BVU v BVX: Setting Aside Arbitral Award for Alleged Fraud and Public Policy Violation
In BVU v BVX, the High Court of Singapore addressed an application by BVU to set aside an international arbitral award in favor of BVX, a state-owned South Korean company. The arbitration concerned a breach of contract claim related to a food supply agreement. BVU alleged that BVX committed fraud and violated public policy by not calling certain witnesses and disclosing internal documents during the arbitration. Ang Cheng Hock JC dismissed BVU's application, finding no deliberate concealment or causative link between the non-disclosure and the arbitral decision. The court also allowed BVX's application to set aside a subpoena for documents, deeming it irrelevant and an abuse of process.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Originating Summons No 249 of 2016 (the Supplier’s application to set aside the Award) dismissed. SUM 1731 (the Purchaser’s application to set aside the Supplier’s subpoena) allowed.
1.3 Case Type
Arbitration
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court dismisses BVU's application to set aside an arbitral award against it, finding no fraud or public policy violation by BVX.
1.7 Decision Date
2. Parties and Outcomes
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Ang Cheng Hock | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- In January 2011, the South Korean government initiated a project to secure long-term stable food supplies.
- BVX, a state-owned company, was appointed to spearhead the Project.
- BVX and BVU entered into an agreement on 14 June 2012 for BVU to supply food products.
- The agreement stipulated that BVU would be BVX’s “most preferred Supplier”.
- BVX was to use its “best commercially reasonable effort to order and purchase” a minimum of 1,000,000 tons annually.
- BVX did not submit a rolling forecast and entered into a Memorandum of Understanding with one of BVU’s competitors.
- BVU commenced ICC Arbitration No 19630/CYK against BVX claiming US$2.25m in damages for breach of the Agreement.
5. Formal Citations
- BVU v BVX, Originating Summons No 249 of 2016(Summons No 1731 of 2018), [2019] SGHC 69
6. Timeline
| Date | Event |
|---|---|
| South Korean government embarked on a project to secure long-term stable lines of food supply. | |
| BVX and BVU formally entered into an agreement. | |
| Agreement commenced. | |
| BVX confirmed entering into a Memorandum of Understanding with one of BVU’s competitors. | |
| BVX forecasted a purchase of 170,000 tons of the Products. | |
| BVX sent a letter inviting BVU to take part in the public tender. | |
| BVU commenced ICC Arbitration No 19630/CYK against BVX. | |
| BVU requested the Tribunal to order BVX to confirm that three witnesses will appear at the hearing. | |
| BVX submitted that the application was improper and made at the eleventh hour. | |
| The Tribunal communicated to the parties its decision not to order BVX to call the three employees as witnesses. | |
| Hearings took place in Singapore. | |
| The Award was issued. | |
| BVU instructed its Korean solicitors to reach out to the three employees whom BVX had declined to call as witnesses. | |
| BVU applied by originating summons to set aside the Award. | |
| BVU procured an issuance of a subpoena to [E] to attend court to produce four categories of documents. | |
| BVX filed SUM 1731 to set aside this subpoena. | |
| Hearing of SUM 1731 adjourned to be heard together with the application to set aside the Award. | |
| Parties appeared to make arguments on the originating summons and SUM 1731. | |
| Judgment reserved. |
7. Legal Issues
- Setting Aside Arbitral Award
- Outcome: The court held that there was no deliberate concealment of evidence to deceive the Tribunal, and that the Purchaser’s conduct was not fraudulent. The court also found that the non-disclosure of evidence would not have impacted the outcome of the arbitration.
- Category: Substantive
- Sub-Issues:
- Fraud
- Public Policy Violation
- Non-disclosure of evidence
- Failure to call witnesses
- Interpretation of Contract
- Outcome: The court found that the parties agreed that the starting point for interpretation is the wording of the contract, and that the proper analysis to adopt is that of a 'reasonable person in the same circumstances of either of the parties'.
- Category: Substantive
- Sub-Issues:
- Best commercially reasonable effort
- Public tender requirement
- Objective interpretation
- Subjective intent
- Setting Aside Subpoena
- Outcome: The court found that the subpoenaed documents would not be relevant or necessary for the disposal of the originating summons for the setting aside of the arbitral award, and that the subpoena application was an abuse of process.
