Strandore Invest A/S and others v Soh Kim Wat

• Court: High Court (Singapore)
• Judge: Quentin Loh JC
• Judgment Date: 14 May 2010
• Neutral Citation: [2010] SGHC 151
• Citation: [2010] SGHC 151
• Docket Number: Originating Summons No 19 of 2010
• Publication Date: 17 May 2010
• Plaintiff Counsel: See Tow Soo Ling (Colin Ng & Partners)
• Defendant Counsel: Leo Cheng Suan (Infinitus Law Corporation)
• Subject: Arbitration

Quentin Loh JC: Introduction

The applicant Danish companies, Strandore Invest A/S (“Strandore”), LKE Electric Europe A/S (“LKE Europe”) and MS Invest Odense A/S (“Odense”), (collectively “the Applicants”), filed Originating Summons 19/2010 (“OS 19/2010”) to enforce an arbitration award (“the Final Award”) against the Respondent, Soh Kim Wat (“Soh”). The Final Award, dated 30 April 2008, in favour of the Applicants, was made by a 3-member Arbitral Tribunal and issued out of the Danish Institute of Arbitrators, (“DIA”).

Soh made the following applications; Summons No 712/2010/D: to stay this Originating Summons, OS 19/2010, pending the resolution of Suit No 968 of 2009 (“S 968/2009”), (in which Soh basically challenged the Final Award and asked for various declaratory reliefs), in the alternative, Soh applied to have OS 19/2010 continue as if the same had been commenced by way of Writ of Summons under O 28 r 9 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed)(“RSC”), and that OS 19/2010 be heard together and consolidated with S 968/2009. Summons No 282/2010/J: to set aside the Mareva injunction issued on 8 January 2010 (“the Mareva injunction”) against him, following an ex parte application by the Applicants for the said injunction in Summons No 94/2010.

The Originating Summons and Soh’s two applications came up for hearing before me on 9 April 2010. After hearing the parties, I dismissed Soh’s applications, granted the Applicants leave to enforce the Final Award and declined to discharge the Mareva injunction. Soh appealed against my decision on 13 April 2010 and I now set out my grounds for my decision.

Background

The Applicants were shareholders of a Malaysian company, LKE Electric (M) Sdn Bhd (“the Company”). Soh was and still is a director and shareholder of the Company.

On 22 March 2003, Soh entered into Share Sale Agreements with Strandore and Odense to purchase their shares in the Company with the former selling 1,520,000 shares for US$500,000 and the latter selling 732,561 shares for US$289,169. On 10 December 2004, Soh entered into a Share Sale Agreement with LKE Europe to purchase its 500,000 shares in the Company for DKK 1,611,923. All the Share Sale Agreements, (collectively, “the Agreements”), contained a similar arbitration clause providing that Danish Law was the governing law and any dispute was to be resolved by arbitration in Denmark:

This agreement shall be governed by Danish Law and any dispute or claim between the parties arising directly or indirectly out of this agreement shall be subject to arbitration before Copenhagen Arbitration according to the Rules of Procedure of Copenhagen Arbitration.

Soh made payment of DKK44,673 to LKE Europe but otherwise failed to make any payments under the Agreements. On 23 June 2006, Strandore, LKE Europe and Odense filed their Request for Arbitration before the DIA.

The DIA had its own published Rules of Procedure which came into force on 1 April 2006, (“DIA Rules”). The Applicants contended that Copenhagen Arbitration meant arbitration under the DIA Rules of Procedure and the applicable law was the Danish Arbitration Act which came into force on 1 July 2005. Mr Leo, counsel for Soh, did not seek to argue otherwise.

