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Timestamp: 2019-04-20 22:34:23+00:00

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2 1066 SINGAPORE LAW REPORTS  1 SLR because its own conduct in the arbitration had led to a result it was dissatisfied with: at . (3) SGT s claim that the tribunal exceeded the scope of its jurisdiction because it failed and/or refused to apply the law governing the March 2003 Agreement, viz, Indonesian law (on which expert opinion and submissions had been provided by both parties) was without merit: at . (4) On whether the tribunal arrived at an unexpected, illogical conclusion unsupported by the available evidence, the tribunal was not required to put this conclusion before the parties given that this was not a dramatic departure from the evidence presented and which was in fact placed before the tribunal by SGT itself: at . (5) The tribunal did not exceed the express mandate given to it by the parties given that a pertinent, and indeed determinative, issue that required resolution was clearly whether the March 2003 Agreement was still in effect after 31 March 2005: at . Case(s) referred to Soh Beng Tee & Co Pte Ltd v Fairmont Development Pte Ltd  3 SLR(R) 86;  3 SLR 86 (folld) Legislation referred to International Arbitration Act (Cap 143A, 2002 Rev Ed) s 24(b), First Schedule Art 34 Arbitration Act (Cap 10, 2002 Rev Ed) s 48(1)(a)(vii) Chou Tzu and Sheila Ng (Rajah & Tann LLP) for the plaintiff; Tan Chuan Thye and Germaine Chia (M/s Wong & Leow LLC) for the defendant. 28 October 2009 Tay Yong Kwang J: Introduction 1 The plaintiff, Sobati General Trading LLC ( SGT ), applied, pursuant to s 24(b) and Art 34 of the First Schedule of the International Arbitration Act (Cap 143A, 2002 Rev Ed) ( IAA ), to set aside an arbitral award, dated 11 November 2008 ( the final award ) and amended on 9 January 2009 ( the addendum ) (henceforth, collectively, the arbitral award ), made by the single arbitrator tribunal ( the tribunal ) in International Chamber of Commerce ( ICC ) International Court of Arbitration Case No 15158/JEM ( the arbitration ) on the following two grounds: (a) the arbitral award was made in breach of the rules of natural justice; and (b) the tribunal exceeded the express mandate given to it by the parties.
3  1 SLR Sobati General Trading LLC v PT Multistrada Arahsarana 1067 Although SGT had initially also contended that the arbitral award was contrary to the public policy of Singapore, its counsel, Ms Chou Tzu, informed me at the outset of the hearing that she was not proceeding on this ground. 2 The central issue before me was whether the tribunal was entitled (as it did) to come to a decision that a distributorship agreement made in March 2003 ( the March 2003 Agreement ) between SGT and the defendant, PT Multistrada Arahsarana ( Multistrada ), had terminated on 31 March The tribunal s decision was based on the express wording of a fax sent by Multistrada to SGT on 29 October 2004 ( the October 2004 Fax ). SGT claimed that because the tribunal was not entitled to find that the March 2003 Agreement had terminated on 31 March 2005, the rules of natural justice were breached and the tribunal exceeded its express mandate given to it by SGT and Multistrada. After hearing the parties, I dismissed SGT s application. I now give the reasons for my decision. Background facts The parties 3 SGT, the claimant in the arbitration, is a company incorporated under the laws of the United Arab Emirates. It is in the business of distributing automobile tyres. Multistrada, the respondent in the arbitration, is a company incorporated under the laws of Indonesia. It is a manufacturer of tyres. The March 2003 Agreement and the arbitration agreement 4 SGT alleged that on or about 7 March 2003, it entered into an exclusive distributorship agreement with Multistrada for the sale and distribution of certain brands of tyres in Iran (i.e., the March 2003 Agreement). The relevant provisions of the March 2003 Agreement, with Art 5.1 as the arbitration clause, read as follows: Article [Multistrada] hereby appoints [SGT] for sales and distribution of Multistrada Arah Sarana vehicle tires on Exclusive Distributor under Corsa, Strada and Duragrip brand in the territories of Iran. 1.2 [Multistrada] shall not sell, nor export the goods under Corsa. Strada and Duragrip brand directly or indirectly to any person, firm or corporation within the above territories. Any fax or inquiry related to the territories received by [Multistrada] will be forwarded to [SGT].
