Singapore High Court Upholds Jurisdictional Boundaries, Partially Sets Aside Arbitral Award

Introduction

In a rare instance of judicial intervention, the Singapore High Court partially set aside an arbitral award in India Glycols Ltd and others v Texan Minerals and Chemicals LLC [2025] SGHC 28. 

The Court found that the Tribunal had decided on matters that were beyond the scope of the arbitration, a key ground for a challenge under Art 34(2)(a)(iii) of the UNCITRAL Model Law on International Commercial Arbitration. This update examines the grounds for the Court’s decision and offers a reminder of the strict limits on an arbitral tribunal’s jurisdiction.

Siraj Omar LLC, working closely with the team from Khaitan & Co, were delighted to secure this favourable outcome for our client.

Background of the Dispute

The case involved a dispute between Texan Minerals and Chemicals LLC (“Texan”), a US-based industrial products company, and India Glycols Ltd (“IGL”), an Indian chemical manufacturer. The two companies had a Manufacturer Representation Agreement (“MRA”) that appointed Texan as the exclusive distributor for IGL’s hand sanitizer products in the US. The MRA required the products to comply with U.S. Good Manufacturing Practices (“GMP”).

When Texan discovered the products did not meet GMP standards, it initiated arbitration proceedings. However, Texan’s claim wasn’t just against IGL, but also against its wholly owned subsidiary, IGL Chem International USA LLC (“ICI”), and a director of ICI, Mr Dharmesh Mehta (“Dharmesh”) (together the “Respondents”). Texan sought, among other things, damages for non-compliance. The Tribunal found the Respondents jointly and severally liable for breaching the MRA and awarded the Claimant US$261,275.89 in damages for storage and disposal costs (after deducting a set-off by the Respondents for payment of outstanding invoices in respect of the hand sanitizer products).

The Respondents, represented by our firm, challenged the award in the Singapore High Court, arguing (amongst other things) that the award on liability against ICI and Mr Dharmesh was made in excess of the Tribunal’s jurisdiction. This was because neither ICI nor Mr Dharmesh were parties to the MRA, and no evidence was adduced by Texan to show that ICI or Mr Dharmesh breached the MRA.

The High Court’s Decision

The Court agreed with the Respondents and granted their application to set aside part of the award under Article 34(2)(a)(iii) of the Model Law.

The Applicable Test

In assessing whether the arbitral award was made in excess of the tribunal’s jurisdiction, the Court adopted the two-stage enquiry set out in Bloomberry Resorts and Hotels Inc and another v Global Gaming Philippines LLC and another [2021] 2 SLR 1279 at [69(a)] and CBX and another v CBZ and others [2022] 1 SLR 47 at [11]): –

(a) first, the court determines what matters were within the scope of the submission to the arbitral tribunal (the “First Stage”); and

(b) second, the court determines whether the arbitral award involved such matters or a new difference outside the scope of the submission to arbitration (the “Second Stage”).

Crucially, the Court confirmed that once an applicant shows that the Tribunal had exceeded its jurisdiction by addressing matters beyond the scope of the submission to arbitration, there is no further requirement for the applicant to show that it had suffered real or actual prejudice (citing CBX and another v CBZ and others [2022] 1 SLR 47 at [11], citing GD Midea Air Conditioning Equipment Co Ltd v Tornado Consumer Goods Ltd and another matter [2018] 4 SLR 271 at [60]; Swire Shipping Pte Ltd v Ace Exim Pte Ltd [2024] 5 SLR 706 at [45]–[46]).

The First Stage

Under the first stage, the Court found that the parties’ pleadings, evidence and submissions, viewed individually and globally, consistently illustrate that the claim for breach of the MRA was brought against IGL only and not against the Respondents collectively.

The use of the term “Respondents” in the pleadings did not mean that the Claimant was advancing a claim against the Respondents “collectively”. Given the legal principles of privity of contract, it was contrived for the Claimant to contend that a breach by IGL of the MRA would result in “collective” liability by all three Respondents. Further, when read in context, the Claimant’s prayer for an award in its favour to be “issued jointly against Respondents” could only refer to an instance where it had succeeded in a claim or claims that engaged the liability of all the Respondents.

Accordingly, only the issue of whether IGL had breached and was liable for breaches of the MRA fell to be determined in the Arbitration.

The Second Stage

Under the second stage of the enquiry, the Court found that the Tribunal had acted in excess of jurisdiction in deciding that ICI and Dharmesh were liable for breach of the MRA. The Court found that this was not a case of mere error in the Tribunal’s reasoning. Were a matter capable of falling within the scope of the submission to arbitration if a tribunal believed it to be so, the entire point of a challenge under Art 34(2)(a)(iii) of the Model Law would be defeated.

Severability

Although the final award of damages in the amount of US$261,275.89 was derived by the Tribunal setting off US$127,698.20 from the storage costs of US$388,974.09, the Court did not consider that this would pose an issue with the severability of the award, and saw fit to set aside the Tribunal’s decision on liability against ICI and Dharmesh, while leaving intact the decision against IGL.

In this regard, the Court found that when the Tribunal allowed the defence of set-off for the sum of US$127,698.20, it did not specify how this entitlement was to be divided between the Respondents. This meant that the set-off could be applied by the Respondents singly or jointly. Thus, if the Court were to set aside the Tribunal’s decision that ICI and Dharmesh were liable for the storage costs, IGL would still retain the right to the set-off granted by the Tribunal, and the damages award against IGL in the amount of US$261,275.89 would remain valid.

Commentary

The high threshold required to set aside arbitration awards is well-established in Singapore, and the Courts are generally hesitant to interfere in decisions even if they are founded on mistakes of fact or law. Nevertheless, this case serves as a valuable reminder that where it is clear that a tribunal has acted in excess of jurisdiction, as the Respondents have successfully shown in this case, the Court will step in to right the wrong.

In arbitral proceedings which involve claims or counterclaims by or against multiple parties (as well any defence of set-off), parties should take care to examine their award and ensure that the terms of the award are clearly and appropriately framed. It may be useful to have separate provisions for the amounts awarded in respect of each claim or counterclaim, rather than to have the award of damages expressed as the sum or difference.

The High Court’s decision can be retrieved at https://www.elitigation.sg/gd/s/2025_SGHC_28