Gokul Patnaik v Nine Rivers Capital Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeSir Vivian Ramsey IJ
Judgment Date12 November 2020
Docket NumberOriginating Summons No 4 of 2020 and Summons No 830 of 2020
Date12 November 2020

[2020] SGHC(I) 23

Singapore International Commercial Court

Sir Vivian Ramsey IJ

Originating Summons No 4 of 2020 and Summons No 830 of 2020

Gokul Patnaik
and
Nine Rivers Capital Ltd

Ramachandran Doraisamy Raghunath and Josiah Fong Ren Jing (Peter Doraisamy LLC) for the plaintiff;

Joseph Lopez, Vanathi Eliora Ray, andKyle Yew Chang Mao (Joseph Lopez LLP) for the defendant.

Case(s) referred to

AJT v AJU [2010] 4 SLR 649 (refd)

AJU v AJT [2011] 4 SLR 739 (folld)

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

AUF v AUG [2016] 1 SLR 859 (refd)

BAZ v BBA [2020] 5 SLR 266 (folld)

BBA v BAZ [2020] 2 SLR 453 (refd)

BLB v BLC [2013] 4 SLR 1169 (refd)

Bloomberry Resorts and Hotels Inc v Global Gaming Philippines LLC [2020] SGHC 113 (refd)

BTN v BTP [2019] SGHC 212 (refd)

CEB v CEC [2020] 4 SLR 183 (folld)

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

CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK [2011] 4 SLR 305 (folld)

Foster v Driscoll [1929] 1 KB 470 (refd)

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

Omnium de Traitement et de Valorisation SA v Hilmarton Ltd [1999] 2 Lloyd's Rep 222 (refd)

Peh Teck Quee v Bayerische Landesbank Girozentrale [1999] 3 SLR(R) 842; [2000] 1 SLR 148 (distd)

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

PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2010] 4 SLR 672 (refd)

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

Ralli Brothers v Compañia Naviera Sota y Aznar [1920] 2 KB 287 (refd)

Sheagar s/o T M Veloo v Belfield International (Hong Kong) Ltd [2014] 3 SLR 524 (distd)

Sinolanka Hotels & Spa (Pte) Ltd v Interna Contract SpA [2018] SGHC 157 (refd)

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

Soleimany v Soleimany [1999] QB 785 (refd)

Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd [2010] 3 SLR 1 (folld)

Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [1999] QB 740 (refd)

Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [2000] QB 288 (refd)

Legislation referred to

Evidence Act (Cap 97, 1997 Rev Ed) s 108

International Arbitration Act (Cap 143A, 2002 Rev Ed) ss 19B(1), 24, 24(b), 31(4)(b)

Arbitration and Conciliation Act 1996 (Act No 26 of 1996) (India)

Contract Act 1872 (Act No 9 of 1872) (India) s 23

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations 2013 (India)

Arbitration — Award — Recourse against award — Setting aside — Arbitral award contemplating performance of contract which allegedly breached foreign law — Whether arbitral award in conflict with public policy of Singapore because it allegedly breached international comity to affirm arbitral award that contemplated performance of contract which was illegal under foreign law — Article 34(2)(b)(ii) UNCITRAL Model Law on International Commercial Arbitration

Arbitration — Award — Recourse against award — Setting aside — Arbitral award granting relief under different agreement from the agreement containing arbitration agreement — Whether arbitral award could be set aside because it contained decisions on matters beyond scope of submissions to arbitration — Article 34(2)(a)(iii) UNCITRAL Model Law on International Commercial Arbitration

Arbitration — Award — Recourse against award — Setting aside — Arbitrator disallowing arbitration applicant's application to amend pleadings at start of arbitration — Whether breach of rules of natural justice occurred in connection with making of arbitral award — Section 24(b) International Arbitration Act (Cap 143A, 2002 Rev Ed)

Civil Procedure — Affidavits — Whether new affidavit providing expert opinion on foreign law should be struck out

Facts

Pursuant to a “Share Subscription and Shareholders Agreement” dated 4 March 2010 (“the SSSA”), the respondent, Nine Rivers Capital Ltd (“Nine Rivers”), subscribed to various investor securities in Global Agrisystem Pte Ltd (“GAPL”), a company incorporated under the laws of India. The applicant, Mr Gokul Patnaik (“Mr Patnaik”), and Katra Finance Ltd (“Katra Finance”), a company incorporated under the laws of Mauritius, were defined as “Promoters” in the SSSA. Under the SSSA, the parties agreed to a “Qualified Exit”, ie that GAPL would undertake an initial public offering of its shares with a valuation of not less than 4bn Indian Rupees (“INR”). In the event that a Qualified Exit did not occur by 31 March 2014, Nine Rivers was entitled to exercise various rights under section 16.5 of the SSSA in order to secure its exit from GAPL.

