Gate Gourmet Korea Company, Ltd v Asiana Airlines, Inc.
| Jurisdiction | Singapore |
| Judge | Simon Thorley IJ |
| Judgment Date | 01 December 2023 |
| Docket Number | Originating Application No 14 of 2023 |
| Court | High Court (Singapore) |
[2023] SGHC(I) 23
Simon Thorley IJ
Originating Application No 14 of 2023
Singapore International Commercial Court
Arbitration — Agreement — Scope — Claim of conspiracy between directors of applicants and former chairman of respondent and appropriate quantum of damages to remedy such allegation — Whether this dispute was matter which fell within scope of arbitration agreement such that there was prima facie breach of arbitration agreement warranting anti-suit injunction in favour of applicants
Arbitration — Agreement — Scope — Claim of conspiracy between directors of applicants and former chairman of respondent and appropriate quantum of damages to remedy such allegation — Whether true interpretation of arbitration agreement to which company was party was wide enough to cover tort claims against its directors
Arbitration — Arbitrability and public policy — Chairman of respondent found guilty of embezzlement and criminal breach of trust by Korean court and sentenced to ten years' imprisonment in relation to material agreements governing relationship between parties — Whether arbitration agreement contained within one of material agreements, the catering agreement, was rendered non-arbitrable as being contrary to public policy under Korean law by virtue of chairman's conviction
Arbitration — Restraint of proceedings — Foreign judicial — Civil proceedings commenced in South Korea by Asiana Airlines allegedly in breach of two arbitration agreements contained in contracts governing parties' relationship — Whether anti-suit injunction should be granted against Asiana in respect of those foreign proceedings
Arbitration — Restraint of proceedings — Foreign judicial — Relief for anti-suit injunction pursued in June 2023 although South Korean civil proceedings commenced allegedly in breach of arbitration agreement was commenced in January 2022 — Whether applicants were guilty of delay which would disentitle them from anti-suit injunction they sought
Held, allowing the application:
The Korean CA Proceedings
(1) The court's power to grant an anti-suit injunction was the flip side of the coin of the court's power to stay domestic proceedings under s 6 of the International Arbitration Act 1994 (2020 Rev Ed) and that, accordingly, the court should apply a prima facie test in order to determine whether there was a valid and binding arbitration agreement which had been breached: at [33].
(2) In the case of an alleged breach of an arbitration agreement, the exercise of the discretion involved drawing a balance between the prima facie right of a party to an arbitration agreement to insist on its right to enforce that agreement and on the duty on such an applicant to act with due diligence to enforce that right. Not every delay would be fatal – whether an otherwise appropriate application for an anti-suit injunction should be refused on the basis of delay lay in assessing the degree of the delay, what had happened during the period of the delay, the state of the foreign proceedings as a result of the delay and the underlying effect on comity, in order to reach a conclusion as to whether the applicant had forfeited its right to compel litigation in the arbitral forum: at [34] to [36].
(3) An anti-suit injunction was granted to meet the ends of justice. The present situation was one where the defendants to the foreign proceedings included parties, some of whom were parties to the arbitration agreement and some who were not. In such a situation, if a litigant was party to an arbitration agreement which was wide enough to cover a tort that arose “out of or in connection with” the agreement and was not limited to a claim made solely against a party to the agreement, then, provided the subject matter of the foreign proceedings did arise out of or in connection with the agreement and the party had a sufficient interest in those proceedings, such as joint liability for damages, the ends of justice were, prima facie, best served by confining the litigation to one forum; the forum the parties to the arbitration agreement had chosen as the place to resolve their disputes: at [40] to [49].
(4) Accordingly, where an anti-suit injunction was sought by a party to an arbitration agreement to restrain foreign tort proceedings not only against itself but also against other parties to those proceedings, the approach was as follows: first, the relevant arbitration clause had to be interpreted to determine whether it extended to cover tort disputes as well as contractual disputes; and whether it extended to tort claims against non-parties. If so, the court had to then decide whether bringing the tort claim against the party was a breach of the arbitration clause. If it was indeed a breach of the arbitration clause, then prima facie the party was entitled to an anti-suit injunction in its favour. If the party had a sufficient interest in the tort claim, it was also prima facie entitled to an anti-suit injunction in its favour to restrain the continuation of the claim as against the non-party. However, if it did not, then it was open to the non-party to seek a non-contractual anti-suit injunction on the basis that the foreign proceedings were vexatious or oppressive: at [50].
