Case Summaries

BBA and others v BAZ and another matter [2020] SGCA 53


28 May 2020

Case summary

BBA and others v BAZ and another matter [2020] SGCA 53
Civil Appeal Nos 9 and 10 of 2019

Decision of the Court of Appeal (delivered by Quentin Loh J):

Outcome: Court of Appeal dismisses appeals brought by respondents in the arbitration and declines to set aside the award. 

Pertinent and significant points of the judgment

  • Court of Appeal endorses the distinction between awarding interest on or upon damages on one hand, and interest as damages on the other: at [55].
  • Court of Appeal holds that issues of time bar which arise from the expiry of statutory limitation periods go towards admissibility and not jurisdiction, hence may not be reviewed de novo by the seat court under Singapore law: at [73].
  • Court of Appeal reiterates that it ill behoves a party to challenge an award at the seat court on the basis of an excess of jurisdiction or a breach of natural justice when it did not raise those points before the tribunal: at [49], [90], [93] and [94].


1 Civil Appeal No 9 of 2019 (“CA 9”) and Civil Appeal No 10 of 2019 (“CA 10”) arose from the sale and purchase of a controlling 64% stake of the shares (“the Shares”) in a company (“C”). C was India’s largest manufacturer of generic pharmaceutical products. The buyer was BAZ, a Japanese corporation. The sellers comprised the family members of C’s founder and several companies controlled by them (“the Sellers”). The Sellers were led by BBA, a grandson of C’s founder. Five of the Sellers were minors (“the Minors”).

2 The sale and purchase agreement (“SPA”) contained an arbitration clause providing for arbitration in Singapore. Clause 13.14.1 of the SPA prohibited the arbitrators from awarding “punitive, exemplary, multiple or consequential damages”. Clause 13.14.4 provided that the award “shall include interest from the date of any breach or other violation of this Agreement and the rate of such interest shall be specified by the arbitral tribunal”.

3 Disputes arose regarding the circumstances under which the SPA was concluded. BAZ alleged that the Sellers had concealed from it the existence of an internal report detailing how C engaged in data falsification to expedite the obtaining of regulatory approval for numerous drug products around the world (“the Report”). It transpired that after an employee of C below the whistle in 2005 by secretly disclosing the Report to the authorities, the United States Department of Justice (“DOJ”) and Food and Drug Administration (“FDA”) began investigations in early 2006. Negotiations with the DOJ and FDA led to a settlement or consent decree in December 2011, and C made provision for paying an anticipated settlement sum of US$500 million.

4 In November 2012, BAZ commenced arbitration in Singapore against the Sellers, twenty of whom were eventually named as respondents in the arbitration. BAZ alleged misrepresentation and concealment of facts regarding the extent of the investigations by the DOJ and FDA.

5 In April 2014, BAZ (who was by then a controlling shareholder of C) announced the merger of C with another company (“Y Co”) under which all C shareholders would receive 0.8 Y Co shares for every one share in C (“the Merger”).

6 Substantive hearings for the arbitration occurred from September to October 2014. In March 2015, the Merger was completed, and in April 2015, BAZ sold all its shares in Y Co in the open market.

7 In an award dated 29 April 2016 (“the Award”), the majority of the tribunal (“the Majority”) held in favour of BAZ.


  1. The Majority rejected the Sellers’ argument that BAZ’s claim was time-barred under the Indian Limitation Act 1963 (Act No 36 of 1963) (India) (“Indian Limitation Act”). It made a finding of fact that BAZ had acted with reasonable diligence in the entire context and could not have discovered the Report before 19 November 2009, which meant that its commencement of arbitration was within the limitation period.
  2. The Majority awarded about INR 25 billion in damages to BAZ for fraudulent misrepresentation after finding BBA liable for fraud. It calculated this sum by taking the difference between what BAZ paid for and eventually received in exchange for the Shares, subtracting any benefits BAZ was able to obtain, and finally accounting for the six-year time gap between the SPA and the Merger by applying a discount rate of 4.44% to obtain the present day value of money. The rate of 4.44% was the midpoint of BAZ’s Weighted Average Cost of Capital (“WACC”). The WACC’s use as a discount rate had been suggested by the Sellers’ expert.
  3. The Majority awarded pre-award interest of about INR 8 billion, being computed as simple interest of 4.44% per annum on the damages sum of INR 25 billion commencing from the date of closing of the SPA to the date of the Award.


8 BAZ applied in Originating Summons No 490 of 2016 (“OS 490”) for leave to enforce the Award, and obtained an ex parte order for enforcement on 18 May 2016. OS 490 was opposed by the Sellers, who split themselves into two groups.


  1. The Minors filed Summons No 4497 of 2016 (“SUM 4497”) to set aside the ex parte enforcement order obtained by BAZ. Separately, they filed Originating Summons No 787 of 2016 (“OS 787”) seeking to set aside the award.
  2. The remaining Sellers (“the OS 784 Sellers”) filed Summons No 4499 of 2016 (“SUM 4499”) to set aside the ex parte enforcement order and Originating Summons No 784 of 2016(“OS 784”) to set aside the Award.


