This Memorandum of Understanding (MOU) made on 24th July 2020 between [DNP] and [the Partnership].

[DNP] has sold and shipped 4,825.80 MT (list attached) of Raw Cashew Nuts of Ivory coast, Ghana & Burkina origin under various contracts (as per attached list) and about 1850 MT already arrived at destination port waiting for payment of documents submitted to bank of [the Partnership].

[The Partnership] has informed to [DNP] that they are unable to make payment of bills due to Covid-19.

To avoid demurrage cost further on cargo, [the Partnership] and [DNP] both parties agreed as below:

1 [DNP] will appoint [Company N] as custodian of cargo.

a) For the arrived about 1850 MT which is already custom manifested in the Mangalore port, [DNP] will arrange to sent a bank instruction to release full set of documents to representative of [Company N]. [The Partnership] will pay for release the cargo from port and transfer the cargo to [Company N] by issuance of local sale invoice for [Company N] which is transfer of title. [Company N] will not make any payment to [the Partnership] for goods value since it is holding the goods on behalf of [DNP] which is ultimately an unpaid seller. [The Partnership] will pay all cost of local clearing/handling/warehouse and insurance cost of goods. [The Partnership] further agree to buy back the cargo from [Company N] at same value of invoice which they have transferred to [Company N] plus interest @7% and also adding further cost incurred by [Company N] on holding of this stock (if any) which is not paid/reimbursed by [the Partnership]. [The Partnership] will keep paying to [DNP] under the foreign liability bill and against such payment [Company N] will keep releasing goods to [the Partnership] as may be directed by [DNP]. It is responsibility of [the Partnership] to clear foreign liability of seller [DNP]. In case of inability of [the Partnership] to pay [DNP] within agreed time of 90 days, [DNP] is free to instruct [Company N] to sale to the goods to any third party and remit the sales proceeds to [DNP] directly or via [the Partnership]. All risk of foreign exchange loss and/or any market loss in such case would be liability of [the Partnership].

b) For remaining cargo yet to arrive:

For arriving cargo all custom manifest will be filed in name of [Company N] and [the Partnership] guarantee to pay [Company N] cost of goods as per contract price of [the Partnership] and [DNP] plus all cost incurred by [Company N] clear and hold the cargo plus 7% towards interest. A local sales contract to be entered between [the Partnership] and [Company N] to facilitate this transaction.

2 [Company N] is representative of [DNP] and is acting custodian of cargo and [Company N] cashew will help in clear the cargo in their name and store in a safe location in Mangalore port area. Cargo will be kept by [Company N] for [the Partnership] to take delivery against payment of cargo value as per [DNP] bill and interest @7% plus all other handling/holding cost of cargo.

3 Landed quality and weight at the time of discharge of cargo as may determined by RBS, shall be final and binding on [DNP] and [the Partnership]. Being RCN on commodity naturally have some moisture weight or outturn variation during storage, [Company N] will not be responsible for any such weight and/or quality variation during storage in warehouse. All such losses shall be on account of [the Partnership].

4 All clearing cost, Demurrages and warehouse rental, insurance, security charges of warehouse to be paid by [the Partnership] to [Company N] within 10–15 days of clearing of cargo from port. Cargo to be kept in Edelweiss warehouse and/or any other independent warehouse may be recommended by [the Partnership] to [Company N] and a separate agreement can be made between warehouse service provider and [Company N]. cargo to be kept in warehouse under title of [Company N] till [the Partnership] has not paid full value of stock to [DNP]/[Company N] and once the value of goods is paid with other cost as per this MOU, title of goods to be transferred to [the Partnership] in same warehouse ([unclear] without lifting). a separate agreement on this matter can be entered between [Company N], Edelweiss & [the Partnership].

5 [The Partnership] will agree to pay interest on cargo value 7% w.e.f. date of arrival till the date of actual payment.

6 [The Partnership] will may payment of deposit 10% of arrived cargo value within 30 days to [Company N] from this MOU date. similarly 10% advance direct to [DNP] for already arrived and cleared cargo value. [The Partnership] will clear all goods against payment within 90 days.

7 Payment to be made to [Company N] in INR for equal dollar value. Any exchange gain/loss will be on account of [the Partnership]. For cargo cleared in [the Partnership] name, [the Partnership] will make payment directly to [DNP] and [Company N] will release goods to [the Partnership] once [DNP] confirm receipt of cargo value.

8 [Company N] is only a custodian of cargo and act as representative of [DNP] as unpaid seller. All terms of contracts remain unchanged.

9 This MoU shall be governed under Singapore Laws and subject to Arbitration in Singapore under SIAC Rules.

[Signatures of DNP, the Partnership, Company N, and a witness]

18. With respect Mr [Z]’s affidavit dated 5 November 2024, he relies on in the Goods and Services Tax (“GST”) registration of [the Partnership] and [DNO] to allege that [the Partnership] is an active entity and different from [DNO]. This statement is wholly misconceived and premised on an incorrect presumption that GST registration of an entity is conclusive evidence of an entity’s incorporation status. An entity’s GST registration is by no means conclusive evidence of its incorporation status.

