AKM v AKN: Setting Aside SIAC Arbitration Award for Breach of Natural Justice and Jurisdictional Excess

In AKM v AKN, the Singapore High Court heard three applications to set aside an award issued by a Singapore International Arbitration Centre tribunal in favor of AKN. The dispute arose from the liquidation of a company and an Asset Purchase Agreement. The plaintiffs, including the liquidator, secured creditors, and investment funds, argued that the tribunal breached natural justice and exceeded its jurisdiction. The High Court, presided over by Justice Vinodh Coomaraswamy, allowed all three applications, setting aside the award in its entirety, citing failures to consider key arguments and evidence, and exceeding the scope of the arbitration agreement.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

All three applications allowed and the award set aside in its entirety.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court sets aside SIAC arbitration award due to breaches of natural justice and exceeding jurisdictional scope, concerning a dispute over clean title and tax obligations.

1.7 Decision Date

30 July 2014

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
AKN	Defendant	Other	Applications Dismissed	Lost	Adrian Wong of Rajah & Tann LLP Andre Yeap of Rajah & Tann LLP Tang Hui Jing of Rajah & Tann LLP
Funds	Plaintiff	Other	Applications Allowed	Won	Ajinderpal Singh of Rodyk & Davidson LLP Philip Jeyaretnam of Rodyk & Davidson LLP June Hong of Rodyk & Davidson LLP
AKM	Plaintiff	Other	Applications Allowed	Won	Chan Hock Keng of WongPartnership LLP Alvin Yeo of WongPartnership LLP Wendy Lin of WongPartnership LLP Lawrence Foo of WongPartnership LLP
Secured Creditors	Plaintiff	Other	Applications Allowed	Won	Zhuo Jiaxiang of Drew & Napier LLC Davinder Singh of Drew & Napier LLC Vishal Harnal of Drew & Napier LLC Lum Wei Yuen Isaac of Drew & Napier LLC

3. Judges

Judge Name	Title	Delivered Judgment
Vinodh Coomaraswamy	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Adrian Wong	Rajah & Tann LLP
Andre Yeap	Rajah & Tann LLP
Tang Hui Jing	Rajah & Tann LLP
Ajinderpal Singh	Rodyk & Davidson LLP
Philip Jeyaretnam	Rodyk & Davidson LLP
June Hong	Rodyk & Davidson LLP
Chan Hock Keng	WongPartnership LLP
Alvin Yeo	WongPartnership LLP
Wendy Lin	WongPartnership LLP
Lawrence Foo	WongPartnership LLP
Zhuo Jiaxiang	Drew & Napier LLC
Davinder Singh	Drew & Napier LLC
Vishal Harnal	Drew & Napier LLC
Lum Wei Yuen Isaac	Drew & Napier LLC

4. Facts

The Corporation, a Mithril producer in Moria, entered liquidation in 2000.
An Asset Purchase Agreement (APA) was formed between the liquidator, secured creditors, shareholders, and the defendants for asset purchase.
A condition precedent to closing the APA was approval of a deferred tax payment scheme by municipal authorities.
A Tax Amnesty Agreement (TAA) was delivered, but later revoked due to unpaid taxes.
The defendants commenced arbitration in 2008, alleging breach of the APA for failure to deliver clean title.
The tribunal awarded the defendants US$80m for lost profits and US$23.7m for property claims.
The plaintiffs applied to set aside the award, citing inability to present their case and jurisdictional issues.

5. Formal Citations

AKM v AKN and another and other matters, Originating Summons No [L]; Originating Summons No [M]; Originating Summons No [N], [2014] SGHC 148

6. Timeline

Date	Event
1990-01-01	Mortgage trust indenture executed securing Corporation's assets.
1999-01-01	Corporation filed petition seeking to suspend payments on liabilities.
2000-01-01	Commission declared Corporation insolvent and placed it in liquidation.
2001-01-01	Liquidator submitted a liquidation plan to the Commission.
2003-01-01	Liquidation plan approved.
2003-01-01	Galaxy won the tender for the Plant Assets.
2004-01-29	Memorandum of agreement entered into.
2004-08-03	SP passed a resolution requiring Erebor’s city treasurer to levy execution on all of the Corporation’s properties for unpaid taxes.
2004-09-07	SP passed the Tax Ordinance.
2004-09-10	Asset Purchase Agreement signed.
2004-10-13	City treasurer and city mayor sent the liquidator the Tax Amnesty Agreement.
2004-10-15	Closing took place; Omnibus Agreement executed; notes issued; PPSA amended.
2005-01-01	Disputes arose over taxes payable in respect of the Plant Assets and the Retained Assets.
2005-01-01	Funds began purchasing the right to receive payments under the notes on the secondary market.
2006-01-01	TAA was eventually revoked.
2008-10-09	Defendants filed an application before a Morian court seeking an injunction restraining AKP.
2008-10-10	Morian court dismissed the defendants’ application; defendants commenced arbitration.
2010-07-07	Tribunal upheld the interim injunction.
2012-05-09	Partial award issued.
2012-06-15	Further partial award issued.
2012-07-05	Memorandum of corrections issued.
2014-07-31	Decision Date

