CNA v CNB: Setting Aside Arbitral Award Based on Jurisdictional Challenge and Fiduciary Duty Breach

In CNA v CNB, the Singapore International Commercial Court heard applications to set aside a partial arbitral award. CNA, CND, and CNE sought to set aside the award in favor of CNB and CNC, arguing the arbitral tribunal lacked jurisdiction due to a superseded arbitration clause. The court, comprising Philip Jeyaretnam J, Simon Thorley IJ, and Yuko Miyazaki IJ, dismissed the applications, finding CNA breached its fiduciary duties to CNB, invalidating the extension agreement containing the new arbitration clause. The court held that the original arbitration clause remained operative, and the tribunal had jurisdiction.

1. Case Overview

1.1 Court

Singapore International Commercial Court

1.2 Outcome

Applications to set aside the First Partial Award and Second Partial Award are dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court dismisses applications to set aside an arbitral award, finding CNA breached fiduciary duties, invalidating an extension agreement.

1.7 Decision Date

1 May 2023

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
CNA	Plaintiff	Corporation	Application Dismissed	Lost	Tan Yuan Kheng of Drew & Napier LLC Cavinder Bull SC of Drew & Napier LLC Lea Woon Yee of Drew & Napier LLC Kenneth Sean Teo Hao Jin of Drew & Napier LLC Junwoo Kim of Bae, Kim & Lee LLC Han Gil Lee of Bae, Kim & Lee LLC Tan Jui Yang of Drew & Napier LLC
CNB	Defendant	Corporation	Judgment Upheld	Won	Chan Hock Keng of WongPartnership LLP Chen Chi of WongPartnership LLP Tang Xi-Rui, Charlotte of WongPartnership LLP Prof Kwon Young Joon of Seoul National University Lee Eun Ngyung of KL Partners
CNC	Defendant	Corporation	Judgment Upheld	Won	Chan Hock Keng of WongPartnership LLP Chen Chi of WongPartnership LLP Tang Xi-Rui, Charlotte of WongPartnership LLP Prof Kwon Young Joon of Seoul National University Lee Eun Ngyung of KL Partners
CND	Plaintiff	Corporation	Application Dismissed	Lost	Alston Yeong of Providence Law LLC Zhuo Jiaxiang of Providence Law LLC Toby Landau KC of Duxton Hill Chambers Rachel Low Tze-Lynn of Rachel Low LLC Sunyoung Kim of Lee & Ko Yoo Lim Oh of Lee & Ko Ing Loong Yang of Akin Gump Strauss Hauer & Feld LLP Chi Ho Kwan of Akin Gump Strauss Hauer & Feld LLP
CNE	Plaintiff	Corporation	Application Dismissed	Lost	Alston Yeong of Providence Law LLC Zhuo Jiaxiang of Providence Law LLC Toby Landau KC of Duxton Hill Chambers Rachel Low Tze-Lynn of Rachel Low LLC Sunyoung Kim of Lee & Ko Yoo Lim Oh of Lee & Ko Ing Loong Yang of Akin Gump Strauss Hauer & Feld LLP Chi Ho Kwan of Akin Gump Strauss Hauer & Feld LLP

3. Judges

Judge Name	Title	Delivered Judgment
Philip Jeyaretnam	Judge of the High Court	Yes
Simon Thorley	International Judge	No
Yuko Miyazaki	International Judge	No

4. Counsels

Counsel Name	Organization
Tan Yuan Kheng	Drew & Napier LLC
Cavinder Bull SC	Drew & Napier LLC
Lea Woon Yee	Drew & Napier LLC
Kenneth Sean Teo Hao Jin	Drew & Napier LLC
Junwoo Kim	Bae, Kim & Lee LLC
Han Gil Lee	Bae, Kim & Lee LLC
Tan Jui Yang	Drew & Napier LLC
Chan Hock Keng	WongPartnership LLP
Chen Chi	WongPartnership LLP
Tang Xi-Rui, Charlotte	WongPartnership LLP
Prof Kwon Young Joon	Seoul National University
Lee Eun Ngyung	KL Partners
Alston Yeong	Providence Law LLC
Zhuo Jiaxiang	Providence Law LLC
Toby Landau KC	Duxton Hill Chambers
Rachel Low Tze-Lynn	Rachel Low LLC
Sunyoung Kim	Lee & Ko
Yoo Lim Oh	Lee & Ko
Ing Loong Yang	Akin Gump Strauss Hauer & Feld LLP
Chi Ho Kwan	Akin Gump Strauss Hauer & Feld LLP

4. Facts

CNA and CNB are co-owners of intellectual property rights in the game [X] series.
CNA licensed distribution rights to CNE via a software licensing agreement (SLA).
CNB was later added as a co-licensor under a supplementary agreement.
CNE became the largest shareholder in CNA.
CNA entered into an extension agreement with CNE, changing the arbitration seat and institution.
CNB commenced arbitration against CND and CNE for breaches of the SLA.
The arbitral tribunal rejected the jurisdictional challenge, finding CNA breached fiduciary duty.

