BTN v BTP: Setting Aside Arbitration Award for Earn Out Consideration Dispute
In BTN and BTO v BTP and BTQ, the Singapore High Court dismissed applications to set aside arbitration awards related to a dispute over earn out consideration payments under a share purchase agreement. The plaintiffs, BTN and BTO, sought to set aside the Second Partial Award, Final Award, and Additional Award, arguing that the arbitral tribunal failed to address key issues and breached natural justice. The court, presided over by S Mohan J, found no grounds to set aside the awards, affirming the arbitral tribunal's decisions and dismissing the originating summons and related summons.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Originating Summons Nos 1401 of 2019 and 874 of 2020 dismissed. Summons Nos 471 of 2021 and 472 of 2021 dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court judgment on setting aside an arbitration award concerning earn out consideration. The court dismissed the setting aside applications.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| BTN | Plaintiff | Corporation | Application Dismissed | Lost | |
| BTO | Plaintiff | Corporation | Application Dismissed | Lost | |
| BTP | Defendant | Individual | Judgment for Defendant | Won | |
| BTQ | Defendant | Individual | Judgment for Defendant | Won | |
| CKR | Plaintiff | Corporation | Application Dismissed | Lost | |
| CKS | Plaintiff | Corporation | Application Dismissed | Lost | |
| CKT | Defendant | Individual | Judgment for Defendant | Won | |
| CKU | Defendant | Individual | Judgment for Defendant | Won | |
| CKV | Plaintiff | Corporation | Application Dismissed | Lost | |
| CKW | Plaintiff | Corporation | Application Dismissed | Lost | |
| CKX | Defendant | Individual | Judgment for Defendant | Won | |
| CKY | Defendant | Individual | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| S Mohan | Judge of the High Court | Yes |
4. Counsels
4. Facts
- BTN acquired 100% ownership and control of the Group from the defendants.
- The consideration included a Guaranteed Minimum Consideration and Earn Outs.
- The Earn Outs depended on the financial performance of the Group in 2013, 2014, and 2015.
- The defendants were employed by BTO, governed by Promoter Employment Agreements.
- BTO issued termination letters to the defendants, dismissing them from their posts.
- The defendants took action against BTO by invoking remedies under Malaysian law.
- The MIC found that the defendants’ dismissals had been “without just cause or excuse”.
5. Formal Citations
- BTN and another v BTP and another and other matters, Originating Summons Nos 1401 of 2019, 874 of 2020, 1274 of 2020 (Summons No 471 of 2021) and 1275 of 2020 (Summons No 472 of 2021), [2021] SGHC 271
- BTN and another v BTP and another, , [2020] 5 SLR 1250
- BTN and another v BTP and another, , [2021] 1 SLR 276
- CKR and another v CKT and another, , [2021] SGHCR 4
6. Timeline
| Date | Event |
|---|---|
| Share and purchase agreement entered into by BTN and the defendants. | |
| BTO issued termination letters to the defendants. | |
| Defendants made representations to the Director General of Industrial Relations, Malaysia. | |
| MIC issued awards against BTO in favour of the defendants. | |
| MIC issued awards against BTO in favour of the defendants. | |
| Defendants commenced non-compliance proceedings under the IRA against BTO. | |
| MIC ordered BTO to pay the defendants the sums ordered under the MIC Awards within 30 days. | |
| BTO informed the MIC that BTO had complied with the MIC Awards and effected full payment as required. | |
| Defendants' solicitors wrote to the plaintiffs demanding payment of sums alleged by the defendants to be due to them as Earn Outs. | |
| Defendants commenced arbitration proceedings against the plaintiffs under the SPA. | |
| Tribunal issued a partial award on certain legal issues. | |
| Plaintiffs filed HC/OS 683/2018, seeking to set aside the First Partial Award. | |
| Belinda Ang Saw Ean J dismissed the plaintiffs’ application entirely in BTN and another v BTP and another [2020] 5 SLR 1250. | |
| Tribunal released a second partial award. | |
| Tribunal released a final award. | |
| Tribunal released an additional award. | |
| Court of Appeal affirmed the Judgment and dismissed the appeal in BTN and another v BTP and another [2021] 1 SLR 276. | |
| Defendants applied ex parte in HC/OS 1274/2020 and HC/OS 1275/2020 for leave to enforce the Second Partial Award, and the Final Award and Additional Award. | |
| Leave was granted by Assistant Registrar Eunice Chan Swee En. | |
| Plaintiffs filed HC/SUM 471/2021 and HC/SUM 472/2021 to set aside the Leave Orders. | |
| Assistant Registrar Eunice Chan Swee En delivered written grounds of decision in CKR and another v CKT and another [2021] SGHCR 4. | |
| Hearing date. | |
| Hearing date. | |
| Judgment reserved. |
7. Legal Issues
- Setting Aside Arbitration Award
- Outcome: The court dismissed the applications to set aside the arbitration awards.
