Marty Ltd v Hualon Corp: Arbitration Agreement, Repudiation & Waiver

In Marty Ltd v Hualon Corporation (Malaysia) Sdn Bhd, the Singapore Court of Appeal addressed whether Hualon Corporation waived its right to arbitrate or repudiated the arbitration agreement by commencing court proceedings in the British Virgin Islands. The court found that Hualon Corporation had repudiated the arbitration agreement, and Marty Ltd had accepted this repudiation by filing a summary judgment application in the BVI action. The appeal was allowed.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal case regarding waiver and repudiation of an arbitration agreement when court proceedings are commenced. Appeal allowed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Marty LimitedAppellantCorporationAppeal AllowedWonPhilip Jeyaretnam, Paras Manohar Lalwani, Chua Weilin, Tan Ting Wei
Hualon Corporation (Malaysia) Sdn Bhd (receiver and manager appointed)RespondentCorporationAppeal DismissedLostYogarajah Yoga Sharmini, Subashini d/o Narayanasamy, Kannan s/o Balakrishnan

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Judith PrakashJustice of the Court of AppealYes
Tay Yong KwangJudge of AppealNo

4. Counsels

Counsel NameOrganization
Philip JeyaretnamDentons Rodyk & Davidson LLP
Paras Manohar LalwaniDentons Rodyk & Davidson LLP
Chua WeilinDentons Rodyk & Davidson LLP
Tan Ting WeiDentons Rodyk & Davidson LLP
Yogarajah Yoga SharminiHaridass Ho & Partners
Subashini d/o NarayanasamyHaridass Ho & Partners
Kannan s/o BalakrishnanHaridass Ho & Partners

4. Facts

  1. Hualon Corporation (Malaysia) Sdn Bhd and Marty Limited were parties to an ongoing arbitration.
  2. Marty Limited challenged the jurisdiction of the arbitrator.
  3. The challenge was based on Hualon Corporation's actions in a foreign court.
  4. Marty Limited argued Hualon Corporation waived its right to arbitrate or repudiated the arbitration agreement.
  5. Hualon Corporation commenced proceedings in the BVI courts against Marty Ltd and the Oung brothers.
  6. The BVI action alleged breach of statutory and fiduciary duties and dishonest assistance.
  7. Marty Ltd filed a jurisdictional challenge in the BVI court on the ground of forum non conveniens.
  8. Hualon Corporation filed a Notice of Arbitration with the SIAC.
  9. Hualon Corporation challenged the validity of the Revised Charter as a whole, but accepted the existence and validity of the arbitration clause.

5. Formal Citations

  1. Marty Ltd v Hualon Corp (Malaysia) Sdn Bhd, Civil Appeal No 175 of 2017, [2018] SGCA 63

6. Timeline

DateEvent
Hualon Corporation (Malaysia) Sdn Bhd incorporated.
Respondent incorporated Hualon Corporation Vietnam as its wholly-owned subsidiary.
Company charter issued for Vietnam Subsidiary.
Vietnam Subsidiary issued shares to Hualon Chemical and E-Hsin.
Marty Ltd incorporated in the BVI.
Mr Duar Tuan Kiat appointed as receiver and manager of the respondent.
Hualon Chemical subscribed for further shares in the Vietnam Subsidiary and E-Hsin transferred its shares in the Vietnam Subsidiary to the appellant.
Vietnam Subsidiary was re-registered and the Revised Charter was updated.
Hualon Chemical transferred all of its shares in the Vietnam Subsidiary to the appellant and Cubic Holdings Limited.
Receiver commissioned Indochine Counsel to undertake due diligence on the Vietnam Subsidiary.
Indochine Counsel sent its Due Diligence Report to the Receiver.
Receiver commenced proceedings in the BVI courts on behalf of the respondent against the appellant and the Oung brothers.
Appellant received the cause papers.
Appellant filed its Acknowledgment of Service.
Appellant filed a challenge against the BVI court’s jurisdiction.
Appellant amended its jurisdictional challenge.
Respondent applied for leave to discontinue the BVI Action against the Oung brothers.
Leave granted to discontinue BVI Action against Oung brothers; jurisdictional challenge heard.
BVI court dismissed the appellant’s jurisdictional challenge.
Appellant filed a fresh application to discharge the Interim Injunction.
Respondent filed its Notice of Arbitration with the SIAC.
Arbitration deemed to have commenced.
Respondent wrote to the appellant proposing that the BVI proceedings be stayed.
Appellant applied to the BVI court for summary judgment.
Respondent asked to inspect certain documents.
Appellant refused the respondent’s request.
Respondent applied to the BVI court to stay the BVI Action in favor of arbitration.
Application heard by the BVI court; judgment reserved.
Tribunal constituted with a sole arbitrator.
Parties tendered submissions on jurisdiction to the tribunal.
Parties tendered submissions on jurisdiction to the tribunal.
Respondent applied to the BVI court to extend the Interim Injunction.
BVI court heard the appellant’s application to discharge the Interim Injunction and the respondent’s application to extend the Interim Injunction.
Appellant applied to the BVI court for security for costs.
BVI court granted the appellant’s application and discharged the Interim Injunction.
Respondent appealed against this order.
Appellant filed a cross-appeal.
BVI court granted the appellant’s application and ordered the respondent to pay security for costs.
BVI Action was struck out.
Tribunal held that it had jurisdiction over the dispute.
Appellant challenged that decision in the High Court by filing Originating Summons No 501 of 2016.
High Court hearings.
High Court hearings.
Judgment reserved.
Judgment delivered.

