Skip to content
laws.sgby aturio
Grounds publishedDecided 15 Jun 2009
Contents

High Court

AAY and others v AAZ

Feedback & support

[2009] SGHC 142Case no. Suit [Y]

What happened, in plain English

There is no plain-English summary of this judgment yet.

Ask about this judgment

Laws this judgment relies on

Grounds of decision

Official text from eLitigation

  1. Chan Seng Onn J:

  2. Introduction

  3. [1] The defendant is a company incorporated in New Jersey, USA, with its principal place of business in Milpitas, California, USA. The first plaintiff joined the defendant’s branch in Singapore, BBZ, around 1981 as a sales and service engineer. The second plaintiff joined BBZ around 1982, and the third plaintiff joined BBZ around 1985 as a financial controller. Subsequently, BBZ was incorporated and became known as CCZ, a wholly owned subsidiary of the defendant until 12 October 1992, and now known as DDZ. The first plaintiff became the managing director and an executive director of CCZ, the second plaintiff became the marketing manager and the third plaintiff remained as the financial controller. CCZ was in the business of marketing, distributing, producing and servicing equipment, including automated industrial cleaning systems and test equipment. Its business was divided into a third-party distributorship division and a production and Z division, to market and distribute products manufactured by third-party manufacturers and the defendant (as well as its related companies) respectively.

  4. [2] In late August 1992, XZ, the defendant’s president, chief executive officer and representative in this suit, received an anonymous letter dated 22 August 1992 about an alleged scheme by the plaintiffs to destroy CCZ by diverting sales from CCZ to a new company set up by them for this purpose, EEZ. Acting upon the anonymous letter of 22 August 1992, XZ immediately sent CCZ’s auditors to the premises of CCZ, without prior notice to any of the plaintiffs, to collect documents for immediate inspection to ascertain the truth of the allegations in the letter. No wrongdoings were uncovered from this inspection.

  5. [3] Upon further investigation, XZ discovered that the company EEZ had changed its name to FFZ. When XZ confronted the first plaintiff with the allegations in the anonymous letter, the first plaintiff denied any involvement in FFZ. XZ did not pursue the matter.

  6. [4] In September-October 1992, the plaintiffs suddenly resigned from their positions in CCZ. 19 employees from the third-party distributorship division of CCZ resigned en masse without prior notice. This prompted XZ to fly to Singapore on 2 October 1992, upon which he discovered that the third-party distributorship division of CCZ was without a single employee. XZ then decided to sell CCZ’s third-party distributorship division to the first and second plaintiffs, faxing them an offer in the morning of 7 October 1992, and faxing the first plaintiff a second offer that same afternoon. On 8 October 1992, XZ and the first and second plaintiffs recorded their agreement in a document titled “Heads of Agreement” by which the defendant agreed to sell to the first and second plaintiffs all its shares in the capital of CCZ and the first and second plaintiffs paid US$1m to GGZ as part payment of the purchase price. The defendant and the first two plaintiffs subsequently entered into a Sale and Purchase Agreement dated 12 October 1992 (the “SPA”). Under the SPA, the defendant agreed to sell the third-party distributorship division to the first and second plaintiffs by way of 1 million issued and fully paid-up ordinary shares in CCZ; the production and Z division of CCZ was to be transferred to the defendant and continued under a separate company owned by the defendant. The sale and purchase of the third-party distributorship division was completed on 4 November 1992 and the first and second plaintiffs transferred the business of the production and Z division to the defendant thereafter. Clause 18 of the SPA provided for any dispute arising out of or in connection with the SPA to be referred to and finally resolved by arbitration before an arbitrator whose decision would be final and binding on the parties.

  7. [5] Shortly after the SPA was signed, all the plaintiffs re-joined CCZ. The defendant, believing itself to be a victim of the plaintiffs’ conspiracy to depress the net asset value of CCZ, started civil proceedings in the USA in July 1993 against the first and second plaintiffs and other parties, alleging inter alia fraud, conspiracy, negligent misrepresentation, conversion and federal securities fraud. A US District Court dismissed these proceedings on the grounds of forum non conveniens in December 1993and the motion for re-consideration was dismissed by a US Court of Appeal.

  8. The 1994 Arbitration

  9. [6] The defendant then commenced arbitration proceedings in Singapore against the first and second plaintiffs on 29 August 1994 by issuing a notice of arbitration and nominating YZ of GGZ as the sole arbitrator. YZ accepted the appointment on 1 September 1994. However, the defendant then decided not to proceed with the arbitration because, inter alia, GGZ had been involved in the sale of the shares in CCZ; the arbitration clause in the Sale and Purchase Agreement would not encompass all the claims and remedies sought by the defendant; the third plaintiff was not a party to the Sale and Purchase Agreement and would thus not have been bound by the arbitration clause; and there was in the defendant’s estimation insufficient evidence at that time to prove the defendant’s suspicions as to the plaintiffs’ wrongful behaviour.

  10. Suit [X] and the 1998 Arbitration

  11. [7] In late February 1997, XZ received a second anonymous letter dated 16 February 1997 which supported his suspicions that the plaintiffs had committed various fraudulent acts in depressing the net asset value of CCZ. The letter also referred to one UZ who allegedly had information about the manner in which the plaintiffs had committed these fraudulent acts.

  12. [8] Having executed a deed of indemnity in favour of UZ in exchange for her testimony against the plaintiffs, the defendant thus commenced court proceedings against the plaintiffs, issuing a Writ of Summons on 10 October 1998 in Suit [X] against all the plaintiffs for fraudulent misrepresentation and conspiracy, and against the first plaintiff for breach of fiduciary duties owed to the defendant as sole shareholder of CCZ.

  13. [9] On 11 November 1998, the plaintiffs applied for an order that Suit [X] be dismissed or stayed pending the 1994 Arbitration. Following negotiations, the defendant offered to agree to the reference to arbitration provided the third plaintiff, a non-party to the arbitration clause, agreed to be made a party to such arbitration. The parties agreed by Consent Order dated 23 February 1999 (the “Consent Order”) to refer the entire dispute to arbitration (the “1998 Arbitration”). Order 1 of the Consent Order provided that:

  14. [10] The parties also agreed that the 1994 Arbitration would be abandoned and that there would be no further proceedings in the US against the third plaintiff. A tribunal was constituted and TZ was appointed the sole arbitrator in the 1998 Arbitration. It is pertinent to note here that there was no express provision in the Consent Order concerning confidentiality in the arbitration.

