(2023) SGHC 86
(2023) SGHC 86
(2023) SGHC 86
[2023] SGHC 86
Between
CZD
… Claimant
And
CZE
… Defendant
GROUNDS OF DECISION
INTRODUCTION............................................................................................1
RA 23 .................................................................................................................5
CONCLUSION...............................................................................................21
CZD
v
CZE
[2023] SGHC 86
5 April 2023
Introduction
Background facts
5 In December 2017, the defendant, TargetCo, company [X], and six other
companies entered into an investment agreement (the “Investment
Agreement”), under which [X] was to provide loans to TargetCo. Under the
Investment Agreement, [X] was entitled to convert the loans to TargetCo shares.
The claimant was not a party to the Investment Agreement.
repay the loans made by the claimant under the Loan Agreement. In 2021, the
arbitration tribunal (the “Tribunal”) issued the Award in favour of the claimant.
9 The defendant brought several legal challenges against the Award in the
PRC.
12 On 14 December 2022, the defendant filed SUM 4435 to set aside the
Enforcement Order. In his affidavit filed in support of his application, the
defendant argued that the Enforcement Order should be set aside on the
following grounds:
(b) The Award dealt with a difference not contemplated by, or not
falling within the terms of, the submission to arbitration or
contained a decision on the matter beyond the scope of the
submission to arbitration (s 31(2)(d) IAA).
(c) The claimant breached its duty of full and frank disclosure.
application to set aside or challenge the Award had been fully dealt with by the
courts of the PRC (including by way of an application to the People’s
Procuratorate, and a potential protest to the Beijing High People’s Court).
14 After both parties had filed their respective affidavits in SUM 4435, the
defendant sought permission to file a further affidavit. The Assistant Registrar
dismissed the application on 31 January 2023. On 1 February 2023, the
defendant lodged an appeal (RA 23) against the Assistant Registrar’s decision.
RA 23
(b) The PRC courts had concluded that the matters decided by the
Tribunal were well within the scope of the arbitration clause. The ruling
by the Fourth Intermediate Court was valid and binding and the
defendant had no right to apply to the Beijing High People’s Court for a
retrial.
The other affidavit was by the claimant’s Executive Partner who also challenged
the defendant’s statements regarding the context and purposes of the agreements
that had been entered into and referred to the same report mentioned in (d)
above.
16 The defendant argued that the claimant’s expert’s opinion raised the
following new issues on PRC law:
(b) whether the Tribunal acted within its jurisdiction in rendering the
Award;
the Award being set aside/revoked, and the basis and the chances
of success of such an application; and
18 Order 3 r 5(6) of the Rules of Court (2021 Rev Ed) (“ROC 2021”)
provides that “[e]xcept in a special case”, the court will not allow an applicant
to file further affidavits after the other party has filed its reply affidavit.
19 Order 3 r 5(6) ROC 2021 is a new rule which has no equivalent in the
previous Rules of Court (2014 Rev Ed). I agreed with the Assistant Registrar
that the intent is clear: there is to be only one round of affidavits from each
party, except in a “special case”. The term “special case” should be interpreted
with the Ideals set out in O 3 r 1 in mind. The present case involved the
enforcement of an arbitral award; an important Ideal was that of achieving
expeditious proceedings.
21 The fact that new issues are raised in affidavits filed to contest an
application may constitute a special case for the purposes of O3 r 5(6) if these
issues could not reasonably have been within the applicant’s contemplation
when he filed his affidavit in support of his application. It is incumbent on the
applicant to ensure that his affidavits filed in support of his application deal with
all matters that are relevant to his application. An applicant cannot adopt a wait-
and-see approach.
22 In the present case, issue (a) (ie, whether the freezing order meant that
the Award had been satisfied) and issue (d) (ie, the effect and chances of success
of the defendant’s intended application to the People’s Procuratorate) were
clearly not new issues. In fact, they dealt with two of the very grounds that the
defendant relied on in his application in SUM 4435 (see [12(a)] and [13] above).
I rejected the defendant’s submission that he was not obliged to raise these
issues of PRC law in his affidavit filed in support of his application. The purpose
of the defendant’s affidavit was to support his application. Obviously, he had to
adduce the relevant expert opinion on PRC law to make good the grounds that
he relied on. The defendant had included an expert opinion from a PRC lawyer
in his affidavit. For reasons best known to the defendant, he did not obtain an
opinion dealing with issues (a) and (d). The defendant must accept the
consequences of his decision not to do so.
noted that the defendant had himself adduced expert evidence in his earlier
affidavit without the court’s approval. It did not lie in his mouth to raise this
objection to the claimant’s expert report. In any event, in my view, this did not
constitute a special case for the purposes of O 3 r 5(6). Practitioners should
however take note of O 12 r 2(1). Where applications relating to arbitration
awards involve questions of foreign law, approval to file expert evidence is
likely to be given. In such cases, approval may be obtained retrospectively if it
is not practicable to obtain approval before filing the expert evidence.
