SICC Upholds Enforcement of U.S. Arbitral Award in Franchise Dispute

In GNC Holdings LLC v ONI Global Pte Ltd & another [2025] SGHC(I) 25, the Singapore International Commercial Court (SICC) considered an application to set aside an order enforcing a U.S. arbitral award in Singapore. The award, issued by a three-member tribunal seated in Pittsburgh, arose from a dispute over the termination of GNC Holdings LLC’s (“GNC”) Singapore franchise.

The franchise relationship had operated harmoniously across several Asian markets, but deteriorated after GNC’s 2020 bankruptcy proceedings and change in ownership. The franchisees alleged that GNC’s subsequent conduct - particularly in pricing, delivery, and operational control - was calculated to push them out, justifying unilateral termination and the independent rebranding of their 54 stores. When GNC commenced arbitration, the franchisees counterclaimed, asserting GNC’s repudiatory breach and seeking freedom from post-termination obligations.

The tribunal found against the franchisees on all key issues. Instead, it ordered specific performance of post-termination covenants requiring the franchisees to assign all their franchised outlets to GNC, and awarded substantial damages to GNC.

When GNC sought to enforce the award in Singapore under the New York Convention, the franchisees opposed enforcement under sections 31(2)(c), 31(2)(d) and 31(4)(b) of the International Arbitration Act 1994, alleging:

1. that GNC had destroyed or concealed evidence amounting to fraud, breach of natural justice, and violation of Singapore’s public policy;
   
   
2. that the tribunal failed to consider a critical argument regarding adverse inferences (namely, that GNC planned to operate the Singapore stores itself);
   
   
3. that the tribunal awarded damages that were not pleaded; and
   
   
4. that it exceeded its jurisdiction by awarding unpleaded specific performance orders beyond the scope of the parties’ submission to arbitration.

The SICC allowed Ground 4 in part only. It found a limited breach of natural justice concerning certain provisions of Order 3 in the final award, which imposed additional procedural duties on the franchisees without giving them an opportunity to comment. Those provisions were deemed to exceed what was necessary, risking unnecessary court supervision. Consequently, those parts of the order were set aside.

On Ground 3, the Court rejected the franchisees’ claim that the tribunal introduced a new and unpleaded damages theory, holding that the damages scenario in question was properly within the pleadings as an alternative case and that all parties had a full and fair opportunity to respond.

As to Grounds 1 and 2, which concerned breaches of public policy and natural justice, the Court held that while the tribunal had found substantial misconduct by a GNC executive involving destruction of documents and dishonesty, the tribunal determined that the missing evidence would not have changed the outcome of the arbitration. The SICC held that it would be inappropriate to relitigate the matter at the enforcement stage, as doing so would undermine the New York Convention and the Model Law. As for the alleged breach of natural justice, the Court found that the “critical argument” said to have been overlooked—that GNC planned to take over the stores itself—had not in fact been properly raised before the tribunal.

In outcome, enforcement of the award was largely upheld, with only minor adjustments to the specific performance order. The franchisees’ broader procedural challenges failed. The decision underscores that even serious evidence spoliation allegations will not automatically enable courts to set aside or refuse enforcement of awards in Singapore, and affirms Singapore’s pro-enforcement stance.