  15. [11] On 30 June 2005, the tribunal issued its partial award on liability, finding the plaintiffs liable for fraudulent misrepresentation and conspiracy. The first plaintiff was also found liable for breach of fiduciary duties owed to the defendant as the sole shareholder of CCZ. Damages were to be assessed at a later date in the second phase of the arbitration.

  16. Sequence of events following the OM

  17. [13] The arbitration proceedings thus continued. By way of letter dated 13 February 2006, the defendant applied for specific discovery of the audited accounts of CCZ for the past 14 years from 4 November 1992. The tribunal allowed the discovery application on 9 May 2006, ordering the plaintiffs to furnish copies of its audited accounts for the period 2 November 1992 to 31 March 2006. On 19 June 2006, the plaintiffs provided copies of CCZ’s audited accounts for 13 consecutive financial years from 1993 to 2005, the unaudited profit and loss account for 9 months ending 31 March 2006 and the unaudited balance sheet as at 31 March 2006.

  18. [14] On 8 August 2006, the defendant made a report to the Commercial Affairs Department of the Republic of Singapore Police Force (the “CAD”), providing in the course of the following week these documents:

  19. (a) contact details of one [S];

  20. (b) polygraph examination documents relating to a polygraph examination that XZ had undergone;

  21. (c) the anonymous letters dated 22 August 1992 and 16 February 1997;

  22. (d) a copy of the partial award issued by the tribunal on 30 June 2005; and

  23. (e) a document obtained in discovery, being page 13 of the audited accounts of CCZ as of 30 June 1993 obtained by the defendant as a result of an order for disclosure issued by the tribunal on 9 May 2006.

  24. [15] On 11 August 2006, the defendant informed the first plaintiff in a letter dated 10 August 2006 that it had lodged a complaint against the plaintiffs with the CAD based on the information obtained in the 1998 Arbitration, and disclosed to the CAD portions of the partial award. The first plaintiff received a package containing the defendant’s letter and the following documents:

  25. (a) the credentials of police officer RZ;

  26. (b) pages 97-106 of the partial award;

  27. (c) a letter dated 20 January 2004 from one QZ setting out the results of a polygraph examination undergone by XZ; and

  28. (d) an undated note from QZ on the polygraph examination.

  29. [16] The letter stated:

  30. [17] On 28 September 2006, the first plaintiff received by fax from PZ a copy of an email which the CAD had sent to XZ:

  31. [18] The plaintiffs were of the view that by the events and correspondence set out above, the defendant had repudiated the arbitration agreement; and by letter dated 29 September 2006 (set out below), the plaintiffs purported to accept the defendant’s repudiation of the arbitration agreement:

  32. [19] The defendant replied on 6 October 2006:

  33. [20] On 23 October 2006, PZ lodged a police report on behalf of XZ against the plaintiffs for cheating. The report enclosed a copy of an email from XZ to PZ to be forwarded to the CAD, which detailed XZ’s version of events as well as his suggestions on how to “break the case open on diversions and tax [avoidance]” by questioning the right witnesses.

  34. [21] The plaintiffs commenced the present suit on 20 October 2006. In a letter dated 26 February 2007, the CAD informed XZ (via PZ) that it would not investigate his complaint:

  35. Issues arising in the present dispute

  36. [22] The plaintiffs brought the present suit against the defendant on the basis of breach of confidentiality, alleging that the defendant had, by the complaint to the CAD, the police report, wrongful disclosure of confidential information to non-parties to the arbitration (namely, one OZ and PZ), and the threats in the letter dated 10 August 2006, evinced a clear and unequivocal intention not to be bound by the arbitration agreement and thus repudiated it. The plaintiffs thus prayed for the following reliefs:

  37. (a) An order to set aside the consent order and discharge the arbitration agreement;

  38. (b) A declaration that the plaintiffs were from 29 September 2006 discharged from all their unperformed primary obligations under the arbitration agreement and consent order;

  39. (c) An injunction to restrain the defendant from taking further steps in connection with the arbitration;

  40. (d) Damages, interest and costs.

  41. [23] The defendant averred that the disclosure to the CAD was within the defendant’s legal and legitimate rights, reasonably necessary to protect the defendant’s legitimate interests, or justified in the public interest. Further or alternatively, the defendant submitted that the plaintiffs had waived any privacy or confidentiality by making such matters public in commencing the OM.

  42. [24] The issues before this court were:

  43. (a) Whether there was a contractual or implied obligation of confidentiality in the 1998 Arbitration, and if so,

  44. (b) Whether this obligation was breached and the nature of such breach,

  45. (i) Whether the breach gave rise to the plaintiffs’ right to terminate the arbitration agreement in the Consent Order,

  46. (ii) Whether the breach was justified or excused in the public interest or the interests of justice;

  47. (c) Alternatively, whether confidence in the 1998 Arbitration was waived when the plaintiffs brought the OM;

  48. (d) Whether the plaintiffs were in any case estopped from terminating the arbitration agreement, having continued in the proceedings after purporting to accept repudiation.

  49. Whether confidentiality was a term of the 1998 arbitration agreement

  50. [25] The Departmental Advisory Committee on Arbitration Law, in its Report on the Arbitration Bill (February 1996) and Supplementary Report on the Arbitration Act 1996 (January 1997), noted that privacy and confidentiality had long been assumed as general principles in English commercial arbitration, subject to important exceptions, and it was only recently that the English courts had been “required to examine both the legal basis for such principles and the breadth of certain of these exceptions, without seriously questioning the existence of the general principles themselves.” The advisory committee observed that there was “of course no statutory guidance to confidentiality in the UNCITRAL Model Law whatever; and indeed, in a different context, Lord Mustill [had] recently warned against an attempt to give in the abstract an accurate exposition of confidentiality at large (see In re D (Adoption Reports: Confidentiality) [1995] 3 WLR 483 [at 496D])”. Heeding Lord Mustill’s sound warning, as well as the advisory committee’s firm view that disputes as to the breadth and existence of exceptions to confidentiality and privacy should be resolved “on a pragmatic case-by-case basis”, I do not propose to expound on confidentiality in arbitration beyond the issues raised by the present case.

  51. [27] The consent order provided for the arbitration to be held under the International Arbitration Act (Cap 143A) (“IAA”), which adopts the UNCITRAL Model Law on International Commercial Arbitration (see s 3 IAA). Under Article 19 of the UNCITRAL Model Law, the tribunal has the power to determine the applicable rules of procedure absent agreement by the parties:

  52. (1) Subject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.

