AAY v AAZ: Arbitration Confidentiality, Repudiation of Agreement, and Disclosure to Authorities

In AAY and others v AAZ, the Singapore High Court addressed whether the defendant, AAZ, repudiated an arbitration agreement by disclosing confidential information to the Commercial Affairs Department (CAD). The plaintiffs, AAY and others, alleged that AAZ's complaint to the CAD, along with disclosures to non-parties, evinced an intention not to be bound by the arbitration agreement. The court, presided over by Justice Chan Seng Onn, dismissed the plaintiffs' claim, finding that the disclosure to the CAD fell within an exception to confidentiality as it was made to the appropriate authorities based on a reasonable suspicion of criminal wrongdoing. The court also found that the plaintiffs had waived their right to confidentiality by proceeding with an earlier originating motion in open court without seeking confidentiality.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiffs' claim dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court judgment on whether disclosing arbitration info to authorities repudiates the agreement. Court dismissed the claim, finding no breach of confidentiality.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
AAY and othersPlaintiffOtherClaim DismissedLost
AAZDefendantOtherJudgment for DefendantWon
Michael Hwang of Michael Hwang
Katie Chung of Michael Hwang

3. Judges

Judge NameTitleDelivered Judgment
Chan Seng OnnJudgeYes

4. Counsels

Counsel NameOrganization
Davinder SinghDrew & Napier LLC
Darius BragassamDrew & Napier LLC
Bhavish AdvaniDrew & Napier LLC
Chia Chor LeongCitiLegal LLC
Christopher Anand DanielAllen & Gledhill LLP
Michael HwangMichael Hwang
Wong Yoke Cheng LeonaAllen & Gledhill LLP
Katie ChungMichael Hwang

4. Facts

  1. Plaintiffs were former employees of the defendant's Singapore branch, later a subsidiary named CCZ.
  2. The defendant received anonymous letters alleging the plaintiffs were diverting sales from CCZ to a new company.
  3. Plaintiffs resigned from CCZ, and 19 employees from the third-party distributorship division also resigned.
  4. The defendant sold CCZ's third-party distributorship division to the first and second plaintiffs.
  5. The defendant commenced arbitration proceedings against the plaintiffs, alleging fraudulent misrepresentation and conspiracy.
  6. The tribunal found the plaintiffs liable for fraudulent misrepresentation and conspiracy.
  7. The defendant made a report to the Commercial Affairs Department (CAD), disclosing the partial award and other documents.

5. Formal Citations

  1. AAY and others v AAZ, Suit [Y], [2009] SGHC 142

6. Timeline

DateEvent
First plaintiff joined the defendant’s branch in Singapore, BBZ, as a sales and service engineer.
Second plaintiff joined BBZ as marketing manager.
Third plaintiff joined BBZ as a financial controller.
XZ, the defendant’s president, received an anonymous letter about an alleged scheme by the plaintiffs to destroy CCZ.
XZ flew to Singapore and discovered that the third-party distributorship division of CCZ was without a single employee.
XZ faxed the first and second plaintiffs an offer to sell CCZ’s third-party distributorship division.
XZ and the first and second plaintiffs recorded their agreement in a document titled “Heads of Agreement”.
The defendant and the first two plaintiffs entered into a Sale and Purchase Agreement.
The sale and purchase of the third-party distributorship division was completed.
The defendant started civil proceedings in the USA against the first and second plaintiffs and other parties.
A US District Court dismissed these proceedings on the grounds of forum non conveniens.
The defendant commenced arbitration proceedings in Singapore against the first and second plaintiffs.
XZ received a second anonymous letter which supported his suspicions that the plaintiffs had committed various fraudulent acts.
The defendant commenced court proceedings against the plaintiffs, issuing a Writ of Summons in Suit [X].
The plaintiffs applied for an order that Suit [X] be dismissed or stayed pending the 1994 Arbitration.
The parties agreed by Consent Order to refer the entire dispute to arbitration.
The tribunal made a decision in respect of the plaintiffs’ application for security for costs.
The tribunal issued its partial award on liability, finding the plaintiffs liable for fraudulent misrepresentation and conspiracy.
The plaintiffs took out an originating summons against the defendant and the tribunal to set aside the partial award.
The hearing took place in open court before Justice V K Rajah.
Rajah J dismissed the plaintiffs’ challenge with costs.
The defendant applied for specific discovery of the audited accounts of CCZ for the past 14 years from 4 November 1992.
The tribunal allowed the discovery application.
The plaintiffs provided copies of CCZ’s audited accounts for 13 consecutive financial years from 1993 to 2005.
The defendant made a report to the Commercial Affairs Department of the Republic of Singapore Police Force.
The defendant informed the first plaintiff in a letter dated 10 August 2006 that it had lodged a complaint against the plaintiffs with the CAD.
The first plaintiff received by fax from PZ a copy of an email which the CAD had sent to XZ.
The plaintiffs purported to accept the defendant’s repudiation of the arbitration agreement.
The defendant replied that the arbitration will proceed.
PZ lodged a police report on behalf of XZ against the plaintiffs for cheating.
The plaintiffs commenced the present suit.
The CAD informed XZ that it would not investigate his complaint.
Judgment reserved.

