CDX v CDZ: Setting Aside Arbitral Award for Fraudulent Misrepresentation

CDX and CDY, the plaintiffs, applied to the High Court of Singapore to set aside an arbitral award in favor of CDZ and CEA, the defendants, concerning fraudulent misrepresentations inducing investment in a company. Vinodh Coomaraswamy J dismissed the application, finding no excess of jurisdiction or breach of natural justice. The arbitrator had awarded substantial damages to the defendants, which the plaintiffs contested. The plaintiffs have appealed against this decision.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Application dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Plaintiffs' application to set aside an arbitral award for fraudulent misrepresentation is dismissed. The court found no breach of natural justice or jurisdictional excess.

1.7 Decision Date

1 December 2020

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
CDX	Plaintiff	Individual	Application dismissed	Lost	Daniel Tay of Chan Neo LLP Philip Jeyaretnam of Dentons Rodyk & Davidson LLP Ashwin Nair of Dentons Rodyk & Davidson LLP
CDY	Plaintiff	Corporation	Application dismissed	Lost	Daniel Tay of Chan Neo LLP Philip Jeyaretnam of Dentons Rodyk & Davidson LLP Ashwin Nair of Dentons Rodyk & Davidson LLP
CDZ	Defendant	Corporation	Judgment for Defendant	Won	Foo Soon Yien of BR Law Corporation Andre Francis Maniam of WongPartnership LLP Wang Chen Yan of WongPartnership LLP Jennifer Ang of BR Law Corporation
CEA	Defendant	Corporation	Judgment for Defendant	Won	Foo Soon Yien of BR Law Corporation Andre Francis Maniam of WongPartnership LLP Wang Chen Yan of WongPartnership LLP Jennifer Ang of BR Law Corporation

3. Judges

Judge Name	Title	Delivered Judgment
Vinodh Coomaraswamy	Judge	Yes

4. Counsels

Counsel Name	Organization
Daniel Tay	Chan Neo LLP
Philip Jeyaretnam	Dentons Rodyk & Davidson LLP
Ashwin Nair	Dentons Rodyk & Davidson LLP
Foo Soon Yien	BR Law Corporation
Andre Francis Maniam	WongPartnership LLP
Wang Chen Yan	WongPartnership LLP
Jennifer Ang	BR Law Corporation

4. Facts

Plaintiffs allegedly made fraudulent misrepresentations to induce defendants to invest in a company.
Defendants invested US$1,999,238 and S$1,179,085 in the Company.
The Restated Shareholders’ Agreement contains a tiered dispute-resolution clause culminating in arbitration.
Defendants declared an event of default under the Restated Shareholders’ Agreement.
Defendants appointed a receiver over the assets charged to them by the Company.
Arbitrator found the plaintiffs liable for fraudulent misrepresentation and awarded damages.
The arbitrator found that the defendants were fully aware in November 2016 of the plaintiffs’ fraud but chose to rely on and invoke their rights as a secured creditor under the RSA to appoint a receiver instead of rescinding the RSA.

5. Formal Citations

CDX and another v CDZ and another, Originating Summons No 1081 of 2019, [2020] SGHC 257

6. Timeline

Date	Event
2014-12-01	Investment Agreement signed
2015-01-01	Shareholders’ Agreement signed
2016-01-01	Restated Investment Agreement signed
2016-01-01	Restated Shareholders’ Agreement signed
2016-07-01	Event of default declared under the Restated Shareholders’ Agreement
2016-10-01	Defendants discovered the plaintiffs’ fraud
2016-11-01	Receiver appointed over Company assets
2017-03-01	Notice of arbitration issued
2017-06-01	Tribunal constituted
2018-05-01	Evidential hearing postponed
2018-07-01	Evidential hearing held
2019-05-01	Final award issued
2019-08-22	[CDX]’s 1st affidavit dated
2019-10-30	[CDX]’s 2nd affidavit dated
2020-03-13	Oral arguments heard
2020-12-02	Decision issued

7. Legal Issues

Breach of Natural Justice
- Outcome: The court found no breach of natural justice.
- Category: Procedural
- Sub-Issues:
  - Failure to provide a fair opportunity to present a case on damages
  - Failure to provide a fair opportunity to present evidence
Excess of Jurisdiction
- Outcome: The court did not analyze this ground, as the plaintiffs preserved it only for appeal.
- Category: Jurisdictional
Fraudulent Misrepresentation
- Outcome: The arbitrator found that the plaintiffs made multiple serious fraudulent misrepresentations to the defendants.
- Category: Substantive