  53. (2) Failing such agreement, the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

  54. [29] This letter came very late in the day, to say the least, more than seven years after the ruling and after the present proceedings had been commenced. It was clearly written as an afterthought once confidentiality became a crucial issue in dispute. The plaintiffs argued that the defendant must have waived its objection to the applicability of the SIAC Rules since it failed to object until more than seven years after the ruling of 15 December 1999 was made (see Articles 4 and 19(1) of the Model Law).

  55. The implied obligation of confidentiality in arbitration

  56. [33] In the recent case of John Forster Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184 (“Emmott”), the English Court of Appeal summarised the common law position on confidentiality in arbitration. The court noted at [81] that it was clear that apart from confidentiality in the sense of the inherent confidentiality of trade secrets or other information in documents deployed in arbitration, there was

  57. [34] Lawrence Collins LJ characterised the obligation as a substantive rule of arbitration law, describing its principal features at [105]-[107]:

  58. [35] Lawrence Collins LJ decided in Emmott that on the facts disclosure was required in the interests of justice, adding at [111] that the “interest of justice are not confined to the interests of justice in England. The international dimension of the present case demands a broader view.”

  59. [36] The existence of an obligation of confidentiality in arbitration has been emphatically recognised by the English courts, though with some ambivalence over its precise legal basis, scope and exceptions. In Dolling-Baker v Merrett [1990] 1 WLR 1205 (“Dolling-Baker”) at 1213, Parker LJ characterised the obligation of confidentiality as “an implied obligation arising out of the nature of arbitration itself”:

  60. [37] Citing this passage with approval in Hassneh Insurance Co. of Israel v Steuart J Mew [1993] 2 Ll LR 243 (“Hassneh”) at 246, Colman J added:

  61. [38] Colman J pointed also to:

  62. [39] Colman J thus distinguished the confidential nature of an arbitration award from that of the documents produced in the course of arbitration (whether or not they were per se confidential). There is some force to the argument that the award may be of a different confidential nature from other documents, but I would observe here that the enforcement of arbitration awards and the development of arbitration law in the jurisprudence need not be at the expense of maintaining confidentiality. Parties’ names could be redacted and the courts’ supervisory jurisdiction could be exercised in private and with due regard to confidentiality. If even the fact of a party’s involvement in arbitration would be confidential, the existence and terms of the award must be too.

  63. [40] In Ali Shipping Corporation v Shipyard Trogir [1999] 1 WLR 314 (“Ali Shipping”), Potter LJ disagreed with Colman J’s characterisation of the obligation of confidentiality as an implied term based on custom or business efficacy, holding that it arose as a matter of law:

  64. [41] In Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co of Zurich [2003] 1 WLR 1041 (“Associated Electric”) (which involved the construction of an express confidentiality agreement) at [20], Lord Hobhouse however expressed some reservations about the analysis of the duty of confidentiality as an implied term:

  65. [42] In a marked departure from the evolving English position, the High Court of Australia rejected an implied duty of confidentiality in arbitration in Esso Australia Resources Ltd v Plowman (Minister for Energy and Minerals) [1995] ALR 391 (“Esso Australia”). Mason CJ recognised that arbitrations are private “in the sense that [they are] not open to the public,” describing “the private character of the hearing as something that inheres in the subject matter of the agreement to submit disputes to arbitration” (at p 398). As for confidentiality, Mason CJ appeared to acknowledge that:

  66. [43] However, Mason CJ also considered at 400-401 that:

  67. [44] The Australian High Court thus recognised privacy in arbitration but rejected a general duty of confidence except in relation to documents compulsorily produced (at 403-404), and added that in any event such a duty of confidence might be subject to a “public interest” exception, the precise scope of which remained unclear (at 402). I have already noted the utility of practical measures to prevent confidentiality being lost upon challenge in court, though as far as the award is a factual statement of the parties’ rights and obligations there are other circumstances in which it would have to be disclosed, such as the third type of reason described by Mason CJ, and I would agree that the confidential nature of the award may often differ from that of the other documents. Bearing in mind also that Esso Australia was decided in 1995, I think the more recent English cases have shown that private arbitration has reached that stage where confidentiality has undoubtedly become an essential attribute.

  68. [45] Esso Australia has been criticised by Patrick Neill QC (“Neill”) in his article, Confidentiality in Arbitration. Neill is unconvinced by the supposed distinction drawn between privacy and confidentiality, preferring Toohey J’s reasoning in the High Court’s judgment at 411:

  69. [46] While privacy and confidentiality may, in the abstract, be conceptually distinct, for the purposes of parties to an arbitration seeking to protect the dispute and proceedings from the knowledge of third parties and the public at large, they must be of the same practical import. Interestingly, however, similar reservations were expressed by the court in Associated Electric (per Lord Hobhouse, above) and Emmott. In Emmott Thomas LJ noted at [129] that Department of Economics, Policy and Development of the City of Moscow v Bankers Trust Co [2005] QB 207 (“City of Moscow”) indicated a move to greater privacy but that the obligations of privacy are not absolute. Thomas LJ also noted that as the obligations of privacy and confidentiality, “whether express or implied, are contractual, the parties may modify them by subsequent agreement.”

  70. [47] Thomas LJ said:

  71. [48] In Campbell v MGN Ltd, Lord Nicholls observed at [13]-[14]:

  72. [49] With this jurisprudential context in mind, I now consider the position (to the extent that it has been articulated, and, beyond that, as it should be) in Singapore.

  73. The position in Singapore

  74. [50] Like the UK Arbitration Act 1996, the Singapore Arbitration Act (“AA”) and International Arbitration Act (“IAA”) do not provide specifically for confidentiality in arbitration, though ss 56-57 AA and ss 22-23 IAA allude to this by providing for any party’s application as of right to have hearings otherwise than in open court, as well as measures to preserve the confidentiality of the proceedings, award and decisions by the court in relation to the arbitration. In Myanma Yaung Chi Oo Co Ltd v Win Win Nu (“Myanma”) [2003] 2 SLR 547, Kan Ting Chiu J adopted the English position over the Australian position in Esso Australia. However, Myanma was decided before Emmott, and Kan J was not referred to the Privy Council’s reservations in Associated Electric in relation to Lord Potter’s formulation in Ali Shipping of confidentiality as a term implied by law.

  75. [51] More recently, in International Coal Pte Ltd v Kristle Trading Ltd (“Kristle Trading”) [2009] 1 SLR 945 Lai Siu Chiu J considered at [82]-[84] that:

  76. [52] Lai J thus appeared to adopt the general principle in Associated Electric that the duty of confidentiality should be evaluated in the context of the circumstances of each case, bearing in mind also that different types of confidentiality would apply to different types of documents.