19. [DNO] is in the process of de-registering [the Partnership’s] GST registration, and I admit that [the Partnership] has been filing Form GSTR-3B. However, it is clarified that [the Partnership] has been filing its GST statements (Form GSTR-3B) on a zero-rated basis since June 2024, as summarised below […]

366. Companies capable of being registered.—(1) For the purposes of this Part, the word "company" includes any partnership firm, limited liability partnership, cooperative society, society or any other business entity formed under any other law for the time being in force which applies for registration under this Part.

(2) With the exceptions and subject to the provisions contained in this section, any company formed, whether before or after the commencement of this Act, in pursuance of any Act of Parliament other than this Act or of any other law for the time being in force or being otherwise duly constituted according to law, and consisting of 1 [two or more members], may at any time register under this Act as an unlimited company, or as a company limited by shares, or as a company limited by guarantee, in such manner as may be prescribed and the registration shall not be invalid by reason only that it has taken place with a view to the company's being wound up:

Provided that—

(i) a company registered under the Indian Companies Act, 1882 (6 of 1882) or under the Indian Companies Act, 1913 (7 of 1913) or the Companies Act, 1956 (1 of 1956), shall not register in pursuance of this section;

(ii) a company having the liability of its members limited by any Act of Parliament other than this Act or by any other law for the time being in force, shall not register in pursuance of this section as an unlimited company or as a company limited by guarantee;

(iii) a company shall be registered in pursuance of this section as a company limited by shares only if it has a permanent paid-up or nominal share capital of fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in the one way and partly in the other, and formed on the principle of having for its members the holders of those shares or that stock, and no other persons;

(iv) a company shall not register in pursuance of this section without the assent of a majority of such of its members as are present in person, or where proxies are allowed, by proxy, at a general meeting summoned for the purpose;

(v) where a company not having the liability of its members limited by any Act of Parliament or any other law for the time being in force is about to register as a limited company, the majority required to assent as aforesaid shall consist of not less than three-fourths of the members present in person, or where proxies are allowed, by proxy, at the meeting;

(vi) where a company is about to register as a company limited by guarantee, the assent to its being so registered shall be accompanied by a resolution declaring that each member undertakes to contribute to the assets of the company, in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.

[(vii) a company with less than seven members shall register as a private company.]

(3) In computing any majority required for the purposes of sub-section (1), when a poll is demanded, regard shall be had to the number of votes to which each member is entitled according to the regulations of the company.

1. On 2 May 2022, the Sole Arbitrator issued Procedural Order No. 1, in which the Procedural Rules and the Provisional Timetable were set out.

2. On 4 July 2022, [DNP] filed its Statement of Claim.

3. On 20 September 2022, the [Partnership] filed its Statement of Defence and Counterclaim.

4. On 25 October 2022, [DNP] filed its Reply and Defence to Counterclaim.

[…]

7. On 22 November 2022, upon the Sole Arbitrator’s invitation dated 17 November 2022, the [Partnership] commented on [DNP’s] email of 17 November 2022, stating that it maintained its position as set out in its email of 14 November 2022. The [Partnership] further informed the Sole Arbitrator that it intended to amend paragraph 20(c) of its Defence and Counterclaim dated 20 September 2022 and provided its proposed timetable regarding this amendment.

[…]

12. On 4 January 2023, [DNP] informed the Sole Arbitrator of the Parties’ agreement on the [Partnership’s] request to amend the Defence and Counterclaim and the costs of the amendment and requested the Sole Arbitrator to issue an order reflecting the Parties’ agreed terms.

13.  On the same date, 4 January 2023, the Sole Arbitrator issued Procedural Order No. 2, reflecting the Parties’ agreed terms on the [Partnership’s] request to amend the Defence and Counterclaim and the costs of the amendment conveyed to the Sole Arbitrator on 4 January 2023 by [DNP].

14.  On 9 January 2023, [DNP] filed its amended Reply and Defence to Counterclaim.

15.  On 10 January 2023, the [Partnership] filed its amended Defence and Counterclaim.

[…]

29. On 28 April 2023, based on the Parties’ confirmation, the Sole Arbitrator fixed the hearing dates for 18 to 20 October 2023.

[…]

34. By email of 31 May 2023, Selvam LLC, the law firm which was representing the [Partnership], informed the Sole Arbitrator that it would no longer be acting for the [Partnership] and requested the Sole Arbitrator to direct all further correspondence to the [Partnership’s] representatives directly.

35. On 1 June 2023, the Sole Arbitrator sent an email to the Parties stating that according to the Sole Arbitrator’s records, the [Partnership] was represented in this arbitration also by Mr. M.P. Shenoy, and invited the [Partnership] to clarify whether it was represented by Mr. M.P. Shenoy only, or whether it would like to retain additional or new counsel in these proceedings, and if so, to inform the Sole Arbitrator of the contact details of the additional or new counsel. Furthermore, the Sole Arbitrator invited [DNP] to inform her whether the Parties were able to exchange the list of witnesses (which was due by 31 May 2023) and to provide any comments on the Selvam LLC’s email of 31 May 2023.

