GATE GOURMET KOREA CO., LTD. & 3 Ors v ASIANA AIRLINES, INC

Facts

Asiana Airlines, Inc, part of the Kumho Asiana Group, entered into four Korean-law agreements with the Gate Gourmet group in 2016 and 2017. Under a joint venture agreement with Gate Gourmet Switzerland GMBH (GGS), GGS held 60% of Gate Gourmet Korea Co Ltd (GGK) and Asiana 40%. Under a catering agreement, GGK became Asiana's exclusive caterer for 30 years. A related bonds with warrants agreement involved a Gate Gourmet affiliate investing in zero interest bonds issued by Kumho & Co. The catering and joint venture agreements each provided for ICC arbitration seated in Singapore of disputes arising out of or in connection with them.

A pricing dispute under the catering agreement was arbitrated. The award of 18 February 2021 went in GGK's favour, Asiana's challenge was dismissed in [2022] SGHC(I) 8, and its appeal failed. During the arbitration Asiana did not challenge jurisdiction or the agreement's validity. Meanwhile Asiana's former chairman, Mr Park Sam-Koo, was indicted for embezzlement and breach of trust, the indictment covering the catering deal, and on 17 August 2022 he was convicted and sentenced to 10 years' imprisonment; his appeal was pending. No charges were brought against any Gate Gourmet company or employee.

Asiana then sued in Korea. On 24 January 2022 it sought a declaration from the Incheon District Court that the catering agreement was void under Article 103 of the Korean Civil Code as contrary to good morals and social order. On 13 October 2022 it sued GGS and its current and former chief executives, Mr Christoph Schmitz and Mr Xavier Rossinyol Espel, in the Seoul Southern District Court, alleging they knowingly joined Mr Park's breach of trust and claiming damages measured by 60% of GGK's business profit. The Gate Gourmet parties applied for anti-suit injunctions in Originating Application No 14 of 2023, transferred to the SICC.

Issues

1. Whether the dispute over the catering agreement's validity under Article 103 was non-arbitrable under Korean law, and whether Article 9(1) of the Korean Arbitration Act meant that suing in Korea was no breach.
2. Whether GGK's delay in applying should bar an anti-suit injunction against the catering agreement proceedings.
3. Whether the damages claim fell within the joint venture arbitration agreement, and whether GGS could also restrain the claim against the two directors.

Holding

The SICC allowed the application, holding that GGK was entitled to an anti-suit injunction restraining Asiana from continuing the Korean proceedings on the catering agreement, and that GGS was entitled to a similar injunction restraining the Korean damages proceedings against it and against the two directors. The parties were to agree the injunction wording, the directors' undertaking to take part in and be bound by any arbitration, and costs.

Reasoning

Where foreign proceedings breach an arbitration agreement, an injunction ordinarily issues unless there are strong reasons not to, subject to delay; a prima facie test applies.

On arbitrability, the arbitration agreement was governed by Korean law by implied choice. Applying Anupam Mittal v Westbridge Ventures II Investment Holdings [2023] 1 SLR 349, the court distinguished the subject matter of a dispute from the grounds relied on. A claim that a contract is void is ordinarily for the tribunal; there was no Korean statute or case making Article 103 disputes non-arbitrable, and both experts accepted separability. Asiana had not shown how the agreement to arbitrate itself offended good morals. Article 9(1) contemplates court proceedings before or during an arbitration, not a new challenge after a final award.

On delay, between January 2022 and June 2023 there were only exchanges of briefs and one procedural hearing, with no substantive consideration of the issues, and GGK had objected throughout and asked Asiana to withdraw. Asiana's own conduct could not excuse delay, but here delay did not bar relief.

On the damages claim, the court applied the approach in Republic of Mozambique v Privinvest Shipbuilding SAL (Holding) and others [2023] UKSC 32 to identify the matters in substance. Though framed as tort against the directors, it was primarily a claim against GGS to redress an alleged imbalance in the GGK shareholding, raising whether there was a conspiracy and what damages would redress it. Korean law reads arbitration clauses broadly to cover disputes closely related to formation, so the claim went to the heart of the joint venture. Following Lord Scott in Donohue, GGS, being liable for any damages, could also restrain the claim against the directors, avoiding forum fragmentation.

From the judgment