DNO v DNP

DNP, a Singapore commodities trader, agreed in eight 2020 contracts to sell raw cashew nuts to an Indian partnership for shipment to Mangalore. When the Partnership said it could not pay because of COVID-19, the parties signed a Memorandum of Understanding on 24 July 2020, with a SIAC arbitration clause. DNP's subsidiary, Company N, was to hold the cargo as custodian, and the Partnership was to pay a 10% deposit, a 10% advance and the clearing charges, and to clear all goods within 90 days. Most of these sums were unpaid. The tribunal found that the parties agreed in late September 2020 that payment would be made by 30 September 2020, failing which DNP could terminate and resell. DNP terminated on 1 October 2020 and resold the cargo. Meanwhile Company N had sued the Partnership in India on dishonoured cheques for clearing charges.

A sole arbitrator awarded DNP US$33,009.53 and INR22,432,076.68 plus interest by an award dated 25 July 2024 and dismissed the Partnership's counterclaim. Before the hearing she had refused the Partnership's late application to amend its defence to rely on the Indian proceedings. DNO, a company which said the Partnership had been converted into it, applied in SIC/OA 4/2025 to set the award aside for breach of natural justice and conflict with Singapore public policy. DNP disputed DNO's standing, pointing to tax returns the Partnership kept filing.

1. Whether DNO had standing as the successor of the Partnership to challenge the award
2. Whether refusing the amendment application, or the tribunal's reasoning on the penalty, discount and termination, breached natural justice
3. Whether the award conflicted with Singapore public policy because of alleged false customs declarations and backdated invoices

On standing, the court applied Indian law as the law of incorporation and asked whether the Partnership's legal personality had merged into DNO. The conversion application, its supporting documents and the near-immediate certificate of incorporation showed that it had, on or about 30 March 2024; the later tax returns recorded nil supplies and deregistration was under way.

On the amendment, refusing leave was a discretionary case management decision within the range open to a reasonable and fair-minded tribunal. The test for the merits of a proposed amendment is whether it is reasonably arguable, and the tribunal had in substance found it was not, because Company N was not a party to the arbitration and double recovery would arise only if Company N obtained judgment. The tribunal also dealt in the award with the argument that Company N was the proper claimant, so there was no prejudice. In any case, the Partnership carried on with the arbitration through the hearing and post-hearing briefs without objecting, and could not hedge against an adverse result, following China Machine New Energy Corp v Jaguar Energy Guatemala LLC [2020] 1 SLR 695.

On the four further complaints, the court found no error, let alone a breach of natural justice. The penalty did not affect the deposit and advance, and the seller was not liable once cargo was cleared more than 15 days after arrival. There was no concluded agreement on a discount, only offers and counter-offers. The finding of an agreed 30 September deadline rested on the evidence, including the words Rest all OK, and the other grounds of termination were construed clearly. These complaints were attacks on the merits.

On public policy, a narrow ground, DNO offered no expert evidence on Indian customs law, so no offence could be found. Even if one were shown, there was no sufficient nexus because DNP was enforcing lawful contracts, and a foreign breach alone does not shock the conscience. The tribunal had found the invoices were neither fabricated nor backdated with a view to mislead.

The Singapore International Commercial Court dismissed DNO's application to set aside the award, finding that DNO had standing but that no breach of natural justice or conflict with public policy was shown. Costs and other orders were left to be argued.