36.  On 6 June 2023, the [Partnership’s] representative, Mr. [A], informed the Sole Arbitrator that the [Partnership] was in the process of appointing new counsel based in Singapore and requested until 25 June 2023 to identify new counsel to be briefed in the proceedings. Mr. [A] further stated that Mr. M.P. Shenoy was not appearing in the proceedings. He added that the [Partnership] wished to appoint Uday Shankar Associates, Indian counsels, and requested that all email correspondence for the [Partnership] be sent to the Uday Shankar Associates’ email addresses.

[…]

38. On 9 June 2023, the Sole Arbitrator granted the [Partnership] until 23 June 2023 to appoint and brief new counsel and directed it to update the Sole Arbitrator by the same deadline.

[…]

41. On 5 July 2023, the [Partnership’s] representative, Mr. [A], informed the Sole Arbitrator that the [Partnership] had engaged PDLegal LLC to represent it, and that Mr. Peter Sir along with his team would be appearing in the arbitration proceedings and would be filing the relevant documents shortly.

42.  On 7 July 2023, PDLegal LLC informed the Sole Arbitrator that it had just been instructed to act for the [Partnership]. On behalf of the [Partnership], counsel requested an extension of 4 weeks (i.e., up to 4 August 2023) to serve the [Partnership’s] witness statement (which was due by 10 July 2023) and an extension of 14 days (i.e., to 21 July 2023) to take instructions from the [Partnership] on the document production issue.

[…]

52. On 30 July 2023, [DNP] requested an extension of four working days, until 4 August 2023, for the Parties to exchange the Factual Witness Statements. [DNP] informed the Sole Arbitrator that it had conferred with the [Partnership], and the [Partnership] had confirmed that it had no objection to extension, provided that the deadlines in S/N 2 and 3 of the Revised Procedural Timetable (service of reply factual witness statements and submission of Joint List of Issues) were extended to 25 August 2023 and 8 September 2023, respectively; and that the deadlines in S/N 4 to 6 (Pre-Hearing Conference, Submission of Opening statements and Hearing Bundles and Hearing) remained as fixed.

53.  On 30 July 2023, the Sole Arbitrator approved the request and issued a revised Procedural Timetable for the remainder of the proceedings, based on the Parties’ agreement. According to the Revised Procedural Timetable dated 30 July 2023, the next step in the proceedings was for the Parties to serve their factual and expert witness statement(s) by 4 August 2023.

54.  On 3 August 2023, the [Partnership] filed an application to amend its Defence and Counterclaim (“Amendment Application”), which contained the [Partnership’s] proposed further amendments to the amended Defence and Counterclaim that had been filed on 10 January 2023.

55.  On 4 August 2023, the Sole Arbitrator invited [DNP] to comment on the [Partnership’s] application by 8 August 2023. The Sole Arbitrator further informed the Parties that the deadline of 4 August 2023 for the “Parties to serve their factual and expert witness statement(s)” was not extended and remained the same and the Parties were expected to serve their factual and expert witness statement(s) on 4 August 2023.

56.  On the same date, 4 August 2023, based on [DNP’s] request, the Sole Arbitrator granted the Parties until 8 August 2023 to serve their factual and expert witness statements. The Sole Arbitrator informed the Parties that the remaining submissions and deadlines in the revised Procedural Timetable dated 30 July 2023 remained unchanged.

57.  On 9 August 2023, the Parties filed their respective Factual Witness Statements.

58.  On 11 August 2023, [DNP] filed its response to the [Partnership’s] Amendment Application.

59.  On 17 August 2023, the [Partnership] filed its reply to [DNP’s] response to the [Partnership’s] Amendment Application.

[…]

61.  On the same date, 21 August 2023, the Sole Arbitrator informed the Parties that she would decide on the [Partnership’s] Amendment Application in due course. The Sole Arbitrator further informed the Parties that the remaining submissions and deadlines in the Procedural Timetable dated 30 July 2023 remain unchanged.

62. In its Amendment Application dated 3 August 2023, the [Partnership] seeks leave to amend its amended Defence and Counterclaim dated 10 January 2023. The [Partnership] summarizes the proposed amendments to its pleading as follows:

•  After PDLegal LLC was appointed as counsel for the [Partnership], it was instructed by the [Partnership] that [Company N] had initiated five proceedings against the [Partnership] before the Karkala Court, Udupi District, Karnataka, India (“Indian Court Proceedings”) under the provisions of Section 138 of the Negotiable Instruments Act, 1881. As per the Memorandum of Understanding dated 24 July 2020 (“MOU”) between [DNP] and the [Partnership], [Company N] was appointed as the “custodian of cargo.”

