Asiana Airlines, Inc v Gate Gourmet Korea Co, Ltd [2022] SGHC(I) 8

Introduction

By this Originating Summons (“the OS”) the plaintiff seeks to set aside the Final Award (“the Award”) dated 18 February 2021 in an Arbitration (“the Arbitration”) (ICC Arbitration No 24544/HTG) together with an Addendum thereto (“the Addendum”) dated 2 April 2021 pursuant to s 24(b) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) and Arts 34(2)(a)(ii) and 34(2)(a)(iii) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). The plaintiff, Asiana Airlines, Inc (“Asiana”) was the respondent and counterclaimant in the arbitration and the defendant, Gate Gourmet Korea Co, Ltd (“GGK”) was the claimant.

The OS was filed in the General Division of the High Court (HC/OS 580/2021) on 11 June 2021 and was transferred to the Singapore International Commercial Court (“SICC”) on 24 August 2021. Following the filing of affidavits and written submissions, there was an oral hearing before me on 23 and 24 March 2022 where Mr Thio Shen Yi SC (“Mr Thio SC”) and Ms Nanthini d/o Vijayakumar appeared on behalf of Asiana and Mr Liew Wey-Ren Colin (“Mr Colin Liew”) appeared on behalf of GGK.

Background

Asiana is a company (organised and existing under the laws of the Republic of Korea) that is engaged in the business of air travel. It is part of a group of companies, the Kumho Asiana Group (“the Kumho Group”).

GGK is a company (also incorporated under the laws of the Republic of Korea) that is engaged in the business of providing catering and other services to the airline industry. GGK is a joint venture between Gate Gourmet Switzerland GmbH (“GGS”) and Asiana. GGS is a subsidiary of the Gate Gourmet group of companies (“Gategroup”).

Since April 2003, catering services had been provided to Asiana by LSG Sky Chefs Korea Co Ltd (“LSGK”), a joint venture between Asiana and a German company. Asiana’s agreement with LSGK was due to expire in June 2018 and, being dissatisfied with the pricing structure adopted by LSGK, Asiana sought to negotiate a replacement agreement with GGK and the Kumho Group. These negotiations bore fruit and resulted in three agreements, one of which was a Catering Agreement (“the Agreement”) dated 30 December 2016 between Asiana and GGK. The Agreement was governed by Korean law.

The other two agreements were a Joint Venture Agreement (“JVA”) between GGS and Asiana and a Bonds with Warrants Subscription Agreement (“BWA”) between an associate company of GGS, Financial Services Sàrl, and the holding company of the Kumho Group.

Under the Agreement, GGK agreed to provide catering and handling services to Asiana for 30 years. The Agreement contained an initial business plan (“the IBP”) that set out calculations for the pricing mechanism for the catering services that GGK was to provide. The Agreement reflected that the IBP would be replaced with an adjusted “2018 Business Plan”. The 2018 Business Plan, in turn, was to be replaced with an adjusted “2020 Business Plan”. The Arbitration was the result of a disagreement between the parties as to the correct interpretation of Annex 1.4 to that Agreement (“Annex 1.4”).

The relevant parts of Annex 1.4 read as follows:

The reference to “no less favourable” terms was a reference back to clause 6.1.1 of the Agreement (“the NLF Clause”) which provided:

Notwithstanding the fact that the parties were unable to agree on the pricing mechanism, GGK nonetheless commenced operations and invoiced Asiana on the basis of its interpretation of the pricing mechanism in the Agreement. Asiana made some payments but otherwise objected to GGK’s interpretation.

GGK commenced the arbitration on 6 June 2016 (“the Arbitration”) pursuant to clause 28 of the Agreement which provided that the seat of the Arbitration should be Singapore and that the Arbitration should be conducted under the Rules of Arbitration of the International Chamber of Commerce.

GGK sought an order that Asiana should pay all outstanding invoices and a declaration that the pricing mechanism in the Agreement was binding and did not require any further agreement.

In the Award, the tribunal (the “Tribunal”) allowed GGK’s claims and dismissed Asiana’s counterclaims. GGK later requested that the Tribunal correct a clerical error. The Tribunal allowed GGK’s request and issued the Addendum.

