ground 4 of the applicant's challenge failed: at [360].

Case(s) referred to

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

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

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

China Machine New Energy Corp v Jaguar Energy Guatemala LLC [2020] 1 SLR 695 (folld)

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

John Holland Pty Ltd v Toyo Engineering Corp (Japan) [2001] 1 SLR(R) 443; [2001] 2 SLR 262 (folld)

JVL Agro Industries Ltd v Agritrade International Pte Ltd [2016] 4 SLR 768 (refd)

L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125 (folld)

Lao Holdings NV v Government of the Lao People's Democratic Republic [2021] 5 SLR 228 (folld)

OAO Northern Shipping Co v Remolcadores de Marin SL (The Remmar) [2007] EWHC 1821 (Comm) (refd)

Prometheus Marine Pte Ltd v King, Ann Rita [2018] 1 SLR 1 (folld)

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

PT Prima International Development v Kempinski Hotels SA [2012] 4 SLR 98 (folld)

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

Sugar Australia Pty Ltd v Mackay Sugar Ltd [2012] QSC 38 (refd)

Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd [2015] 1 SLR 114 (folld)

William Hare UAE LLC v Aircraft Support Industries Pty Ltd [2014] NSWSC 1403 (refd)

Facts

The applicant and respondent were parties to a joint venture agreement (“JVA”) and memorandum of agreement (“MOA”) (“the Agreements”). The joint venture (“JV”) aimed to develop a mining project (“the Project”) in the Philippines. As part of the Agreements, the applicant could acquire interest in the JV which was later to be converted into equity in the respondent. The applicant was also obliged to transfer certain land rights (“the Surface Rights”), which were relevant to the JV's operations, to the respondent. Correspondingly, the respondent was to provide the applicant with the information it needed to complete due diligence on the respondent in anticipation of becoming a shareholder of the respondent. Each party claimed that the other had breached their contractual obligations.

In the Singapore International Arbitration Centre arbitration, the arbitral tribunal (“the Tribunal”), by a majority (“the Majority”), found that only the applicant had breached the Agreements and that the respondent had validly rescinded the MOA and terminated the JVA (“the Award”).

The applicant sought to set aside the Award. It submitted that the Award contained decisions that were beyond the scope of the parties' submission to the arbitration. These decisions were that: (a) the respondent was entitled to rescind the MOA even though both the applicant and the respondent had failed or refused to abide by the MOA (“Ground 1”); (b) the respondent could not be regarded as the party that breached the MOA in light of the applicant's breaches (“Ground 2”); and (c) the applicant was to transfer the Surface Rights to the...