The Qualified Exit did not occur by 31 March 2014. Thus, pursuant to processes under section 16.5 of the SSSA, the parties agreed that Katra Finance would purchase the securities owned by Nine Rivers for a sum of INR302,500,000 (“the 2014 SPA”). When this did not happen, various amendments were made to the 2014 SPA which included, inter alia, making Mr Ramesh Vangal (“Mr Vangal”) an additional purchaser of the securities (“the 2015 Amendment”). However, neither Mr Vangal nor Katra Finance completed the purchase of the securities in accordance with the 2014 SPA, as amended by the 2015 Amendment.

On 16 December 2016, pursuant to section 17.2.2.1 of the SSSA, Nine Rivers called upon Mr Patnaik and Katra Finance, as Promoters of the SSSA, to purchase the securities for INR1,329,000,000 (“Investor Put Option”). Mr Patnaik and Katra Finance did not complete that purchase either. As a result, Nine Rivers commenced arbitration in the Singapore International Arbitration Centre (“SIAC”) on 5 May 2017 pursuant to an arbitration agreement contained in cl 11.12 of the 2014 SPA, as amended by the 2015 Amendment (“the Arbitration”). In the Arbitration, Nine Rivers sought payment from certain respondents, including Mr Patnaik and Katra Finance, for the securities that it held in GAPL.

The arbitrator found that Mr Patnaik and Katra Finance were jointly and severally required to purchase the securities held by Nine Rivers pursuant to the Investor Put Option for INR1,329,000,000 (“the Award”). Mr Patnaik then commenced the present Originating Summons No 4 of 2020, which was heard before the Singapore International Commercial Court, to set aside the Award under the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”). Nine Rivers also filed Summons No 830 of 2020 (“SUM 830”) to strike out a new expert affidavit on Indian law filed by Mr Patnaik to show that the SSSA and the 2014 SPA were in breach of Indian law.

Held, dismissing the applications:

(1) The Award could not be set aside under Art 34(2)(a)(iii) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). The arbitrator correctly found that the arbitration agreement in cl 11.12 of the 2014 SPA, as amended by the 2015 Amendment, was widely drawn to cover disputes arising “out of or in relation to or in connection with the interpretation or implementation of” the 2014 SPA. The issue of whether Nine Rivers was entitled to relief under section 17.2.2.1 of the SSSA arose “out of or in relation to or in connection with the implementation of” the 2014 SPA. This was because the failure of Mr Vangal and Katra Finance to meet their obligations under the 2014 SPA amounted to a “Default” under cl 8.1 of the 2014 SPA, and cl 8.1 of the 2014 SPA entitled Nine Rivers to exercise any other rights and remedies under the SSSA – which would include the right to exercise the Investor Put Option under section 17.2.2.1 of the SSSA – upon a “Default”. Thus, the Award did not contain decisions on matters beyond the scope of the submissions to the Arbitration: at [75] and [83] to [85].

(2) There was no breach of the rules of natural justice and the Award could not be set aside under s 24(b) of the IAA. Mr Patnaik was not deprived of the right to a fair hearing by the arbitrator's decision not to allow Mr Patnaik to amend his pleadings at the start of the Arbitration. The parties were allowed to ventilate their submissions on the amendment application fully, both in writing and orally. The arbitrator allowed one amendment but disallowed two amendments only after hearing submissions from parties. In the circumstances, there was no breach of the rules of natural justice occurring in connection with the making of the Award: at [121], [123] and [127].

(3) The Award could not be set aside under Art 34(2)(b)(ii) of the Model Law. Findings of fact made in an IAA award were binding on the parties and could not be reopened except where there was fraud, breach of natural justice or some other recognised vitiating factor. The arbitrator had already found that the SSSA and the 2014 SPA were not contrary to the Indian Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations (India) (“FEMA Regulations”). These were findings of fact made by the arbitrator, and there was no vitiating factor such as fraud or breach of natural justice in this case which allowed them to be reopened by the court. Consequently, the Award was not in conflict with the public policy of Singapore. The court therefore also allowed the application in SUM 830 and struck out the new evidence of Indian law: at [178], [182] to [187] and [208].

[Observation: In any event, even if the arbitrator's findings on the FEMA Regulations amounted to findings of law rather than fact, those would be findings of Indian law which he made after hearing submissions from Indian lawyers. There was no issue of Singapore law which was engaged and therefore no finding of law which a Singapore court could set aside under Art 34(2)(b)(ii) of the Model Law. Furthermore, the parties selected arbitration by the SIAC (a competent international body) and the arbitrator was an experienced arbitrator. The arbitrator decided the...

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