9 In BAZ v BBA and others [2018] SGHC 275, the High Court judge (“the Judge”) dismissed the OS 784 Sellers’ setting aside application and SUM 4499, but allowed the Minors’ setting aside application and SUM 4497. Only the OS 784 Sellers appealed. On appeal, three of the OS 784 Sellers sought separate representation to bring CA 10, while the remaining OS 784 Sellers brought CA 9.

The decision below


10 In OS 784 and OS 787, the Sellers sought to set aside the Award on the following grounds:


  1. The award of damages, either by itself or together with the pre-award interest, was beyond the scope of the tribunal’s jurisdiction because this constituted “punitive, multiple and/or consequential damages” prohibited by the arbitration agreement. Hence the Award should be set aside under Art 34(2)(a)(iii) of the UNCITRAL Model Law (“ML”).
  2. There were breaches of natural justice in that the Majority had failed to consider, amongst other things, the Sellers’ position that the tribunal was not permitted to apply a discount rate, so the Award should be set aside under s 24(b) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”).
  3. The issue of time limitation could be reviewed de novo given that the time limitation was a jurisdictional issue under Indian law, and the Majority was wrong to find that the claim was not time-barred, so the Award should be set aside.
  4. The Award against BBB, BBD, BBG, BBH and BBM (“the Non-Management Sellers”) was against the public policy of Singapore because they should not be bound by the fraudulent misrepresentation of BBA, and the Award was disproportionate to the sizes of their respective shareholdings in C, so it should be set aside as against them under Art 34(2)(b)(ii) of the ML.
  5. The Award against the Minors was against the public policy of Singapore and should be set aside under Art 34(2)(b)(ii) of the ML.


11 The Judge held that: (a) the Majority did not exceed their jurisdiction, (b) there were no breaches of natural justice, (c) time bar was not a jurisdictional issue such that the determination of whether the claim was time-barred was for the tribunal to deal with, and (d) there was no breach public policy in relation to the Non-Management Sellers; but (e) that the Award should be set aside as against the Minors for being in breach of public policy.

Issues on appeal


12 On appeal, the appellants in CA 9 (“the CA 9 Appellants”) repeated their submission that the awards of damages as well as pre-award interest were beyond the parties’ scope of submission to arbitration, because this was compensation for loss of opportunity that amounted to consequential damages. When taken together with the damages award, the pre-award interest also amounted to double recovery and therefore also constituted punitive or multiple damages. The CA 9 Appellants further submitted that the seat court was entitled to undertake a de novo review of whether BAZ’s fraud claim was time-barred.

13 The appellants in CA 10 (“the CA 10 Appellants”) aligned themselves with the CA 9 Appellants on the excess of jurisdiction submission. Additionally, they argued that the finding of joint and several liability gave rise to three grounds of challenge: (a) a breach of natural justice, because the Majority found the Sellers jointly and severally liable to BAZ without hearing submissions on this point; (b) an excess of jurisdiction, because the Majority found the Sellers jointly and severally liable even though this was not a matter submitted for determination to the tribunal; and (c) a breach of public policy, because this ignored the principle of shareholders’ limited liability and was also an egregious error of law in the making of an award.

14 The Court of Appeal (“CA”) therefore had to decide on the following issues:

  1. Did the Majority, in awarding damages and/or pre-award interest as it did, fall afoul of the prohibition on “punitive, exemplary, multiple or consequential damages” in the arbitration clause (“the Express Prohibition”) and thereby exceed its jurisdiction (“the Damages and Interest Issue”)?
  2. Is the seat court entitled to undertake a de novo review of whether BAZ’s fraud claim is time-barred under the Indian Limitation Act, and if so, would that claim be time-barred (“the Time Bar Issue”)?
  3. Does the Majority’s finding of joint and several liability give rise to a challenge on the grounds of breach of natural justice, excess of jurisdiction, or public policy (“the Joint and Several Liability Issue”)?


The Court of Appeal’s decision

The Damages and Interest Issue

15 The CA held that the award of damages, either alone or taken with the grant of pre-award interest, did not fall afoul of the Express Prohibition in the arbitration clause: at [61].

16 First, the Majority did not award consequential damages in breach of the Express Prohibition, whether by using a discounting method per se or by using the WACC as the discount rate. The CA 9 and CA 10 Appellants had sought to rely on various portions of the Award that allegedly indicated the Majority’s intention to compensate for loss of opportunity. However, reading these portions of the Award in context, it became apparent that the Majority was trying to bring the figures from the Merger back to 2008 to account for the time value of money. There was nothing impermissible about using the WACC as the discount rate, given that this was a figure put forth by the Sellers’ expert and legal counsel in the arbitration. Even if the Majority erred in using the WACC as the appropriate discount rate, that was an error that went towards the merits that should not be canvassed before the seat court: at [45], [46], [47], [48], [49] and [50].