•  Although the [Partnership] had provided post-dated cheques to [Company N] for demurrage charges, clearing costs, warehouse rental charges, insurance charges, and security charges, due to concerns about the quality of supplied cashews and the suspicion that [DNP] was selling the cargo to third parties, the [Partnership] issued stop payment instructions to its [banker], for these cheques on the basis that the sums reflected in the cheques were neither due nor payable by the [Partnership].

•  Out of eight cheques given to [Company N], five were dishonoured due to the stop payment instructions.

•  [Company N] initiated the Indian Court Proceedings on 22 January 2021 and 9 April 2021 (i.e., before [DNP] initiated the current arbitral proceedings) for the recovery of a total sum of INR 30,300,000 for demurrage charges, clearing costs, warehouse rental charges, insurance charges, and security charges. [Company N] alleged that it was entitled to that amount since it provided services to the [Partnership] as a custodian of the cargo, “which comprises part of the subject matter of the present dispute based on which identical reliefs for charges have been claimed by [DNP] in the present proceedings.”

•  [DNP], in paragraph 33 its Statement of Claim, sought to demonstrate losses totaling INR 52,692,796.74, the calculation of which included amounts paid towards demurrage charges, clearing costs, warehouse rental charges, insurance charges, and security charges. While [DNP] stated in paragraph 13.3 of its Statement of Claim that the [Partnership] was to make payments for these charges to [Company N], [Company N] had already initiated proceedings against the [Partnership] for the recovery of INR 30,300,000, even prior to the commencement of the present arbitral proceedings.

•  Accordingly, [DNP] is not entitled to claim any amounts towards demurrage charges, clearing costs, warehouse rental charges, insurance charges, and security charges, as calculated in paragraph 33 of the Statement of Claim. Such sums were not payable to either [DNP] or [Company N]. At present, the Indian Court Proceedings are ongoing with the next case hearing scheduled for 14 August 2023.

97. Finally, the Sole Arbitrator notes that she does not consider that the [Partnership’s] proposed amendments (even if they were to be allowed) directly affect the claim in question or the quantum of the claim sum. Based on the Parties’ submissions, the Sole Arbitrator observes that the Indian Court Proceedings were initiated by [Company N] against the [Partnership] on the basis that the cheques that were presented to [Company N] were dishonoured. However, as rightly stated by the [Partnership], [Company N] is not a party to the MOU, which means that it is not a party to the arbitration agreement between [DNP] and the [Partnership]. In this arbitration, [DNP] claims the loss [DNP] (and not [Company N]) has allegedly suffered. Thus, it is the Sole Arbitrator’s understanding that the Indian Court Proceedings do not affect the claim or the quantum in this proceeding. This conclusion seems to be accepted, albeit indirectly, by the [Partnership] as well, which has stated that [Company N] “is not a party to the arbitration agreement and therefore, the decisions by the Tribunal would not have any effect on the Indian Court Proceedings.” Furthermore, the Sole Arbitrator is not convinced by the [Partnership’s] argument regarding “double recovery.” Based on the Parties’ submissions before her, it is the Sole Arbitrator’s understanding that the issue of “double recovery” (if any) would only arise in the event that [Company N] succeeds in obtaining a judgment against the [Partnership]. In fact, [Company N] has not yet obtained a judgment against the [Partnership], nor has it been compensated based on such judgment.

37  A critical foundational principle in arbitration is that the parties choose their adjudicators. Central to this is the notion of party autonomy. Just as the parties enjoy many of the benefits of party autonomy, so too must they accept the consequences of the choices they have made. The courts do not and must not interfere in the merits of an arbitral award and, in the process, bail out parties who have made choices that they might come to regret, or offer them a second chance to canvass the merits of their respective cases. This important proscription is reflected in the policy of minimal curial intervention in arbitral proceedings, a mainstay of the Model Law and the IAA (see BLC v BLB [2014] 4 SLR 79 (“BLC”) at [51]–[53]).

38  In particular, there is no right of appeal from arbitral awards. That is not to say that the courts can never intervene. However, the grounds for curial intervention are narrowly circumscribed, and generally concern process failures that are unfair and prejudice the parties or instances where the arbitral tribunal has made a decision that is beyond the scope of the arbitration agreement. It follows that, from the courts’ perspective, the parties to an arbitration do not have a right to a “correct” decision from the arbitral tribunal that can be vindicated by the courts. Instead, they only have a right to a decision that is within the ambit of their consent to have their dispute arbitrated, and that is arrived at following a fair process.

39  In the light of their limited role in arbitral proceedings, the courts must resist the temptation to engage with what is substantially an appeal on the legal merits of an arbitral award, but which, through the ingenuity of counsel, may be disguised and presented as a challenge to process failures during the arbitration. A prime example of this would be a challenge based on an alleged breach of natural justice. When examining such a challenge, it is important that the court assesses the real nature of the complaint. Among the arguments commonly raised in support of breach of natural justice challenges are these:

(a) that the arbitral tribunal misunderstood the case presented and so did not apply its mind to the actual case of the aggrieved party;

(b) that the arbitral tribunal did not mention the arguments raised by the aggrieved party and so must have failed to consider the latter’s actual case; and

(c) that the arbitral tribunal must have overlooked a part of the aggrieved party’s case because it did not engage with the merits of that part of the latter’s case.