7. Legal Issues

  1. Repudiation of Arbitration Agreement
    • Outcome: The court found that the respondent had repudiated the arbitration agreement.
    • Category: Substantive
    • Sub-Issues:
      • Repudiatory intent
      • Acceptance of repudiation
    • Related Cases:
      • [2015] EWHC 998 (Comm)
      • [2002] 2 All ER (Comm) 545
  2. Waiver of Right to Arbitrate
    • Outcome: The court found that the respondent had waived its right to arbitrate.
    • Category: Substantive

8. Remedies Sought

  1. Re-transfer of shareholding
  2. Damages

9. Cause of Actions

  • Breach of Contract
  • Breach of Fiduciary Duty

10. Practice Areas

  • Arbitration
  • Commercial Litigation

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
BMO v BMPHigh CourtYes[2017] SGHC 127SingaporeCited for the Judge's decision on the challenge to the tribunal's jurisdiction.
Sadruddin Hashwani v Nurdin JivrajHigh CourtYes[2015] EWHC 998 (Comm)England and WalesCited for the principle that reliance on one method of dispute resolution signifies an intention not to rely on another.
BEA Hotels NV v Bellway LLCHigh CourtYes[2007] EWHC 1363 (Comm)England and WalesCited for the principle that commencement of court proceedings is not a repudiation of an arbitration agreement if the claim is qualified.
National Navigation Co v Endesa Generacion SAHigh CourtYes[2009] EWHC 196 (Comm)England and WalesCited as an authority that states the commencement of court proceedings per se is insufficient to amount to the repudiation of an arbitration agreement.
Rederi Kommanditselskaabet Merc-Scandia IV v Couniniotis SA (The “Mercanaut”)Court of first instanceYes[1980] 2 Lloyd's Rep 183England and WalesCited for the principle that a party does not repudiate a contract unless he evinces an intention not to be bound.
Al Thani v Steven Steel Company Incorporated and AnotherQueen’s Bench Division, Commercial CourtYes(28 June 1996) (Queen’s Bench Division, Commercial Court, UK)United KingdomCited for the principle that there was no repudiation since the defendant had a good reason for starting court proceedings, had communicated this reason to the claimant, and in any event had expressly reserved its position.
AAY and others v AAZHigh CourtYes[2011] 1 SLR 1093SingaporeCited for approving Al Thani and the passage cited from Chitty as representing the correct legal position.
Lloyd and Others v WrightQueen's BenchYes[1983] 1 QB 1065England and WalesCited as an example of a case in which the proposition that the commencement of court proceedings per se is not repudiatory has been applied.
World Pride Shipping Ltd v Daiichi Chuo Kisen Kaisha (The “Golden Anne”)Court of first instanceYes[1984] 2 Lloyd’s Rep 489England and WalesCited as an example of a case in which the proposition that the commencement of court proceedings per se is not repudiatory has been applied.
Dubai Islamic Bank PJSC v PSI Energy Holding Company BSCHigh CourtYes[2011] EWHC 1019 (Comm)England and WalesCited for the principle that there was no repudiatory breach of the exclusive jurisdiction agreement because the claimant had restricted the claim in Bahrain to the profit sum due to it and had not claimed the principal sum and had expressly referred in its claim to the right to bring separate proceedings in respect of the debt due.
Costain Limited v Tarmac Holdings LimitedHigh CourtYes[2017] EWHC 319 (TCC)England and WalesCited as an example of a case in which the proposition that the commencement of court proceedings per se is not repudiatory has been applied.
Comandate Marine Corp v Pan Australia Shipping Pty LtdFederal Court of AppealYes[2006] FCAFC 192AustraliaCited as an example of a case in which the proposition that the commencement of court proceedings per se is not repudiatory has been applied.
Downing v Al Tameer Establishment and anotherCourt of AppealYes[2002] 2 All ER (Comm) 545England and WalesCited for the principle that where a party to the arbitration agreement disavows the entire contract that contains the arbitration clause, it can be inferred that the intention was also to disavow the arbitration agreement specifically.
Carona Holdings Pte Ltd and others v Go Go Delicacy Pte LtdCourt of AppealYes[2008] 4 SLR(R) 460SingaporeCited for the interpretation of the phrase “any other step in the proceedings” contained in the legislation.
Rappo, Tania v Accent Delight International Ltd and another and another appealCourt of AppealYes[2017] 2 SLR 265SingaporeCited for the principle that the written undertakings provided by each of the appellants would have provided the Swiss courts with a firm footing on which to assume jurisdiction.

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

  • Arbitration agreement
  • Repudiation
  • Waiver
  • Forum non conveniens
  • Revised Charter
  • BVI Action
  • Interim Injunction
  • SIAC Arbitration
  • Share Transfers

15.2 Keywords

  • Arbitration
  • Repudiation
  • Waiver
  • Contract Law
  • Singapore
  • Court of Appeal

16. Subjects

  • Arbitration
  • Contract Law
  • Civil Procedure

17. Areas of Law

  • Arbitration Law
  • Contract Law