What did the Court of Appeal consider in Asiana Airlines v Gate Gourmet Korea [2024] SGCA(I) 8?

The Court of Appeal considered Asiana Airlines' appeal against two anti-suit injunctions granted by the Singapore International Commercial Court, which had restrained Asiana from continuing South Korean court proceedings against Gate Gourmet Korea and three other respondents, on arbitration-agreement grounds.

Who heard Asiana Airlines v Gate Gourmet Korea [2024] SGCA(I) 8?

The appeal was heard in the Court of Appeal by Sundaresh Menon CJ, Steven Chong JCA and Jonathan Hugh Mance IJ, with the judgment delivered by Sundaresh Menon CJ on 29 October 2024, on a Civil Appeal from the Singapore International Commercial Court No 12 of 2023.

[2024] SGCA(I) 8 — ASIANA AIRLINES, INC v GATE GOURMET KOREA CO., LTD. & 3 Ors

SUPREME COURT OF SINGAPORE

29 October 2024

Case summary

Asiana Airlines, Inc v Gate Gourmet Korea Co, Ltd and others [2024] SGCA(I) 8

Court of Appeal — Civil Appeal from the Singapore International Commercial Court No 12 of 2023

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Decision of the Court of Appeal (delivered by Chief Justice Sundaresh Menon):

Outcome: The Court of Appeal allowed part of the appeal against the decision of a judge sitting in the Singapore International Commercial Court (the “Judge”). It set aside the anti-suit injunction granted by the Judge in respect of the claims against the directors in the Korean Compensation Proceedings but upheld the Judge’s decision regarding: (a) the anti-suit injunction granted in respect of the Korean CA Proceedings; and (b) the anti-suit injunction granted in respect of the claims against Gate Gourmet Switzerland GmbH in the Korean Compensation Proceedings.

Pertinent and significant points of the judgment

• A party to a contract with a exclusive forum clause (A) may apply for an anti-suit injunction to prevent proceedings commenced by another party (B) against a non-party (C), where it could show either that the clause was intended to also cover the non-party or that the real purpose for suing the non-party was to bypass the exclusive forum clause in a manner making the foreign proceedings vexatious and oppressive between A and B. To the extent that C was able to show it would be vexatious and oppressive to C to allow the foreign proceedings to continue against it, it too would be able, in its own right, to seek an anti-suit injunction against B: at [84].

• It sufficed for a party relying on an arbitration agreement to seek the grant of an anti-suit injunction to show that that agreement was prima facie valid. This aligned the standard of review for the grant of an anti-suit injunction (whether interim or permanent) with that of a stay application under s 6 of the International Arbitration Act 1994 (2020 Rev Ed), both of which represented efforts to safeguard parties’ agreement to arbitrate their disputes: at [92]–[93].

Background to the appeal

1 This was an appeal against the decision of the Judge in SIC/OA 14/2022. The Judge granted two anti-suit injunctions (“ASIs”) restraining the appellant from continuing court proceedings in South Korea against the respondents. Both ASIs were granted on the basis that arbitration agreements between some of the relevant parties would be breached by the continuation of court proceedings against all of them, including the third and fourth respondents who were not parties to these agreements.

2 By way of brief introduction, the appellant was Asiana Airlines Inc (“Asiana”), a Korean company which was controlled by one Mr Park Sam-Koo (“Chairman Park”) at the material time. There were four respondents (collectively, “Gate Gourmet”). The first respondent, Gate Gourmet Korea Co Ltd (“GGK”), was formed pursuant to a joint venture between Asiana and the second respondent, Gate Gourmet Switzerland GmbH (“GGS”). The third and fourth respondents (the “directors”) were the current and former chief executive officers of the Gate Gourmet Group.

