CKG v. CKH: Setting Aside Arbitral Award for Failure to Consider Principal Debt
In CKG v. CKH, the Singapore International Commercial Court addressed an application by CKG to set aside parts of a Final Arbitral Award. CKG argued that the arbitral tribunal failed to consider a principal debt owed by CKH, which would have altered the final outcome. The court denied the application regarding the freight interest issue but allowed the application regarding the principal debt issue, suspending the setting aside proceedings to allow the tribunal to address the matter. The court found that the tribunal's failure to consider the principal debt constituted a breach of natural justice.
1. Case Overview
1.1 Court
SINGAPORE INTERNATIONAL COMMERCIA COURT of the republic of singapore1.2 Outcome
Application in relation to the Freight Interest Issue denied. Application in relation to the Principal Debt Issue succeeds to the extent that all the Dispositive Section of the Award, as well as those parts specifically affected by the failure to determine the Principal Debt Issue and interest thereon should be set aside, if the Tribunal is unable to eliminate the grounds for setting them aside.
1.3 Case Type
Arbitration
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court partially set aside an arbitral award due to the tribunal's failure to consider a principal debt owed by CKH to CKG.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| CKH | Defendant, Claimant | Other | Application in relation to the Freight Interest Issue denied. | Lost | |
| CKG | Plaintiff, Respondent | Other | Application in relation to the Principal Debt Issue succeeds to the extent that all the Dispositive Section of the Award, as well as those parts specifically affected by the failure to determine the Principal Debt Issue and interest thereon should be set aside, if the Tribunal is unable to eliminate the grounds for setting them aside. | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Jeremy Lionel Cooke | International Judge | Yes |
4. Counsels
4. Facts
- The plaintiff sought to set aside parts of an arbitral award.
- The arbitral tribunal found the plaintiff liable to the defendant for US$8,512,789.88 and IDR15,126,969,785.
- The plaintiff argued the tribunal failed to consider a debt owed by the defendant related to freight and taxes for logs.
- The plaintiff claimed the failure to consider the debt impacted interest and costs figures.
- The defendant contended the debt issue was only raised as a defense to a claim for breach of log supply obligations.
- The tribunal determined the plaintiff's obligations to supply logs remained unaltered until 15 November 2011.
- The tribunal found the plaintiff breached the agreement by terminating log supply after 15 November 2011, without attempting an amicable settlement.
5. Formal Citations
- CKG v CKH, Originating Summons 3 of 2021, [2021] SGHC(I) 5
6. Timeline
| Date | Event |
|---|---|
| Parties concluded a Master Agreement. | |
| Parties signed and agreed to Meeting Minutes. | |
| Plaintiff reserved right to exercise a contractual set-off. | |
| Final Arbitral Award was dated. | |
| First Memoranda of Corrections to the Final Award was dated. | |
| Second Memoranda of Corrections to the Final Award was dated. | |
| Plaintiff sought the setting aside of paragraphs of a Final Arbitral Award by an Originating Summons. | |
| Judgment reserved. | |
| Judgment issued. |
7. Legal Issues
- Setting Aside Arbitral Award
- Outcome: The court partially granted the application to set aside the award, finding that the tribunal failed to consider the Principal Debt Issue, which constituted a breach of natural justice.
- Category: Procedural
- Sub-Issues:
- Failure to consider material issue
- Breach of natural justice
- Breach of Natural Justice
- Outcome: The court found that the tribunal's failure to consider the Principal Debt Issue constituted a breach of the rules of natural justice, prejudicing the plaintiff's rights.
- Category: Procedural
- Sub-Issues:
- Failure to consider material issue
- Prejudice to party's rights
- Failure to Exercise Authority
- Outcome: The court found that the tribunal's failure to consider the Principal Debt Issue constituted a failure to exercise the authority granted to it by the parties.
- Category: Procedural
- Sub-Issues:
- Failure to decide matters submitted
- Award dealing with matters beyond scope of submission
8. Remedies Sought
- Setting Aside of Arbitral Award
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Arbitration
- Commercial Litigation
11. Industries
- Timber
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd | Singapore Court of Appeal | Yes | [2013] 4 SLR 972 | Singapore | Cited for the principle that the court adopts a policy of minimal curial intervention and a pro-arbitration approach. |
| Soh Beng Tee & Co Ltd v Fairmount Development Pte Ltd | Singapore Court of Appeal | Yes | [2007] 3 SLR(R) 86 | Singapore | Cited for the principles to be applied in an application challenging an award on the ground of a breach of natural justice and the need for actual or real prejudice. |
| John Holland Pty Ltd v Toyo Engineering Corp | Singapore High Court | Yes | [2001] 1 SLR(R) 443 | Singapore | Affirmed in Soh Beng Tee for the four questions that arise when challenging an award based on a breach of natural justice. |
| AKN v ALC | Singapore Court of Appeal | Yes | [2015] 3 SLR 488 | Singapore | Cited for the principle that failing to consider an important pleaded issue is a breach of natural justice. |
| CRW Joint Operation v PT Perusahan Gas Negara (Persero) TBK | Singapore Court of Appeal | Yes | [2011] 4 SLR 305 | Singapore | Cited for the principle that a failure by a tribunal to decide matters submitted to it is a failure to exercise authority and can be a breach of Article 34(2)(a)(iii) of the Model Law. |
| BLC and others v BLB and another | Singapore Court of Appeal | Yes | [2014] 4 SLR 79 | Singapore | Cited for the principle that the court considers pleadings, lists of issues, and submissions to determine what was truly in issue. |
| Secretary of State for the Home Department v Raytheon Systems Ltd | English Court | No | [2015] 159 Con LR 168 | England | Cited regarding whether a tribunal can rid itself of previously expressed views in coming to a conclusion on the quantum of the Principal Debt. |
13. Applicable Rules
| Rule Name |
|---|
| Arbitration Rules of the Singapore International Arbitration Centre(5th ed, 2013) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act (Cap 143A, 2002 Rev Ed) | Singapore |
| UNCITRAL Model Law on International Arbitration | N/A |
15. Key Terms and Keywords
15.1 Key Terms
- Arbitral Award
- Setting Aside
- Principal Debt
- Debt-to-Log Conversion
- UNCITRAL Model Law
- Natural Justice
- Freight Interest Issue
- Originating Summons
- Dispositive Section
- SIAC Rules
15.2 Keywords
- arbitration
- setting aside
- principal debt
- singapore
- international commercial court
17. Areas of Law
16. Subjects
- Arbitration
- International Commercial Law
- Civil Procedure