Swiss Singapore Overseas Enterprises Pte Ltd v Exim Rajathi India Pvt

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judgment Date: 16 October 2009
• Date: 16 October 2009
• Docket Number: Originating Summons No 1620 of 2008

[2009] SGHC 231

High Court

Judith Prakash J

Originating Summons No 1620 of 2008

Swiss Singapore Overseas Enterprises Pte Ltd

Plaintiff

and

Exim Rajathi India Pvt Ltd

Defendant

Tan Chuan Thye and Daniel Chia Hsiung Wen (Wong & Leow LLC) for the plaintiff

N Sreenivasan, S Palaniappan and AS Shankar (Straits Law Practice LLC) for the defendant.

Alton House Garages v Marleywood Marine [1983] QB (5 July 1983) (folld)

DDT Trucks of North America Ltd v DDT Holdings Ltd [2007] 2 Lloyd's Rep 213 (folld)

Dongwoo Mann+Hummel Co Ltd v Mann+Hummel Gmbh [2008] 3 SLR (R) 871; [2008] 3 SLR 871 (folld)

Elektrim SA v Vivendi Universal SA [2007] 1 Lloyd's Rep 693 (folld)

Golden Strait Corpn v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353 (distd)

Harlow & Jones Ltd v Panex (International) Ltd [1967] 2 Lloyd's Rep 509 (folld)

Lazenby Garages Ltd v Wright [1976] 1 WLR 459 (distd)

Profilati Italia SrL v PaineWebber Inc [2001] 1 Lloyd's Rep 715 (folld)

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

R Pagnan & Fratelli v Corbisa Industrial Agropacuaria Limitada [1970] 1 WLR 1306 (refd)

Thyssen Canada Ltd v Mariana Maritime SA [2005] 1 Lloyd's Rep 640 (folld)

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

International Arbitration Act (Cap 143A, 2002 Rev Ed)s 24 (a)

Sale of Goods Act (Cap 393,1999 Rev Ed)ss 50 (2),50 (3)

Arbitration Act 1996 (c 23) (UK)ss 68,68 (2) (g)

Sale of Goods Act 1893 (c 71) (UK)s 50 (2)

Arbitration–Award–Recourse against award–Setting aside–Fraud–Public Policy–Section 24 (a) International Arbitration Act (Cap 143A, 2002 Rev Ed)–Article 34 (2) (b) (ii) United Nations Commission on International Trade Law Model Law on International Commercial Arbitration

Commercial transactions–Sale of goods–Breach of contract–Assessment of damages–Section 50 (2) Sale of Goods Act (Cap 393, 1999 Rev Ed)

In March 2005, the plaintiff entered into a contract with the defendant, whereunder the plaintiff agreed to purchase from the defendant 40,000mt of iron ore fines ("the cargo") FOB Karwar Port in South India. Shipment of the cargo was to be in April 2005. The contract provided that the parties would submit any dispute arising under it to arbitration in Singapore under the rules of the Singapore International Arbitration Centre.

Subsequently, a dispute arose between the parties and on 11 January 2007, the defendant issued a Notice of Arbitration. The defendant alleged that the plaintiff had breached the contract because it had not taken delivery of the cargo and had failed to nominate a vessel to ship the cargo. The defendant claimed that it had mitigated its damages by selling the cargo to two buyers in India: 12,500mt to Terapanth Foods Limited ("Terapanth") for a sale price of rupees 20m; and 27,500mt to Susmi Impex ("Susmi") at prices that were substantially lower than the contract price payable by the plaintiff. The defendant claimed the difference in the prices which it calculated as amounting to US$1,201,609.20.

The plaintiff's position at the arbitration was that the defendant was in repudiatory breach and that it failed to mitigate its loss as it had sold the cargo at approximately 50% undervalue and not based on prices in China (the contracted destination of the cargo). The arbitrator ("the Arbitrator") rendered the Award on 12 September 2008 in the defendant's favour. The Arbitrator also found that there was no available market for the cargo at the time of the plaintiff's breach of contract.

On 24 December 2008, the plaintiff filed an application to declare that the award ("the Award") was procured by fraud and/or in a manner contrary to public policy; and that the Award be set aside pursuant to s 24 (a) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) and Art 34 (2) (b) (ii) of the United Nations Commission on International Trade Model Law on International Commercial Arbitration.