Although such arguments may be commonly raised, more often than not, they do not, in fact, amount to breaches of natural justice.

… If the facts are also consistent with the arbitrator simply having misunderstood the aggrieved party’s case, or having been mistaken as to the law, or having chosen not to deal with a point pleaded by the aggrieved party because he thought it unnecessary (notwithstanding that this view may have been formed based on a misunderstanding of the aggrieved party’s case), then the inference that the arbitrator did not apply his mind at all to the dispute before him (or to an important aspect of that dispute) and so acted in breach of natural justice should not be drawn.

… [T]he proper approach a court should take is to ask itself if what the tribunal did (or decide not to do) falls within the range of what a reasonable and fair-minded tribunal in those circumstances might have done’. This test is a fact-sensitive inquiry to be applied from the arbitrator’s perspective: China Machine at [98] and [104(c)]–[104(d)].

226 […] An analysis of the award and the chain of reasoning in it reveals that this is not a case in which the tribunal posed the correct questions to itself but, through error of fact or law, arrived at the wrong answers to those questions. This is a case in which the tribunal failed entirely to appreciate the correct questions it had to pose to itself, let alone apply its mind to determining those questions. It therefore rendered its award in breach of the fair hearing rule and in breach of natural justice.

170  In our judgment, there is a principle to be drawn from this and it is this: if a party intends to contend that there has been a fatal failure in the process of the arbitration, then there must be fair intimation to the tribunal that the complaining party intends to take that point at the appropriate time if the tribunal insists on proceeding. This would ordinarily require that the complaining party, at the very least, seek to suspend the proceedings until the breach has been satisfactorily remedied (if indeed the breach is capable of remedy) so that the tribunal and the non-complaining party has the opportunity to consider the position. This must be so because if indeed there has been such a fatal failure against a party, then it cannot simply “reserve” its position until after the award and if the result turns out to be palatable to it, not pursue the point, or if it were otherwise to then take the point. After all, the requirement of a fair process avails both parties in the arbitration and to countenance such hedging would be fundamentally unfair to the process itself, to the tribunal and to the other party. In the final analysis, it is a contradiction in terms for a party to claim, as CMNC now does, that the proceedings had been irretrievably tainted by a breach of natural justice, when at the material time it presented itself as a party ready, able and willing to carry on to the award. If a party chooses to carry on in such circumstances, it does so at its own peril. The courts must not allow parties to hedge against an adverse result in the arbitration in this way.

66  While the respondent referred only to procedural unfairness (ie, breach of natural justice) and did not expressly mention excess of jurisdiction, we agreed with counsel for the respondent, Mr Cavinder Bull SC (“Mr Bull”), that the Tribunal nevertheless had sufficient notice of the gist of the respondent’s objection, ie, that the EOT Defence was new and unpleaded. Such an objection was equally relevant to the excess of jurisdiction point. In other words, we did not think it necessary in this case for the respondent to have explicitly identified the specific ground for setting aside (eg, breach of natural justice or excess of jurisdiction). It was sufficient that the respondent had set out the substance of its objection. This was unlike in China Machine where, despite the setting-aside applicant’s contention that “the prospects of a fair arbitration had been irretrievably lost as a result of the [t]ribunal’s management of its procedure”, the applicant never raised this objection at all to the tribunal for its consideration. Instead, the applicant’s conduct during the arbitration had at all times suggested that it was ready, able and willing to proceed with the hearing (see China Machine at [165]–[172]). This was clearly not the case here.

67  Finally, we took the view that it was not necessary for the respondent to have specifically intimated to the Tribunal that it intended to commence setting-aside proceedings if its objections were ignored. In this regard, our observation in China Machine that a complaining party would ordinarily be required to “seek to suspend the proceedings until the breach has been satisfactorily remedied” must be understood in the context of that case, where the complaint in question was that there had been a “fatal failure in the process of the arbitration” such that the “prospects of a fair arbitration had been irretrievably lost” (see China Machine at [165] and [170]). Furthermore, the alleged breach of natural justice in China Machine pertained to a relatively early stage of the arbitration, before the main evidentiary hearing had commenced. In those circumstances, it was only fair that the complaining party should have raised its objections rather than keeping silent and proceeding with the arbitration.

[emphasis in original]

In case cargo is sold on Landed Quality basis, it is the buyer’s responsibility to clear the goods within 7 days after goods arrive at destination port. In case buyer fails to clear the goods in time, any variation in quality of cargo cleared after 7 days but before 15 days of arrival of goods at discharge port, seller will be liable for 50% of the penalty on quality as per discharge port inspection. In case cargo is cleared after 15 days of arrival at destination, seller is not liable for any quality claim whatsoever.

What is the amount of the 10% Advance and 10% Deposit that [the Partnership] was obliged to pay by 23 August 2020 pursuant to the MOU?