5. Formal Citations

CNA v CNB and another and other matters, , [2023] SGHC(I) 6

6. Timeline

Date	Event
1997-01-01	First iteration of the game [X] developed.
1998-11-01	Game [X] launched.
2000-02-18	CNA and CNB entered into the Basic Agreement.
2000-02-23	CNA and CNB entered into the Domestic Agreement.
2000-09-01	Development of the game [X2] completed.
2001-02-26	CNA and CNB entered into the Overseas Agreement.
2001-05-23	CNA and CNB entered into an agreement to clarify Art 9 of the Domestic Agreement.
2001-06-29	CNA entered into the Software Licensing Agreement with the predecessors of CND and CNE.
2001-08-01	CNA and CNB signed an agreement to clarify terms used in the Overseas Agreement.
2001-12-01	Chinese-language version of the game [X2] launched in the PRC.
2002-07-14	CNA, CNB and CNE entered into a Supplementary Agreement to the SLA.
2003-07-04	CNE commenced an arbitration against CNA and CNB.
2003-08-19	CNA and CNE entered into the 2003 Settlement Agreement.
2003-08-29	CNE informed the ICC that it had settled with CNA and was withdrawing the 2003 ICC Arbitration against CNA and CNB.
2003-09-08	CNB filed its Answer with Counterclaim against CNE.
2003-10-20	CNB filed cross-claims against CNA.
2004-04-29	CNA and CNB agreed to settle all pending litigation in the Korean courts by way of the 2004 Settlement Record.
2004-12-31	Overseas Agreement was effective until this date.
2004-12-31	The Overseas Agreement was effective until this date.
2005-09-22	CNA, CNE and an import agent entered into the 2005 Extension Agreement.
2005-10-28	Professor Lawrence G S Boo issued the 2005 Interim Award.
2008-11-26	CNA, CNE and the import agent entered into the 2008 Extension Agreement.
2009-02-04	CNA, CNB and CNE made the 2009 Supplementary Agreement.
2015-03-10	CND entered into two separate mobile games licence agreements with CNB and CNA respectively.
2016-01-06	CND / CNE entered into two separate mobile games licence agreements with CNB and CNA respectively.
2016-08-01	CNA issued an authorisation letter for CND and CNE covering the period of 2015-09-29 to 2017-09-28.
2017-04-01	CNB expressed its unhappiness to CNA through letters detailing CND and CNE’s breaches of the SLA.
2017-05-18	CNB commenced the Present Arbitration against CND and CNE.
2017-05-23	CNC succeeded to all of CNB’s rights and obligations in respect of the game [X2].
2017-05-26	CNC summarised the previous correspondence between parties and detailed the evidence it had of the breaches by CND and/or CNE of the SLA, and sent this to CNA by letter.
2017-05-29	CNC indicated in another letter to CNA that it did not intend to renew or extend the SLA, and urged CNA to do the same.
2017-06-16	CND responded to CNA to deny the allegations.
2017-06-22	CNA informed CNB that it took the view that “[CNE] has stated a sufficiently reasonable opinion with regard to the questions raised by [CNB]”.
2017-06-23	CNA indicated to CNB / CNC that it was negotiating the renewal of the SLA with CND and/or CNE.
2017-06-27	CNB / CNC applied for injunctive relief before the Korean courts to restrain CNA from renewing the SLA.
2017-06-30	The 2017 Extension Agreement was concluded between CNA and CND / CNE.
2017-08-18	CND and CNE filed their Answer, where they relied on the SHIAC Clause in the newly executed 2017 Extension Agreement to challenge the jurisdiction of the Tribunal.
2017-08-22	CND commenced the SHIAC Arbitration against CNA seeking a declaration that the 2017 Extension Agreement was valid and effective.
2017-10-11	CNB alleged that it was unaware of the SHIAC Arbitration until this date.
2017-12-27	The Tribunal in the Present Arbitration was constituted.
2018-01-03	CNB / CNC applied to the Tribunal for interim injunctive relief.
2018-01-23	The tribunal in SHIAC Case No. SX2017053 delivered its award, which confirmed the validity of the 2017 Extension Agreement.
2018-03-26	Interim relief was granted against CND / CNE to prevent enforcement and reliance on the SHIAC award.
2020-06-08	The Tribunal issued the First Partial Award on liability.
2020-12-18	CNA filed HC/OS 1293/2020 (later SIC/OS 2/2022).
2020-12-23	CND and CNE filed HC/OS 1306/2020 (later SIC/OS 3/2022).
2021-07-31	The Tribunal issued the Second Partial Award.
2021-09-30	CNA filed HC/OS 991/2021 (later SIC/OS 5/2022).
2021-09-30	CND and CNE filed HC/OS 985/2021 (later SIC/OS 4/2022).
2022-11-21	Hearing commenced.
2022-11-22	Hearing commenced.
2022-11-23	Hearing commenced.
2023-05-02	Judgment reserved.

