DBX and another v DBZ

• Jurisdiction: Singapore
• Judge: Roger Giles IJ
• Judgment Date: 15 November 2023
• Neutral Citation: [2023] SGHC(I) 18
• Court: International Commercial Court (Singapore)
• Docket Number: Originating Application No 10 of 2023
• Hearing Date: 18 September 2023
• Citation: [2023] SGHC(I) 18
• Year: 2023
• Plaintiff Counsel: Ang Cheng Ann Alfonso and James Ch'ng Chin Leong (A.Ang, Seah & Hoe)
• Defendant Counsel: Chong Wan Yee Monica, Leau Jun Li, Wong Chun Mun and Foo Hsien Weng (WongPartnership LLP)
• Subject Matter: Arbitration,Award,Recourse against award,Setting aside
• Published date: 18 November 2023

Roger Giles IJ: Introduction

This is an application to set aside the final awards in two Singapore seated arbitrations. In one award, the First Applicant was held liable to the Respondent as principal debtor under a margin financing facility agreement in a sum just short of HKD 80m, plus interest and costs.¹ In the other award, the Second Applicant was held liable to the Respondent as guarantor for the same amount, plus interest and costs.²

The application was filed in the General Division of the High Court on 19 June 2023,³ and was transferred to the Singapore International Commercial Court on 7 August 2023. At an early time, the learned Deputy Registrar made consent orders on the Respondent’s application that the court file for this application be sealed and the identity of the parties to the proceedings not be identified in any hearing lists,⁴ hence the computer allocated title of this judgment. The learned Deputy Registrar reserved to the Judge hearing the application the Respondent’s prayer for an order that the “[p]arties’ identities on the case file be anonymised and any written judgments, orders, and/or grounds in the proceedings be duly amended so as not to reveal the identity of the parties to the proceedings”.⁵

The first part of that prayer has in practice been accommodated by the sealing of the court file and the allocated title. The Applicants did not oppose the second part of the prayer. The arbitral proceedings were subject to confidentiality, and on the materials before me no reason appears why the derivative interest in protecting their confidentiality (see The Republic of India v Deutsche Telecom AG [2023] SGCA(I) 4 at [23]) should not be recognised as an exception to the general principle of open justice. However, I am doubtful about an order effectively directed to myself, and an order is unnecessary. Avoiding the confusion of consonants in the names in the allocated title, I will refer to the First Applicant, a company, as “ACo” and to the Second Applicant, a natural person, as “A” (and to them together as the “Applicants”), and to the Respondent, a company, as “RCo”; and I will frame this judgment and any orders so as not to reveal the parties’ identities (including gender neutrality as to A).

The relief claimed in the application was in the form that the Applicants applied to set aside the awards in both arbitrations; that is, that ACo applied to set aside the award against A (the “A award”) as well as the award against itself (the “ACo award”), and vice versa.⁶ This was incorrect. The wrapped-up approach was carried through to the hearing of the application, albeit not entirely inappropriately when the grounds for setting aside and the submissions were generally directed to setting aside both awards without distinction according to the applicant and the award, although there were occasions when distinction was necessary. RCo noted the incorrect form of the application as “irregular”,⁷ but no substantive point was taken and the matter need not be considered further.

The application was brought on the following grounds: that there was no valid arbitration agreement between ACo and RCo (see Art 34(2)(a)(i) of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”) as given the force of law in Singapore by s 3 of the International Arbitration Act 1994 (2020 Rev Ed) (the “IAA”)) (“Ground (a)”);⁸ that the Applicants were not given proper notice of the arbitral proceedings (see Art 34(2)(a)(ii) of the Model Law and s 24(b) of the IAA) (“Ground (b)”);⁹ and that the awards are contrary to the public policy of Singapore (see Art 34(2)(b)(ii) of the Model Law) (“Ground (c)”).¹⁰

The application was supported by two affidavits of A, one made on behalf of ACo¹¹ and the other made on their own behalf adopting the contents of the first affidavit.¹² The application was opposed through an affidavit of the CEO (and also a director) of RCo. All affidavits went beyond evidence to include a deal of argumentative material.