Sub-issues

(a)  What is the total price of the Arrived Cargo?

(b) Whether the Contractual Penalty on the Burkina Faso 023 Cargo affects the computation of the amount of the 10 % Advance and the 10% Deposit, as alleged by [the Partnership].

(c) If the answer to (b) is yes, how is the Contractual Penalty on the Burkina Faso 023 Cargo computed?

[…]

343. [DNP] provided a breakdown of the value of the Arrived Cargo in [Mr Z’s] 1st WS at paragraph 19 (S/N 1-18), based on invoices submitted by [DNP] to [Company N]. The [Partnership] also provided a breakdown of the Arrived Cargo in its Opening Statement at paragraph 17. Although the invoice amounts regarding the Arrived Cargo provided by both Parties are the same, the Parties’ calculations in respect of the Arrived Cargo (and thus the calculation of the 10% Deposit and 10% Advance) are different. According to the Sole Arbitrator’s calculation, the total amount of the Arrived Cargo based on the breakdown provided by the Parties is USD 2,174,824.41 (which corresponds to the amount indicated by the [Partnership] in its Opening Statement).

344. The Sole Arbitrator thus finds that the total price of the Arrived Cargo on 24 July 2020 was USD 2,174,824.41.

346. The Sole Arbitrator considers that the contractual penalty on the Burkina Faso 023 Cargo does not affect the computation of the amount of the 10% Advance and 10% Deposit. The MoU does not include any provision stating that 10% Advance and 10% Deposit shall be calculated by taking into account the contractual penalty (or the contractual premium). Instead, the Sole Arbitrator finds that contractual penalty would only be relevant when taking delivery of the Cargo, and not at the time of arrival of the Cargo. Accordingly, it cannot be taken into account in the computation of the amount of the 10% Advance and 10% Deposit, which, per the terms of the MoU, are based only on the value of the Arrived Cargo. The [Partnership] failed to provide any evidence or persuasive argument to the contrary.

347. Having found that the contractual penalty on the Burkina Faso 023 Cargo does not affect the computation of the amount of the 10% Advance and 10% Deposit, it is not necessary for the Sole Arbitrator to assess how the Contractual Penalty on the Burkina Faso 023 Cargo is computed at this point.

What is the amount of the 10% Advance and 10% Deposit that [the Partnership] was obliged to pay by 23 August 2020 pursuant to the MOU?

Sub-issues

[…]

(e) Whether there is a valid agreement between the parties on 14 September 2020 that in addition to the Contractual Penalty, [DNP] would also provide a discount of USD 50.00 per MT to the price of the Burkina Faso 023 Cargo, as alleged by the [Partnership].

(f) If the answer to (e) is yes, whether the discount of USD 50.00 per MT also applied to the other Arrived Cargo, as alleged by the [Partnership].

Whether the [Partnership’s] email dated 14 September 2020 constitutes a valid acceptance of [DNP’s] Proposal to provide a discount of USD 50.00 per MT to the price of the Burkina Faso 023 Cargo in addition to the Contractual Penalty, as alleged by the [Partnership].

[emphasis added]

410. The [Partnership’s] position is that it accepted [DNP’s] proposal of a discount of USD 50 per MT over and above the “1:1 basis” to settle the matter amicably on 14 September 2020 via email. Similarly, [Mr A’s] 1st WS states in paragraph 38 that on 14 September 2020, via email, he accepted Mr [Z]’s discount offer and thereby created a binding agreement in this regard.

(e) Whether there is a valid agreement between the parties on 14 September 2020 that in addition to the Contractual Penalty, the Claimant would also provide a discount of USD 50.00 per MT to the price of the Burkina Faso 023 Cargo, as alleged by the Respondent.

(f) If the answer to (e) is yes, whether the discount of USD 50.00 per MT also applied to the other Arrived Cargo, as alleged by the Respondent.

[…]

1. Whether the Respondent’s email dated 14 September 2020 constitutes a valid acceptance of the Claimant’s Proposal to provide a discount of USD 50.00 per MT to the price of the Burkina Faso 023 Cargo in addition to the Contractual Penalty, as alleged by the Respondent.

We are finding it difficult to accept deep discounts especially when we are stuck with financing problems and there is a limit of taking losses. We are unable to do any new business due to our working capital stuck in this cargo[;] however to give a respect and subject to your quick clearing the cargo before 11th of September, we can agree to reduce $50 per mt apart from RBS claim as per contract for this 765 MT. In case you insist for double penalty beyond 2 lbs we are unable to extend this $50 per mt discount. I appeal to you please make the commitment good and do not delay payment of your committed clearing charges plus 10% advance latest [b]y 11th September. …

… Also please look into the Burkina Faso 765 mts qualty issues. We have bought 48 lbs cargo. On an anticipation the initial cargo will be one or two lbs more. But it is unfortunate the quality is 43–45 lbs. No one will accept 48 lbs cargo in 43 lbs at 1:1 basis. Kindly look into the matter on a processor basis and at least allow 100 usd additional discount over and above the RBS report.