- Category: Procedural
- Sub-Issues:
- Infra petita
- Breach of natural justice
- Contrary to public policy
- Issue Estoppel
- Outcome: The court upheld the Tribunal's decision to apply issue estoppel, precluding the plaintiffs from relitigating issues already decided by the Malaysian Industrial Court.
- Category: Substantive
- Sub-Issues:
- Identity of subject matter
- Special circumstances
- Conditions Precedent
- Outcome: The court found that the Tribunal erred in dismissing the Confidentiality Pleading Issue but that this did not result in any actual or real prejudice to the plaintiffs.
- Category: Substantive
- Sub-Issues:
- Compliance with confidentiality obligations
- Satisfaction of earn out conditions
8. Remedies Sought
- Setting aside of arbitration awards
- Declaration that the Tribunal has jurisdiction to determine whether the defendants committed misconduct
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Arbitration
11. Industries
- Online Travel Agency
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| AKN and another v ALC and others and other appeals | Court of Appeal | Yes | [2015] 3 SLR 488 | Singapore | Cited for the principle that parties who choose arbitration must accept the consequences of their choices and that courts should not interfere in the merits of an arbitral award. |
| BTN and another v BTP and another | High Court | No | [2020] 5 SLR 1250 | Singapore | Cited as the judgment of the High Court which dismissed the plaintiffs’ application to set aside the First Partial Award. |
| BTN and another v BTP and another | Court of Appeal | Yes | [2021] 1 SLR 276 | Singapore | Cited as the Court of Appeal's judgment affirming the High Court's decision and dismissing the appeal against the First Partial Award. |
| CKR and another v CKT and another | High Court | No | [2021] SGHCR 4 | Singapore | Cited for the written grounds of decision for granting leave to enforce the Second Partial Award, Final Award, and Additional Award. |
| AQZ v ARA | High Court | Yes | [2015] 2 SLR 972 | Singapore | Cited for the principle that section 10(3) of the International Arbitration Act does not apply to an award that deals with the merits of the dispute, however marginally. |
| Kingdom of Lesotho v Swissbourgh Diamond Mines (Pty) Ltd and others | High Court | Yes | [2019] 3 SLR 12 | Singapore | Cited for endorsing the principles in AQZ regarding the inapplicability of section 10(3) of the International Arbitration Act to awards dealing with the merits of a dispute. |
| BZV v BZW and another | High Court | No | [2021] SGHC 60 | Singapore | Cited for the holding that an application to set aside an award is made when an originating summons alone is filed, not when both an originating summons and an affidavit are filed. |
| PT Prima International Development v Kempinski Hotels SA and other appeals | Court of Appeal | Yes | [2012] 4 SLR 98 | Singapore | Cited for the role of pleadings in defining the jurisdiction of the tribunal by setting out the precise nature and scope of the disputes. |
| CDM and another v CDP | Court of Appeal | Yes | [2021] SGCA 45 | Singapore | Cited for the sources a court may have regard to in order to determine what matters were within the scope of submission to the arbitral tribunal. |
| CAJ and another v CAI and another appeal | Court of Appeal | Yes | [2021] SGCA 102 | Singapore | Cited for the principle that the five sources for determining the ambit of the tribunal's jurisdiction are not discrete or independent, and it remains important whether the relevant issue had been adequately pleaded. |
| Prometheus Marine Pte Ltd v King, Ann Rita and another appeal | Court of Appeal | Yes | [2018] 1 SLR 1 | Singapore | Cited for the principle that a practical view has to be taken regarding the substance of the dispute which has been referred to arbitration. |
| JVL Agro Industries Ltd v Agritrade International Pte Ltd | High Court | Yes | [2016] 4 SLR 768 | Singapore | Cited for the principle that an issue raised in a party’s pleadings remains in play throughout the arbitration unless it is expressly withdrawn. |