While the relevant sub-articles of Art 34(2) of the Model Law and the sub-sections of s 24 of the IAA underlying the grounds for setting aside can be inferred from the Applicants’ affidavits (in which Ground (a) included that there was no valid arbitration agreement between A and RCo), they were not explicitly stated in the application or the affidavits. By O 48 r 2(4)(a) of the Rules of Court 2021 (the “Rules”), the affidavit in support of an application to set aside an award must “state the grounds in support of the application”. Referring to BZW and another v BZV [2022] 1 SLR 1080 (“BZW”) at [48], where in relation to the predecessor O 69A r 2(4A) of the Rules of Court (2014 Rev Ed) the Court of Appeal said that the rule would be satisfied by a brief statement of the sub-articles of Art 34(2) of the Model Law and s 24 of the IAA which were relied on to justify the setting aside application, RCo submitted that the application was again “irregular”.¹³ It did not, however, submit that the application was defective, as had been the argument in BZW (at [39]–[44]), and BZW does not prescribe that express reference to the relevant sub-articles is the only way of stating the grounds. Again, while RCo noted the matter it did not take a substantive point, and again the matter need not be considered further.

Apart from contesting the merits of the grounds, RCo contended that the application had been brought out of time, being outside the period of three months from the date of receipt of the awards stipulated in Art 34(3) of the Model Law and O 48 r 2(3) of the Rules.¹⁴

The margin financing facility

ACo is an investment holding company incorporated in the British Virgin Islands (the “BVI”).¹⁵ A is its sole director and beneficial shareholder.¹⁶ RCo is incorporated in Singapore, and carries on the business of brokering stocks and futures.¹⁷

In December 2017, RCo provided to ACo a margin financing facility (the “Facility”) for its investment activities. A Margin Facility Letter (the “Letter”) dated 17 December 2017 offered the opening and operation of a Margin Financing Account (the “Account”) with a limit of HKD 200m on the terms set out therein, and was signed by A as the authorised signatory of ACo by way of acceptance.¹⁸ Relevantly to the application, the Letter included in cll 1.1 and 1.3 that the Account would be subject to “the provisions of all relevant Rules of Singapore Exchange Securities Trading Limited”, that is, the Singapore Stock Exchange, and to RCo’s Terms and Conditions for Trading Accounts (the “Terms”).¹⁹ The acceptance of the Letter included that ACo had read and understood the Terms,²⁰ and I will return more fully to the document in these respects. The Letter also included that A would guarantee the Account, and A signed a separate Deed of Guarantee and Indemnity (the “Guarantee”).²¹ The copies in evidence were undated.

The Letter and the Guarantee were in English, as were the Terms. Each of the Terms and the Guarantee contained an arbitration clause, in cl 34 and cl 33 respectively, these being the clauses on which RCo brought the arbitral proceedings.²² Again relevantly to the application, the arbitration clause in cl 34 of the Terms provided that submission of a dispute to arbitration was “[a]t the sole option of [RCo] and at its absolute discretion”, that is, it was a unilateral arbitration clause; and that the arbitration would be “in accordance with the UNCITRAL Arbitration Rules”, meaning the Arbitration Rules of the United Nations Commission on International Trade Law (the “UNCITRAL Rules”). The arbitration clause in cl 33 of the Guarantee provided that the arbitral proceedings would be “in accordance with the Arbitration Rules of the Singapore International Arbitration Centre” (the “SIAC Rules”). Both the Terms and the Guarantee provided for Singapore law as the governing law.

An Account Opening Form dated 13 December 2017 was also signed by A on behalf of ACo.²³ It recorded ACo’s request to open and maintain a securities and a securities margin trading account on the terms and conditions in the Securities Trading Account Terms and Conditions (that is, the Terms) and the Securities Margin Trading Account Terms and Conditions.²⁴ The signed document was also in English, and included that A acknowledged and confirmed receipt of the Terms, the Securities Margin Trading Account Terms and Conditions, a fee schedule, and a risk disclosure statement.²⁵

A also signed a Client Information Statement dated 13 December 2017 as the authorised signatory of ACo.²⁶ Relevantly to the application, ACo gave an address in the BVI as its “Registered Address” (the “BVI address”), an address in Hong Kong as its “Correspondence Address” (the “ACo Hong Kong address”), an email address xxx@163.com as its email address (the “163 email address”), and a Hong Kong number as its telephone number.²⁷ The form asked for the identity of the ultimate beneficial owner of the Account, and was completed with the name of A and a different Hong Kong address (the “A Hong Kong address“) as well as the same Hong Kong number as their telephone number. It also asked for the identity of the persons ultimately responsible for giving instructions in relation to transactions to be conducted through the Account, and was completed with the name of A and some particulars including the same Hong Kong number, as well as the name and some particulars of a second person, who is in fact A’s son and whom I will call “X”.

In the Guarantee which they signed, A was said to be “of” the ACo Hong Kong address.²⁸ In their affidavit made on behalf of ACo in support of the application, under “Registered Address”, they were said to be “Care Of” the BVI address.²⁹

No evidence explained the different dates of 13 and 17 December 2017, save perhaps for an obscure reference in ACo’s affidavit to ACo having submitted the Account Opening Form to an...