- Category: Procedural
- Sub-Issues:
- Relevance of documents
- Abuse of process
- Collateral purpose
8. Remedies Sought
- Setting aside of arbitral award
- Monetary Damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Arbitration
- Commercial Litigation
11. Industries
- Food Supply
- Government
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Swiss Singapore Overseas Enterprises Pte Ltd v Exim Rajathi India Pvt Ltd | High Court | Yes | [2010] 1 SLR 573 | Singapore | Cited for the principle that the 'public policy' ground for setting aside an award encompasses corruption, bribery, or fraud. |
| PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA | High Court | Yes | [2007] 1 SLR(R) 597 | Singapore | Cited for the principle that upholding an award conflicts with public policy only if it would 'shock the conscience' or violate the forum's most basic notion of morality and justice. |
| Elektrim SA v Vivendi Universal SA | Unknown | Yes | [2007] 1 Lloyd’s Rep 693 | England | Cited for the approach under s 24(a) of the IAA and Art 34(2)(b)(ii) of the Model Law in respect of the withholding or non-disclosure of evidence are by and large similar. |
| Dongwoo Mann+Hummel Co Ltd v Mann+Hummel GmbH | High Court | Yes | [2008] 3 SLR(R) 871 | Singapore | Cited for the principle that a 'high standard of proof' applies where the upholding of an award is said to contravene public policy because it was secured by fraudulent or unconscionable means. |
| Celtic BioEnergy Ltd v Knowles Ltd | Unknown | Yes | [2017] 1 Lloyd’s Rep 495 | England | Cited for the principle that when it relates to the failure to call a witness or disclose documents, it must be shown that what is involved is dishonesty, and not the more likely explanation of human error. |
| Chantiers de L’Atlantique SA v Gaztransport & Technigaz SAS | Unknown | Yes | [2011] EWHC 3383 (Comm) | England | Cited for the principle that when it relates to the failure to call a witness or disclose documents, it must be shown that what is involved is dishonesty, and not the more likely explanation of human error. |
| Profilati v PaineWebber | Unknown | Yes | [2001] 1 Lloyd’s Rep 715 | England | Cited for the principle that where an important document is deliberately withheld and as a result, the party withholding the document has obtained an award in its favour, the Court may consider that the award was procured in a manner contrary to public policy. |
| Double K Oil Products 1996 Ltd v Neste Oil OYJ | Unknown | Yes | [2010] 1 Lloyd’s Rep 141 | England | Cited for the principle that it would not be sufficient to show a lack of proper disclosure, if it was an innocent failure to do so, or that one party had inadvertently misled the other, however carelessly. |
| The Lao People’s Democratic Republic v Sanum Investments Ltd & Anor | Court of Appeal | Yes | [2013] 4 SLR 947 | Singapore | Cited for the principle that what is sought in a subpoena for the production of documents must be 'relevant, material and necessary for the fair disposal of the matter'. |
| ALC v ALF | High Court | Yes | [2010] SGHC 231 | Singapore | Cited for the principle that the threshold for setting aside a subpoena will be crossed when the documents sought are clearly irrelevant, or when the subpoena application is an abuse of process or where it has been issued for a collateral purpose. |
| Westacre Investments Inc v Jugoimport-SDPR Holding Co Ltd | Unknown | Yes | [1999] 2 Lloyd’s Rep 65 | England | Cited for the principle that when new evidence is being introduced to demonstrate fraud at the setting aside stage, the applicant would have to demonstrate why, at the time of the arbitration, the new evidence was not available or could not have been obtained with reasonable diligence. |
13. Applicable Rules
| Rule Name |
|---|
| IBA Rules on the Taking of Evidence in International Arbitration |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act | Singapore |
| UNCITRAL Model Law on International Commercial Arbitration | Singapore |
| Vienna Convention on Contracts for the International Sale of Goods | International |
| State Act on Contracts to which the State is a Party | Korea |
15. Key Terms and Keywords
15.1 Key Terms
- Arbitral Award
- Setting Aside
- Fraud
- Public Policy
- Best Commercially Reasonable Effort
- Most Preferred Supplier
- Public Tender
- International Arbitration Act
- UNCITRAL Model Law
- CISG
- Contract Regulations
- State Contracts Act
15.2 Keywords
- Arbitration
- Setting Aside
- Fraud
- Public Policy
- Contract
- Singapore
- International Trade
17. Areas of Law
16. Subjects
- Arbitration
- Contract Law
- International Trade
- Civil Procedure