AJT v AJU: Setting Aside Arbitration Award for Illegality and Public Policy
In AJT v AJU, the Singapore High Court heard an application by AJT to set aside an arbitration award related to a concluding agreement between AJT and AJU. The court, presided over by Justice Chan Seng Onn, delivered its judgment on 2010-07-16, allowing AJT's application and setting aside the award. The court found that the concluding agreement, which the award sought to uphold, was contrary to public policy as it sought to stifle the prosecution of a non-compoundable offense under Thai law. The court determined that enforcing the award would breach international comity and contravene Singapore's public policy.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application to set aside the Award allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Singapore High Court set aside an arbitration award, finding the underlying agreement to stifle prosecution of non-compoundable offenses was against public policy.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| AJT | Plaintiff | Corporation | Application to set aside the Award allowed | Won | Dinesh Dhillon, Felicia Tan, Emmanuel Duncan Chua |
| AJU | Defendant | Corporation | Application to set aside the Award allowed | Lost | Chua Sui Tong, Edwin Cheng, Daniel Tan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Seng Onn | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Dinesh Dhillon | Allen & Gledhill LLP |
| Felicia Tan | Allen & Gledhill LLP |
| Emmanuel Duncan Chua | Allen & Gledhill LLP |
| Chua Sui Tong | Wong Partnership LLP |
| Edwin Cheng | Wong Partnership LLP |
| Daniel Tan | Wong Partnership LLP |
4. Facts
- AJT initiated arbitration against AJU for disputes arising under an agreement.
- AJU filed a complaint with Thai police against AJT's director for fraud, forgery, and use of a forged document.
- AJT and AJU entered into a Concluding Agreement to terminate the arbitration.
- AJU withdrew its complaint to the Thai Police.
- Thai Prosecution issued a non-prosecution order for forgery charges due to insufficient evidence.
- AJT refused to terminate the Arbitration, alleging AJU failed to comply with the Concluding Agreement.
- AJU applied to the Tribunal to terminate the arbitration based on the Concluding Agreement.
- The Tribunal decided that the Concluding Agreement was not illegal.
- The governing law of the Concluding Agreement is Singapore law.
- Under Thai law, fraud is a compoundable offence, while forgery and the use of a forged document are non-compoundable offences.
5. Formal Citations
- AJT v AJU, Originating Summons No 230 of 2010, [2010] SGHC 201
- AJT v AJU, Civil Appeal No 125 of 2010, [2011] 4 SLR 739
- AJT v AJU, Civil Appeal No 125 of 2010, [2011] SGCA 41
6. Timeline
| Date | Event |
|---|---|
| Notice of Arbitration served by AJT on AJU. | |
| AJU made a complaint of fraud, forgery and the use of a forged document to the Thai police against AJT’s sole director and shareholder, Mr [O], [P], and [Q]. | |
| Concluding Agreement signed between AJT and AJU. | |
| Special Prosecutor’s Office issued a Cessation Order in respect of the criminal investigations. | |
| Payment of US$ 470,000.00 was made by AJU to AJT. | |
| Thai Prosecution confirmed that a non-prosecution order had been issued with respect to the charges of forgery and the use of the forged document. | |
| AJU gave [O], [P] and [Q] a letter of guarantee that it would not reinitiate criminal proceedings against them. | |
| AJT accused AJU of failing to comply with its obligations under the Concluding Agreement. | |
| AJU formally applied to the Tribunal to terminate the process. | |
| Parties agreed to have the Tribunal determine the preliminary question of whether the Concluding Agreement should be set aside or declared void. | |
| Interim Award issued in SIAC Arbitration ARB No 86 of 2006. | |
| Judgment reserved. | |
| The appeal in Civil Appeal No 125 of 2010 was allowed by the Court of Appeal. |
7. Legal Issues
- Illegality of Concluding Agreement
- Outcome: The court held that the Concluding Agreement was illegal as it sought to stifle the prosecution of a non-compoundable offence, violating public policy.
- Category: Substantive
- Sub-Issues:
- Stifling prosecution of non-compoundable offence
- Violation of public policy
- Related Cases:
- [2007] 1 SLR(R) 597
- [2010] SGHC 62
- [2008] 2 SLR(R) 929
- [1999] QB 785
- [2000] QB 288
- [2010] SGHC 108
- [1999] 3 SLR(R) 842
- [1958] AC 301
- [1988] QB 448
- [1904] 1 KB 591
- [1929] 1 KB 470
- AIR 1930 PC 100
- AIR 1945 Bombay 82
- AIR 1941 PC 95
- AIR 1965 SC 166
- [1993] 2 MLJ 224
- [1998] SGHC 70
- [2006] 3 SLR(R) 174
- Breach of Natural Justice
- Outcome: The court found no breach of natural justice.