  77. [53] The court in Emmott similarly noted that in different contexts the obligation of confidentiality would operate to result in different consequences. For example, confidentiality would not be an absolute bar to a party to litigation seeking discovery of documents generated in an arbitration. In that case the court would compel disclosure only if it considered it relevant and necessary for the fair disposal of the case. Second, should a party to an arbitration seek the court’s assistance to obtain through a witness summons material deployed in another arbitration (see London and Leeds Estates Ltd v Paribas Ltd (No 2) [1995] 1 EGLR 102), the court would take into account the strong policy in favour of confidentiality in an arbitration, though confidentiality would not necessarily be an absolute bar either. Third, with regard to issues arising about the disclosure of documents on the court file relating to an arbitration, or whether the judgment of a court given in relation to an arbitration should be published, the privacy of arbitration would be an important but not decisive factor. The court would therefore exercise its discretion with privacy or confidentiality being “an important factor in the balance.” As for the fourth kind of case in which a party to an arbitration might have an interest, commercial or otherwise, in disclosing documents generated in an arbitration (including the award) to third parties (as in Hassneh and Insurance Co v Lloyd’s Syndicate [1995] 1 Lloyd’s Rep 272) or in another arbitration (as in Ali Shipping and Associated Electric), disclosure would be permissible to the extent to which it was reasonably necessary for the establishment or protection of an arbitrating party’s legal rights vis-à-vis a third party to found a cause of action or defend a claim.

  78. [54] It thus appears that the discussion has come almost a full circle, the obligation having been characterised in turn as an implied term based on custom or the officious bystander test, then as an implied term in law, and finally as a substantive rule of arbitration law masquerading as an implied term, whose scope, nature and application must be determined in the context of each case and the nature of the information or documents at issue. Perhaps, and this finds some support from the Departmental Advisory Committee’s declining to legislate on confidentiality in the English Arbitration Act in favour of a pragmatic case-by-case approach, the proper characterisation of the obligation of confidentiality is as a general principle or doctrine of arbitration law developed through the common law (as opposed to arbitration statutes). Certainly the obligation of confidentiality does not find expression in the statutes because of its somewhat amorphous scope and exceptions as well as its elusive juridical basis. The Departmental Advisory Committee was also right to point out that parties in doubt should specify the obligation of confidentiality in their arbitration agreements, rather than leaving it to chance that the curial court would be in a jurisdiction that recognises the obligation as a rule of substantive arbitration law. Further, it appears from Esso Australia and USA v Panhandle Eastern Corp (1988) 118 FRD 346 (“Panhandle”) (though see Neill’s caution in Confidentiality in Arbitration, [45] supra, that Panhandle should be limited to its facts) respectively that the Australian and American courts might not enforce such an obligation. Thus parties would do well to heed the caution raised by Lawrence Collins LJ in Emmott at [70], noting that important and widely used arbitral rules such as the ICC Rules and the UNCITRAL Rules are silent on confidentiality:

  79. [55] In summary, therefore, I would characterise the obligation of confidentiality in arbitration as a doctrine of arbitration law developed through the common law rather than the wider corpus of international arbitration law; as has been pointed out, the position in other civil law jurisdictions and indeed even in some other common law jurisdictions such as Australia (as well as the US) may differ significantly. Thus as a principle of arbitration law at least in Singapore and England, the obligation of confidentiality in arbitration will apply as a default to arbitrations where the parties have not specified expressly the private and/or confidential nature of the arbitration. While parties anticipating international arbitration would remain well advised to agree prospectively on the obligation of confidentiality, there is no need to do so where Singapore is to be the seat of the arbitration because confidentiality will apply as a substantive rule of arbitration law, not through the IAA or the AA, but from the common law. As Professor Merkin notes in The Effect of Arbitration on Third Parties, AL Service Issue No 49 at para 17.38, while very few decisions in which express confidentiality agreements have fallen to be construed, “the cases to date have operated on the basis that a confidentiality agreement should in principle be construed as reflecting the common law rules.”

  80. [56] I also find support for this characterisation in ss 22-23 of the IAA and ss 56-57 of the AA, which by conferring on parties the power to ensure and maintain confidentiality over challenges in court as of right, reflect the underlying general principle in Singapore’s arbitration law that arbitrations are not only private but also confidential. Of course, this confidentiality may be lost by parties’ agreement, or if for example a party chooses not to exercise its rights under s 22 IAA by making an application when appropriate.

  81. [57] Quentin Loh SC and Edwin Lee, Confidentiality in Arbitration: How Far does it Extend? (Academy Publishing, 2007) (“Loh and Lee”) suggest at p 109 that the “elements necessary for a cause of action for breach of confidence… fit well with those for breach of arbitration confidentiality.” Their characterisation of this doctrine (at p 113) as one “rooted in equity”, and “a class on its own, lying side by side with commercially confidential information and protection of private information” is not unpersuasive. Nevertheless, whether the doctrine be grounded in equity or tort, or developed independently in the context of arbitration albeit by analogy to other principles (though such analogies to banking law principles and even the Riddick principle have proved to be quite imperfect), it will continue to develop on a case-by-case basis, measured always against the “good yardstick” (as Loh and Lee put it at p110, citing Dunford & Elliott Ltd v Johnson and Firth Brown Ltd [1978] FSR 143 at 148) that the court will recognise and enforce confidentiality only to the extent that it is reasonable to do so.

  82. [58] Finally, while privacy and confidentiality may remain conceptually distinct, given my holding that confidentiality is a substantive common law-developed doctrine of arbitration in Singapore, it would be for parties to submit in appropriate cases where the practical import and consequences of breach of privacy and confidentiality diverge, if at all.

  83. Exceptions to confidentiality – whether the defendant breached confidentiality by making the report and disclosure to the CAD

  84. [59] The courts have been at least as ready to accept that there are exceptions to confidentiality as they have been to accept the existence of the obligation of confidentiality itself. As with the obligation proper, however, the scope and nature of its exceptions have not been exhaustively and precisely identified, and some ink has been spilt equivocating over whether and how they should be categorised. In Ali Shipping at 326-328, Potter LJ recognised four categories of exceptions to the obligation of confidentiality:

  85. [60] However in Associated Electric, the Privy Council (per Lord Hobhouse) questioned the categories enunciated in Ali Shipping, cautioning that these categories failed to distinguish between the confidentiality of the award and the confidentiality of the evidence presented in the proceedings. In Emmott, the court echoed Lord Hobhouse’s admonition against generalisations and the formulation of detailed implied terms, as well as over-reliance on banking principles as in Tournier.

