CBX v CBZ: Setting Aside Arbitration Awards & Costs | International Arbitration Act
In CBX and another v CBZ and others, the Singapore Court of Appeal heard two related appeals concerning a judgment by the Singapore International Commercial Court regarding the validity of two arbitration awards and an order for costs. The disputes arose from two sale and purchase agreements (SPA I and SPA II) for interests in a company owning windfarm projects in Thailand. The Buyers, CBX and CBY, sought to set aside parts of the Phase II Partial Awards and the Final Award (Costs). The Court of Appeal allowed the appeal, setting aside the Phase II Partial Awards in so far as they ordered payment of the Remaining Amounts and setting aside the Costs Award.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Phase II Partial Awards set aside in so far as they order payment of the Remaining Amounts. Costs Award set aside. Appeal allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal addresses setting aside arbitration awards and costs under the International Arbitration Act in a dispute over SPA payments.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| CBX | Appellant, Plaintiff | Corporation | Appeal allowed in part | Partial | |
| CBY | Appellant, Plaintiff | Corporation | Appeal allowed in part | Partial | |
| CBZ | Respondent, Defendant | Corporation | Appeal dismissed in part | Partial | |
| CCA | Respondent, Defendant | Corporation | Appeal dismissed in part | Partial | |
| CCB | Respondent, Defendant | Corporation | Appeal dismissed in part | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Justice of the Court of Appeal | No |
| Quentin Loh | Judge of the Appellate Division | No |
| Jonathan Mance | International Judge | Yes |
4. Counsels
4. Facts
- The disputes arose from two sale and purchase agreements (SPA I and SPA II) dated 19 June 2015.
- The SPAs were for the sale and purchase of interests in company AAA, which owned 59.46% of company BBB.
- The SPAs made provision for ICC arbitration seated in Singapore in the event of any dispute.
- Disputes arose in June 2016, leading to two arbitrations heard together by the same arbitral tribunal.
- The Buyers’ applications to the Judge were to set aside parts of the Phase II Partial Awards dated 5 June 2019 and the Final Award (Costs).
- The Remaining Amounts had originally been claimed in the arbitrations on the basis that their due dates had been accelerated by reason of the Buyers’ defaults or conduct.
- The Tribunal awarded Compound Interest on those amounts under the terms of Clause 12.9 of the SPAs.
- The parties had agreed that compounding was unlawful and unenforceable under Thai law.
5. Formal Citations
- CBX and another v CBZ and others, Civil Appeal No 136 of 2020, [2021] SGCA(I) 3
- CBX and another v CBZ and others, , [2020] SGHC(I) 17
6. Timeline
| Date | Event |
|---|---|
| SPA I and SPA II signed | |
| Closing of SPA I | |
| Closing of SPA II | |
| Disputes arose, leading to two arbitrations | |
| Thai Supreme Administrative Court held windfarm usage fell outside relevant land’s agricultural zoning | |
| Phase I Hearing | |
| Thai National Council for Peace and Order issued Order No 31/2560 | |
| Phase I Partial Awards issued | |
| Ministerial regulations issued | |
| Tribunal ordered US$85.75m be paid into an escrow account in respect of the non-payment of the first instalment under SPA I | |
| Buyers applied for new leases | |
| ICC Secretariat acknowledged receipt of US$85.75m | |
| Buyers filed their Defence and Counterclaim | |
| Sellers applied for an order for security for the global purchase price and damages | |
| Tribunal dismissed Sellers' application for security | |
| Sellers filed Reply | |
| Buyers filed Rejoinder and Reply | |
| Written Opening Statements exchanged | |
| Phase II hearing began | |
| Phase II hearing ended | |
| Buyers commenced the separate ALRO arbitration against the Sellers | |
| Buyers’ request for arbitration received by the Sellers | |
| Parties exchanged the first round of PHBs | |
| Parties exchanged the second round of PHBs | |
| Projects T1 reached their CODs | |
| Projects NKS reached their CODs | |
| Buyers informed the Tribunal of the notices and the reason for their rejection by emails | |
| Projects T4 reached their CODs | |
| Buyers informed the Tribunal of the notices and the reason for their rejection by emails | |
| Phase II Partial Awards dated | |
| Tribunal rejected the application on the basis that, although due to a regrettable oversight, its decision did not involve an error of the nature covered by Article 35(2) | |
| Final Award (Costs) dated | |
| Judgment of the Singapore International Commercial Court dated | |
| CA/CA 136/2020 filed | |
| Hearing date | |
| Judgment reserved |
7. Legal Issues
- Excess of Jurisdiction
- Outcome: The Court held that the Tribunal dealt with disputes not properly brought within the terms of, and beyond the scope of, the relevant submissions by the parties to arbitration.