Asiana seeks to set aside the Award and the Addendum on the basis that there was a breach of natural justice and a failure to consider all issues placed before the Tribunal. Asiana’s complaints in outline are that:

(a) The Tribunal failed to give any or any proper consideration to the expert report of a Korean law expert, Professor Young-Joon Kwon (“Professor Kwon” and “the Kwon Report”), and therefore applied the wrong principles when interpreting the terms of the Agreement. In particular, it failed properly to address the aspects of the Kwon Report which supported the assertion by Asiana that GGK’s interpretation of the Agreement might render the Agreement null and void under Korean law under the doctrine of “abuse of power of representation” (see below at [39] and [64]) and that this factor was one that the Tribunal should have taken into account when interpreting Annex 1.4 in accordance with Korean law having regard to the principle of “effective interpretation” (see below at [38] and [41]).

(b) The Tribunal failed to consider Exhibit C-333, which is an Excel sheet setting out the net profitability projection for the Agreement, which again might have impacted on its interpretation of Annex 1.4.

The legal issues

In this case Asiana places reliance upon Arts 34(2)(a)(ii) and/or 34(2)(a)(iii) of the Model Law and/or a breach of natural justice under s 24(b) of the IAA. The First Schedule to the IAA contains the Model Law.

Article 34(1) of the Model Law provides that an application for setting aside an award to the appropriate supervisory court is the sole means by which an award can be challenged. Such an application can only be made on one or more of the grounds specified in Art 34(2). In this case, the relevant grounds are found in Arts 34(2)(a)(ii) and/or 34(2)(a)(iii), which read:

The reference to being “unable to present his case” is a reference back to Art 18 of the Model Law, which requires that “[t]he parties shall be treated with equality and each party shall be given a full opportunity of presenting his case”.

Section 24 of the IAA provides:

The general principles for setting aside an award on the basis of the above provisions were not in dispute. Asiana summarises those principles in paras 58 and 65–67 of its Written Submissions:

For its part, GGK summarises its submissions on the relevant principles in ten propositions in paras 77–86 of its Written Submissions but in oral submissions particularly emphasises the following:

Two aspects of law are however in dispute. The first related to GGK’s fourth point set out above. GGK contends, based on TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (“TMM”), that provided the Tribunal dealt with every essential issue, it was not necessary for it to deal with every argument raised on that issue and refers me to [72]–[76]:

Relying on this passage, GGK contends that the essential issue which the Tribunal had to grapple with in this case was the question of interpretation and this it had done. Asiana’s reliance on the principle of effective interpretation was an argument underlying that issue, not a separate essential issue. Any failure of the Tribunal specifically to address that argument was unobjectionable. It had recorded the existence of the argument in para 7.1.2(d) of the Award and, since it was not of itself an essential issue, it was not necessary to consider it further and to expressly reject it.

GGK drew my attention to a recent decision of the Court of Appeal in BRS v BRQ and another and another appeal [2021] 1 SLR 390 and contrasted the approach taken by the Court in [94] with that in [98] and [106]. In the former, it accepted that if the Tribunal had reached a conclusion based on one argument, it did not need to go on to consider other arguments which, by then, had become academic. In the latter the Court emphasised that a failure to consider arguments on a particular issue, whether explicitly or implicitly, would amount to a breach of natural justice. I do not consider that [75] in TMM can be interpreted as rigidly as GGK contends. In seeking to resolve an essential issue, a tribunal must assess all the arguments raised and then determine whether any one argument is decisive of that issue. If satisfied that it is, then there is no need to consider any other arguments. But in considering the decisive argument the Tribunal must take into account all the contentions made both in favour and against that argument in informing its conclusion. It cannot ignore a contention which is a material consideration in the judgmental exercise.

The second area of contention lay in the jurisdiction of the Tribunal to adjudicate on matters which were not directly raised on the pleadings but which were appropriate to decide for the purpose of resolving the entirety of the dispute between the parties. GGK asserts that a Tribunal would have exceeded its jurisdiction and thus breached natural justice if it dealt with a dispute which was not contemplated by or not falling within the terms of the submission to arbitration. It relies on GD Midea Air Conditioning Equipment Co Ltd v Tornado Consumer Goods Ltd and another matter [2018] 4 SLR 271 (at [44]–[45] and [56]) and Arjowiggins HKK2 Ltd v X Co [2022] HKCFI 128 (at [42]). It contends that these cases emphasise that the Tribunal has no jurisdiction to decide any issue that is not referred to it for determination. It is not the Tribunal’s duty to resolve all matters in dispute between the parties, it can only act and resolve the issues referred to it under the arbitration agreement.