  86. [61] The Court of Appeal in Emmott nevertheless considered two exceptions laid down in Tournier: compulsion by law and duty to the public requiring disclosure (Tournier provided for two other exceptions, where it was reasonably necessary for the establishment or protection of an arbitrating party’s legal rights vis-à-vis a third party in order to found a cause of action or defend a claim, and consent: see Emmott at [101]-[102]). As Merkin notes, despite the warnings in Associated Electric and Emmott, the cases have recognised a series of exceptions to confidentiality as modified from Ali Shipping or illustrated by later cases: consent, order or permission of court, protection of a party’s legitimate interests and the interests of justice. As for confidentiality in relation to the award, Merkin suggests at para 17.34.1 that “the true rule may be that the award itself can be regarded as a factual statement of the respective legal rights and liabilities of the parties.” What is required for disclosure of the award, therefore, is “a link between the two sets of proceedings.”

  87. [62] Thomas LJ distinguished at [127]-[128] the analysis where the issue was whether a party to an arbitration agreement had to disclose the arbitration documents in litigation with a stranger to the arbitration, as in Dolling-Baker v Merrett, and where the issue was whether as between the parties to an arbitration the obligations of privacy and confidentiality affected one party’s ability to use pleadings and arguments produced in the arbitration in specific litigation outside the arbitration. In the former case, the court would employ

  88. [63] There is thus no comprehensive list of exceptions to the obligation of confidentiality; but neither does the court have a general discretion to lift confidentiality. Indeed while the court in Emmott recognised that there were limits to the obligation of confidentiality, it stressed that the possible exceptions to confidentiality must also be discussed in their appropriate context. Specifically (at [87]):

  89. [64] In sum, an examination of exceptions to confidentiality would probably still begin with a reference to the established categories, taking into account the context and circumstances of the case, including the nature of the document(s) sought to be disclosed, to whom disclosure is sought to be made, and for what purpose. Lawrence Collins LJ accepted at [107]:

  90. [65] In the present case, the plaintiffs argued that the defendant had breached confidentiality by disclosing the partial award and other documents in making the report to the CAD. They submitted that this disclosure should be proscribed as it undermined the public interest in encouraging and protecting arbitrations and their confidentiality, citing Matthews & Malek, Disclosure (2007, 3 ed):

  91. [66] The defendant in turn referred to Clerk & Lindsell on Torts (19 ed, 2006) at para 28-32, emphasising that there could be no equity in the disclosure of iniquity:

  92. [67] Similarly, in Initial Services Ltd v Putterill (“Initial Services”) [1968] 1 QB 396 Lord Denning cited Wood V-C’s “vivid phrase: ‘There is no confidence as to the disclosure of iniquity’” and extended the exception to:

  93. [68] The defendant thus submitted that the public interest pointed to excepting from confidentiality obligations a report to the law enforcement authorities based on materials obtained in arbitration which revealed prima facie commission of criminal offences.

  94. [69] It is apposite to clarify here the distinction between an exception to confidentiality and a defence to a breach of confidentiality. Toulson and Phipps, Confidentiality (2 ed. 2006) at paras 22-033 to 22-034, appears to conflate the two:

  95. [70] Thus the cases cited characterise disclosure to the appropriate authorities as an exception, but the learned authors termed it the “public interest defence”. The question is whether disclosure of confidential information arising out of arbitration to the relevant authorities where there is reasonable suspicion of criminal conduct, would be a breach of confidentiality at all – in other words, does the disclosure fall within an exception to confidentiality or does it operate as a defence? If it were an exception, then the scope of the obligation of confidentiality would not even extend to cover disclosure to the proper authorities and the plaintiffs would not be able to establish a prima facie case of breach without showing that the exception did not apply. If it were a defence, then the burden would be on the defendant to prove the defence and justify the disclosure which would not be in breach of the obligation of confidentiality. I consider here, therefore, whether disclosure to the proper authorities where there is reasonable suspicion of criminal conduct is an exception to confidentiality.

  96. [71] I adopt the standard of reasonable suspicion of criminal conduct from the ordinary standard for anyone to make a police report. Reasonable suspicion is of course a lower standard than the standard of being “aware” of the commission or intention to commit a seizable offence under s 22 of the Criminal Procedure Code, but it is echoed in s 39 of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act Cap.65A, discussed in greater detail below; see clause 6 of the Explanatory Statement of the Amendment Act 2007, imposing an obligation to make a report “if a person (for example) reasonably suspects the property to be the proceeds of any offence, so long as the possibility that they may be the proceeds of a drug trafficking offence, serious offence, foreign drug trafficking offence or foreign serious offence cannot be ruled out.” Reasonable suspicion is also the standard applied to justify an arrest without warrant by a police officer under s 32(1)(a) CPC; see Zainal bin Kuning v Chan Sin Mian Michael [1996] 3 SLR 121. This is an objective standard that encourages the public to report suspected criminal acts but does not condone frivolous complaints. Making a police report on reasonable suspicion of criminal conduct is one aspect of an exception in the public interest (as opposed to the “interests of justice” exception concerned with preserving the integrity of judicial proceedings), though not all acts in the public interest would necessarily warrant an exception to confidentiality. The correct characterisation of disclosure to the relevant authorities must be that of an exception, as the jurisprudence has reflected. Lawrence Collins LJ put it beyond doubt in Emmott at [103]:

  97. [72] While the English courts have not had to consider whether an exception exists for disclosure in the public interest in the wider sense of Esso Australia, Lawrence Collins LJ in Emmott noted that it might be a potential fifth category of exceptions. I would venture to suggest that where disclosure to the public at large is sought to be justified on the grounds of public interest, this justification should instead operate as a defence, and the court would have to undertake a balancing exercise weighing the interest in protecting confidentiality against the public interest in disclosure to the public at large. The burden would then be on the defendant to show that such disclosure is necessary in the public interest to the extent that it should be excused from breaching confidentiality. Disclosure to the public at large (for example to the press or over the internet) would completely destroy confidentiality and the defendant must show a compelling public interest to justify such disclosure. It cannot be said that there is no obligation of confidentiality where the information in question is of public interest. A balancing exercise must be undertaken to weigh the importance of this public interest against the interest of protecting confidentiality and it must be for the defendant to convince the court that disclosure is justified. It is clear from Initial Services that there can be no liability for disclosure of wrongdoing to the appropriate authorities. The basis for this is that confidentiality is a lesser interest than the public interest of having criminal wrongdoing revealed to the relevant authorities for their investigation. Disclosure to the appropriate authorities where there is reasonable suspicion of criminal conduct is thus an exception to the obligation of confidentiality which can be broadly categorised as falling within the public interest, though this is not to say that there exists (or should exist) a general public interest exception. The development of other aspects of public interest exceptions will have to be considered as appropriate cases arise. I will now consider whether the defendant’s disclosures fall within this exception.