7. Legal Issues

  1. Breach of Confidentiality
    • Outcome: The court held that the defendant's disclosure to the CAD fell within an exception to confidentiality in the public interest.
    • Category: Substantive
    • Sub-Issues:
      • Disclosure of confidential information to non-parties
      • Disclosure of confidential information to law enforcement
      • Repudiation of arbitration agreement
    • Related Cases:
      • [2008] EWCA Civ 184
      • [1990] 1 WLR 1205
      • [1993] 2 Ll LR 243
      • [1999] 1 WLR 314
      • [2003] 1 WLR 1041
      • [1995] ALR 391
      • [2003] 2 SLR 547
      • [2009] 1 SLR 945
      • [1968] 1 QB 396
  2. Repudiation of Arbitration Agreement
    • Outcome: The court held that the defendant's conduct did not amount to repudiation of the arbitration agreement.
    • Category: Substantive
    • Sub-Issues:
      • Wrongful disclosure of confidential information
      • Intention not to be bound by the agreement
    • Related Cases:
      • [1981] AC 910
      • [1962] 2 QB 26
      • [1942] AC 356
  3. Waiver of Confidentiality
    • Outcome: The court held that the plaintiffs had waived their right to confidentiality by proceeding with an earlier originating motion in open court.
    • Category: Procedural
    • Sub-Issues:
      • Failure to apply for in-camera proceedings
      • Disclosure of arbitration-related documents in open court
    • Related Cases:
      • [1994] 1 SLR 164
      • (1990) 170 CLR 394

8. Remedies Sought

  1. Order to set aside the consent order and discharge the arbitration agreement
  2. Declaration that the plaintiffs were discharged from all their unperformed primary obligations under the arbitration agreement and consent order
  3. Injunction to restrain the defendant from taking further steps in connection with the arbitration
  4. Damages
  5. Interest
  6. Costs