The plaintiff alleged that Mr Rajasekar, the defendant's managing director, had given false and misleading testimony during the arbitration proceedings, and that the defendant had, in bad faith, failed to provide proper disclosure of documents. The plaintiff alleged that the conduct of the defendant had caused substantial injustice to the plaintiff, thereby justifying the setting aside of Award. Through a declaration of one Mr Panjai B Singhvi, a director of Terapanth, it was alleged that the defendant did not sell 12,5000mt of the cargo to Terapanth, and that only 7,615.07mt of the cargo was sold for a price of rupees 12.5m. It was further alleged that a difference of rupees 7.5m had been refunded by the defendant to Terapanth. The plaintiff alleged that such information could be found in an invoice and the Terapanth ledger entries. The plaintiff further submitted that such non-disclosure cast serious doubts on whether the sale of 27,500mt of iron ore fines to Susmi had actually taken place.

Mr Rajasekar gave evidence that in June 2005, the defendant did enter into a contract with Terapanth, whereunder the latter was entitled to purchase 12,800mt with the sale of 14,277mt plus or minus 10% at the buyer's option. Terapanth had paid 20m rupees on 18 June 2005. However, Terapanth breached the contract by refusing to take all the cargo. Terapanth refused to take delivery of the balance 4,415.260mt of iron ore despite the defendant's continued insistence. In October 2005, Terapanth suddenly insisted on taking delivery of the difference between 18,000mt and 8.804mt at the contractually agreed price, in an attempt to take advantage of the price increase in iron ore in October 2005. The matter was resolved amicably as the defendant agreed to return 7.5m rupees to Terapanth in November 2005. The defendant claimed that it had not disclosed these matters as it was advised that it could not claim further losses caused by Terapanth and the defendant had genuinely believed that the subsequent conduct of Terapanth in breaching the contract was not relevant to its claim against the plaintiff.

Held, dismissing the plaintiff's application:

(1) It was clear that suppression of documents or perjury could amount to obtaining an arbitration award by fraud. However, to set aside an Award, the complainant had to show that the reprehensible conduct or fraud had caused it substantial injustice in that the same procured or substantially impacted the making of the award: at [29] and [30].

(2) If the fraud alleged was in the shape of perjury, the applicant had to prove that its new evidence could not have been discovered with reasonable diligence during the arbitration proceedings. The newly discovered evidence had to be decisive in that it would have prompted the arbitrator to have ruled in favour of the applicant instead of the other party: at [30].

(3) If the fraud alleged was in the shape of non-disclosure of a material document, the document had to be so material that earlier discovery would have prompted the arbitrator to rule in favour of the applicant. Negligence or error in judgment in failing to discover a crucial document would not be sufficient to justify a setting aside of the award and for that purpose, the non-disclosure had to have been deliberate and aimed at deceiving the arbitrator: at [30].

(4) The defendant had sufficient cargo to supply the 12,500mt that Terapanth had paid for, and the only reason that the full quantity had not been delivered to Terapanth was that the latter failed to take full delivery. The defendant's letter to Terapanth dated 15 June 2005 showed that although Terapanth had accepted the defendant's sale confirmation of 18,000mt of cargo, Terapanth had informed the defendant that it could only lift 15,000mt and that the balance would be cleared subsequently: at [52] and [58].

(5) Mr Rajasekar did not commit perjury as the evidence and documentation given in the arbitration supported the defendant's position that as of 1 July 2005, there was a contract between the defendant and Terapanth for the latter to purchase at least 14,227mt of cargo (plus or minus 10%) at rupees 1,600 per metric tonne, and Terapanth had paid for 12,500mt. At that date, Terapanth had taken partial delivery and the defendant was asking it to take delivery of the balance. This position was supported by Terapanth's letter dated 9 June 2005 to the defendant that confirmed the sale of 18,000mt (plus minus 10%) at the same price as stated in the Draft Contract; a bank statement which showed that Terapanth had made deposits amounting to rupees 20m to the defendant; and a letter dated 1 July 2005 from the defendant to Terapanth which informed the latter to take delivery of the remaining cargo: at [45], [47], [50] and [54].

(6) The defendant's failure to disclose Terapanth's breach of contract could not have affected the Arbitrator's finding of fact that the defendant had had sufficient cargo to fulfil the contract with the plaintiff in April 2005. First, the fact that the defendant did not deliver cargo to Terapanth in October 2005 had absolutely no probative value on the question of what quantity was available for delivery to the plaintiff in April 2005. Second, the plaintiff's contention that the defendant was unable to supply 12,500mt of cargo went against the Arbitrator's finding of fact based on contemporaneous correspondence that 24,000mt of cargo was available by the end of March. Third, the evidence supported the defendant's position and Mr Rajasekar did not commit perjury: at [63].

(7) The plaintiff's position that the defendant could not have supplied 27,500mt to Susmi because the defendant was unable to supply 4,000mt of cargo to Terapanth, was illogical and without basis: at [64].

(8) The court could not disturb the Arbitrator's findings of fact. Even if the Arbitrator had made mistakes of fact, the court's jurisdiction was limited. When fraud was alleged, the plaintiff...