The DIA sent notice of the Applicants’ Request for Arbitration by registered letter dated 30 June 2006 to Soh at the address used in the Agreements, 16 Ford Avenue, Singapore (“the Singapore Address”). This letter was returned “unclaimed”. The Applicants then served the Request for Arbitration on Soh on 4 November 2006 together with the DIA’s letter dated 30 June 2006 and the DIA Rules at Soh’s office at Lot 1 & 3, Jalan SS 13/3C Subang Jaya Industrial Estate 47500, Petaling Jaya, Selangor Darul Ehsan, Malaysia, (“Soh’s Malaysian office address”). There is a statutory declaration from a Malaysian solicitor to that effect and it exhibits a document with Soh’s endorsement: “Received without prejudice.” Soh followed this up with a 3-page letter dated 8 November 2006 to the DIA, inter alia, challenging the validity of the request for arbitration, the service and contending that the documents were “definitely not in order”. Soh also gave some background and alleged an agreement that all the Agreements were for the collateral purpose of showing them to a third party to assist the Claimants (ie the Applicants in this case), and were at all material times not meant to be enforced against him. However Soh did not nominate an arbitrator as required under the DIA Rules. The DIA sent a letter dated 29 December 2006 in accordance with Article 19 of the DIA Rules notifying Soh of its proposal to appoint Advokat Peter Wengler-Jørgensen and Attorney Per Magid, both from Copenhagen, as members, and Dr Wolfgang Kühn from Dusseldorf, as Chairman, of the Arbitral Tribunal. The DIA requested Soh for his comments on or before 16 January 2007, failing which the DIA would proceed with their formal appointment.

On 31 January 2007, the DIA informed parties of the appointment of the Arbitral Tribunal in accordance with Articles 19 and 20 of the DIA Rules. This letter was sent to Soh’s Malaysian office address. This was followed by a Procedural Order dated 26 February 2007 from the Arbitral Tribunal ordering a hearing to take place on 3 May 2007. In his letter dated 6 March 2007, Soh opposed the appointment of the Arbitral Tribunal on various grounds, including lack of proper service of the Request for Arbitration. The hearing was held as scheduled on 3 May 2007 and the Arbitral Tribunal issued its Award dated 15 May 2007 on jurisdiction ruling that it had no competence to render a decision on the grounds, inter alia, that Soh did not receive the DIA’s letter dated 29 December 2006 on the appointment of the Arbitral Tribunal.

The DIA then sent a letter dated 24 May 2007 enclosing the Arbitral Tribunal’s Award of 15 May 2007 and proposed the appointment of the same three arbitrators. The DIA also said that unless one of both parties propose other candidates or are otherwise instructed by the parties no later than 24 July 2007, it would proceed to regard the three gentlemen as approved by the parties.

Soh replied on 16 July 2007, stating, inter alia:

Please note that I STRONGLY OBJECT to the Proposed Tribunal, proposed members of the Tribunal and the proposed Arbitration.

If the proposed Tribunal/Arbitration is valid, I would certainly wish to propose an Arbitrator for the purported Arbitration.

However, the proposed Tribunal and the proposed Arbitration is invalid. In any event your documents are not even complete.

Soh also complained that there was no valid Request for Arbitration issued to him, the Request for Arbitration was unsigned and not authenticated not addressed to any person or organisation, it was unlawful, highly improper and irregular for the DIA to employ the Applicant’s lawyers to effect service on him, the DIA was not impartial, the Agreements relied upon to launch the arbitration were being challenged by him, as the Applicants well knew (referring to Singapore Court proceedings), their arbitration clauses were therefore invalid, that the Agreements were not to be enforced against him personally since they were for the collateral purpose of assisting the Applicants and to be showed to a third party. Soh also claimed that under the DIA Rules he could propose his arbitrator and only upon his failure to do so could the DIA proposed an arbitrator. He accused the DIA of not treating him with equality and fairness, for not being impartial, breaches of natural justice and proper procedure and reserved his rights. It should be noted however, that Soh did not propose anyone as arbitrator.

The Applicants’ solicitor wrote to the DIA on 30 July 2007 stating that their clients had no objections to the tribunal and noted that Soh had not objected to the claims and had not put forward any comments about the claims. It appears the Applicants or their solicitor sent an earlier letter dated 29 May 2007 informing the DIA that they had no objections to the proposed...