TMM v Pacific Richfield: Setting Aside Arbitral Award for Vessel Sale Dispute

TMM Division Maritima SA de CV sought to set aside an arbitral award against Pacific Richfield Marine Pte Ltd in the Singapore High Court, regarding a dispute over the sale and purchase of two second-hand vessels, The Pacific 18 and The Pacific 38. TMM claimed breach of natural justice and that the award dealt with issues beyond the scope of submission to arbitration. Chan Seng Onn J dismissed TMM's application, upholding the arbitral award and emphasizing the importance of minimal curial intervention in arbitration matters. The court found no breach of natural justice or excess of jurisdiction by the arbitrator.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application to set aside the Award is dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Written Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court dismisses TMM's application to set aside an arbitral award regarding a dispute over the sale of two vessels.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
TMM Division Maritima SA de CVApplicantCorporationApplication DismissedLost
Pacific Richfield Marine Pte LtdRespondentCorporationCounterclaim AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Chan Seng OnnJudgeYes

4. Counsels

Counsel NameOrganization
Andrew ChanAllen & Gledhill LLP
Paul TanAllen & Gledhill LLP
Vivian AngAllen & Gledhill LLP
Haridass AjaibHaridass Ho & Partners
Subashini NarayanasamyHaridass Ho & Partners

4. Facts

  1. Grupo TMM entered into MOAs with PRM for purchasing two vessels.
  2. Addendum No 1 stated each Vessel shall be delivered with repairs in the attached spreadsheet completed at PRM’s cost.
  3. One key repair was restoring the Vessels to Dynamic Positioning (DP) System 1 (DP-1) Class notation.
  4. TMM paid US$5.15m deposit into an escrow account.
  5. PRM issued a NOR which TMM rejected, citing incomplete repairs.
  6. PRM treated TMM’s rejection as a repudiatory breach.
  7. TMM commenced arbitration claiming the deposit and damages.

5. Formal Citations

  1. TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd, Originating Summons No 178 of 2012/E, [2013] SGHC 186

6. Timeline

DateEvent
Grupo TMM SAB entered into two Memoranda of Agreement with Pacific Richfield Marine Pte Ltd for the purchase of the Vessels.
PRM issued a Notice of Readiness for delivery of the Vessels.
TMM rejected the Notice of Readiness.
Delivery date for the Vessels.
TMM commenced arbitration against PRM.
Mr G P Selvam was appointed as the sole arbitrator.
The separate arbitrations concerning each of the Vessels were consolidated.
The Arbitrator’s decision was contained in an award which was released to the parties.
TMM commenced application to set aside the Award.
Decision Date

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that TMM had repudiated the MOAs by wrongfully rejecting the NOR and failing to make funds available.
    • Category: Substantive
    • Sub-Issues:
      • Repudiatory Breach
      • Validity of Notice of Readiness
      • Interpretation of Contractual Terms
  2. Setting Aside Arbitral Award
    • Outcome: The court dismissed the application to set aside the arbitral award, finding no breach of natural justice or excess of jurisdiction.
    • Category: Procedural
    • Sub-Issues:
      • Breach of Natural Justice
      • Excess of Jurisdiction
  3. Interpretation of Contractual Terms
    • Outcome: The court upheld the arbitrator's finding that Clause 11 of the MOAs was a collateral warranty, not a condition precedent.
    • Category: Substantive
    • Sub-Issues:
      • Condition Precedent
      • Warranty
      • Innominate Term

