Dongwoo Mann+Hummel Co Ltd v Mann+Hummel GmbH

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 08 May 2008
• Neutral Citation: [2008] SGHC 67
• Docket Number: Originating Summons No 713 of 2007
• Date: 08 May 2008
• Published date: 13 May 2008
• Year: 2008
• Plaintiff Counsel: Alvin Yeo SC, Chan Hock Keng, Koh Swee Yen and Bryanne Liao (WongPartnership LLP)
• Citation: [2008] SGHC 67
• Defendant Counsel: Wong Por Luk Paul and Sharon Liu (Rodyk & Davidson LLP)
• Court: High Court (Singapore)
• Subject Matter: Award,Whether tribunal tacitly relying on information not disclosed to other party as required,Whether party given full opportunity to be heard,Recourse against award,Rules of natural justice,Arbitration,Whether award made contrary to public policy,Setting aside

8 May 2008 Judgment reserved.

Chan Seng Onn J:

Introduction

1 The plaintiff, Dongwoo Mann+Hummel Co., Ltd (“Dongwoo”), is a company incorporated in Korea and is in the business of manufacture and sale of automotive filtration systems to the Korean automotive industry. The defendant, Mann+Hummel GmbH (“M+H”), is a company incorporated in Germany and is in the business of automotive filtration.

2 Dongwoo commenced the present action (by way of Originating Summons No 713 of 2007 dated 9 May 2007) to set aside the final award dated 13 February 2007 (the “award”) in an arbitration between Dongwoo and M+H (“the parties”). The arbitration was conducted pursuant to the Singapore International Arbitration Centre (“SIAC”) Rules (2nd Ed, 22 October 1997) (“the SIAC Rules”). The lex situs was Singapore and the law governing the arbitration was therefore Singapore law.

3 Dongwoo brought this action in relation to the arbitration tribunal’s (“the tribunal”) determination of two particular issues raised in the arbitration: (1) the Crank Case Ventilation (“CCV”) oil separator and (2) the S-Engine oil filter, and on the following grounds:

(a) that the conduct of the proceedings and/or the conduct of the tribunal was such that Dongwoo was not accorded a full and proper opportunity to present its case and/or was otherwise unable to present its case (pursuant to Art 34(2)(a)(ii) of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”));

(b) that the rules of natural justice had been breached in connection with the making of the award by which Dongwoo’s rights have been prejudiced (pursuant to s 24 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”)); and

(c) that the award is in conflict with the public policy of Singapore (pursuant to Art 34(2)(b)(ii) of the Model Law).

4 After hearing the parties’ submissions, I dismissed Dongwoo’s action. I now give my reasons.

Facts

5 Sometime in March 2001, M+H and one Mr Choonsung Ley (“Ley”) entered into a memorandum of understanding (“MOU”) in which they envisaged the establishment of a joint venture, using Dongwoo as the vehicle for the joint venture.

6 However, the parties did not proceed precisely along the terms of the MOU, but eventually entered into various agreements:

(a) A share purchase agreement dated 20 December 2002 between Dongwoo’s shareholders and M+H for the acquisition of 10% equity interest in Dongwoo by M+H (“the SPA”);

(b) A shareholders agreement dated 20 December 2002 between Dongwoo and Dongwoo’s shareholders on one part and M+H on the other part (“the SA”); and

(c) As provided for in the SPA, a technical assistance and trademark licensing agreement between Dongwoo and M+H dated 3 January 2003 (“the TATLA”).

7 Under the TATLA, M+H was obliged to supply Dongwoo with technical information in order that Dongwoo may manufacture air and liquid filtration products (“the Products”) for vehicles, industrial and construction machinery and equipment, which included the CCV oil separator and the S-Engine oil filter. Article 3.1 of the TATLA provides as follows:

3.1 [M+H] shall supply [Dongwoo] with Technical Information available to [M+H] in order that [Dongwoo] may manufacture the Products. Such Technical Information shall include:

(a) Engineering drawings needed in the establishment of manufacturing processes for the Products;

(b) Specifications;

(c) Lists of recommended raw materials, and identity of sources of supply for raw materials;

(d) Data for inspection and trial operations;

(e) Any other Technical Information which in [M+H’s] opinion will be reasonably necessary to [Dongwoo] in its manufacture of the Products; and

(d) Any improvements or modifications of the foregoing.