420. Based on the above-described correspondence, the Sole Arbitrator observes the following. On 4 September 2020, [DNP] proposed to provide a discount of USD 50.00 per MT on the price of the Burkina Faso 023 Cargo in addition to the contractual penalty, subject to the [Partnership] taking delivery of the Burkina Faso 023 Cargo against full payment before 11 September 2020. On 9 September 2020, the [Partnership] counter-proposed that [DNP] provide a discount of USD 100.00 per MT in addition to the contractual penalty. On the same date, [DNP] proposed to take back the Burkina Faso 023 Cargo. Although [DNP] contends that this was rejected by the [Partnership], there seems to be no record of any response to [DNP’s] 9 September 2020 proposal before 11 September 2020. Ultimately, the [Partnership] did not make payment or take delivery of the Burkina Faso 023 Cargo before 11 September 2020, or at all. While the [Partnership’s] email dated 14 September 2020 stated “[k]indly arrange the discount on Burkina as per our previous discussions,” it is not clear whether this statement referred to [DNP’s] proposed discount of USD 50.00 per MT (made on 4 September 2020), or to the [Partnership’s] counter-proposal of USD 100.00 per MT (made on 9 September 2020). In any event, as the [Partnership] did not make payment before 11 September 2020, the [Partnership’s] purported acceptance of [DNP’s] proposal on 14 September 2020 had no effect, because such acceptance did not conform to the terms of the offer.

Dear sir

Please seen the calculation. While Burkina has been a problem origin this year it’s not possible for us to accept any discount if you are putting double penalty.

My suggestion was $50 per mt basis single penalty as per RBS report for this particular first lot of Burkina

Sunit please make calculations on above line and sent to [the Partnership].

… On 2 September 2020, Mr [Z] of [DNP] sent an email to the Broker and Mr [A] and stated that it was not possible for [DNP] to accept any discount if the Respondent was putting “double penalty” and that [DNP’s] “suggestion was $50 per mt basis single penalty as per RBS report for this particular first lot of Burkina” (Exhibit R-18, [Mr Z’s] 1st WS, Tab 12, p. 275) On 3 September Mr [A] declined this offer further requested Mr [Z] to consider a discount of USD 100 per MT over and above the contractual penalty (Exhibit R-19).

As discussed and agreed in details, please ensure compliance as under:

a. You will make all clearing cost + 10% advance before coming Friday i.e. 25th September 2020. Please also make payment of warehouse charges and interest due up to September.

b. All Burkina or any other cargo will be subject to 1:1 penalty as per contract as per RBS Report. There is no discount beyond it. Needless to remind that due to your default in payments as per MOU we have suffered huge losses in consequence mainly on demurrage of our on port cargoes.

We request you when you want to mix the cargo for example IVC + Burkina, for example you can pay for one bill of IVC and one bill of burkina. We will release you both bills and then mix/match is your quality management on which we have nothing to say. However we can’t allow to release any cargo for mix match until it is paid.

We hope you will not fail again. We are committed to support you and extend our best services always, however please note that in case you do not make payment again on time for item no. (a) noted above, we will be compelled to declare your default under MOU and we will have to sell the stock at our own to bring necessary liquidity needed in our side.

We are looking forward for your payment as you promised.

Dear Sir,

We don’t intend to mix Burkina Faso with IVC. We will only mix the 43 lbs Burkina with 45.5 lbs Burkina. Moreover we will be selling IVC separately in order to clear the cargo at the earliest. We will be settling the 10% advance and clearing charges before Sept 30th as per our teletalk. Rest all OK.

 […]

XI) Should the buyer’s written confirmation of this contract not be received by the seller within one day of issuance of the contract and/or should the buyer fail to remit the advance within the time stipulated by the contract, the seller shall have the right to postpone/cancel shipment of the cargo without being liable for delay in shipment/non-shipment.

[…]

XVII) Seller will not file the Custom IGM in favour of Buyer until full payment is received. Once documents sent to buyer bank, its buyer duty to track arrival of cargo and make timely payment to ensure Timely filing of custom IGM in favour of buyer. If any delay in payment causes Amendment in custom manifest or demurrage of cargo for whatsoever reason, it will be solely on buyer’s account. In case of delay in payment, seller has right to Cancel the contract and consider It as default from buyer on account of non-payment and claim the negative market difference (if any) from buyer, also in case the documents remain unpaid and till arrival of the cargo, seller has right to sale the cargo to any other buyer and buyer of this contract confirm that there is no need of separate NOC for the custom/IGM amendment/change and this contract is to be considered cancelled.

101.  The Award failed to consider that the evidentiary hearing proved otherwise. [Company N] was not only a representative and a custodian but the legal owner of the Remaining Cargo as title was transferred to it. The transfer of title of the Remaining Cargo to [Company N] was completely unaddressed or considered by the Tribunal. This is a substantial breach of natural justice as there was a clear failure to consider a critical submission that could have changed the outcome of the Award. The sheer fact that this possibility even exists makes the affirmation of the Award prejudicial.