5  1 SLR Sobati General Trading LLC v PT Multistrada Arahsarana 1069 (c) the March 2003 Agreement on 12 August 2006 by appointing a new sole distributor in Iran in place of SGT; Multistrada had failed to pay SGT the rebate it was contractually entitled to under the March 2003 Agreement. SGT claimed damages and specific performance of the March 2003 Agreement. 6 On 15 October 2007, Multistrada filed its answer to SGT s Request ( Answer ) denying the existence and validity of the March 2003 Agreement on the grounds that: (a) (b) (c) (d) the March 2003 Agreement had not been signed by a duly authorised officer of Multistrada; the March 2003 Agreement was a sham document and void from inception; the existence of the March 2003 Agreement was inconsistent with all the contemporaneous documentation; and an oral arrangement between SGT and Multistrada had commenced only from September Before September 2004 and after 31 July 2005, transactions between SGT and Multistrada had proceeded on a case by case basis. 7 In the alternative, Multistrada claimed, in its Answer, that even if the March 2003 Agreement was valid and binding, it had not been renewed after 7 March In this regard, Multistrada asserted that: (a) (b) (c) because SGT did not import the minimum quantity of tyres in the one year period between 7 March 2003 and 7 March 2004 as required by the March 2003 Agreement, SGT was not entitled to a rebate under Art 4 of the March 2003 Agreement (see  above); since 7 March 2004, SGT had only sold tyres to Multistrada on a case by case basis and not pursuant to the March 2003 Agreement; and SGT had breached the terms of the March 2003 Agreement by importing tyres into Iraq (as opposed to Iran), thus entitling Multistrada to a counterclaim for damages to be assessed ( the counterclaim ). Appointment of the arbitrator and the issues in the Terms of Reference 8 On 9 November 2007, the ICC Court decided that the arbitration should proceed in accordance with Art6(2) of the ICC Rules. On 23 November 2007, a single arbitrator (ie, the tribunal) was appointed pursuant to Art 9(3) of the ICC Rules.
6 1070 SINGAPORE LAW REPORTS  1 SLR 9 Save for Multistrada s counterclaim (see [7(c)] above), which is not relevant for the purpose of these proceedings, the parties respective positions and the issues arising in the arbitration were agreed and set out in the Terms of Reference ( the Terms of Reference ) sometime on or about 25 January Based on the documents submitted by the parties, para 7 of the Terms of Reference set out the following issues to be decided in the arbitration: (a) (b) (c) whether the March 2003 Agreement was valid and binding; whether the tribunal had jurisdiction to hear SGT s claims; and if the March 2003 Agreement was valid and binding, whether: (i) (ii) (iii) (iv) (v) Multistrada had breached its obligations under the March 2003 Agreement; the minimum quantities and/or value stated in Art 4 of the March 2003 Agreement were fulfilled or varied by the parties; the March 2003 Agreement was renewed after 7 March 2004; SGT was entitled to the 1.5% rebate under the terms of the March 2003 Agreement; and SGT was entitled to damages and/or each of the reliefs sought. Multistrada s statement of defence and counterclaim 10 In addition to its position as set out in its Answer (see   above), Multistrada averred, inter alia, in its statement of defence and counterclaim, filed on 28 February 2008, that: 5. Following a conversation between [the] representatives of the respective parties in April/May 2004, it was agreed that the terms of the [March 2003 Agreement] were not to govern the parties relationship. It was also agreed that [Multistrada] would not pay [SGT] a rebate and that [Multistrada] would supply tyres to [SGT] on a case-by-case basis. All sales since March 2004 by [Multistrada] to [SGT] have been on that basis. 6. Quite apart from the parties agreement in April/May 2004, [SGT] had not, during the period March 2003 to March 2004, imported the minimum number of tyres required under the [March 2003 Agreement]. Further, the quantity of tyres imported during that time was less than the minimum required to entitle [SGT] to claim the rebate it now seeks.