(5) Applying the three-stage test in Anupam Mittal v Westbridge Ventures II Investment Holdings[2023] 1 SLR 349 (“Anupam Mittal”), the court found that the proper law of the “CA Arbitration Agreement” was Korean law: at [62] to [64].
(6) It was not in dispute that the subject matter of the Korean CA Proceedings was whether and to what extent the CA was void. This was subject matter which was prima facie suitable for determination by way of arbitration under the agreement. Therefore, the sole question was whether in the circumstances of this case, the dispute ws non-arbitrable so that the CA Arbitration Agreement could not be invoked: at [90] and [91].
(7) It was accepted that the principles of separability and kompetenz-kompetenz applied and that the subject matter did not fall within any of the accepted categories of non-arbitrable agreements under Korean law and that there was no express provision in Korean law which created an exception to arbitrability when Art 103 of the Korean Civil Code (“Art 103”) was invoked. It was necessary to draw a clear distinction between the grounds on which it was said that the subject matter of the “CA Main Agreement” was void and the grounds on which it was said that the “CA Arbitration Agreement” was void. It did not follow from the fact that Art 103 was being invoked to invalidate the CA Main Agreement, that the CA Arbitration Agreement was also rendered invalid. Therefore, in the light of the absence of any statutory provision that disputes under Art 103 were non-arbitrable under Korean law, the correct view was that the principle of separability and kompetenz-kompetenz applied even in cases where Art 103 was raised. It was held that the subject matter was arbitrable, and therefore GGK raised the necessary prima facie case that the CA Arbitration Agreement was breached: at [89], [92], [93] and [97] to [101].
(8) Article 9(1) of the Korean Arbitration Act 2016 (Act No 14176 of 2016) (“Art 9”) did not absolve the respondent of the possibility of being in breach of the CA Arbitration Agreement in starting the Korean CA Proceedings. The purpose underlying Art 9 was to enable a party alleging that an arbitration agreement was void to have that issue determined by the National Court instead of, or as well as, by the Tribunal. It was not to enable a party who did not make that allegation in the arbitration nor seek to raise it before or during the course of the arbitration to do so in the National Court subsequent to the rendering of the Final Award: at [114].
(9) Having found that the commencement of the Korean CA Proceedings was prima facie a contractual breach of the CA Arbitration Agreement, the correct approach was that anti-suit relief would ordinarily be granted unless there were strong reasons not to do so and there was thus no need to adduce additional evidence of unconscionable conduct. However, relief had to be sought without undue delay and without unconscionable conduct on the applicant's part: at [115].
(10) Although there was a period of delay between January 2022 and June 2023, the focus of the inquiry was not delay simpliciter. What was of more importance was the extent to which the delay had allowed the foreign proceedings to progress. In this regard, few judicial resources had been expended by the end of June 2023 and no judgment on the merits had been handed down in any form. Accordingly, it was held that the conduct of GGK during the relevant period was not such as to disentitle it, in the exercise of the court's discretion, to the relief it sought to restrain Asiana's breach of the CA: at [123], [130] and [131].
The Korean Compensation Proceedings
(11) The true nature of the Korean Compensation Proceedings was a claim based upon Chairman Park's alleged breach of trust and a further assertion that because the Directors, and through them GGS, were well aware that Chairman Park's conduct “was an act of disloyalty”, all three had incurred joint and several liability to Asiana under the Korean Civil Code: at [134].
(12) It was held that the proper law of the “JVA Arbitration Agreement” was also Korean law, and that on its true construction, the language of the JVA Arbitration Agreement was wide enough to include tort disputes between the parties: at [138], [144] and [145].
(13) Not all tort disputes involving the parties to an arbitration agreement would fall to be decided by way of arbitration. Accordingly, the issue was therefore whether the subject matter of the Korean Compensation Proceedings was a “matter” which was the subject of the JVA Arbitration Agreement. The court adopted the approach laid down...
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