59  Although the concept of public policy of the State is not defined in the Act or the Model Law, the general consensus of judicial and expert opinion is that public policy under the Act encompasses a narrow scope. In our view, it should only operate in instances where the upholding of an arbitral award would “shock the conscience” (see Downer Connect ([58] supra) at [136]), or is “clearly injurious to the public good or … wholly offensive to the ordinary reasonable and fully informed member of the public” (see Deutsche Schachbau v Shell International Petroleum Co Ltd [1987] 2 Lloyds’ Rep 246 at 254, per Sir John Donaldson MR), or where it violates the forum’s most basic notion of morality and justice: see Parsons & Whittemore Overseas Co Inc v Societe Generale de L’Industrie du Papier (RAKTA) 508 F 2d 969 (2nd Cir, 1974) at 974. This would be consistent with the concept of public policy that can be ascertained from the preparatory materials to the Model Law. As was highlighted in the Commission Report (A/40/17), at para 297 (referred to in A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary by Howard M Holtzmann and Joseph E Neuhaus (Kluwer, 1989) at p 914):

In discussing the term “public policy”, it was understood that it was not equivalent to the political stance or international policies of a State but comprised the fundamental notions and principles of justice … It was understood that the term “public policy”, which was used in the 1958 New York Convention and many other treaties, covered fundamental principles of law and justice in substantive as well as procedural respects. Thus, instances such as corruption, bribery or fraud and similar serious cases would constitute a ground for setting aside.

[emphasis in original]

206  In the present case, there is no reason why a breach of the FEMA Regulations or the laws of India, without more, would “shock the conscience” or violate the “most basic notions of morality and justice”. If Mr Patnaik’s submissions are taken to their logical conclusion, then any minor illegality or regulatory infringement by a contract in its place of performance would ipso facto lead to the conclusion that international comity, and thus Singapore public policy, would be breached so that the arbitral award would have to be set aside. The public policy ground under Art 34(2)(b)(ii) of the Model Law is a narrow ground and does not lead to that conclusion. I therefore reject Mr Patnaik’s submission that Art 34(2)(b)(ii) of the Model Law would have been satisfied, even if the SSSA and 2014 SPA, as amended, were found to be illegal because of a breach of the FEMA Regulations or the laws of India. [emphasis in original]

52  The claimant did not adduce any expert evidence on Malaysian law to show that it is illegal for the first respondent to have beneficial ownership of the Built Facilities. The only persuasive authority before the court was the KLHC Decision which held that there was no contravention of the CMA and the CMLR (see [68] below).

53  Even on a plain reading of the provisions, as the claimant invited me to do, the position was not as clear-cut as the claimant made it out to be. Though reg 5(a) of the CMLR prohibits a foreign company from applying for the requisite licence, neither of the provisions relied on by the claimant prohibits a foreign company from being a beneficial owner of the relevant facilities through ownership of a Malaysian-incorporated subsidiary that has the requisite licence. In any event, in the absence of expert evidence, I was unable to make a finding that Malaysian law was breached.

…there is insufficient reason to hold that upholding the awards despite the illegality of the provision of the margin financing without a licence would shock the conscience, be clearly injurious to the public good, be wholly offensive to the reasonable and fully informed member of the public, violate Singapore’s most basic notion of morality and justice, or otherwise conflict with the public policy of Singapore in accordance with the authorities.

105 The function of the expert witness on foreign law was described in MCC Proceeds Inc v Bishopsgate Investment Trust plc [1999] CLC 417 at [23], cited in Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal [2008] 2 SLR(R) 491 (“Pacific Recreation”) at [76], as

(1) to inform the court of the relevant contents of the foreign law; identifying statutes or other legislation and explaining where necessary the foreign court’s approach to their construction;

(2) to identify judgments or other authorities, explaining what status they have as sources of the foreign law; and

(3) where there is no authority directly in point, to assist [the court] in making a finding as to what the foreign court’s ruling would be if the issue was to arise for decision there.

106  As made clear in Pacific Recreation at [77]–[78], the expert should first place the relevant raw sources of foreign law before the court, which is a requirement under O 40A r 3(2)(b) of the Rules, and the purpose of obtaining expert evidence is not only to place the content of the foreign law before the court, but also to obtain the expert’s opinion as to such law’s effect. In this regard, the Court of Appeal in Pacific Recreation cited (at [78]) Baron de Bode’s Case (1845) 8 QB 208 at 251; 115 ER 854 at 870:

Properly speaking, the nature of such evidence is not to set forth the contents of the written law, but its effect and the state of law resulting from it. The mere contents, indeed, might often mislead persons not familiar with the particular system of law…

… Also, Mr [Z] explained at the Hearing that the dates on the relevant commercial invoices are irrelevant as it is [DNP’s] “standard format” in its computer system that [DNP] “keep[s] the invoice date same as the BL [Bill of Lading] date” (Hearing Transcript (19 December 2023), page 82, lines 14 – page 84 line 1).