COT v COU & 2 Ors

Facts

Three related applications, Originating Summonses Nos 482, 489 and 492 of 2021, each sought to set aside the same arbitration award. The parties were anonymised. The claimant in the arbitration supplied high-value components (called Modules) to the Procurement Company of a corporate group (the Rohan Group) under a supply agreement. The Modules went on to the second respondent, a construction contractor, which used them to build a project owned by the third respondent. The first respondent was the group's Singapore holding company. The respondents later came under separate ownership, so each was separately represented.

In March 2016, with invoices overdue, the claimant suspended deliveries. Rohan Group executives negotiated with it and, on 17 March 2016, sent a signed non-disposal undertaking (NDU-3) under which the first respondent would keep 24% of the shares in the third respondent until the claimant was paid; it provided for Singapore law and SIAC arbitration. The claimant asked for further changes, but after a senior group executive personally promised payment it accepted NDU-3 unamended and released the Modules on 18 March 2016. The group later entered Chapter 11, the shares were sold to another group, and ₴7.35m remained unpaid.

The tribunal found that all three respondents were parties to a partly oral, partly written Modules Delivery Agreement (MDA) of which NDU-3 formed part, and held them jointly and severally liable for ₴7.35m as damages for breach.

Issues

1. Whether a valid arbitration agreement existed between the claimant and each respondent
2. Whether the tribunal acted beyond the scope of the submission to arbitration by finding a contract concluded on 18 March 2016 rather than the written NDU-3
3. Whether the tribunal breached natural justice by accepting a changed case and in its findings on loss without giving the respondents a fair opportunity to respond

Holding

Vinodh Coomaraswamy J dismissed all three applications to set aside the award, with costs. Each respondent appealed, and these grounds were given for that reason.

Reasoning

On the first issue, the court decided afresh whether an arbitration agreement existed, and allowed the respondents to file evidence they had not put before the tribunal. Applying the objective approach, the respondents' email and draft on 15 March 2016 was an offer, the claimant's marked-up draft was a counteroffer, and once the claimant dropped its demand to raise the share percentage to 57% and the respondents raised no other objection, the parties agreed the essential terms on 17 March 2016, with full terms following on 18 March 2016. The later disputed amendments were not essential terms, and releasing the Modules was both performance of and consideration for the contract. The first respondent accepted that its signatory could bind it. Directors of the second and third respondents took part in the negotiations, and the group's president for the country, who led them, had implied actual authority to bind those companies, so all three were parties and the arbitration clause bound them.

On the second issue, the court treated the scope of a submission as a matter of substance. The notice of arbitration, terms of reference and pleadings all framed the claim as arising from obligations contained in or evidenced by NDU-3, which was wide enough to cover a contract formed partly orally in the March negotiations. The tribunal's label for that contract was a matter of form. A claim that the tribunal failed to decide issues was in substance an attack on the merits.

On the third issue, the claimant's list of issues made its case plain well before closing submissions. The respondents chose to rely on their jurisdictional objection rather than engage with the case or seek an accommodation from the tribunal, and could not now complain. Their objections on quantum were complaints of error of fact, and they had themselves withheld evidence about the share price. The award showed the tribunal had engaged with their key arguments.

From the judgment