For its part, Asiana relies upon CKG v CKH [2021] SGHC(I) 5 (“CKG”), a decision at first instance, in support of a submission that even if a party does not expressly seek relief in respect of a given issue, once it is appreciated by the parties that the issue has arisen during the course of the arbitration or will arise in the event that the tribunal decides a pleaded issue a given way, then it must follow that that issue becomes an issue to be decided. It points to Term 29 of the Terms of Reference in this Arbitration (see below at [70]) as being the sort of term that expressly conferred jurisdiction on a tribunal to determine such an issue.

I shall not consider the reasoning in CKG further since, subsequent to the oral hearing, the Court of Appeal gave judgment on the appeal from that decision (CKH v CKG and another matter [2022] SGCA(I) 4 (“CKH”)). The parties were given an opportunity to provide further written submissions in relation to that judgment which they did.

The issue in CKH was whether an arbitral tribunal erred in failing to take into account an outstanding debt (referred to as the “Principal Debt”) when making its award. A request was made to the tribunal that it should make an additional award in respect of the Principal Debt but the Tribunal declined to do so on the basis that there was no plea in the counterclaim for the Principal Debt.

Having acknowledged that there was no pleading in relation to the Principal Debt, the judgment continued in [16] and [17] as follows:

The judgment then continued to consider the five sources referred to at the end of [16] and concluded in relation to the facts in that case in [29] as follows:

Whilst the jurisdiction of a tribunal is determined by its terms of reference and by the relief sought by the parties in their pleadings, it is always open to a party to plead its case in the alternative and, in appropriate circumstances, to amend its claim for relief during the proceedings so as to raise new issues. However, as the judgment in CKH makes clear, the way in which an arbitration develops may lead to a widening of its scope explicitly by an amendment of the pleadings or by the consent of the parties but, equally, it may arise implicitly in circumstances where the point in issue is clearly raised and there is an adequate opportunity to address it. In these circumstances it will become apparent, objectively, that the parties have accepted that the point necessarily falls to be determined as though it was a pleaded issue and/or the subject of requested relief.

Korean law on the interpretation of contracts

The pleadings and submissions

Put very simply, underlying all Asiana’s contentions is the assertion that the Tribunal erred in identifying the principles of Korean law that it applied when reaching its conclusion on the proper meaning of the contractual provisions which were in dispute. Mr Thio SC accepts that if this was merely an error of law or fact, then this court could not intervene. But, he says, the reason the Tribunal fell into error was due to its failure to consider properly or at all the expert evidence of Professor Kwon. Such a failure, he contends, constituted a failure to consider all the issues raised in the case and therefore amounted to a relevant breach of natural justice.

I shall address this issue first. The Arbitration was conducted memorial style, with four rounds of pleadings each supported by evidence. I shall consider each pleading in turn.

The Statement of Claim considered the Korean law principles in paras 135–140:

The relief sought by GGK included a request for a declaration in relation to the true interpretation of Annex 1.4:

In response, in the Defence it was accepted that the parties “[appeared] to be largely in agreement with these Korean law principles on contractual interpretation”. Paragraphs 100–104 read as follows:

In paras 213 and 214, attention was first drawn to the contention that Asiana’s interpretation of the Agreement should be preferred because the principle of “abuse of power of representation” would have the effect of rendering the Agreement void:

The Request for Relief in para 299(2) invited the Tribunal to reject the claim for a declaration. There was no request for a declaration that if GGK was entitled to the declaration sought by them that the Agreement should be declared void. Such a claim was the antithesis of Asiana’s position which was that the Agreement was valid so as to entitle it to make a claim for a not inconsiderable sum on its Counterclaim.