3 The parties entered into several agreements, two of which were relevant to this appeal: (a) a joint venture agreement between GGS and Asiana to create GGK (the “JVA”); and (b) a catering agreement between GGK and Asiana (the “CA”). Both the JVA and the CA contained arbitration agreements (the “JVA Arbitration Agreement” and the “CA Arbitration Agreement”, respectively).

4 Owing to a dispute over the interpretation of the CA, GGK and Asiana proceeded to arbitration in 2019 (the “2019 ICC Arbitration”), which was decided in favour of GGK in 2021. Asiana’s attempt to set aside the award before the Singapore International Commercial Court (the “SICC”) was dismissed on 27 May 2022; its appeal, CA/CAS 5/2022 (“CAS 5”), was subsequently dismissed on 14 November 2022.

5 In the meantime, Chairman Park was indicted on 26 May 2021 and convicted on 17 August 2022 for his involvement in the negotiation of the agreements.

6 Two civil suits were commenced by Asiana against Gate Gourmet in Korea. These suits were the subject of the ASIs. First, on 24 January 2022, Asiana commenced the Korean CA Proceedings against GGK to seek, among other reliefs, a declaration that the CA was null and void. Second, on 13 October 2022, Asiana commenced the Korean Compensation Proceedings against GGS and the directors, on the basis that the directors were allegedly involved in Chairman Park’s unlawful conduct, and that GGS was vicariously liable for the directors’ alleged acts.

7 Prior to the hearing of the appeal, the parties each applied to adduce further evidence on appeal:

a. Asiana applied on 15 March 2024 for permission to adduce further evidence in support of its argument that the arbitration agreements were null and void. The court dismissed this on 4 July 2024 with costs to Gate Gourmet.

b. Gate Gourmet applied on 18 April 2024 for permission to adduce a judgment from the Seoul Southern District Court, where the Korean court allowed the enforcement of the award arising from the 2019 ICC Arbitration. The court made no order, as parties were free to refer to the judgment without the need for an order permitting them to do so.

The Court of Appeal’s decision

Whether it was even open to Asiana to contend that the arbitration agreements were null and void

8 It was not open to Asiana to contend on appeal that the arbitration agreements were null and void. It had at least three opportunities to raise this argument prior to the appeal but did not do so: (a) the 2019 ICC Arbitration; (b) the setting aside proceedings before the SICC and on appeal; and (c) before the Judge in the present proceedings. Given that these were opportunities Asiana could have taken but did not take, it was an abuse of process for Asiana to raise this argument on appeal. Further, on the first two of these occasions it proceeded on the basis that the CA Arbitration Agreement was valid: at [36]–[40].

9 The court rejected the argument that Asiana had been controlled by Chairman Park during the 2019 ICC Arbitration and the setting aside proceedings, and therefore could not have known that the arbitration agreements were invalid. By the time the setting aside proceedings were commenced, Asiana knew of Chairman Park’s indictment and conviction: at [41].

10 The court also rejected the argument that Asiana had been unsuccessful in adducing evidence of Chairman Park’s conviction. Although Asiana applied in CAS 5 to adduce the judgment of the Seoul Central District Court, where it convicted Chairman Park, this application was not made for the purpose of showing that the CA Arbitration Agreement was invalid. In any event, a decision under Korean criminal law would not affect the validity of the CA Arbitration Agreement under Korean civil law: at [42].

Whether the ASIs should be granted

11 The court upheld the Judge’s decision to grant the ASI for the Korean CA Proceedings on the basis that it would be in prima facie breach of the CA Arbitration Agreement. The court dismissed Asiana’s arguments that: (a) the proceedings were not arbitrable; and (b) it was not in breach of the CA Arbitration Agreement by virtue of Art 9 of the Korean Arbitration Act: at [44]–[49].

12 The court also upheld the Judge’s decision to grant the ASI for the claims against GGS in the Korean Compensation Proceedings on the basis that it would be in prima facie breach of the JVA Arbitration Agreement. The court dismissed Asiana’s arguments that: (a) the proceedings were not arbitrable; and (b) the proceedings did not fall within the scope of the JVA Arbitration Agreement: at [50]–[55].

