Court upheld an arbitral award, dismissing challenges on public policy and enforceability, stressing narrow interpretation of grounds for setting aside under Arbitration Act 2005.

Introduction

[1] On 14 October 2021, the Plaintiff, Q & M Dental Group (Malaysia) Sdn Bhd ("Q&M"), referred their disputes with the Defendants for arbitration ("Arbitration") to the Singapore International Arbitration Centre ("SIAC") and a final award was made by the Arbitrator in favour of Q&M on 21 June 2024 ("Final Award").

[2] Enclosure 1 is the Originating Summons (ex-parte) filed by the Plaintiff for the recognition and enforcement of the Final Award ("OS") which Court allowed on 27 August 2024 ordering that the Final Award be recognised as binding and a judgment be entered in terms of the Final Award ("Ex-Parte Order").

[3] Enclosure 10 is the Notice of Application filed by the 1st, 2nd and 4th Defendants to set aside the Ex-Parte Order ("Setting Aside Application") on the grounds that the Final Award is said to be in conflict with the public policy of Malaysia and was not enforceable as at the date of the Ex-Parte Order.

[4] After hearing oral submissions from counsel, I dismissed the Setting Aside Application with costs on 11 December 2024.

Background Facts

[5] Prior to 11 March 2013, 1st, 2nd and the 3rd Defendants owned the subject company known as AR Dental Supplies Sdn Bhd ("AR Dental"). AR Dental is a company in the business of providing supplies of dental materials and equipment for dental surgeries as well as dental laboratories. The composition of shareholders of AR Dental at the material time was as follows:

[6] On 11 March 2013, by a Sale and Purchase Agreement ("SPA"), Q & M purchased an aggregate of 70% shareholding in AR Dental from the 1st, 2nd and 3rd Defendants, for a consideration sum of RM & 8,400,000.00. Thereafter, the composition of AR Dental became as follows:

[7] On 5 July 2013, parties entered into a Shareholders' Agreement ("SHA") to set out their respective rights and obligations as shareholders in AR Dental. This was further supplemented by the 1st Supplemental Shareholders' Agreement dated 5 July 2013 ("1st Supplemental SHA") and 2nd Supplemental Shareholders Agreement dated 8 December 2014 ("2nd Supplemental SHA") (collectively referred to as "SHAs"). At the heart of the SHAs, the 1st, 2nd and 3rd Defendants guaranteed that Q&M shall receive 70% of the minimum After Tax Distributable Profit of the aggregate sum of RM 8,000,000.00 ie, RM 5,600,000.00, as dividends from AR Dental over a period of 6 years, failing which the 1st, 2nd and 3rd Defendants would be liable to pay to Q & M the guaranteed dividend ("Dividend Guarantee Scheme").

[8] Further, as part of the 2nd Supplemental SHA, the 4th Defendant, a company owned by the 1st, 2nd and 3rd Defendants, executed a Memorandum of Deposit ("Memorandum of Deposit") and agreed to deliver and deposit the required documents with Q&M in relation to a property owned by the 4th Defendant ("Property") as security for payment on behalf of the 1st, 2nd and 3rd Defendants arising from their obligations under the Dividend Guarantee Scheme.

[9] On 14 October 2021, Q&M referred its disputes to SIAC which culminated in the Arbitration and contended that the Defendants breached the SPA, SHAs and/or Memorandum of Deposit (collectively "Agreements"), in that, among others:

(a) the 1st, 2nd and 3rd Defendants failed to pay the outstanding sum of RM 5,353,998.00 as Dividends Payable under the Dividend Guarantee Scheme;

(b) the 1st, 2nd and 3rd Defendants failed to cause the 4th Defendant and the 4th Defendant failed to deliver and deposit with Q&M the resolution of the board of directors and shareholders of the 4th Defendant for the sale of the Property;

(c) the 1st, 2nd and 3rd Defendants failed to comply with Q&M's demands following its exerci