| CRW Joint Operation v PT Perushaan Gas Negara (Persero) TBK | Court of Appeal | Yes | [2011] 4 SLR 305 | Singapore | Cited for the legal principles underlying the application of Article 34(2)(a)(iii) of the Model Law and the crucial question of whether there has been real or actual prejudice. |
| L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appeal | Court of Appeal | Yes | [2013] 1 SLR 125 | Singapore | Cited for the explanation of what constitutes real or actual prejudice and the inquiry into whether the breach of natural justice was merely technical and inconsequential. |
| BRS v BRQ and another and another appeal | Court of Appeal | Yes | [2021] 1 SLR 390 | Singapore | Cited for the application of the test of real or actual prejudice in the context of an application to set aside an award based on a complaint of breach of natural justice. |
| Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd | Court of Appeal | Yes | [2007] 3 SLR(R) 86 | Singapore | Cited for the requirements to establish a challenge to an arbitration award as having contravened the rules of natural justice. |
| China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another | Court of Appeal | Yes | [2020] 1 SLR 695 | Singapore | Cited for the proper approach a court should take in determining whether a party had been denied his right to a fair hearing by the tribunal’s conduct of the proceedings. |
| Zhang Run Zi v Koh Kim Seng and another | High Court | No | [2015] SGHC 175 | Singapore | Cited for the language used by the High Court in relation to special circumstances. |
| TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd | High Court | Yes | [2013] 4 SLR 972 | Singapore | Cited for the principle that even if some of an arbitral tribunal’s conclusions are bereft of reasons, that is not necessarily fatal. |
| Eagil Trust Co Ltd v Pigott-Brown | Unknown | No | [1985] 3 All ER 119 | England | Cited for the principle that the contents of the arbitral award taken as a whole inform the parties of the bases on which the arbitral tribunal reached its decision on the material or essential issues. |
| Checkpoint Ltd v Strathclyde Pension Fund | England and Wales Court of Appeal (Civil Division) | No | [2003] EWCA Civ 84 | England and Wales | Cited for the principle that there is plainly no requirement for the arbitral tribunal to touch on “each and every point in dispute” in its grounds of decision. |
| PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA | Court of Appeal | No | [2007] 1 SLR(R) 597 | Singapore | Cited for the public policy objection to succeed, the court must be satisfied that upholding the Awards would shock the conscience, be clearly injurious to the public good or violate the forum’s most basic notion of morality and justice. |
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 | N/A |
| Industrial Relations Act 1967 (No 177 of 1967) | Malaysia |
| Rules of Court (2014 Rev Ed) | Singapore |
| Interpretation Act (Cap 1, 2002 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Earn Out Consideration
- Share Purchase Agreement
- Promoter Employment Agreements
- Without Cause Termination
- With Cause Termination
- Malaysian Industrial Court
- Issue Estoppel
- Confidentiality Obligations
- Conditions Precedent
- Infra Petita
- Breach of Natural Justice
- Public Policy
15.2 Keywords
- arbitration
- setting aside
- earn out
- share purchase agreement
- issue estoppel
- natural justice
- confidentiality
- Singapore High Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Arbitration | 95 |
| Recourse against award | 95 |
| Setting aside | 95 |
| Commercial Disputes | 30 |
| Contract Law | 20 |
| Natural justice | 20 |
| Company Law | 20 |
| Estoppel | 20 |
| Shareholders Agreement | 20 |
| Misrepresentation | 10 |
| Evidence | 10 |
| Fraud and Deceit | 10 |
16. Subjects
- Arbitration
- Contract Law
- Civil Procedure
- International Commercial Law