[emphasis added]

8 Technical information is defined in Article 1.6 of the TATLA as:

… designs, drawings and other technical and sales documentation and information relating to the manufacture, use and sale of the Products which [M+H] now possesses and is free to disclose to [Dongwoo] without accounting to others and which, in [M+H’s] opinion, would be reasonably necessary for an experienced manufacturer to manufacture, use and sell the Products... [emphasis added]

9 Article 9 governs the termination of the TATLA and provides, inter alia, that:

9.1 This Agreement shall be effective for an initial period from the Effective Date of this Agreement until December 31, 2005, unless earlier terminated as provided herein…

9.2 This Agreement shall be terminable forthwith upon the sending of notice in writing upon the occurrence of one or more of the following events:

…

(c) by either party hereto, if the other party shall commit a material breach (including but not limited to nonpayment of the fees and royalties set forth in Article 4 of this Agreement or non-fulfilment of [M+H’s] quality standards) of any of its obligations under this Agreement which shall not be remedied within thirty (30) days from the giving of written notice requiring said breach to be remedied provided, however, that if any further breaches occur of the same type, this agreement may then be terminated forthwith…

[emphasis added]

10 Article 12.3 states that:

12.3 Any controversy or claim arising out of or in relation to this Agreement, or breach hereof, shall be finally settled by arbitration.

(a) Arbitration shall be conducted in Singapore.

(b) Arbitration shall be conducted in accordance with the rules of conciliation and arbitration of the SIAC.

(c) …

(d) The decision of the arbitrators shall be final and binding on all parties without right of appeal…

11 The SA provided in Article 11.1 for M+H to have a call option to acquire the balance of the shares in Dongwoo, and in Article 15.2(d) for the termination of the SA:

… forthwith upon the sending of notice in writing upon the occurrence of one or more of the following events:

…

(d) by either Party hereto, if the SPA or the [TATLA] has been terminated due to breach by the other Party…

12 Subsequent to changes in Dongwoo’s shareholding, Dongwoo’s shareholders and M+H entered into an amended and restated shareholders agreement on 15 March 2004 (“the ARSA”) which contained Articles 11.1 and 15.2(d) of the SA in the same terms, save that Article 15.2(d) included a reference to a second share purchase agreement providing for the acquisition of an additional 3% equity interest in Dongwoo by M+H. The second share purchase agreement was entered into at or about the same time as the ARSA.

13 On 14 September 2005, Dongwoo sent a letter to M+H stating that it had been experiencing substantial difficulties in communicating with and obtaining technical cooperation from M+H regarding its inquiries about various Products (which included the CCV oil separator and the S-Engine oil filter) and requiring M+H to promptly remedy its default in providing the requisite technical information.

14 On 10 October 2005, Dongwoo sent a further letter to M+H stating that the technical information provided by M+H continued to fall far short of the technical information that should be provided under the TATLA.

15 On 27 October 2005, Dongwoo sent a letter terminating the TATLA pursuant to Article 9.2(c) of the TATLA (see [9] above).

16 Thereafter, Dongwoo’s shareholders sent a letter dated 28 October 2005 terminating the ARSA pursuant to Article 15.2(d) of the ARSA (see [11] and [12] above).

17 M+H denied the right of Dongwoo to terminate the TATLA and referred the question of the validity of the purported termination of the TATLA by Dongwoo to arbitration.

18 In its Statement of Case, M+H prayed for:

(a) a declaration that Dongwoo’s purported termination of the TATLA was invalid and that the TATLA remained in full force and effect; and

(b) compensation for all legal and other expenses incurred in connection with the dispute. M+H did not have a specific prayer for damages.

19 In its Statement of Defence and Counterclaim, Dongwoo sought:

(a) a declaration that the TATLA had been validly terminated as of 27 October 2005;

(b) payment for all lost profits and loss of goodwill due to M+H’s failure to provide the technical documents; and

(c) full compensation for all legal fees and other expenses incurred in connection with the arbitration.

20 In the course of the run up to the hearing of the substantive issues, the tribunal comprising Mr Tómas Kennedy-Grant QC (as chairman), Mr Michael Hwang SC and Dr Wolfgang Kuhn made rulings on various applications and gave various directions regarding the future conduct of the arbitration up to and including the hearing of the substantive issues.

21 Of particular relevance to the present action was the tribunal’s rulings on discovery and document production. Another significant part of the tribunal’s findings related to the S-Engine Oil Filter Project. I will elaborate on these in turn.

The tribunal’s directions as to discovery

22 Prior to the arbitration hearing and by a letter dated 10 March 2006, Dongwoo’s Korean counsel, M/s Bae Kim & Lee (“BKL”), sent a request to M+H for the production of 7 categories of documents as part of its discovery. In particular, Request No 7 was a request for copies of all technical information that related to certain Products, including the CCV oil separator, which was requested previously by Dongwoo through its various correspondence sent to M+H. The basis for this request was that the documents were relevant to the arbitration because the scope of the technical assistance required under the TATLA was the primary issue to be resolved in the arbitration and M+H had alleged that it had already provided Dongwoo with the necessary technical assistance required.

23 On 17 March 2006, M+H’s Korean counsel, M/s Kim & Chang (“KC”), wrote to the chairman of the tribunal with a copy to BKL and SIAC stating that Dongwoo’s request for documents was unreasonably broad and burdensome. It sought the production of many categories of documents which were neither relevant nor material to this dispute. M+H...