  98. The defendant’s disclosures to the CAD, PZ and OZ

  99. [73] It is undisputed that the defendant disclosed the following documents to the CAD:

  100. (a) the complete partial award;

  101. (b) a letter dated 20 January 2004 from one QZ setting out the results of a polygraph examination that XZ had undergone on some issues that arose in the arbitration, and an undated note, also from QZ, setting out the steps involved in a polygraph examination;

  102. (c) an anonymous letter dated 22 August 1992 describing what the plaintiffs had allegedly done;

  103. (d) a second anonymous letter dated 16 February 1997 setting out more of what the plaintiffs had allegedly done;

  104. (e) a computer print-out from XZ’s secretary’s computer of the contact details of one SZ; and

  105. (f) page 13 of DDZ’s audited accounts as of 30 June 1993.

  106. [74] The defendant also disclosed documents relating to the arbitration to one PZ and one OZ. XZ stated in his affidavit of evidence-in-chief that he had instructed OZ to send a copy of the entire partial award to the CAD

  107. [75] The plaintiffs alleged that the complaint to the CAD and the defendant’s letter of 10 August 2006 notifying the plaintiffs of this complaint constituted “an attempt by the defendant to intimidate and apply illegitimate and improper pressure on the plaintiffs to settle the defendant’s claim on the latter’s terms.” The plaintiffs also alleged that the defendant made wrongful disclosure of confidential information to PZ and OZ, being non-parties to the arbitration. They further submitted that items (a) and (f) were of “particular concern,” item (f) having been disclosed to the defendant pursuant to the arbitrator’s discovery order and therefore “subject to the same implied undertaking as in court proceedings not to be used for a collateral purpose.”

  108. [76] The defendant pleaded that the documents from QZ, both anonymous letters and the computer print-out of the contact details of SZ were the defendant’s own documents, and that page 13 of DDZ’s audited accounts as of 30 June 1993 had been disclosed inadvertently. Further, the defendant pleaded that:

  109. (a) the disclosures to the CAD were reasonably necessary to protect the defendant’s legitimate interests;

  110. (b) the disclosures to the CAD were justified in the public interest;

  111. (c) the disclosure to OZ was necessary or reasonable to enable the defendant to prepare for the arbitration and to make the disclosures to the CAD;

  112. (d) the disclosure to PZ was necessary or reasonable to enable the defendant to make the disclosures to the CAD.

  113. Disclosure to the CAD and the defendant’s motives

  114. [77] The plaintiffs submitted in their closing submissions that the defendant’s reasons for making the disclosures were irrelevant since it was strictly liable for its contractual breach. They continued to argue, however, that “the evidence is clear that the complaint was made by the defendant for one reason, and one reason only: to coerce the plaintiffs into a settlement on the defendant’s terms.” I agree with the plaintiffs that the defendant’s reasons for making the disclosures to the CAD (“CAD report”) are irrelevant. It is somewhat puzzling that the plaintiffs then devoted a significant part of their submissions to arguing at length that the defendant’s complaint was “actuated by an improper and illegitimate motive – to coerce the plaintiffs into a settlement on the defendant’s terms.” In their reply closing submissions, the plaintiffs then changed their tune and submitted instead that the defendant’s motives for making the CAD report were relevant to the determination of the present action.

  115. [78] The plaintiffs also cited Beckkett Pte Ltd v Deutsche Bank AG [2005] 3 SLR 555, in which the Court of Appeal considered at [37] the conduct and motives of disclosure which were aimed at securing a resolution of the dispute by exerting pressure on the other party, and held that the risk that disclosure of documents would subject the other party to criminal prosecution weighed against allowing the other party to make disclosure. In the present case, the plaintiffs asserted that XZ had improper motives in making the CAD report, stating that threatening people to get his way was “part and parcel of XZ’s modus operandi. In fact, it has become a reflex,” and “XZ is a master at using threats to get what he wants. He has had a lot of practice.”

  116. [79] The significance of disclosure to the relevant authorities being an exception rather than a defence, apart from the difference in the burdens of proof, is also that the defendant’s motives cannot have been relevant. If confidentiality did not extend to prevent disclosure to the CAD, then the defendant (via XZ) was well within its legal rights in making the report to the CAD, and whether XZ hoped to cause the plaintiffs anxiety or prompt them to propose a settlement of the arbitration dispute is quite immaterial as long as he did not seek to extort from or blackmail them – that is, as long as he did not in making the disclosure himself commit an offence. In this case, the public interest would simply be that of having suspected criminal conduct reported and investigated, rather than the public’s interest in knowing the confidential information. Since disclosure to the appropriate authorities is an exception and not a defence to confidentiality, the defendant’s alleged motive must be irrelevant. What is relevant is that factually a report was made to CAD with reasonable suspicion of commission of an offence.

  117. [80] Further, as the defendant points out, the tort of malicious prosecution is a cause of action available to a party against whom bad-faith police complaints have been made, but an element of the tort of malicious prosecution is that there was no reasonable cause for the police complaint. In Robin v Sunrise Investments (Pte) Ltd [1991] SLR 436 (“Robin”) Chao Hick Tin J (as he then was) set out the elements of malicious prosecution: (a) prosecution by the defendant of a criminal charge against the plaintiff before a tribunal into whose proceedings the criminal courts were competent to inquire; (b) that the proceedings terminated in the plaintiff’s favour; (c) that the defendant instituted or carried on the proceedings maliciously; (d) that there was an absence of reasonable and probable cause for the proceedings; and (e) that the plaintiff suffered damage. Here, the plaintiffs did not plead malicious prosecution at all and therefore did not submit on the five elements of the tort. In any case, Chao J held in Robin that mere acquittal did not mean that the criminal proceedings were without reasonable and probable cause, and if reasonable cause was established as a matter of fact based on all the circumstances, it did not matter whether there was malice or not. Reasonable and probable cause was (Robin at [43], citing Hicks v Faulkner (1878) 8 QBD 167 at 171):

