Court of Appeal: Narrow scope of public policy ground for challenging arbitral awards reaffirmed

By Chou Sean Yu/Chua Sui Tong

Court of Appeal: Narrow Scope of Public Policy Ground for Challenging Arbitral Awards Reaffirmed

In a significant decision, the Singapore Court of Appeal in AJU v AJT [2011] SGCA 41 overturned the High Court's decision to set aside an arbitral award on the basis that it enforced an illegal agreement and was therefore in conflict with the public policy of Singapore. The Court of Appeal held that the High Court erred in reopening the arbitral tribunal's finding of fact that the agreement in issue was not illegal. This decision is to be welcomed as it reaffirms the narrow scope of the public policy ground for challenging arbitral awards under Article 34(2)(b)(ii) of the UNCITRAL Model Law on International Commercial Arbitration ("Model Law') set out in the First Schedule to the International Arbitration Act ("IAA"). WongPartnership LLP acted for the successful Appellant. This Update takes a closer look at the case.

Facts Complaint of fraud to Thai Police after commencement of arbitration The Respondent was a company incorporated under the laws of the British Virgin Islands and the Appellant was a public company incorporated under the laws of Thailand. Consequent to disputes arising pursuant to an agreement for the staging of a tennis tournament in Thailand, the Respondent initiated arbitration proceedings in Singapore against the Appellant for inter alia alleged wrongful termination of the agreement. Approximately three months after the initiation of arbitration, the Appellant made a complaint to the Thai Police of fraud against the Respondent's sole director and shareholder ("O") and two of its subsidiary companies ("P and Q") on the basis of an alleged forged document faxed from O to the Appellant. Pursuant to the complaint, the Thai police brought charges against 0, P and Q for joint fraud and against 0 for forgery and use of a forged document.

Agreements to compromise non- compoundable offences unenforceable Under Thai law. fraud is a compoundable offence and an agreement to compromise a compoundable offence is valid and enforceable. However, forgery and the use of a forged document are both non-compoundable offences and agreements to compromise such offences are against Thai public policy and will not be enforced by the Thai courts. Parties reach agreement to settle dispute Whilst the police investigations were continuing, the parties negotiated a settlement of their disputes and entered into a concluding...