17 Secondly, awards of interest were not subject to the Express Prohibition. The tribunal’s power to award interest was addressed in a separate sub-clause from the Express Prohibition. Moreover, there was a distinction between awarding interest on or upon damages, and interest as damages. While the latter being a form of damages could presumably be subject to the Express Prohibition, the former was not: at [55].

18 Thirdly, the CA rejected the CA 9 and CA 10 Appellants’ argument that when taken together with the damages awarded, the pre-award interest amounted to double recovery and therefore also constituted punitive or multiple damages. The Majority had quantified damages by calculating BAZ’s loss in 2008 by reference to the Merger, discounted backwards to 2008. Once they obtained this initial quantum, they were entitled to award interest on the damages to bring that sum forward in time: at [59] and [60].

The Time Bar Issue

19 The CA held that (a) it was Singapore law, as the lex arbitri as well as the law of the seat court, that governed the question of whether limitation should be classified as going towards jurisdiction or admissibility (“the classification question”); and (b) under Singapore law, issues of time bar arising from statutory limitation periods went towards admissibility. For this reason, a de novo review of whether BAZ’s fraud claim was time-barred could not be undertaken: at [64] and [84].

20 Regarding (a), the CA rejected the CA 9 Appellants’ argument that the seat court in answering the characterisation question should have regard to the position taken under the governing law of the arbitration agreement and substantive agreement because that was consistent with the parties’ intentions. The parties’ intention was a neutral factor. It could equally be said that parties, despite all the connecting facts to India and Indian law, specifically chose Singapore as the seat. That meant and included the choice of the seat’s laws to govern the classification question independently of their choice of governing law: at [66].

21 Regarding (b), the CA held that the “tribunal versus claim” test underpinned by a consent-based analysis should apply for purposes of distinguishing whether an issue went towards jurisdiction or admissibility. The “tribunal versus claim” test asked whether the objection was targeted at the tribunal (in the sense that the claim should not be arbitrated due to a defect in or omission to consent to arbitration), or at the claim (in that the claim itself was defective and should not be raised at all). In the former case the objection would go towards jurisdiction, and in the latter case, towards admissibility. Consent served as the touchstone for whether an objection was jurisdictional because arbitration was a consensual dispute resolution process: at [76], [77] and [78].

22 Applying the “tribunal versus claim” test, issues of time bar which arose from the expiry of statutory limitation periods went towards admissibility as they attacked the claim. It made no difference whether the applicable statute of limitations was classified as substantive (extinguishing the claim) or procedural (barring the remedy) in the private international law sense. In both cases the complaint was that the claim was stale and therefore defective, and not – barring express provision in the arbitration clause – that the bringing of claims that were out of time under limitation laws fell outside the scope of consent to arbitration: at [80].

23 Since there was no express provision regarding statutory time bars in the arbitration clause in the SPA, the CA rejected the CA 9 Appellants’ attempt to recast the statutory time bar objection as a jurisdictional one by asserting that there was no consent to the bringing of time-barred claims to arbitration. The CA 9 Appellants’ contention was also rejected because they had not pursued the time bar point as a jurisdictional objection in the arbitration despite being aware of this possibility: at [81].

The Joint and Several Liability Issue

24 The CA rejected the CA 10 Appellants’ arguments, in relation to breach of natural justice, excess of jurisdiction, and breach of public policy, which were premised on the Majority’s finding that the CA 10 Appellants were found jointly and severally liable for damages: at [85].

25 First, there was no breach of the fair hearing rule. Although the tribunal did not invite submissions on joint and several liability, the short answer was the Sellers did not take the point before the tribunal at all, such that the tribunal could not be faulted for not foreseeing any complications and not dealing with this issue in depth in the Award. The onus was on the Sellers to highlight the issue of joint and several liability to the tribunal, in light of the state of the terms of reference and the pleadings. Having failed to make the point on joint and several liability before the tribunal, it was too late to bring this complaint before the seat court in setting aside proceedings: at [90], [91] and [94].

26 Secondly, there was no excess of jurisdiction in making a finding of joint and several liability. The imposition of joint and several liability per se did not transform an otherwise unobjectionable award of damages into punitive or exemplary damages: at [95] and [98].

27 Thirdly, it would not be a breach of public policy to find the Sellers jointly and severally liable to BAZ. The doctrine of shareholders’ limited liability did not limit shareholders’ liability in relation to torts committed by their agents in the sale of their shares. Moreover, mere errors of law would not cross the threshold of making out a breach of Singapore’s public policy: at [100] and [102].

28 The appeals were therefore dismissed. Costs of $100,000 and $90,000, inclusive of disbursements, were awarded to BAZ for CA 9 and CA 10 respectively: at [106].


This summary is provided to assist in the understanding of the court’s judgment. It is not intended to be a substitute for the reasons of the court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the court’s judgment.