9  1 SLR Sobati General Trading LLC v PT Multistrada Arahsarana March 2005 meant that all sales made by Multistrada to SGT from 7 March 2004 to 31 March 2005 were made pursuant to the March 2003 Agreement; (e) (f) (g) because the March 2003 Agreement had been extended by the parties to 31 March 2005, it was unnecessary to determine whether the minimum quantity of tyres for the first year (viz, 7 March 2003 to 7 March 2004) had in fact been achieved; because the aggregate purchases made by SGT for the duration of the March 2003 Agreement from 7 March 2003 to 31 March 2005 (ie, during the lifetime of the March 2003 Agreement) was less than US$1,000,000 in value, no rebate was payable to SGT under Art 4 of the March 2003 Agreement (see  above); and SGT did not breach the March 2003 Agreement by exporting tyres to Iraq as there was no evidence that: (i) (ii) SGT had exported tyres to Iraq or any country outside of Iran at any time from 7 March 2003 to 31 March 2005; and any shipment to Iraq or outside of Iran was made during the period without Multistrada s consent or knowledge. Costs orders were also made against both parties. The net result of these costs orders was that SGT was ordered to pay Multistrada US$108,750. This amount comprised Multistrada s entitlement to the legal costs and expenses of the arbitration, the administrative expenses of the ICC Court and the tribunal s fees and expenses. 16 Following the release of the final award, SGT s lawyers in the arbitration sought by way of two letters dated 25 November 2008 and 1 December 2008 respectively, to apply for a correction and interpretation of the final award pursuant to Art 29 of the ICC Rules. On 9 January 2009, the tribunal rendered the addendum correcting a typographical error and dismissing SGT s said application. SGT s application to set aside the arbitral award 17 As mentioned above at , SGT applied pursuant to s 24(b) and Art 34 of the First Schedule of the IAA to set aside the arbitral award made by the tribunal on the following two grounds: (a) (b) the arbitral award was made in breach of the rules of natural justice; and the tribunal exceeded the express mandate given to it by the SGT and Multistrada.
13  1 SLR Sobati General Trading LLC v PT Multistrada Arahsarana 1077 reasoning of the type revealed in the award. It is only in these very limited circumstances that the arbitrator s decision might be considered unfair. (e) It is almost invariably the case that parties propose diametrically opposite solutions to resolve a dispute. They may expect the arbitrator to select one of these alternative positions. The arbitrator, however, is not bound to adopt an either/or approach. He is perfectly entitled to embrace a middle path (even without apprising the parties of his provisional thinking or analysis) so long as it is based on evidence that is before him. Similarly, an arbitrator is entitled indeed, it is his obligation to come to his own conclusions or inferences from the primary facts placed before him. In this context, he is not expected to inexorably accept the conclusions being urged upon him by the parties. Neither is he expected to consult the parties on his thinking process before finalising his award unless it involves a dramatic departure from what has been presented to him. (f) Each case should be decided within its own factual matrix. It must always be borne in mind that it is not the function of the court to assiduously comb an arbitral award microscopically in attempting to determine if there was any blame or fault in the arbitral process; rather, an award should be read generously such that only meaningful breaches of the rules of natural justice that have actually caused prejudice are ultimately remedied. [emphasis added] The decision of the court Whether the arbitral award was made in breach of the rules of natural justice? 22 The thrust of SGT s case under this head is that it had been denied the opportunity to be heard (see [19(a)] above) on the effect of the terms of the October 2004 Fax which expressly provided that the March 2003 Agreement was to terminate on 31 March In deciding whether the tribunal s decision on this issue breached the rules of natural justice, it must first be asked whether this issue was indeed in play during the course of the arbitration proceedings or whether the tribunal had gone on a frolic of it own and put forth its very own idea unsupported by the evidence placed before it. Whether SGT was denied the opportunity to be heard 23 SGT claimed it had been denied the opportunity to be heard on: (a) (b) (c) the question on whether the March 2003 Agreement was terminated on 31 March 2005; the status of the transactions between the parties from 31 March 2005 to 12 August 2006; and the question of when the March 2003 Agreement was terminated.