13 As regards the ASI for claims against the directors in the Korean Compensation Proceedings, Gate Gourmet relied on the following two grounds: (a) that GGS should be granted an ASI that extended to the claims against the directors, on the basis that the proceedings were in breach of the JVA Arbitration Agreement; and (b) that the directors should be granted an ASI because the proceedings would be vexatious and oppressive to them if allowed to continue: at [57].

The applicable test for the grant of an ASI where there was a non-party to an exclusive forum clause

14 For the purposes of the present analysis, no distinction should be drawn between an arbitration agreement and an exclusive jurisdiction clause. Both represented the agreed conferral of jurisdiction upon a particular dispute resolution forum, in circumstances where none might otherwise exist: at [79]–[83].

15 A party to a contract with a exclusive forum clause (A) may apply for an ASI to prevent proceedings commenced by another party (B) against a non-party (C), where it could show either that the clause was intended to also cover the non-party or that the real purpose for suing the non-party was to bypass the exclusive forum clause in a manner making the foreign proceedings vexatious and oppressive between A and B. To the extent that C was able to show it would be vexatious and oppressive to C to allow the foreign proceedings to continue against it, it too would be able, in its own right, to seek an ASI against B: at [84].

The applicable test for assessing the validity of an arbitration agreement when considering the grant of an ASI

16 It sufficed for a party relying on an arbitration agreement to seek the grant of an ASI to show that that agreement was prima facie valid. This aligned the standard of review for the grant of an ASI (whether interim or permanent) with that of a stay application under s 6 of the International Arbitration Act 1994 (2020 Rev Ed), both of which represented efforts to safeguard parties’ agreement to arbitrate their disputes: at [92]–[93].

Application to the facts in respect of the ASI for the claims against the directors in the Korean Compensation Proceedings

17 The JVA Arbitration Agreement was prima facie valid, because Asiana failed to show that the JVA Arbitration Agreement was null and void: at [102].

18 Gate Gourmet failed to show that the JVA Arbitration Agreement was intended by Asiana and GGS to apply to the directors: at [102].

19 Gate Gourmet also failed to show that Asiana’s suit against the directors in the Korean Compensation Proceedings had the effect or even the purpose of frustrating or subverting the operation of the JVA Arbitration Agreement. Gate Gourmet raised two contentions in support of this, both of which were rejected by the court. Gate Gourmet first contended that Asiana failed to indicate in the pre-action correspondence that they intended to sue the directors. The court held that this did not indicate any bad faith on Asiana’s part. As regards Gate Gourmet’s second contention that Asiana should have sued GGS directly without involving the directors, the court held that there was no basis to deprive Asiana of the option of suing parties other than GGS, to safeguard against a situation where it failed to obtain relief against GGS: at [103]–[104].

20 Granting an ASI preventing Asiana from commencing claims against the directors would prejudice Asiana, in at least two situations: (a) if Korea were the natural forum, and there was no other jurisdiction where the directors could be held personally liable, the ASI would effectively insulate them from liability; or (b) if vicarious liability could not be imposed on GGS under Korean law, and the ASI prevented Asiana from suing the directors, Asiana would be left with no recourse: at [105].

21 Although forum fragmentation was a relevant consideration, and the directors had previously provided an undertaking to the Judge that they would participate in and be bound by arbitral proceedings, until and unless Asiana consented to this arrangement, it remained open to Asiana to proceed with its claims against the directors in the Korean Compensation Proceedings: at [106].

22 The court therefore set aside the ASI granted in respect of the claims against the directors in the Korean Compensation Proceedings: at [108].

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

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

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What did the Court of Appeal consider in Asiana Airlines v Gate Gourmet Korea [2024] SGCA(I) 8?

Who heard Asiana Airlines v Gate Gourmet Korea [2024] SGCA(I) 8?

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