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Singapore International Commercial Court dismisses “back-door” appeal

In Twarit Consultancy Services Pte Ltd and another v GPE (India) Ltd and others [2021] SGHC(I) 17, the plaintiff sought to set aside an arbitral award by challenging the tribunal's jurisdiction, arbitrability and breach of natural justice.

From 2010 to 2011, the defendants entered into two share subscription and shareholders' agreements (“SHAs”) with the second plaintiff (“the promoters”), under which, the promoters undertook to procure a listing event by 31 March 2014. The SHAs both contained an arbitration clause  which provided for an arbitration in Mumbai under the Arbitration and Conciliation Act 1996.

When the listing event did not materialise, the defendants entered into three share purchase agreements (“SPAs”) with the plaintiffs, to oblige the plaintiffs to purchase the shares from the defendants for a total price of 2 billion Indian rupees. The SPAs provided for arbitration under the Singapore International Arbitration Centre (“SIAC”).

However, the plaintiffs only paid 5 million Indian rupees under the SPAs. The defendants commenced SIAC arbitral proceedings pursuant to the SPA’s arbitration clause. On 7 January 2021, the award was issued, obliging the plaintiffs to pay to the defendants 1.95 billion Indian rupees with interest.

The plaintiffs applied to set aside the award on the basis that the award was made in excess of the tribunal's jurisdiction, the dispute was non-arbitrable and there was a breach of natural justice.

Jurisdictional objection
The Court rejected the plaintiff's claim that the relief claimed under the former agreements flowed substantively from the SHA and thus, the SHA arbitration clause should apply. The Court found that tribunal was properly constituted pursuant to the SPA arbitration clause as the "dispute" between the parties fall within the meaning of the said clause.

Objection to arbitrability
Relying on section 11 of the International Arbitration Act, the Court found that the dispute was properly arbitrated because the economic effect on third parties did not make the dispute non-arbitrable.

Natural justice objections
There was also no breach of natural justice because there was no evidence that the tribunal’s assessment had been wrong or unreasonable, resulting in prejudice. Thus, the tribunal had not acted beyond its powers.  

In view of this decision, parties to multi-party contracts containing different arbitration clauses should be aware of their dispute resolution obligations under each respective agreement to ensure that the dispute is heard before the right tribunal.

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