SUM 4435
27 The claimant had referred the dispute to arbitration based on Art 4.2 of
the Loan Agreement, which provided that “[a]ny dispute arising from the
interpretation or performance of this Agreement shall … be settled through
arbitration in Beijing in accordance with the rules of Beijing Arbitration
Commission”. The thrust of the defendant’s argument was that the Tribunal
acted in excess of jurisdiction because the Tribunal found the defendant liable
for a total of RMB 140m not for a breach of the Loan Agreement, but under the
Cooperation Agreement, Investment Agreement and Memorandum.
(a) the Tribunal did not exceed its jurisdiction because it found the
defendant liable under the Loan Agreement; and
Whether the Tribunal found the defendant liable under the Loan Agreement
29 The defendant argued that the Tribunal did not find the defendant liable
under the Loan Agreement and had instead impermissibly found the defendant
liable on an analysis of the Cooperation Agreement, the Investment Agreement
and the Memorandum. It is true that in the Award, the Tribunal dealt quite
extensively with the Cooperation Agreement, the Investment Agreement and
the Memorandum. However, that did not mean that the Tribunal did not find the
defendant liable under the Loan Agreement. As the defendant conceded during
10
oral submissions, there was nothing in the Award that expressly stated that the
defendant’s liability to pay the claimant was founded on the Cooperation
Agreement and/or Investment Agreement. The Award must be read in context.
It was necessary for the Tribunal to deal with the Cooperation Agreement, the
Investment Agreement and the Memorandum because the claimant’s case was
that the payments that were made under the Cooperation Agreement and
Investment Agreement were disbursements of the loan given by the claimant
under the Loan Agreement.
31 In my view, the Tribunal did not exceed its jurisdiction. Reading the
Award in its totality, I was of the view that the Award meant that the defendant
was liable on the Loan Agreement.
32 Having decided that the Tribunal did not exceed its jurisdiction, it was
unnecessary for me to decide whether issue estoppel applied in this case. The
question whether the principles of transnational issue estoppel apply to the “re-
litigation of identical issues in different fora in the context of arbitration” is “less
than clear”: BAZ v BBA and others and other matters [2020] 5 SLR 266 (“BAZ”)
at [33]. In BAZ, the High Court held that jurisdictional challenges to the powers
of the tribunal attracted a de novo review from the seat court and issue estoppel
arising from the determination of a foreign enforcement court “should not
11
feature” although the decision of the foreign enforcement court may have
persuasive effect (at [51]–[52]).
33 The present case concerned the reverse scenario, the question being
whether issue estoppel arising from decisions of a foreign seat court applies in
proceedings before an enforcement court. The claimant relied on the following:
(b) Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd and
another [2006] 3 SLR(R) 174 (“Aloe Vera"), in which the High Court
held that except to the extent permitted by s 31(2) of the IAA, the court
could not look into the merits of the award and allow the award debtor
to “relitigate issues that he could have brought up either before the
Arbitrator or the supervisory court” (at [56]).
12
that the losing party in an arbitration could either apply to the seat court
to set aside the award or wait until enforcement was sought and then
oppose the enforcement; the two options were alternatives, not
cumulative (at [26]–[28]).
(d) Darius Chan, Paul Tan and Nicholas Poon, The Law and Theory
of International Commercial Arbitration in Singapore (Academy
Publishing, 2022) (“International Commercial Arbitration”), in which
the authors expressed the view that when resisting enforcement
proceedings, the award debtor will be estopped from contending
anything that is contrary to the decision of the seat court (at para 9.68).
34 In BAZ (at [41]), the High Court expressed doubt over the decision in
Newspeed given the ruling of the Court of Appeal in PT First Media (at [75])
that the Model Law provides for a system of “double-control”. At any rate,
Newspeed did not deal with issue estoppel. As the court observed in BAZ (at
[41]), the decision in Newspeed was driven by the notion that a party should not
have two bites at the cherry. That said, it has been suggested that Newspeed
could still probably be justified on the ground of issue estoppel (see Sundaresh
Menon et al, Arbitration in Singapore: A Practical Guide (Sweet & Maxwell,
2nd Ed, 2018) at para 14.080).
35 I also noted that in Gujarat NRE Coke Ltd v Coeclerici Asia (Pte) Ltd
[2013] FCAFC 109, the Federal Court of Australia recognised that the question
whether issue estoppel operates during enforcement proceedings is one of
importance and potential difficulty and expressly refrained from deciding the
question, stating instead that it will “generally be inappropriate for this court,
being the enforcement court of a Convention country, to reach a different
13
14
40 During the arbitration, the claimant and [X] rejected the authenticity of
the Letter of Undertaking. [X] issued two Explanatory Statements to clarify that
it had provided funds to the defendant to fulfil the claimant’s loan obligation
under the Loan Agreement. However, subsequently, in separate proceedings
before the Third Intermediate People’s Court of Beijing Municipality, [X]’s
lawyers expressly admitted that [X]’s seal on the Letter of Undertaking was
authentic. This, the defendant argued, meant that the claimant took inconsistent
evidential positions amounting to procedural fraud.