7. Legal Issues

Breach of Natural Justice
- Outcome: The court found that the tribunal breached the rules of natural justice by failing to consider key arguments and evidence.
- Category: Procedural
- Sub-Issues:
  - Failure to consider submissions
  - Failure to provide a fair hearing
Excess of Jurisdiction
- Outcome: The court found that the tribunal exceeded its jurisdiction by dealing with matters not submitted to it.
- Category: Jurisdictional
- Sub-Issues:
  - Dealing with disputes not contemplated by the submission to arbitration
  - Decisions on matters beyond the scope of the submission to arbitration
Interpretation of Contractual Obligations
- Outcome: The court disagreed with the tribunal's interpretation of the APA regarding the obligation to deliver clean title and the responsibility for tax payments.
- Category: Substantive
- Sub-Issues:
  - Obligation to deliver clean title
  - Responsibility for tax payments

8. Remedies Sought

Setting aside of arbitration award
Damages

9. Cause of Actions

Breach of Contract
Failure to deliver clean title
Failure to settle property claims

10. Practice Areas

Commercial Litigation
Arbitration

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd	Singapore Court of Appeal	Yes	[2007] 3 SLR(R) 86	Singapore	Cited for the principles on setting aside an award based on denial of natural justice.
L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appeal	Singapore Court of Appeal	Yes	[2013] 1 SLR 125	Singapore	Cited for the principles on setting aside an award based on denial of natural justice.
CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK	Singapore Court of Appeal	Yes	[2011] 4 SLR 305	Singapore	Cited for the legal principles on setting aside an award on the ground of excess of jurisdiction under Art 34(2)(a)(iii) of the Model Law.
PT Prima International Development v Kempinski Hotels SA and other appeals	Singapore Court of Appeal	Yes	[2012] 4 SLR 98	Singapore	Cited for the importance of pleadings and the memorandum of issues play in delineating the issues which are before an arbitral tribunal.
Al-Medenni v Mars UK Limited	England and Wales Court of Appeal (Civil Division)	Yes	[2005] EWCA Civ 1041	England and Wales	Cited for the principle that parties should clearly identify the issues that arise in the litigation, so that each has the opportunity of responding to the points made by the other.
TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd	Singapore Court of Appeal	Yes	[2013] 4 SLR 972	Singapore	Cited for the principle that in some arbitrations, the memorandum of issues includes a catch-all provision which gives the arbitral tribunal some latitude to add issues which are not expressly listed.
Super Continental Pte Ltd v Essential Engineering & Construction Pte Ltd	Singapore High Court	Yes	[2010] SGHC 365	Singapore	Cited for the distinction between a claim for actual loss of profits and a claim for the loss of a chance to earn profits.
Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd	Singapore High Court	Yes	[2010] SGHC 80	Singapore	Cited for the principle that the arbitrator mistakenly thought that one party had abandoned one part of its claim because of a concession which did not in fact take place.
Insigma Technology Co Ltd v Alstom Technology Ltd	Singapore Court of Appeal	Yes	[2009] 1 SLR(R) 23	Singapore	Cited for the principle that the arbitral tribunal’s decision as to its own jurisdiction can be challenged afresh by the court in exercise of its original jurisdiction.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act	Singapore
UNCITRAL Model Law on International Commercial Arbitration 1985	N/A

15. Key Terms and Keywords

15.1 Key Terms

Asset Purchase Agreement
Tax Amnesty Agreement
Clean Title
Liquidation
Arbitration
Natural Justice
Jurisdictional Excess
Lost Land Claims
Secured Creditors
Liquidator
Notes
Omnibus Agreement
Plant Assets
Retained Assets

15.2 Keywords

arbitration
contract
natural justice
jurisdiction
Singapore
SIAC
Asset Purchase Agreement
Tax Amnesty Agreement

17. Areas of Law

Area Name	Relevance Score
Arbitration	90
International Commercial Arbitration	90
Contract Law	70
Commercial Law	60
Breach of Contract	60
Litigation	50
Damages	50
Company Law	30

16. Subjects

Arbitration
Contract Law
Civil Procedure
International Arbitration
Setting Aside Arbitration Award