  118. [81] Even if it is true that the defendant made the CAD report to prompt the plaintiffs to settle, this cannot found any liability on the defendant’s part. Nor can it render inapplicable the public interest exception of making a police report on reasonable suspicion of criminal conduct. The defendant had ample legitimate grounds to make a complaint based on the arbitrator’s finding in the partial award that the plaintiffs had committed such dishonest and fraudulent acts as setting up FFZ to compete with CCZ while still employed by CCZ, diverting business and staff resources from CCZ to FFZ, removing documents and confidential records from CCZ around July 1992, procuring breaches of CCZ’s exclusive distributorship agreements and the resignation of employees of the marketing and distribution division of CCZ. In addition, the arbitrator found that the plaintiffs had fabricated evidence, which the arbitrator noted was potentially an offence under s 192 of the Penal Code. A report disclosing fabrication of evidence would thus also be considered within the “interests of justice” exception, as well as the general public interest exception of reporting reasonably suspected criminal conduct; the two exceptions are discrete but not mutually exclusive.

  119. [82] In this case, I am of the opinion that the defendant did have reasonable and probable cause based on the arbitrator’s findings in the partial award. It would suffice to complete the point with the following extract from Clerk & Lindsell on Torts (19 ed, 2006) at pp31-32:

  120. [83] Bradford v Pickles [1895] AC 587 and Allen v Flood [1989] AC 1 were both cited with approval in Remus Innovation Forschungs-Und Abgasanlagen-Produktionsgesellschaft mbH v Hong Boon Siong [1999] 1 SLR 179 in the context of parallel import sales made with improper motive: “damage alone is insufficient to found a cause of action even if it results from an evil motive of the defendant. An additional element is necessary, namely, the conduct must be unlawful: in this case a deception must be practised.” Thus the law would not leave the plaintiffs completely without recourse should they indeed be harassed by malicious prosecution, but that was quite rightly not pleaded here. The defendant’s motives, improper or otherwise, are therefore irrelevant to its exercise of its legal right to make a police report based on the arbitrator’s findings in the partial award. I find that the CAD report (including the disclosure of the partial award to the CAD) fell within the exception of disclosure to the appropriate authorities where there was reasonable cause to suspect criminal conduct. The obligation of confidentiality therefore did not apply to proscribe this disclosure.

  121. Disclosure to OZ and PZ

  122. [84] The exception in the public interest of disclosure to the appropriate investigative authorities based on reasonable suspicion of criminal conduct clearly did not apply to the disclosures made to OZ and PZ. OZ was an employee of HHZ, a related company of the defendant, and an executive secretary to the Board of Directors of JJZ, another related company of the defendant. OZ was a witness in the arbitration and was also XZ’s personal secretary in Asia. PZ was a director and an employee of CCZ, a related company of the defendant, and was assisting XZ (who was not resident in Singapore) in making the police report in Singapore. The defendant pleaded that XZ, OZ and PZ were acting as agents of the defendant to carry out its instructions in relation to the arbitration and the police report, as was reasonably necessary in light of the fact that the defendant is a corporate entity.

  123. [85] The plaintiffs submitted that since OZ had to leave the room after giving her evidence in the arbitration, XZ “had full knowledge that matters relating to the arbitration could not be disclosed” to her, much less to PZ who was in no way involved in the arbitration.

  124. [86] Having heard OZ’s evidence, it was amply clear that she was XZ’s personal secretary and in charge of filing, printing and organising his papers from her office in Malaysia. I find that the disclosure made to OZ did not result in a breach of confidentiality as she was acting purely in the capacity of XZ’s secretary as the defendant’s agent, even though technically she was employed by a related company of the defendant rather than the defendant itself.

  125. [87] PZ was a director of CCZ along with XZ himself. He testified that he had merely delivered the package containing the documents listed above to the CAD and lodged the police report, and that he did not open the package and did not know what it contained. I have no reason to doubt his evidence. In any case, even if he did have some knowledge of the arbitration award and the documents in the package, I also find that PZ acted as an agent of the defendant in making the police report on XZ’s behalf. The correspondence from the CAD clearly shows that he held himself out and was treated in this capacity as XZ’s representative. I therefore find that there was also no breach of confidentiality in disclosing documents to PZ in relation to the CAD report.

  126. [88] There is no issue in the present case of any disclosure to the press or the public at large; the report and disclosure made to the CAD were kept confidential, and there is no allegation that either OZ or PZ disseminated the information that they obtained in acting as the defendant’s agents for the purposes of making the CAD report. Lord Denning’s essential proviso that the disclosure must be justified in the public interest (see Initial Services above) is therefore not offended. Put another way, the disclosure cannot be disproportionate or excessive; and in this case it was not. Thus there was no breach of confidentiality in the defendant making the disclosures to OZ and PZ.

  127. Nature and consequences of the defendant’s disclosure absent the application of an exception to confidentiality

  128. [89] Assuming arguendo that the obligation of confidentiality extended to prohibit disclosure of the award to the CAD and the defendant was consequently in breach of the arbitration agreement, I turn now to consider the nature and consequences of such breach – specifically, whether it had the effect, as the plaintiffs alleged, of repudiating the arbitration agreement and releasing the plaintiffs from all future performance of the agreement including the assessment of damages pursuant to the partial award.

  129. Whether the defendant’s breach was repudiatory

  130. [90] It is trite law that an arbitration agreement, like any contract, can be repudiated: see Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation [1981] AC 910 at 980; Al Thani v Steven Steel Company Incorporated 1996 QB (hearing date: 28 June 1996):

  131. [91] The plaintiffs submitted that a breach of confidentiality would repudiate the arbitration agreement because confidentiality was a condition of the arbitration; alternatively, it was a term “the breach of which deprived the [plaintiffs] of substantially the whole of the benefit they sought to derive from” the arbitration agreement.

  132. Whether confidentiality was a condition of the arbitration agreement

  133. [92] It is clear that the breach of a condition entitles the innocent party to treat himself as discharged from the contract. Whether a term is a condition of a contract in turn depends on whether it has been so categorised by statute or jurisprudence, or whether the parties have agreed in the contract expressly or by necessary implication that the term is to be a condition: see Chitty at 24-039. I have found that the parties were subject to a duty of confidentiality as a doctrine of arbitration law in Singapore. Assuming arguendo that this duty of confidentiality did extend to prohibit disclosure to the appropriate authorities where there was reasonable cause to suspect criminal conduct, I nevertheless find that confidentiality was not a condition of the arbitration agreement. Confidentiality was not an express term of the arbitration agreement since the SIAC Rules did not apply; and the parties certainly did not agree that it was to be a condition of the arbitration agreement. Confidentiality was also not a condition by virtue of any statute or case authority, and I do not find that XZ’s acknowledgement that confidentiality was a feature of the arbitration amounted to an admission that it was a condition of the arbitration agreement. I therefore reject the plaintiffs’ submissions on this point.

