Jiangsu Overseas Group Co Ltd v Concord Energy Pte Ltd and another matter

• Jurisdiction: Singapore
• Judge: Steven Chong J
• Judgment Date: 10 August 2016
• Neutral Citation: [2016] SGHC 153
• Plaintiff Counsel: See Tow Soo Ling and Chia Shengyou, Edwin (Colin Ng & Partners)
• Docket Number: Originating Summons Nos 730 and 731 of 2015
• Date: 10 August 2016
• Hearing Date: 29 June 2016
• Subject Matter: Award,Setting aside,Arbitration,Recourse against award
• Year: 2016
• Citation: [2016] SGHC 153
• Defendant Counsel: Pancharatnam Jeya Putra and Thuolase d/o Vengadashalapathy (AsiaLegal LLC)
• Court: High Court (Singapore)
• Published date: 16 August 2016

Steven Chong J: Introduction

This case concerns two applications to set aside two related arbitral awards on the specific ground that the arbitral tribunal which heard both disputes lacked jurisdiction because there were no concluded contracts, and hence, no valid arbitration agreements between the parties. It arose from rather peculiar circumstances. At all times, the plaintiff was well aware of the arbitration. However, it initially elected to ignore the various arbitration notices and procedural orders by the tribunal altogether. It also refused service by courier of the pleadings and documents in relation to the arbitration which thereafter necessitated the engagement of Chinese lawyers to effect the service. Just before the commencement of the arbitration hearing, the plaintiff belatedly decided to take some interest in the arbitral process. It sought to obtain the same documents which had previously been served. It claimed to have difficulty locating the documents due to “an unavoidable internal handover” and its “network server’s problem”. It also appointed solicitors who wrote to the tribunal to seek an extension of time to file its submissions to challenge the tribunal’s jurisdiction. When the tribunal replied that the hearing would proceed as previously ordered with liberty to the plaintiff to apply for an adjournment at the commencement of the hearing, the plaintiff decided that it would not be able to attend the hearing as “there is little time for preparing to travel to Singapore”. As a consequence, it elected to limit its participation in the arbitration by submitting a brief letter to challenge the tribunal’s jurisdiction. The tribunal proceeded with the hearing and, having found that the contracts had indeed been concluded between the parties, assumed jurisdiction to hear both disputes. After due consideration of the evidence, it issued the two arbitral awards in favour of the defendant.

The plaintiff now seeks to present arguments which should rightly have been raised before the tribunal. Although the arguments strictly deal with the merits of the defendant’s claims as regards the existence of the two concluded contracts, the plaintiff should be entitled to advance them since the determination of this issue would have a direct bearing on the tribunal’s jurisdiction. However, having nailed its colours to the mast in asserting that there were no valid arbitration agreements because there were no signed contracts between the parties, can the plaintiff pursue other arguments to challenge the existence of the concluded contracts or should it stand or fall from such election? This decision will examine the scope and nature of the court’s role in its de novo review of the tribunal’s decision on jurisdiction. In undertaking this de novo review, should the court be confined to examine the tribunal’s decision with reference only to the evidence before the tribunal?

Background facts The parties

The plaintiff, Jiangsu Overseas Group Co., Ltd (“Jiangsu”), is a company incorporated in the People’s Republic of China. Its business includes, among other things, the import and sale of raw materials such as steel, timber and chemicals.¹ The defendant, Concord Energy Pte Ltd (“Concord”), is a company incorporated in Singapore which trades in crude oil and refined products.²

The negotiations for shipments of green petroleum coke

The arbitration pertained to two contracts which had their genesis in an alleged agreement in 2013 between Concord and Jiangsu for the sale of six shipments of green petroleum coke. This was not the first time Jiangsu purchased green petroleum coke from Concord: it had also done so on various occasions in 2012 and on-sold them to its own buyers. The alleged agreement in 2013 was for the same purpose.

Negotiations began on 23 May 2013 when Ms Malinda Pai (“Malinda”), a broker appointed by Jiangsu, wrote to Ms Herlene Koh (“Herlene”), a trader at Concord, to convey a query from Mr Liu Lin (“Liu”), an Assistant General Manager at Jiangsu, regarding “six shipments of green coke”. Liu had asked about the shipment schedule, and for Herlene to provide him with the “selling price formula” by that day.³ Herlene replied within an hour, setting out the “main terms of the deal”: the quantity (“5 shipments or 6 shipments to be decided at time of conclusion of deal”, each shipment being 20,000 Metric Tons (MT) +/- 10% at the seller’s option), place of delivery, price, month of delivery, quality specifications of the petroleum coke, date of payment, and mode of payment (which was to be against an irrevocable documentary letter of credit).⁴ Malinda replied to Herlene that Liu would consider the terms. ⁵

