by the Arbitration Association
RU

The Singapore High Court, BVU v. BVX [2019] SGHC 69, 13 March 2019

June 17, 2019

Judicial bench:

Ang Cheng Hock JC

Counsel to plaintiff:

Rajah & Tann

Counsel to defendant:

WongPartnership 

On 13 March 2019, the Singapore High Court upheld the 2015 International Chamber of Commerce (ICC) award in the dispute arising from the breach of the food supply agreement  between BVX (Defendant), the South Korean state-owned company, and BVU (Plaintiff), the food supply company[1].

The circumstances giving rise to the dispute had occurred since 2011 when South Korea entrusted Defendant with a project to secure long-term domestic food supply from international sources. To complete the project, Defendant entered into the 20-year Agreement with Plaintiff, under which the latter was obliged to make “best commercially reasonable effort” to supply minimum of 1,000,000 tons of products from Latin America annually subject to the forecast of purchase orders. Defendant failed to provide the Forecast timely and even confirmed negotiations with the Plaintiff’s competitor. Finally, contrary to the terms of the Agreement, to purchase food products Defendant carried out a public tender instead of placing the orders. Consequently, Plaintiff filed the claim with the ICC tribunal asking for US$2.25 million in damages plus interest. Defendant argued that, first, Korean procurement regulation required it as a state-owned company to begin the public tender, of which Plaintiff should have been aware, and, second, that the wording “best commercially reasonable effort” set out merely an obligation of conduct. In Defendant’s opinion, the whole Agreement was a framework one and could not be treated as imposing absolute obligations. 

In 2015, the ICC tribunal rendered the Award, having upheld the Defendant’s arguments, with one arbitrator dissenting. Plaintiff attempted to set aside the Award before the Singapore High Court on the ground that the Award “was induced by fraud or corruption and was in conflict with the public policy of Singapore”. Particularly, Plaintiff alleged that Defendant deliberately concealed crucial witnesses, internal documents and distorted the facts. 

Nonetheless, the Singapore High Court refused to set aside the Award for the following main reasons. The International Bar Association rules applicable to the arbitral proceedings did not require Defendant to call witnesses at issue to the proceedings, especially given Plaintiff’s failure to show the importance of those witnesses’ testimony to the outcome of the dispute. Moreover, Plaintiff did not request disclosure of the documents during the arbitration. In any event, Plaintiff did not establish a causal link between the absence of witnesses and the fact that the Award favored Defendant.

Darya Zavershinskaya,

Higher School of Economics, LLM student in international trade, finance and economic integration, Moscow

[1]Sources:

1.    Amoga Krishnan, South Korean state entity defends award in Singapore, April 3, 2019, https://globalarbitrationreview.com/article/1189494/south-korean-state-entity-defends-award-in-singapore.

2.    Alastair Henderson, Daniel Waldek, Mitchell Dearness, Singapore court refuses set aside on the basis that the successful party in the arbitration did not call witnesses to give evidence and disclose certain documents, March 22, 2019, https://hsfnotes.com/arbitration/2019/03/22/singapore-court-refuses-set-aside-on-the-basis-that-the-successful-party-in-the-arbitration-did-not-call-witnesses-to-give-evidence-and-disclose-certain-documents/.