  134. Whether the plaintiffs were deprived of substantially all the benefit of the arbitration agreement

  135. [93] The plaintiffs also strenuously asserted that the arbitration agreement had been repudiated as they had been deprived of substantially all the benefit of the arbitration agreement; confidentiality was very important to protect their reputation with their customers, and because of the confidential nature of documents that would have to be produced in the arbitration.

  136. [94] In Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 66 Diplock LJ framed the question as such:

  137. [95] Again, I am not convinced that the plaintiffs entered into the arbitration agreement with confidentiality as the paramount consideration. The defendant pointed to testimony by the third plaintiff that she had been quite indifferent to the issue of confidentiality when she agreed to be party to the arbitration. Certainly the defendant did not share such a concern, desiring only to have the claim settled so that he could recover any damages as soon as possible. As the aggrieved party, the defendant would have been happy for proceedings to be public and in court, but for the possibility of delay due to potential concurrent criminal proceedings. The consent order to transfer proceedings to arbitration in order to join the third plaintiff was a compromise reached in the light of the plaintiffs’ application for a stay of Suit [X] since the 1994 arbitration was still pending.

  138. [96] Furthermore, the defendant’s act did not amount to a breach so serious and fundamental that it “struck at the heart of the plaintiffs’ legitimate expectations.” Had the defendant for example procured the dissemination of the partial award in the newspapers or on the internet to all the plaintiffs’ customers and business associates, this conduct could well have deprived the plaintiffs of substantially the whole benefit of the arbitration agreement as it would have completely undermined both confidentiality and privacy in the arbitration. However, the defendant’s disclosure to the CAD did not have this effect since the CAD would have kept both the documents disclosed to them and their investigations into the matter confidential. In this case, the defendant’s disclosure did not even result in any further investigations as the CAD decided not to pursue the defendant’s complaint.

  139. [97] The plaintiffs also cited Heyman v Darwins [1942] AC 356 where Lord Wright held at 379:

  140. [98] I do not accept the plaintiffs’ submission that the defendant’s conduct evinced an intention to no longer be bound by the terms of the arbitration agreement. The defendant had already obtained an award on liability and was eager to proceed to the assessment of damages stage of the arbitration. There was no reason for the defendant to terminate the arbitration agreement and lose what it had fought hard to secure in the form of the partial award. After the CAD wrote to XZ on 26 February 2007 informing him that they were unable to investigate, the defendant took no further action with regard to the complaint.

  141. [99] I therefore do not find that the defendant’s conduct amounted to repudiation of the arbitration agreement. The disclosure and complaint to the CAD were not such that the plaintiffs were deprived of substantially all the benefit of the arbitration agreement; nor did the defendant objectively evince an intention to no longer be bound by the arbitration agreement. On the contrary, it was applying pressure to speed the arbitration along to the stage of assessment, and the bona fides of its complaint must be evaluated on the strength of the grounds it had to believe that the plaintiffs had committed an offence.

  142. [100] The plaintiffs argued that they were “discharged from all unperformed obligations still existing under the arbitration agreement” since they had accepted the defendant’s alleged repudiatory breach. They relied on Bremer Vulkan where the House of Lords held at 980-I that:

  143. [101] Having found that the defendant did not repudiate the arbitration agreement by making the complaint and disclosures to the CAD, I would just note that this extract from Bremer Vulkan was concerned with a supervening event or breach prior to the issue of an award, and may be distinguishable from the present case, where liability had already been determined pursuant to the partial award before the alleged breach of confidentiality. The plaintiffs had already challenged and failed to set aside the award, and I do not take Bremer Vulkan as support for the proposition that subsequent breach of confidentiality by a party would invalidate, ex post facto, the award. As the defendant also pointed out, the irony of the relief sought by the plaintiffs is that if the arbitration were to be terminated without a conclusive determination of the dispute, the defendant would certainly seek to pursue its claims against the plaintiffs in the ordinary course of litigation. That would leave the plaintiffs without any of the desired privacy and confidentiality afforded by arbitration.

  144. Whether the defendant’s breach could be excused or justified

  145. [102] For completeness, having analysed the consequences of the disclosure absent the exceptions which I have articulated above, I will now briefly address the issue of whether the defendant’s putative breach of confidentiality could be excused or justified. The plaintiffs stressed in their further reply closing submissions (at para 26) that the court must consider all the relevant facts in the case and all the countervailing public interests in issue before deciding whether the defendant’s breach of its obligation of confidence could be excused. The plaintiffs alleged that the defendant (a) had conducted itself in bad faith; (b) did not need to breach its obligation of confidence in order to report the alleged wrongdoing; (c) attempted to circumvent the discovery process in the arbitration; (d) attempted to use the criminal authorities for its own private interests; and (e) caused the plaintiffs distress. Counsel for the plaintiffs also emphasised that the court should approach the question of whether the defendant’s breach could be excused from the perspective of whether it would have been sanctioned had the defendant applied to court for leave to make the disclosure.

  146. Application of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap 65A)

  147. [103] The defendant argued, alternatively, that it was compelled to make the disclosure and complaint to the CAD because it had reasonable grounds to suspect the plaintiffs of having committed serious offences within the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap 65A) (“SCA”). S 39 of the SCA provides:

  148. [104] The defendant argued that it was not necessary to be apprised of all the facts of a suspicious transaction to establish reasonable grounds for reporting it under the SCA, citing the parliamentary debates (Parliamentary Reports vol 83, 19 September 2007) where Senior Minister of State for Home Affairs, Associate Professor Ho Peng Kee said:

  149. [105] Stressing that there was no need for the suspicion to relate to a specific predicate offence under the SCA before it was reportable, the defendant argued that it had reasonable grounds to suspect that the shares of CCZ after 4 November 1992 and its commissions, represented the proceeds of criminal conduct by the plaintiffs, and the monthly management accounts for 1989-1992 were used in connection with such criminal conduct.

The judgment continues past this page. Read the rest at eLitigation.