Zhong Da Chemical v Lanco Industries: Security for Costs in Setting Aside Arbitration Award

Zhong Da Chemical Development Co Ltd, a Chinese company, applied to the Singapore High Court to set aside an arbitral award in favor of Lanco Industries Ltd, an Indian company. The award was related to a dispute over agreements for the sale of low ash metallurgical coke. Lanco Industries applied for security for costs. Judith Prakash J ordered Zhong Da Chemical to provide security for Lanco Industries' costs, finding that Zhong Da Chemical had a propensity to resist paying costs orders and that enforcing a Singapore costs order in China would be difficult.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff ordered to provide security for the defendant’s costs.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Singapore High Court ordered Zhong Da Chemical to provide security for costs to Lanco Industries in a dispute over setting aside an arbitral award.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Zhong Da Chemical Development Co LtdPlaintiffCorporationSecurity for costs orderedLost
Lanco Industries LtdDefendantCorporationSecurity for costs grantedWon

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Lek Siang PhengRodyk & Davidson LLP
Tan Teck WangRodyk & Davidson LLP
Jeannette LimRodyk & Davidson LLP
Ang Yong TongRobert Wang & Woo LLC
Linus NgRobert Wang & Woo LLC

4. Facts

  1. Plaintiff and defendant entered into agreements for the sale of coke.
  2. A dispute arose, and the defendant claimed the plaintiff repudiated the agreements.
  3. Defendant commenced arbitration proceedings against the plaintiff at SIAC.
  4. The arbitral tribunal ruled in favor of the defendant and awarded damages.
  5. Plaintiff applied to set aside the arbitral award in Singapore High Court.
  6. Defendant applied for security for costs in the Singapore High Court proceedings.
  7. Plaintiff had not paid costs orders made against it in the arbitration proceedings.

5. Formal Citations

  1. Zhong Da Chemical Development Co Ltd v Lanco Industries Ltd, OS 1546/2008, SUM 266/2009, [2009] SGHC 112

6. Timeline

DateEvent
Agreements signed for sale of coke
Agreements signed for sale of coke
Defendant took position that plaintiff repudiated or breached the Agreements
Defendant commenced arbitration proceedings at SIAC
Hearings of substantive claim before the arbitral tribunal took place in Singapore
Interim Award issued
Hearings of substantive claim before the arbitral tribunal took place in Shanghai
Arbitral tribunal decided in favour of the defendant and awarded damages
Defendant filed an application at the Shanghai Court for recognition of the Final Award
Plaintiff filed proceedings in the Singapore High Court to set aside the Final Award
Court ordered plaintiff to give security for the defendant’s costs
Decision Date

7. Legal Issues

  1. Security for Costs
    • Outcome: The court ordered the plaintiff to provide security for the defendant’s costs.
    • Category: Procedural
    • Sub-Issues:
      • Residence out of jurisdiction
      • Propensity to resist paying costs orders
      • Difficulty in enforcing costs order in foreign jurisdiction

8. Remedies Sought

  1. Setting aside of arbitral award
  2. Security for costs

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Arbitration

11. Industries

  • Chemical

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Wishing Star Ltd v Jurong Town CorpHigh CourtYes[2004] 1 SLR 1SingaporeCited for the principle that a corporation is resident in the jurisdiction where its central management and command takes place.
Jurong Town Corp v Wishing Star LtdCourt of AppealYes[2004] 2 SLR 427SingaporeCited for the principle that the court has complete discretion to consider all relevant factors in determining whether it is just to order security for costs.
Keary Developments Ltd v Tarmac Construction LtdN/AYes[1995] 3 All ER 534England and WalesCited for the principle that the court has a complete discretion in the matter of security for costs.
Ooi Ching Ling Shirley v Just Gems IncCourt of AppealYes[2002] 3 SLR 538SingaporeCited for the principle that the lack of reciprocal enforcement of judgments between Singapore and another country is a factor in granting security for costs.
Porzelack KG v Porzelack (UK) LtdN/AYes[1987] 1 WLR 420England and WalesCited for the principle that the merits of the plaintiff’s case are only relevant if there is a very high probability of success or failure.
Syed Mohamed Abdul Muthaliff and Another v Arjan Bisham ChotraniCourt of AppealYes[1999] 1 SLR 750SingaporeCited for the principle that an unless order is an order of last resort.
Hytec Information Systems Ltd v Coventry City CouncilN/AYes[1997] 1 WLR 1666England and WalesCited for the principle that an unless order is an order of last resort.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration ActSingapore
Arbitration Act (Cap. 10, 2002 Rev Ed)Singapore
Rules of Court (Cap 322, R 5, 2006 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Security for costs
  • Arbitration
  • Arbitral award
  • Repudiation
  • Enforcement of judgment
  • International Arbitration Act
  • Rules of Court
  • SIAC
  • Interim Award
  • Final Award

15.2 Keywords

  • Security for costs
  • Arbitration
  • Singapore High Court
  • International Arbitration Act
  • Zhong Da Chemical
  • Lanco Industries

17. Areas of Law

Area NameRelevance Score
Costs85
International Arbitration Act75
Arbitration70
Civil Litigation60
Commercial Disputes50
Contract Law40
Enforcement of Foreign Judgments30
Commercial Law30
Fraud and Deceit25

16. Subjects

  • Civil Procedure
  • Arbitration
  • International Arbitration
  • Costs