Dbx v Dbz

• Jurisdiction: Singapore
• Judge: Roger Giles IJ
• Judgment Date: 15 November 2023
• Docket Number: Originating Application No 10 of 2023
• Court: High Court (Singapore)

DBX and another

and

DBZ

[2023] SGHC(I) 18

Roger Giles IJ

Originating Application No 10 of 2023

Singapore International Commercial Court

Arbitration — Award — Recourse against award — Setting aside — Corrections made to awards on arbitral tribunal's own initiative — Court determining date of receipt of awards as referred to in Art 34(3) UNCITRAL Model Law on International Commercial Arbitration — Whether corrections affected commencement of three-month time period during which setting-aside application could be made — Whether application to set aside awards was brought out of time — Articles 33 and 34(3), First Schedule, International Arbitration Act 1994 (2020 Rev Ed)

Held, dismissing the application:

[Editorial note: The paragraphs enclosed within parentheses in the holdings below are not reported; they can be found in the unreported version of the judgment ([2023] SGHC(I) 18) on LawNet. The “Case(s) referred to” and “Legislation referred to” below list the cases and legislation referred to in the headnote and/or the paragraphs reported below.]

(1) As the corrections were made on the tribunal's own initiative, the question was when the applicants had received the awards as referred to in Art 34(3) of the UNCITRAL Model Law on International Commercial Arbitration (“the Model Law”). On the evidence, the awards dated 18 February 2023 were received by the applicants on 6 March 2023. The corrections did not affect the commencement of the three-month time period during which a party could make a setting-aside application, based on a proper construction of the relevant articles in the Model Law. The application to set aside the awards was thus brought out of time: at [41] and [46] to [59].

(2) It was established law that a party who signed a contractual document was bound by its terms even if the party had not read them, and there was no reason to parse the arbitration clause out and find that it was not incorporated. Further, the applicants acknowledged and confirmed receipt of the terms and conditions, and their evidence was inconsistent between a denial of knowledge of the terms and conditions, and an assertion that they did not have the opportunity to truly read the terms and conditions. There was no substance in the applicants' submission that the arbitration clause was not incorporated as it failed the tests for a unilateral arbitration clause. There was thus a valid arbitration agreement between the first applicant and the respondent.: (at [67], [68] and [72] to [76]).

(3) The applicants were given proper notice of the arbitral proceedings, but chose not to participate in the proceedings. Actual notice of the proceedings was given to both applicants, whereby they were well aware of the arbitral proceedings and had full opportunity to present their case. Further, although deemed service could be rebutted by appropriate evidence of non-receipt, the applicants failed to furnish acceptable evidence of non-receipt. By force of Art 3(1) of the Model Law and the arbitration rules governing the arbitral proceedings, the applicants received proper notice of the arbitral proceedings: (at [91], [92], [97] and [100]).

(4) The awards were not contrary to the public policy of Singapore. The provision of the margin financing facility was not illegal in Hong Kong. Even if the provision of the facility was illegal in Hong Kong, there was no conflict with the public policy of Singapore warranting setting the awards aside. There was insufficient reason to hold that upholding the awards despite the illegality of the provision of the margin financing without a licence would shock the conscience, be clearly injurious to the public good, be wholly offensive to the reasonable and fully informed member of the public, violate Singapore's most basic notion of morality and justice, or otherwise conflict with the public policy of Singapore. The choice of the rules of the Singapore Stock Exchange and of Singapore law was neither improper nor unfair: (at [123], [128], [133] to [138] and [141] to [145]).

Case(s) referred to

ABC Co v XYZ Co Ltd [2003] 3 SLR(R) 546; [2003] 3 SLR 546 (folld)

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

BRQ v BRS [2019] SGHC 260 (refd)

BRS v BRQ [2021] 1 SLR 390 (folld)

BXS v BXT [2019] 4 SLR 390 (folld)

BZW v BZV [2022] 1 SLR 1080 (refd)

Daewoo Shipbuilding & Marine Engineering Co Ltd v Songa Offshore Equinox Ltd [2019] 1 All ER (Comm) 161 (distd)

Harold Birnbaum v Islamic Republic of Iran DEC 124-967-2 (14 December 1995) (refd)

Republic of India, The v Deutsche Telecom AG [2023] 2 SLR 77 (refd)

Xstrata Coal Queensland Pty Ltd v Benxi Iron & Steel (Group) International Economic & Trading Co Ltd [2020] Bus LR 954 (refd)

Facts

The respondent commenced two arbitrations before the same sole arbitrator, one against each applicant. The first applicant was an investment holding company incorporated in the British Virgin Islands, while the second applicant was its sole director and beneficial shareholder. The respondent was a company incorporated in Singapore, which carried on the business of brokering stocks and futures.