- Category: Jurisdictional
- Sub-Issues:
- Tribunal dealt with disputes not properly brought within the terms of, and beyond the scope of, the relevant submissions by the parties to arbitration
- Breach of Natural Justice
- Outcome: The Court held that the making of the Partial Awards by the Tribunal involved breaches of the rules of natural justice by which the Buyers’ rights were prejudiced.
- Category: Procedural
- Sub-Issues:
- Denial of opportunity to be heard
- Failure to consider relevant evidence
- Setting Aside Arbitration Award
- Outcome: The Court set aside the Phase II Partial Awards in so far as they ordered payment of the Remaining Amounts.
- Category: Procedural
- Costs Award
- Outcome: The Court set aside the Costs Award.
- Category: Procedural
- Compound Interest
- Outcome: The Court held that the awards of Compound Interest would have had to be set aside in any event on that ground.
- Category: Substantive
8. Remedies Sought
- Setting aside of arbitration awards
- Setting aside of costs award
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Arbitration
- Commercial Litigation
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA | High Court | Yes | [2007] 1 SLR(R) 597 | Singapore | Cited to explain the two-stage process involved in Article 34(2)(a)(iii) of the Model Law. |
| AKN and another v ALC and others and other appeals | Court of Appeal | Yes | [2015] 3 SLR 488 | Singapore | Cited for the principle that the issue of jurisdiction is for the Court to decide de novo. |
| Dallah Real Estate and Tourism Holding Co v The Ministry of Religious Affairs, Government of Pakistan | United Kingdom Supreme Court | Yes | [2011] 1 AC 763 | United Kingdom | Cited for the principle that the issue of jurisdiction is for the Court to decide de novo. |
| CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK | Court of Appeal | Yes | [2011] 4 SLR 305 | Singapore | Cited for the principle that annulment will be virtually automatic once an order is shown to have been made in excess of an arbitrator’s jurisdiction. |
| GD Midea Air Conditioning Equipment Co Ltd v Tornado Consumer Goods Ltd and another matter | High Court | Yes | [2018] 4 SLR 271 | Singapore | Cited for the principle that there is no further logical or legal requirement, on an application to set the order aside, to show prejudice (beyond the fact of the order itself). |
| Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd | High Court | Yes | [2007] 3 SLR(R) 86 | Singapore | Cited for the policy of “minimal curial intervention” which is commonly accepted in international practice and underlies the Model Law. |
| PT Prima International Development v Kempinski Hotels SA and other appeals | Court of Appeal | Yes | [2012] 4 SLR 98 | Singapore | Discusses the introduction of new facts or changes of an “ancillary” nature. |
| Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd | High Court | Yes | [2010] SGHC 80 | Singapore | Dealt with costs of the Arbitration be set aside as a whole |
| City of Vancouver and Walsh | British Columbia Supreme Court | Yes | [1961] BCJ No 110 | Canada | Addressed the consequences of setting aside the whole of an award. |
| Martin and others v Harris | High Court of Justice | Yes | [2019] EWHC 2735 (Ch) | England and Wales | Addressed the position regarding any arbitral costs order following setting aside of the substantive award |
| Davis v Witney Urban Council | English Court of Appeal | Yes | (1899) 63 JP 279 | England and Wales | Held that, when a substantive award is set aside for want of jurisdiction, the costs awarded go with it. |
| PT Prima International Development v Kempinski Hotels SA | High Court | Yes | [2011] 4 SLR 633 | Singapore | The arbitrator, during the course of these exchanges, kept the parties very closely informed about his thinking in relation to this issue, and invited their reactions and expert evidence. |
13. Applicable Rules
| Rule Name |
|---|
| ICC Rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act (Cap 143A) | Singapore |
| UNCITRAL Model Law on International Commercial Arbitration | Singapore |
| Rules of Court (Cap 322, R5, 2014 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Sale and Purchase Agreement
- SPA
- International Arbitration Act
- ICC Arbitration
- Partial Award
- Remaining Amounts
- Commercial Operation Date
- COD
- Agricultural Land Reform Office
- ALRO
- Terms of Reference
- ToRs
- Compound Interest
15.2 Keywords
- arbitration
- contract
- international arbitration
- setting aside
- costs
- Singapore
17. Areas of Law
16. Subjects
- Arbitration
- Contract Law
- Civil Procedure