It appears that, initially, the transaction for the six shipments of petroleum coke was to be split into two contracts, each for three shipments. In an internal update to her colleagues on 30 May 2013, Herlene stated that Jiangsu had “confirmed [a] deal of 3 cargoes” but “still wanted to take 6 cargoes”; she would therefore “send the contract for 3 cargoes first”.⁶ On 31 May 2013, Herlene sent an email addressed to Liu, stating, “[w]e are pleased to have concluded the 3 greencoke cargoes with you”. The three shipments of 20,000 metric tons each were to be shipped to Tianjin, China. Herlene attached a contract for the three shipments for Liu’s signature, and proposed to send the contract for the “balance 3 cargoes” once the details had been finalised.⁷ Liu did not specifically respond to this email.

The structure of the transaction then changed. On 6 June 2013, Herlene stated in another internal update that Jiangsu had “finally confirmed the 6 cargoes”.⁸ About an hour later, Concord sent an email to Jiangsu enclosing a revised contract (“the 6 June contract”), which was for all six shipments:⁹ three shipments bound for Tianjin and the remaining three shipments bound for Rizhou, China. The preamble to this contract read: “We are pleased to have concluded the deal on 30th May 2013 and 6th June 2013 with your good company with the following terms and conditions”.¹⁰ In a further email, Concord noted that this revised contract was to supersede all previous contracts.¹¹ Malinda replied on 10 June 2013 that, due to the holiday period in China, Liu would provide an answer on 13 June 2013.¹² However, Liu again did not reply specifically to Concord’s email.

On 17 June 2013, Malinda wrote to Concord to advise on the laycan dates for the first two shipments.¹³ She stated that there was no problem for the laycan of 17–27 July for the first shipment and indicated a preferred laycan for the second half of August in respect of the second shipment. On 21 June 2013, Jiangsu advised Concord that the delivery date for the second shipment would be after 15 July 2013.¹⁴ The email ended with this sentence: “Please confirm and thank you for cooperation!” In response, Concord duly confirmed that the delivery date to Rizhao, China would be after 15 July 2013 as requested by Jiangsu.¹⁵

Concord sent three email reminders dated 21 June, 27 June and 2 July 2013 for Jiangsu to return the 6 June contract which had been sent earlier for its signature.¹⁶ Jiangsu did not react to any of the reminders. Nonetheless, on 2 July 2013, Concord sent Liu an email setting out the shipping schedule for the six shipments.¹⁷ The discharge ports for the first two were stated to be Rizhao and Tianjin. In this email, Concord noted: “The first 2 delivery to Rizhao and Tianjin has been agreed upon.” On 4 July 2013, Liu accepted the nomination of the vessel Ken Zui for the shipment to Rizhao¹⁸ and, on 5 July 2013, Liu sent Concord a draft letter of credit (LC) for this shipment.¹⁹

The alleged Spot and Term contracts

The structure of the transaction thereafter underwent a further change: the six shipments were to be split into two contracts. On 15 July 2013, Concord sent two draft contracts to Liu.²⁰ The first shipment of petroleum coke was covered in one contract, which the parties referred to as the “Spot contract”. The remaining five shipments were covered in a separate contract, referred to as the “Term contract”. The contractual terms of all four contracts – the draft contract sent on 30 May 2013, the 6 June contract as well as the Spot and Term contracts of 15 July 2013 – were essentially the same except for the splitting of the six shipments and the nominated discharge ports. This change of the split was done at the request of Jiangsu to facilitate the opening of a letter of credit for the first shipment.²¹ It is important to bear in mind that, at all times after 6 June 2013, the proposed agreement was always for six shipments. This remained unchanged though the structure of the transaction was amended at the request of Jiangsu.

In response to Concord’s email requesting that Jiangsu “expedite on the LC issuance”,²² Liu sent another draft LC on 15 July 2013.²³ This was materially the same as the LC sent earlier on 5 July 2013 except for the contract reference number and the correction of the unit price. One of the documents which had to be submitted for payment under the LC was a commercial invoice indicating a specified purchase contract number. It is of significance that the contract reference number stated in this LC was that of the Spot contract: 1306/PDT/TERM/T144771.²⁴

The first meeting between Jiangsu and Concord

When Jiangsu failed to issue the LC for the Spot contract, Concord’s solicitors sent a letter dated 17 July 2013 asserting that Jiangsu had breached the Spot contract.²⁵ This prompted a meeting on 18 July 2013 between the two parties in Jiangsu’s office in Nanjing, China. Both the General Manager and President of Jiangsu were in attendance together with Liu.²⁶ Concord was represented by Herlene and its China representative, Gary Li (“Gary”).

I pause to observe that Jiangsu initially took objection to Concord exhibiting the minutes of this meeting, on the ground that the...