In December 2017, the respondent provided to the first applicant a margin financing facility for its investment activities. A margin facility letter offered the opening and operation of a margin financing account on the terms set out therein, and was signed by the second applicant as the authorised signatory of the first applicant by way of acceptance. The acceptance of the margin facility letter included that the second applicant had read and understood the respondent's terms and conditions for trading accounts, and that the second applicant would guarantee the margin financing account. The second applicant separately signed a deed of guarantee and indemnity.

The margin financing account was substantially in debit. Some partial payments in reduction of the debit balance in the account were made, and the respondent also liquidated some securities which it held in further reduction of the account. The respondent initiated the arbitral proceedings against the first applicant pursuant to the arbitration clause in the terms and conditions, incorporated by reference into the margin facility letter, and against the second applicant pursuant to the arbitration clause in the deed of guarantee and indemnity. The arbitral proceedings against the second applicant were later consolidated with separate arbitral proceedings brought against a third party, who also signed a guarantee of the first applicant's payment obligations to the respondent under the margin financing facility, and the award in that arbitration was for their joint and several liability. The third party had not applied to set aside the award.

Neither applicant participated in the arbitrations in any way. They did not respond to the notices of arbitration, attend any procedural meetings, respond to any communication from the respondent or the tribunal, or attend either merits hearing.

The tribunal issued awards dated 18 February 2023 in both arbitrations. In the award against the first applicant, it was ordered that the first applicant pay to the respondent HKD79,978,911.10, plus interest and an amount for costs, subject to reduction in the event of payment by one of the guarantors or further realisation of securities. In the award against the second applicant, it was ordered that the second applicant and the third party were jointly and severally liable to the respondent for the same amount, plus interest and an amount for costs, subject to a similar reduction, and in the case of the third party, to a cap of HKD100m. The tribunal subsequently issued corrections dated 19 March 2023 to both awards on its own initiative by way of e-mail on 20 March 2023. The corrections recorded that the tribunal had become aware of miscalculations of the costs of the arbitrations, specifically as to the rate of the Goods and Services Tax (“GST”) applied to the fees and expenses of the Singapore International Arbitration Centre (“SIAC”). After the corrections, the amounts of the awards against either applicant did not change, as the changes were only in the component figures for SIAC's fees and expenses, but not in the total amounts for those fees and expenses or in the amounts for the total costs of the arbitrations.

The applicants then applied to court to set aside both awards, on the grounds that: (a) there was no valid arbitration agreement between the first applicant and the respondent; (b) the applicants were not given proper notice of the arbitral proceedings; and (c) the awards are contrary to the public policy of Singapore. The respondent contended that none of the grounds for setting aside were established, and that the application was brought out of time.

Legislation referred to

International Arbitration Act 1994 (2020 Rev Ed) First Schedule Art 33, First Schedule Art 34(3) (consd); ss 2(1), 3, 24, 24(b), First Schedule Art 33(1), First Schedule Art 33(2), First Schedule Art 33(3), First Schedule Art 34(2), First Schedule Art 34(2)(a)(i), First Schedule Art 34(2)(a)(ii), First Schedule Art 34(2)(b)(ii)

Rules of Court (2014 Rev Ed) O 69A r 2(4A)

Rules of Court 2021 O 48 r 2(3), O 48 r 2(4)(a)

Ang Cheng Ann Alfonso and James Ch'ng Chin Leong (A.Ang, Seah & Hoe) for the applicants;

Chong Wan Yee Monica, Leau Jun Li, Wong Chun MunandFoo Hsien Weng (WongPartnership LLP) for the respondent.

15 November 2023

Judgment reserved.

Roger Giles IJ:

[Editorial note: Paragraphs 1 to 147 are summarised in the headnote, while paras 1 to 60 (summarised in the headnote in holding (1)) are reported below in full.

The complete text of the unreported version of the judgment in [2023] SGHC(I) 18 is available on LawNet.]

Introduction

1 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...