9. Cause of Actions

  • Breach of Confidentiality
  • Repudiation of Contract

10. Practice Areas

  • Commercial Litigation
  • Arbitration

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
In re D (Adoption Reports: Confidentiality)N/AYes[1995] 3 WLR 483N/ACited to warn against giving an accurate exposition of confidentiality at large.
John Forster Emmott v Michael Wilson & Partners LtdEnglish Court of AppealYes[2008] EWCA Civ 184EnglandSummarized the common law position on confidentiality in arbitration.
Dolling-Baker v MerrettN/AYes[1990] 1 WLR 1205N/ACharacterized the obligation of confidentiality as an implied obligation arising out of the nature of arbitration itself.
Hassneh Insurance Co. of Israel v Steuart J MewN/AYes[1993] 2 Ll LR 243N/ADiscussed the implied obligation in the agreement to arbitrate and the distinction between the reasoned award and other documents.
Ali Shipping Corporation v Shipyard TrogirN/AYes[1999] 1 WLR 314N/AHeld that the obligation of confidentiality arose as a matter of law, not based on custom or business efficacy.
Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co of ZurichN/AYes[2003] 1 WLR 1041N/AExpressed reservations about the analysis of the duty of confidentiality as an implied term.
Esso Australia Resources Ltd v Plowman (Minister for Energy and Minerals)High Court of AustraliaYes[1995] ALR 391AustraliaRejected an implied duty of confidentiality in arbitration.
Department of Economics, Policy and Development of the City of Moscow v Bankers Trust CoN/AYes[2005] QB 207N/AIndicated a move to greater privacy but that the obligations of privacy are not absolute.
Campbell v MGN LtdN/AYes[2004] 2 AC 457N/AObserved that the law relating to arbitrations may need to parallel the distinction in the general law where the law relating to privacy and confidentiality are distinct.
Myanma Yaung Chi Oo Co Ltd v Win Win NuN/AYes[2003] 2 SLR 547SingaporeAdopted the English position over the Australian position in Esso Australia.
International Coal Pte Ltd v Kristle Trading LtdN/AYes[2009] 1 SLR 945SingaporeConsidered that an obligation of confidentiality is to be implied in arbitration proceedings due to the private nature of such proceedings.
Initial Services Ltd v PutterillN/AYes[1968] 1 QB 396N/AExtended the exception to crimes, frauds and misdeeds, both those actually committed as well as those in contemplation, provided always that the disclosure is justified in the public interest.
Robin v Sunrise Investments (Pte) LtdN/AYes[1991] SLR 436SingaporeSet out the elements of malicious prosecution.
Bradford v PicklesN/AYes[1895] AC 587N/ACited with approval in the context of parallel import sales made with improper motive.
Allen v FloodN/AYes[1989] AC 1N/ACited with approval in the context of parallel import sales made with improper motive.
Remus Innovation Forschungs-Und Abgasanlagen-Produktionsgesellschaft mbH v Hong Boon SiongN/AYes[1999] 1 SLR 179Singaporedamage alone is insufficient to found a cause of action even if it results from an evil motive of the defendant.
Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping CorporationN/AYes[1981] AC 910N/AStated that an arbitration agreement, like any contract, can be repudiated.
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha LtdN/AYes[1962] 2 QB 26N/AFramed the question of whether the occurrence of the event deprive the party who has further undertakings still to perform of substantially the whole benefit.
Heyman v DarwinsN/AYes[1942] AC 356N/ADefined repudiation as an anticipatory breach of a contract where the party by words or conduct evinces an intention no longer to be bound.
Beckkett Pte Ltd v Deutsche Bank AGN/AYes[2005] 3 SLR 555SingaporeConsidered the conduct and motives of disclosure which were aimed at securing a resolution of the dispute by exerting pressure on the other party.
Re a Company’s applicationN/AYes[1989] 1 Ch 477N/AHeld that disclosure of the plaintiff’s documents by the defendant to the Financial Intermediaries, Managers and Brokers Regulatory Association (FIMBRA), even if motivated by malice, was not a breach of confidence in the defendant’s employment contract.
Chip Thye Enterprises Pte Ltd v Development Bank of Singapore LtdN/AYes[1994] 1 SLR 164SingaporeHeld that a contractual term for the sole benefit of one party could be waived by that party.
The Commonwealth of Australia v VerwayenN/AYes(1990) 170 CLR 394AustraliaObserved that while a right introduced solely for the benefit of a defendant was capable of waiver by a defendant, waiver does not apply to an element in a plaintiffs’ cause of action.
Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India (the ‘Kanchenjunga’)N/AYes[1990] 1 Lloyd’s Rep 391N/AStressed the differences between election and estoppel and arguing that any waiver of confidentiality in the OM based on estoppel would only be suspensory.
Home Office v HarmanN/AYes[1983] 1 AC 280N/ARejected the submission that once a document made available under discovery had been read out in open court the obligation not to use it for any other purpose automatically disappeared.
Franchi v FranchiN/AYes[1967] RPC 149N/AStated that a claim that the disclosure of some information would be a breach of confidence is not to be defeated simply by proving that there are other people in the world who know the facts in question.
Transvic Investment Pte Ltd v Amva Investment Pte LtdN/AYes[1995] 1 SLR 120SingaporeCited for the principle that a term inserted in the contract for the mutual benefit of both parties cannot be waived unilaterally by one party without the other party’s consent.
Loh Wee Tin v Transvic Investment Pte LtdN/AYes[1995] 2 SLR 724SingaporeCited for the principle that a term inserted in the contract for the mutual benefit of both parties cannot be waived unilaterally by one party without the other party’s consent.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration Act (Cap 143A)Singapore
Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap 65A)Singapore
Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap 65A) s 39Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration
  • Confidentiality
  • Repudiation
  • Commercial Affairs Department
  • Partial Award
  • Sale and Purchase Agreement
  • Fraudulent Misrepresentation
  • Waiver
  • Public Interest
  • Reasonable Suspicion

15.2 Keywords

  • arbitration
  • confidentiality
  • repudiation
  • disclosure
  • CAD
  • Singapore
  • contract law

17. Areas of Law

Area NameRelevance Score
Arbitration90
Fraud and Deceit80
Misrepresentation70
International Arbitration Act70
Confidentiality60
Breach of Contract60
Fiduciary Duties60
Repudiation50
Contract Law50
Waiver40
Company Law40
Estoppel30
Forum Non Conveniens30
Civil Procedure20

16. Subjects

  • Arbitration
  • Contract Law
  • Confidentiality
  • Civil Litigation