7. Legal Issues

Jurisdiction of Arbitral Tribunal
- Outcome: The court held that the arbitral tribunal had jurisdiction because the extension agreement was invalid due to a breach of fiduciary duty.
- Category: Jurisdictional
- Sub-Issues:
  - Separability of arbitration agreement
  - Validity of extension agreement
Breach of Fiduciary Duty
- Outcome: The court found that CNA breached its fiduciary duty to CNB by entering into the extension agreement without proper consultation and in a manner that favored the interests of CND and CNE.
- Category: Substantive
- Sub-Issues:
  - Duty to act in joint interest
  - Duty to consult

8. Remedies Sought

Setting Aside of Arbitral Award

9. Cause of Actions

Breach of Contract
Breach of Fiduciary Duty

10. Practice Areas

Commercial Litigation
Arbitration

11. Industries

Gaming
Software Development

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
AQZ v ARA	High Court	Yes	[2015] 2 SLR 972	Singapore	Cited for the principle that the court will undertake a de novo hearing of the arbitral tribunal’s decision on its jurisdiction in an application to set aside an arbitral award on the ground of lack of jurisdiction to hear the dispute.
AKN and another v ALC and others	High Court	Yes	[2015] 4 SLR 488	Singapore	Cited for the principle that the court will undertake a de novo hearing of the arbitral tribunal’s decision on its jurisdiction in an application to set aside an arbitral award on the ground of lack of jurisdiction to hear the dispute.
PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV and others and another appeal	High Court	No	[2014] 1 SLR 372	Singapore	Cited for the principle that the tribunal’s own view of its jurisdiction has no legal or evidential value before a court that has to determine that question.
BXH v BXI	High Court	Yes	[2020] 3 SLR 1368	Singapore	Cited for the principle that the court may have regard to the reasoning and findings of the tribunal if it considers that they are of assistance, but the court is neither bound nor restricted by these findings.
Fiona Trust & Holding Corporation and others v Privalov and others	House of Lords	No	[2007] 4 All ER 951	England	Cited for the principle that the arbitration agreement must be treated as a “distinct agreement” which is void or voidable only on grounds which relate directly to the arbitration agreement.
Lee Tat Development Pte Ltd v Management Corporation of Strata Title Plan No 301	High Court	Yes	[2005] 3 SLR(R) 157	Singapore	Cited for the requirements of issue estoppel.
CKR Contract Services Pte Ltd v Asplenium Land Pte Ltd and others	High Court	Yes	[2020] 5 SLR 665	Singapore	Cited for the principle that arbitration awards can be final and conclusive determinations for the purposes of invoking res judicata.
Tonny Permana v One Tree Capital Management Pte Ltd and another	High Court	Yes	[2021] 5 SLR 477	Singapore	Cited for the evidential approach of identifying and establishing the existence and terms of any contractual instruments (express or implied) entered into by parties.
Elton John v Richard Leon James	English High Court	Yes	[1991] FSR 397	England	Cited for the principle that a publisher with full control over copyright exploitation owes fiduciary duties to the artist for their joint benefit.
Susilawati v American Express Bank Ltd	Court of Appeal	Yes	[2009] 2 SLR(R) 737	Singapore	Cited with approval Mason J’s identification of the critical feature of fiduciary relationships in his dissent in the High Court of Australia’s decision in Hospital Products Ltd v United States Surgical Corporation and others (1984) 55 ALR 417.
Tan Teck Kee v Ratan Kumar Rai	Court of Appeal	Yes	[2022] 2 SLR 1250	Singapore	Cited for the principle that a director of a company to which he owes fiduciary obligations may not voluntarily undertake a role vis-à-vis a third party giving rise to fiduciary obligations.
Tan Yok Koon v Tan Choo Suan and another and other appeals	Court of Appeal	Yes	[2017] 1 SLR 654	Singapore	Cited for the principle that the agency relationship, being an established fiduciary relationship, gives rise to a presumption of fiduciary duties.
CBX and another v CBZ and others	Court of Appeal	Yes	[2022] 1 SLR 47	Singapore	Cited for the principle that any new claim or cause of action must require clear identification and admission by the arbitration tribunal.

13. Applicable Rules

Rule Name
International Chamber of Commerce Arbitration Rules 2017

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act 1994	Singapore
UNCITRAL Model Law on International Commercial Arbitration	N/A
Copyright Act	Korea
Civil Act	Korea

15. Key Terms and Keywords

15.1 Key Terms

Arbitration
Fiduciary Duty
Jurisdiction
Software Licensing Agreement
Extension Agreement
Partial Award
Entrustment
SHIAC Clause
ICC Clause
De Novo Review

15.2 Keywords

arbitration
fiduciary duty
jurisdiction
software licensing
Singapore
international commercial court

17. Areas of Law

Area Name	Relevance Score
Arbitration	95
Fiduciary Duties	80
Jurisdiction	75
International Arbitration Act	60
Contract Law	50
International Commercial Court Practice	40
Foreign Law	30

16. Subjects

Arbitration
Contract Law
Intellectual Property
Fiduciary Duty