15  1 SLR Sobati General Trading LLC v PT Multistrada Arahsarana March 2005 was that these transactions were on a regular, case-by-case basis and not pursuant to the March 2003 Agreement. In this respect, I note that SGT had in fact had ample opportunities to deal with Multistrada s position (as set out above at  ) but it chose not to do so. Following the filing of Mr Setiobudi s first witness statement on 2 June 2008 on behalf of Multistrada, SGT filed four witness statements on three separate occasions, viz, that of Mousa Vahedzadeh on 14 June 2008, Maribel Franco Cabrieto on 16 June 2008 and Maribel Franco Cabrieto (again) and Mr Sobati on 9 July However, in none of these four witness statements did SGT address the terms of the October 2004 Fax or their effect. 26 The question as to the effect of the October 2004 Fax remained a live one even during the hearing from 14 to 17 July 2008 when Mr Setiobudi expressly stated that the arrangement between the parties was only valid until March 2005 and that the October 2004 Fax was an acknowledgment of this arrangement. Despite this, SGT chose not to challenge the evidence presented by Multistrada on this. SGT also chose not to challenge the evidence on Indonesian law presented by Multistrada s expert witness, Dr Otto (see  above). 27 In its closing submissions dated 8 August 2008, Multistrada submitted that the March 2003 Agreement terminated on 31 March 2005 and that the business relationship between the parties thereafter (ie, from 31 March 2005 to 12 August 2006) was no longer based on the March 2003 Agreement but pursued on a month-to-month basis, consistent with Multistrada s dealings with all its other clients. It was only at this juncture that SGT sought to meet and challenge Multistrada s case by way of its Reply to Multistrada s Closing Submissions dated 22 August 2008 wherein SGT argued that that October 2004 Fax did not form an agreement between the parties and that the March 2003 Agreement was renewed after 7 March 2005 and did not terminate until 12 August Given the foregoing sequence of events, it is clear that Multistrada considered and dealt with the effect of the terms of the October 2004 Fax. While SGT was, since 2 June 2008 (see  above), aware of Multistrada s position that the March 2003 Agreement had terminated on 31 March 2005, it chose only to mount a delayed challenge to Multistrada s position more than two months later in its Reply to Multistrada s Closing Submissions. Clearly, SGT failed to fully avail itself of the opportunities it was accorded to rebut Multistrada s position (see also  of Soh Beng Tee ( supra)). In these circumstances, I am of the view that SGT cannot now seek to set aside the arbitral award simply because its own conduct in the arbitration has led to a result it was dissatisfied with. Accordingly, SGT s claims that it was denied the opportunity to be heard on the stated issues could not be sustained.
18 1082 SINGAPORE LAW REPORTS  1 SLR make. However, as Multistrada correctly pointed out, this allegation was unfounded because the tribunal s decision had in fact arisen out of the parties respective cases vis-à-vis the March 2003 Agreement, viz: (a) SGT s allegation that the March 2003 Agreement was still in effect in August 2006 and its reliance on the October 2004 Fax as evidence of this; and (b) Multistrada s alternative allegation that the March 2003 Agreement between the parties ceased to have effect after 31 March Based on the parties respective cases as framed in this manner, a pertinent, and indeed determinative, issue that required resolution was clearly whether the March 2003 Agreement was still in effect after 31 March As mentioned above, no rules of natural justice were breached as it was well within the tribunal s power to come to the conclusion that the March 2003 Agreement terminated by 31 March 2005 by virtue of the October 2004 Fax. In these circumstances, I cannot agree with SGT s contention that the tribunal exceeded the express mandate given to it by the parties. Conclusion 35 For the above reasons, the application to set aside the arbitral award must fail. Therefore I dismissed SGT s application and ordered that SGT pay Multistrada S$15,000 costs (excluding disbursements). Reported by Ho May Kim.

References: Art 34
 Art 34
 Art 5
 Art 4
 Art6
 Art 9
 Art 4
 Art 4
 Art 29
 Art 34