06 May 2019
BVX is a state-owned company in the Republic of Korea. It was tasked with securing a long term stable food supply for the country. BVX engaged BVU to supply the Republic of Korea with food products. The supply agreement contained a term that BVU would be BVX’s 'preferred supplier' and included a 'forecast range' for product purchases. In fact, BVX purchased significantly less than the forecast range, and began a tender process for the remaining products set out in the forecast range.
On 25 July 2013, BVU commenced International Chamber of Commerce (ICC) arbitration proceedings against BVX, claiming damages for breach of contract.
BVX provided disclosure of documents on which it proposed to rely and responded to requests for production by BVU. During the arbitration, BVU asked the ICC Tribunal to order employees of BVX to attend and give evidence that BVU maintained was relevant to the dispute. The Tribunal declined to compel the witnesses’ attendance, because it was not persuaded that the proposed evidence was material to the issues in dispute.
On 10 December 2015, the ICC Tribunal issued the final award in favour of BVX.
BVU subsequently contacted employees from BVX who had not given evidence in the proceedings. BVU hoped that the BVX employees might give evidence that would assist BVU in an application to set aside the award. One of the employees agreed to give evidence in support of BVU.
On 10 March 2016, BVU commenced an action in the Singapore High Court to set aside the award. BVU also subpoenaed the BVX employee, to compel the employee to produce documents it maintained were relevant but which had not been disclosed in the arbitration.
BVX applied to the Court to set aside the subpoena. Judicial Commissioner Ang Cheng Hock heard BVU’s application to set aside the award and the application for a subpoena.
BVU claimed that BVX’s failure to call its employee as a witness and disclose key documents in the arbitration was in breach of public policy, such that the award was procured by fraud. BVU argued that the employee’s evidence and BVX’s internal documents were “crucial evidence” and that BVX had made a conscious and deliberate decision not to disclose them.
BVX did not dispute that it intentionally did not lead evidence from the employee or disclose its internal documents (which it did not view as being relevant to its case and were confidential and commercially sensitive).
BVU argued that the award should be set aside on two grounds, which are familiar to countries adopting the Model Law:
The Court emphasised that when dealing with non-disclosure issues, the two grounds were founded on substantially the same premise under the Singapore International Arbitration Act and the UNCITRAL Model Law. This is consistent with earlier decisions in Singapore and the United Kingdom.
The Court said it would not infer fraud and that BVU would be held to a high standard of proof. In order for the Court to set aside the award on the basis of non-disclosure of evidence, BVU needed to satisfy three requirements:
The Court referred to the decision in Swiss Fortune. In that case, Justice Prakash explained that for there to be fraud on the basis of non-disclosure, the document must have been 'so material that earlier discovery would have prompted the arbitrator to rule in favour of the applicant'.
In determining the application, the Court outlined the following principles to be considered in similar situations:
The Court held that BVX’s failure to call the employee as a witness and disclose certain documents did not satisfy the requirements for fraudulent conduct. In coming to that conclusion, the Court found that:
The Court dismissed BVU’s application to set aside the arbitral award and refused to grant BVU’s subpoena on the same grounds. The Court held that BVU’s subpoena was 'an abuse of process' and that BVU was 'seeking to reopen the arbitrated dispute through a backdoor appeal'.
There are two noteworthy aspects of this decision.
First, it is a reminder that the bar to set aside an award on grounds of non-disclosure is high. Not only must a non-disclosure be shown, but it must have been deliberate, must have affected the outcome of the arbitration, and cannot have been done for a good reason. This means that if a non-disclosure issue arises during an arbitration, it is dangerous to treat it as ‘a card in hand’ to be played to resist enforcement later.
Second, it is a good illustration of the dangers of approaching arbitration with the presumption that usual Court-based procedures and obligations apply. The IBA Rules only require disclosure of evidence and documents on which the parties rely. Accordingly, where documents do not support a party’s position, procedures should be put in place in the arbitration to ensure those documents are disclosed if that is what the parties expect should occur. The procedures may include appropriate and carefully drawn disclosure directions, which provide for each party to obtain categories of documents that enable them to make their respective cases.
Without such directions, the party looking to withhold disclosure can of course assert that it was under no obligation to disclose. This is a stark difference to continuing disclosure obligations that exist in Australian superior courts, which can require that parties disclose any documents that are relevant to the case (adverse or not).
 PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA  1 SLR(R) 597, 622 .
 Swiss Singapore Overseas Enterprises Pte Ltd v Exim Rajathi India Pvt Ltd  1 SLR 573, 597 .
 Dongwoo Mann+Hummel Co Ltd v Mann+Hummel GmbH  3 SLR(R) 871, 926 .
 Celtic BioEnergy Ltd v Knowles Ltd  1 Lloyd’s Rep 495, 503 ; Chantiers de L’Atlantique SA v Gaztransport & Technigaz SAS  EWHC 3383 .
 Profilati v PaineWebber  1 Lloyd’s Rep 715, 720 –.
 SA v Vivendi Universal SA  1 Lloyd’s Rep 693, 710 .
 Swiss Singapore Overseas Enterprises Pte Ltd v Exim Rajathi India Pvt Ltd  1 SLR 573, 587 .
 Swiss Singapore Overseas Enterprises Pte Ltd v Exim Rajathi India Pvt Ltd  1 SLR 573, 586  citing Dongwoo Mann+Hummel Co Ltd v Mann+Hummel GmbH  3 SLR(R) 871, 921 .
 Where an arbitration involves parties from jurisdictions which are not accustomed to the disclosure of adverse evidence, different considerations will of course apply.
 Although courts are moving away quickly from the prevenance of so called 'general ' discovery orders: see Built Environs WA Pty Ltd v Perth Airport  WASC 76  ; Federal Court of Australia, Commercial and Corporations Practice Note (2016) .