DBO v DBP: Appeal Dismissed in Loan Repayment Dispute Arising from COVID-19 Pandemic

In DBO and others v DBP and others, the Singapore Court of Appeal dismissed an appeal against a decision of the Singapore International Commercial Court (SICC) regarding a partial arbitration award. The Appellants, including DBO, DBQ, DBS, and DBU, sought to set aside the award, which dismissed their claim that a Facility Agreement was discharged by frustration due to the COVID-19 pandemic's impact on a project financed by the loan. The Respondents, including DBP, DBR, DBT, and DBV, counterclaimed for the validity and enforceability of the agreement and for payment of the total amount due. The Court of Appeal upheld the SICC's decision, finding that the Appellants' arguments, including the existence of a collateral contract, did not justify setting aside the arbitration award.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal dismisses appeal to set aside arbitration award regarding loan repayment obligations impacted by the COVID-19 pandemic.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
DBOAppellantCorporationAppeal DismissedLost
DBQAppellantCorporationAppeal DismissedLost
DBSAppellantCorporationAppeal DismissedLost
DBUAppellantCorporationAppeal DismissedLost
DBPRespondentCorporationAppeal DismissedWon
DBRRespondentCorporationAppeal DismissedWon
DBTRespondentCorporationAppeal DismissedWon
DBVRespondentCorporationAppeal DismissedWon
DBWRespondentCorporationNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Steven ChongJustice of the Court of AppealNo
David NeubergerInternational JudgeYes

4. Counsels

Counsel NameOrganization
Zhulkarnain bin Abdul RahimDentons Rodyk & Davidson LLP
Reuben Gavin PeterDentons Rodyk & Davidson LLP
Hannah ChuaDentons Rodyk & Davidson LLP
Ong Tun Wei DannySetia Law LLC
Jelita PandjaitanLinklaters Singapore Pte Ltd
Junjie HuangLinklaters Singapore Pte Ltd
Bethel Chan RuiyiSetia Law LLC
Tan MazieSetia Law LLC
Zhuo JiaxiangProvidence Law Asia LLC

4. Facts

  1. A Facility Agreement was made on 26 February 2020, for a US$200m loan.
  2. The Loan was granted by the Lenders to the Borrowers.
  3. The Loan was taken for the purposes of carrying out the development of a project.
  4. The COVID-19 pandemic and government orders adversely affected sales of units in the Project.
  5. The Appellants claimed they were unable to repay the Loan when it matured in March 2021.
  6. The Agreement contained a clause that provided for disputes to be resolved by arbitration.
  7. The Appellants contended that the Agreement had been discharged by frustration.

5. Formal Citations

  1. DBO and othersvDBP and others, Civil Appeal No 9 of 2023, [2024] SGCA(I) 4
  2. DBO and others v DBP and others, , [2023] SGHC(I) 21

6. Timeline

DateEvent
Facility Agreement made
Loan matured
Notice of Arbitration issued
Respondents responded to Notice of Arbitration
Guarantors joined as parties to Arbitration
Tribunal constituted
Appellants filed statement of claim
Respondents filed defence and counterclaim
Respondents applied for early dismissal under Rule 29.1 of the SIAC Rules
Oral submissions on the Application for Early Dismissal heard
Partial Arbitration Award issued
Appellants applied to set aside the Award
SICC dismissed SIC/OA 6/2023
Chua Lee Ming J issued grounds of decision
Appeal dismissed
Grounds of decision delivered

7. Legal Issues

  1. Frustration of Contract
    • Outcome: The court held that the COVID-19 pandemic and related government orders did not frustrate the Facility Agreement.
    • Category: Substantive
    • Sub-Issues:
      • Impact of COVID-19 pandemic on contractual obligations
      • Impossibility of performance due to government orders
  2. Early Dismissal of Claim
    • Outcome: The court upheld the Tribunal's decision to grant early dismissal of the Appellants' claim.
    • Category: Procedural
    • Sub-Issues:
      • Application of Rule 29.1 of the SIAC Rules
      • Manifest lack of legal merit
  3. Collateral Contract
    • Outcome: The court found that the alleged collateral contract did not limit the Respondents' right to seek repayment of the loan from other sources.
    • Category: Substantive
    • Sub-Issues:
      • Oral agreement on source of funds for repayment
      • Effect on unconditional payment obligations

8. Remedies Sought

  1. Setting aside of Partial Arbitration Award
  2. Declaration that the Agreement was valid and enforceable
  3. Order for payment of the total amount due and payable under the Agreement

9. Cause of Actions

  • Breach of Contract
  • Frustration of Contract

10. Practice Areas

  • Commercial Litigation
  • Arbitration

11. Industries

  • Construction
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
No cited cases

13. Applicable Rules

Rule Name
Rule 29.1 of the Rules of the Singapore International Arbitration Centre
Singapore International Commercial Court Rules 2021

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration Act 1994Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Facility Agreement
  • Loan
  • Termination Date
  • Interest Period
  • COVID-19 pandemic
  • Frustrating Event
  • Collateral Contract
  • Early Dismissal
  • SIAC Rules

15.2 Keywords

  • arbitration
  • contract
  • loan
  • COVID-19
  • frustration
  • Singapore
  • appeal
  • dismissed

17. Areas of Law

Area NameRelevance Score
Arbitration90
Setting aside80
Recourse against award80
Frustration70
Breach of Contract60
Contractual terms50
International Commercial Arbitration40
Commercial Disputes40
Natural justice30
Contractual discretions30
Waiver of objections20
Illegality and public policy20
Costs20
Estoppel20
Moratorium10

16. Subjects

  • Construction Dispute
  • Arbitration
  • Contract Law
  • Loan Agreements