8. Remedies Sought

Setting aside arbitral award
Rescission of contracts
Monetary damages

9. Cause of Actions

Fraudulent Misrepresentation
Breach of Contract

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Building and Construction

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd	Court of Appeal	Yes	[2019] 2 SLR 131	Singapore	Cited regarding the state of authorities relevant to the excess of jurisdiction ground for setting aside an award.
Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd	N/A	Yes	[2007] 3 SLR(R) 86	Singapore	Cited for principles of natural justice, including the right to a disinterested tribunal and the right to be heard.
China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another	N/A	Yes	[2020] 1 SLR 695	Singapore	Cited for principles of natural justice, including the right to be heard and the limitations of that right.
JVL Agro Industries Ltd v Agritrade International Pte Ltd	N/A	Yes	[2016] 4 SLR 468	Singapore	Cited for the right to reasonable and fair notice of the case to be met.
Koh Bros Building and Civil Engineering Contractor Pte Ltd v Scotts Development (Saraca) Pte Ltd	N/A	Yes	[2002] 2 SLR(R) 1063	Singapore	Cited for the right to reasonable and fair notice of issues adopted by the tribunal.
Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd	High Court	Yes	[2010] SGHC 80	Singapore	Cited for the right to have the tribunal make some attempt bona fide to understand, engage with and apply its mind to its case on those issues
TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd	High Court	Yes	[2013] SGHC 186	Singapore	Cited for the right to have the tribunal make some attempt bona fide to understand, engage with and apply its mind to its case on those issues
ABB AG v Hochtief Airport GmbH	N/A	Yes	[2006] 2 Lloyd’s Rep 1	N/A	Cited for the principle that it is not a breach of natural justice for a tribunal to fail to refer every issue which it incorporates as a link in its chain of reasoning to the parties for submission
PT Prima International Development v Kempinski Hotels SA and other appeals	N/A	Yes	[2012] 4 SLR 98	Singapore	Cited for the principle that it is not a breach of natural justice for a tribunal to adopt an issue as a link in its chain of reasoning even if the parties did not plead or include that issue in a formal list of issues, provided that the issue surfaced in the course of the arbitration and was known to all the parties
Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd	N/A	Yes	[2015] 1 SLR 114	Singapore	Cited for the principle that it is not a breach of natural justice if a party was deprived of a reasonable opportunity to present its case by its own conduct and not by any conduct of the tribunal
BLC v BLB	N/A	Yes	[2014] 4 SLR 79	Singapore	Cited for the principle that it is not a breach of natural justice for a tribunal simply to make an error in its award
Hedley Byrne & Co Ltd v Heller & Partners Ltd	House of Lords	Yes	[1964] AC 465	England and Wales	Cited in relation to the common law tort of negligent misrepresentation.
RBC Properties Pte Ltd v Defu Furniture Pte Ltd	N/A	Yes	[2015] 1 SLR 997	Singapore	Cited in relation to Section 2(2) of the Misrepresentation Act.
Salt v Stratstone Specialist Ltd	England and Wales Court of Appeal	Yes	[2015] EWCA Civ 745	England and Wales	Cited in relation to Section 2(2) of the Misrepresentation Act.
Fiona Trust & Holding Corporation v Privalov	N/A	Yes	[2007] 2 All ER (Comm) 1053	N/A	Cited in relation to the scope of arbitration agreements.
British and Commonwealth Holdings v Quadrex	N/A	Yes	[1995] CLC 1169	N/A	Cited in relation to rescission being the normal remedy for all varieties of misrepresentation.
Smith New Court Securities Ltd v Citibank NA	House of Lords	Yes	[1997] 1 AC 254	England and Wales	Cited in relation to a misrepresentee seeking damages against a misrepresentor without rescission.

13. Applicable Rules

Rule Name
SIAC Rules 2016, Art 33.1
UNCITRAL Model Law on International Commercial Arbitration, Art 16(2)
SIAC Rules 2016, Rule 18.3

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act	Singapore
Misrepresentation Act (Cap 390, 1994 Rev Ed)	Singapore
Civil Law Act (Cap 43, 1999 Rev Ed)	Singapore
Supreme Court of Judicature Act (Cap 322, 2013 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Arbitral award
Fraudulent misrepresentation
Excess of jurisdiction
Breach of natural justice
Rescission
Damages
Investment Agreement
Shareholders’ Agreement
Restated Investment Agreement
Restated Shareholders’ Agreement
Singapore International Arbitration Centre
Affirmation

15.2 Keywords

Arbitration
Fraudulent Misrepresentation
Setting Aside Award
Singapore
Investment

17. Areas of Law

Area Name	Relevance Score
Fraud and Deceit	90
Misrepresentation	85
Arbitration	75
Damages Assessment	70
Natural justice	65
Contract Law	60
Breach of Contract	60
Jurisdiction	50
Civil Procedure	40
Summary Judgement	30
Corporate Law	25
Company Law	25

16. Subjects

Arbitration
Contract Law
Fraud
Investment Law