- Category: Procedural
8. Remedies Sought
- Setting aside of the Interim Award
9. Cause of Actions
- Breach of Contract
- Setting Aside Arbitration Award
10. Practice Areas
- Commercial Litigation
- Arbitration
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA | Court of Appeal | Yes | [2007] 1 SLR(R) 597 | Singapore | Cited for the principle that errors of law or fact, per se, do not engage the public policy of Singapore under Article 34(2)(b)(ii) of the Model Law. |
| Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd | High Court | Yes | [2010] SGHC 62 | Singapore | Cited for the principle that assertions of breach of public policy cannot be vague and generalised. |
| VV v VW | High Court | Yes | [2008] 2 SLR(R) 929 | Singapore | Cited for the principle that assertions of breach of public policy cannot be vague and generalised. |
| Soleimany v Soleimany | English Court of Appeal | Yes | [1999] QB 785 | England and Wales | Cited for the principle that the interposition of an arbitration award may not isolate the successful party’s claim from the illegality which gave rise to it. |
| Westacre Investments Inc v Jugoimport-SDPR Holding Co Ltd | Court of Appeal | Yes | [2000] QB 288 | England and Wales | Cited regarding the balancing exercise between the competing public policies of finality and illegality. |
| Denmark Skibstekniske Konsulenter A/S I Likvidation (formerly known as Knud E Hansen A/S) v Ultrapolis 3000 Investments Ltd (formerly known as Ultrapolis 3000 Theme Park Investments Ltd) | High Court | Yes | [2010] SGHC 108 | Singapore | Cited regarding the court's entitlement to conduct a rehearing based on the grounds prescribed in s 31(2) of the Act. |
| Peh Teck Quee v Bayerische Landesbank Girozentrale | High Court | Yes | [1999] 3 SLR(R) 842 | Singapore | Cited for the principle that the courts will treat a contract governed by its own law as void where the parties’ intention and object contemplated thereby jeopardises relations between its government and another friendly government. |
| Regazzoni v KC Sethia (1944) Ltd | House of Lords | Yes | [1958] AC 301 | United Kingdom | Cited for the principle that to recognise the contract between the appellant and the respondent as an enforceable contract would give a just cause for complaint by the Government of India and should be regarded as contrary to conceptions of international comity. |
| Lemenda Trading Co Ltd v African Middle East Petroleum Co Ltd | Queen's Bench Division | Yes | [1988] QB 448 | England and Wales | Cited for the principle that English courts should not enforce an English law contract which falls to be performed abroad where it relates to an adventure which is contrary to a head of English public policy which is founded on general principles of morality, and the same public policy applies to the country of performance so that the agreement would not be enforceable under the law of that country. |
| Kaufman v Gerson | English Court of Appeal | No | [1904] 1 KB 591 | England and Wales | Distinguished on the basis that the contract there (governed by French law and to be performed in France) was not contrary to French law and was valid and enforceable in France. |
| Foster v Driscoll and Others, Lindsay v Attfield and Another, Lindsay v Driscoll and Others | King's Bench Division | Yes | [1929] 1 KB 470 | England and Wales | Cited for the principle that the courts will treat a contract governed by its own law as void where the parties’ intention and object contemplated thereby jeopardises relations between its government and another friendly government. |
| Kamini Kumar Basu and ors v Birendra Nath Basu | Privy Council | Yes | AIR 1930 PC 100 | India | Cited for the principle that if it was an implied term of the reference or the ekrarnama that the complaint would not be further proceeded with, then in their Lordships’ opinion the consideration of the reference or the ekrarnama as the case may be, is unlawful. |
| Shirpad v Sanikatta Co-Operative Sale Sale Society | Bombay High Court | Yes | AIR 1945 Bombay 82 | India | Cited for the principle that even if the creditor does not expressly agree to drop the prosecution, yet if the agreement is the outcome of an implied understanding that he should consent to the withdrawal of the prosecution, it is against public policy, although it may not be in his power to withdraw the prosecution himself. |
| Bhowanipur Banking Corporation Ltd v Sreemati Durgesh Nandini Dasi | Privy Council | Yes | AIR 1941 PC 95 | India | Cited for the principle that it is of the essence of the defence that the defendant should establish a contract whereby the proposed or actual prosecutor agrees as part of the consideration received or to be received by him either not to bring or to discontinue, criminal proceedings for some alleged offence. |
| Ouseph Poulo and ors v Catholic Union Bank Ltd and Ors | Supreme Court of India | Yes | AIR 1965 SC 166 | India | Cited for the principle that agreements which are made for stifling prosecution are opposed to public policy and as such, they cannot be enforced. |
| Ooi Kiah Inn Charles & Anor v Kukuh Maju Industries Sdn Bhd (former known as Pembinaan Muncul Hebat Sdn Bhd) | Supreme Court of Malaysia | Yes | [1993] 2 MLJ 224 | Malaysia | Cited for the principle that no court will enforce an agreement to stifle prosecution for it should be apparent that such agreement, if allowed to be enforced, could mean that the law of freedom to contract has been abused for purpose of extortion where the person accused is innocent, or where he is guilty, it has been abused for making a trade of a crime. |
| Teo Yong Seng & Ors v Lim Bweng Tuck & Ors | High Court | Yes | [1998] SGHC 70 | Singapore | Cited for the principle that an agreement to stifle prosecution is an illegal contract and the Court would not assist in the recovery of money paid under it. |
| Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd | High Court | Yes | [2006] 3 SLR(R) 174 | Singapore | Cited regarding the review of the arbitrator’s decision rather than a rehearing. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act (Cap 143A, 2002 Rev Ed) | Singapore |
| UNCITRAL Model Law on International Commercial Arbitration | Not Applicable |
15. Key Terms and Keywords
15.1 Key Terms
- Concluding Agreement
- Arbitration
- Public Policy
- Non-compoundable offence
- Stifling prosecution
- International comity
- Illegality
- Thai law
- Non-prosecution order
- Cessation Order
15.2 Keywords
- arbitration
- public policy
- illegality
- singapore
- contract
- international comity
- stifling prosecution
16. Subjects
- Arbitration
- Contract Law
- Public Policy
- International Law
- Criminal Law
17. Areas of Law
- Arbitration Law
- Contract Law
- Public Policy
- International Comity
- Criminal Law