8. Remedies Sought

  1. Setting Aside Arbitral Award
  2. Release of Deposit
  3. Damages

9. Cause of Actions

  • Breach of Contract
  • Repudiation of Contract

10. Practice Areas

  • Commercial Litigation
  • Arbitration
  • Shipping
  • Sale of Goods

11. Industries

  • Shipping

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBKCourt of AppealYes[2011] 4 SLR 305SingaporeCited regarding awards infra petita may be challenged under Art 34(2)(a)(iii).
Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte LtdCourt of AppealYes[2007] 3 SLR(R) 86SingaporeCited for the principle of minimal curial intervention in arbitration.
Atkins Limited v The Secretary of State for TransportEnglish High CourtYes[2013] EWHC 139 (TCC)EnglandCited for the principle that the Court is not required to carry out a hypercritical or excessively syntactical analysis of what the arbitrator has written.
IRB Brasil Resseguros SA v CX Reinsurance Company LtdEnglish High CourtYes[2010] EWHC 974 (Comm)EnglandCited for the principle that infelicities are to be expected and are generally irrelevant to the merits of any challenge.
Zermalt Holdings SA v Nu-Life Upholstery Repairs LtdN/AYes[1985] 2 EGLR 14N/ACited for the principle that courts strive to uphold arbitration awards and do not approach them with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults in awards.
ABB AG v Hochtief Airport GmbH and anotherN/AYes[2006] 2 Lloyd’s Law RepN/ACited with approval of Bingham J’s statement in Zermalt.
Fidelity Management SA & Ors v Myriad International Holdings BV & OrEnglish High CourtYes[2005] EWHC 1193 (Comm)EnglandCited with approval of Bingham J’s statement in Zermalt.
Lesotho Highlands Development Authority v Impregilo SpA and othersN/AYes[2006] 1 AC 221N/ACited for the principle of minimal curial intervention.
Tjong Very Sumito and others v Antig Investments Pte LtdN/AYes[2009] 4 SLR(R) 732N/ACited for the principle of minimal curial intervention.
PT Prima International Development v Kempinski Hotels SA and other appealsCourt of AppealYes[2012] 4 SLR 98SingaporeCited for the law on setting aside an award on the ground of excess of jurisdiction under Art 34(2)(a)(iii) of the Model Law.
PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SACourt of AppealYes[2007] 1 SLR(R) 597SingaporeCited for the principle that the arbitral tribunal has no jurisdiction to decide any issue not referred to it for determination.
Pacific Recreation Pte Ltd v SY Technology IncCourt of AppealYes[2008] 2 SLR(R) 491SingaporeCited for the principle that a court or arbitral tribunal might be in breach of the rules of natural justice if it decided a case on a ground not raised or contemplated by the parties.
Ascot Commodities NV v Olam International LtdN/AYes[2002] CLC 277N/ACited for the principle that an award should deal, however concisely, with all essential issues.
Hussman (Europe) Ltd v Al Ameen Development and Trade CoN/AYes[2000] 2 Lloyd’s Rep 83N/ACited for the principle that the arbitral tribunal need not deal with each point made by a party in an arbitration.
SEF Construction Pte Ltd v Skoy Connected Pte LtdN/AYes[2010] 1 SLR 733N/ACited for the principle that natural justice requires that the parties should be heard; it does not require that they be given responses on all submissions made.
Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte LtdHigh CourtYes[2010] SGHC 80SingaporeCited for the principle that to ensure that the right to be heard is effectively safeguarded, an arbitral tribunal must demonstrably have at least attempted to comprehend the parties’ arguments on the essential issues.
Russell v Duke of NorfolkN/AYes[1949] 1 All ER 109N/ACited for the principle that the requirements of natural justice ultimately depend on the circumstances of each case.
Lawlor and Others v Union of Post Office WorkersN/AYes[1965] Ch 712N/ACited for the principle that the content of the rules of natural justice is generally “lacking in precision”.
London Underground Limited v Citylink Telecommunications LimitedN/AYes[2007] EWHC 1799 (TCC)N/ACited for the principle that the arbitral tribunal generally has wide prerogative and autonomy to evaluate the available competing evidence and arrive at its conclusion.
Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) LtdN/AYes[2010] 3 SLR 1N/ACited for the principle that the plaintiff’s allegation that the arbitral tribunal had ignored certain facts amounted to an “error of fact, in respect of which there is also no remedy under the [IAA].”
L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appealN/AYes[2013] 1 SLR 125N/ACited for the test of whether the breach of natural justice was merely technical and inconsequential or whether as a result of the breach, the arbitrator was denied the benefit of arguments or evidence that had a real as opposed to a fanciful chance of making a difference to his deliberations.
Re Shankar Alan s/o Anant KulkarniN/AYes[2007] 1 SLR(R) 85N/ACited for the test for apparent bias is whether the circumstances gave rise to a reasonable suspicion or apprehension in a fair-minded reasonable person with knowledge of the relevant facts that the arbitral tribunal was biased.
Piglowska v PiglowskiN/AYes[1999] 1 WLR 1360N/ACited for the principle that findings of fact are inherently an incomplete statement of the impression which was made upon [the judge] by the primary evidence.
Sovarex SA v Romero Alvarez SAN/AYes[2011] 2 Lloyd’s Rep 320N/AMentioned as an example of English courts referring to the Model Law.
Sea Trade Maritime Corporation v Hellenic Mutual War Risks Association (Bermuda) Ltd (The “Athena”)N/AYes[2006] 2 Lloyd’s Rep 147N/AMentioned as an example of English courts referring to the Model Law.
Trustees of Rotoaira Forest Trust v Attorney-GeneralNew Zealand High CourtYes[1999] 2 NZLR 452New ZealandCited favourably in Soh Beng Tee at [57] regarding the arbitrator will normally be precluded from taking into account evidence or argument extraneous to the hearing without giving the parties further notice and the opportunity to respond.
Bremer Handelsgesellschaft mbH v Westzucker GmbH (No 2) and othersN/AYes[1981] 2 Lloyd’s Rep 130N/ACited for the principle that all that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is.
Thong Ah Fat v Public ProsecutorSingapore Court of AppealYes[2012] 1 SLR 676SingaporeCited for the scope and content of the court’s duty to give reasons offers, in my view, an instructive parallel.
Prestige Marine Services Pte Ltd v Marubeni International Petroleum (S) Pte LtdHigh CourtYes[2012] 1 SLR 917SingaporeThere is a suggestion in the High Court decision of Prestige Marine Services Pte Ltd v Marubeni International Petroleum (S) Pte Ltd [2012] 1 SLR 917 at [39] that the inadequate provision of reasons by an arbitral tribunal is a mere error of law.
World Trade Corporation v C Czarnikow Sugar LtdN/AYes[2005] 1 Lloyd’s Rep 422N/ACited for the principle that arbitrators are under no duty to deal with every possible argument on the facts and to explain why they attach more weight to some evidence than to other evidence.
Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2)N/AYes[2012] FCA 1214AustraliaThere appears to be some recognition of this “no evidence” rule falling under the umbrella of natural justice in Australia and New Zealand, both of which are jurisdictions which apply the Model Law.
Downer-Hill Joint Venture v Government of FijiN/AYes[2005] 1 NZLR 554New ZealandThere appears to be some recognition of this “no evidence” rule falling under the umbrella of natural justice in Australia and New Zealand, both of which are jurisdictions which apply the Model Law.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Memorandum of Agreement
  • Notice of Readiness
  • Dynamic Positioning System
  • Repudiatory Breach
  • Condition Precedent
  • Collateral Warranty
  • Arbitral Award
  • Natural Justice
  • Excess of Jurisdiction
  • As is where is

15.2 Keywords

  • arbitration
  • contract
  • shipping
  • vessel
  • breach
  • repudiation
  • natural justice
  • jurisdiction
  • Singapore
  • maritime

17. Areas of Law

Area NameRelevance Score
Arbitration90
Breach of Contract80
Contract Law75
Commercial Law70
Shipping Law60
International Commercial Law50

16. Subjects

  • Arbitration
  • Contract Law
  • Shipping
  • Sale of Goods