15
42 The claimant also argued that the defendant was estopped from relying
on the ground of procedural fraud because it was argued in the defendant’s
setting aside application in the PRC and rejected by the PRC court. Again, as I
had rejected the defendant’s submission on procedural fraud, it was not
necessary for me to decide whether issue estoppel applied. I noted however that
procedural fraud fell within the public policy ground and as the High Court
stated in BAZ at [50]:
In BAZ, the court was concerned with the public policy ground in setting aside
applications under Art 34(2)(b)(ii) of the Model Law. However, there is no
reason in principle why the position should be any different with respect to the
public policy ground in enforcement proceedings under s 31(4)(b) of the IAA.
Whether the Award should not be enforced because it had been satisfied
43 The defendant argued that the Award had been fully and/or effectively
satisfied, in part because its shares in the Listed Company had been frozen
pursuant to enforcement proceedings by the claimant in the PRC. In the course
of oral submissions, the defendant withdrew his reliance on this ground.
16
45 Further, the fact that an Award has been satisfied is not a recognised
ground of challenge under s 31 of the IAA, which provides an exhaustive list of
grounds for refusal of enforcement: Aloe Vera at [46]; International
Commercial Arbitration at para 9.52.
Whether the Enforcement Order should be set aside because the claimant
failed to provide full and frank disclosure of material facts
48 The claimant submitted that the Pending Application was not material
to its application because:
17
(d) in any event, the Pending Application was not “an application
for the setting aside or for the suspension” of the Award within the scope
of s 31(5) of the IAA; even if it was successful, it would not have
resulted in the Award being set aside or suspended; instead, it would
have led only to the Fourth Intermediate Court re-hearing the application
to set aside the Award.
50 The Pending Application was also relevant to s 31(5) of the IAA, which
states as follows:
18
51 I disagreed with the claimant’s proposition (in [48(c)] above) that s 31(5)
did not apply at the stage of the hearing of the application without notice. The
language in s 31(5) of the IAA is broad enough for it to apply at the stage when
the court is considering an application without notice for permission to enforce
an award. It is also logical that the decision to adjourn the proceedings (if
warranted) should be made before permission to enforce the award is granted.
After all, if the award should be set aside, there would be no award to enforce
(see PT First Media at [77]).
53 The claimant relied on CKR and another v CKT and another [2021]
SGHCR 4. In that case, the Assistant Registrar expressed the view (at [30]) that
a pending application to set aside an arbitral award was “not an issue to be
determined at the first ex parte stage in deciding whether leave to enforce an
19
award should be granted”. I noted that the Assistant Registrar was not dealing
with s 31(5) of the IAA and AUF did not appear to have been brought to her
attention. In any event, in my view, s 31(5) of the IAA is also relevant at the
stage of the hearing without notice. Therefore, facts that are material to a
consideration of s 31(5) of the IAA are also material to an application without
notice for permission to enforce an award.
56 However, despite a finding that the applicant has failed to make full and
frank disclosure, the court still retains an overriding discretion not to set aside
the court order granted without notice: The “Vasiliy Golovnin” at [108].
Whether the court would exercise such discretion “depends on factors such as
the particular relief sought, how serious the material non-disclosure is or how
important the undisclosed facts are, and the overall merits of the plaintiff’s
case”: Bahtera Offshore (M) Sdn Bhd v Sim Kok Beng [2009] 4 SLR 365 at [26].
57 In AUF, the applications to set aside the award and for leave to appeal
failed. Consequently, the High Court concluded that the failure to disclose these
20
applications was “technical and inconsequential” and declined to set aside the
enforcement order (at [166]).
58 Even if the court sets aside the order granted without notice, it retains a
discretion to re-grant the court order if it is just to do so: Unión Fenosa Gas SA
v Arab Republic of Egypt [2020] EWHC 1723 (Comm) at [110]. In Lin Chien
Hsiung v Lin Hsiu-Fen [2022] HKCFI 1270, the High Court of Hong Kong
discharged an ex parte order for the enforcement of an arbitral award on the
ground of failure to make full and frank disclosure of a pending setting aside
application, which was similarly dismissed before the High Court delivered its
decision. The High Court went on to re-grant the enforcement order because
there were no grounds to refuse enforcement in Hong Kong (at [53]). The High
Court of Hong Kong was of the view that the discretion to re-grant the order
was “indisputable” (at [24]).
59 In the present case, by the time I heard SUM 4435, the Fourth Branch,
People’s Procuratorate had rejected the defendant’s application for civil
supervision. In the circumstances, the claimant’s failure to disclose the Pending
Application was rendered inconsequential. There was no reason why the Award
should not be enforced. I was also of the view that there was no necessity to set
aside the Enforcement Order and re-grant the order. It was sufficient to penalise
the claimant for its breach of its duty of full and frank disclosure by denying it
costs in SUM 4435 despite SUM 4435 being dismissed. Accordingly, I
dismissed SUM 4435 and ordered each party to bear its own costs.
Conclusion
21
(b) I dismissed SUM 4435 and ordered each party to pay its own
costs.
22