In the Reply, GGK reiterated its position on interpretation and accepted that the principle of “effective interpretation” was a means of interpretation:

It went on in para 162 to repeat its contention that “the wording of the agreement has primacy where the objective meaning is clear on its face – i.e. without resorting to subsidiary means of interpretation”

It was in the Rejoinder that the Kwon Report was submitted (see para 24(c)). In para 25, Asiana identified three key disputed issues the first of which was:

In paras 91–96 the Rejoinder addressed “Korean Law’s Approach to Contractual Interpretation” as follows:

In paras 132–134, Asiana amplified its submissions on the “abuse of power of representation” aspect relying on aspects of the Kwon Report:

GGK elected not to give an oral opening but Asiana did. On the first day of the Arbitration, Asiana’s counsel said this:

When dealing with the expression in Annex 1.4 “net profit … will be preserved” Asiana’s counsel said this:

Asiana’s counsel then continued:

As with the Skeleton Arguments, no further comments were made on the question of the Korean law on interpretation nor were matters arising out of the abuse of power principle discussed further. However, it is clear that counsel was advocating the view that Korean law only required reference to the relevant surrounding materials where the meaning of a given phrase was not clear on its face.

GGK did not seek to cross-examine Professor Kwon so I can turn next to the closing submissions. Both sides used a selection of slides to illustrate their oral submissions.

Counsel for GGK reiterated its submission that “Korean law does not allow commercial reasonableness to trump the plain wording of the contract” (see also slide 7 of GGK’s closing submissions).

So far as concerns Asiana’s oral closing, the relevant slide was slide 34 in relation to which counsel for Asiana said this:

Slide 34 stated the following, referencing Professor Kwon’s expert report at para 32:

It will be seen that counsel was not contending that the Agreement was invalid, merely that it could give rise to an invalidation argument and invited the Tribunal to make its own assessment of the weight to be attached to Professor Kwon’s evidence. There was no suggestion that the analysis of Korean law in the Defence needed to be qualified.

The Award on interpretation

At para 2.2.16 the Tribunal recorded that Asiana had filed the Kwon Report and at paras 5.3.5 to 5.3.9 said this:

In para 7.1.2 the Tribunal set out its conclusion as to the Korean law principles of contract interpretation:

Having reached the conclusion that the text has primacy where its objective meaning is clear and that subsidiary means can only be used where ambiguity exists in the wording itself, the Tribunal went on to consider the various aspects of the wording of the Agreement which were in dispute. In each case it concluded that the meaning of the wording was clear on its face (see paras 8.1.6–8.1.11; 8.2.1–8.2.3; 8.2.4–8.2.8 and 8.2.12; and 8.3.9–8.3.10). The Tribunal went on to make it clear that it was only considering the subsidiary means on the basis that it was wrong in its conclusion that the objective wording was clear from the text and that there was no element of ambiguity (see paras 8.1.12, 8.2.3, 8.2.13, 8.2.30 and 8.3.3).

No reference was made in the dispositive parts of the Award to the Kwon Report or to the potential invalidity of the Agreement on the basis of the interpretation placed on the disputed wording by the Tribunal.

Asiana’s contentions on interpretation

I have outlined the complaints made by Asiana in [17] above. In a little more detail, on the question of interpretation of contracts under Korean law, Asiana contends that the analysis of law set out in para 7.1.2 of the Award cites only from the Statement of Claim and from the Defence, it does not consider the subsequent pleadings and submissions, particularly the Rejoinder, and thus makes no reference to the Kwon report.

In adopting the approach that it did, it is said that the Tribunal was adopting a common law approach to interpretation by focusing unduly on the words used in the Agreement whereas, had it focused on the Kwon Report, it should have concentrated more on the intentions of the parties as discerned not only from the wording of the Agreement but also taking into account the motives and circumstances leading to the execution of the contract, the purpose that was to be achieved by the contract as well as any relevant prevailing business practices. It should also have taken into account the Korean law principle of “effective interpretation”.

The importance of taking the principle of effective interpretation into account in this case lies, so Asiana contends, in the fact that its contention on interpretation was based upon treating the Agreement as a self-standing contract which therefore stood to be interpreted independently from the other contracts, ie, the JVA and BWA. The alternative, which was advocated by GGK, involved considering the interpretation of the Agreement on the basis that the three agreements formed a suit of contracts forming a package deal. This the Tribunal accepted when assessing the commercial reasonableness of the Agreement in paras 8.1.16 and 8.2.28 of the Award.

However, in so doing, the Tribunal, it is said, failed to take into account that if one did consider the three agreements as part of a package, the consequence would, or might be, that the Agreement would be null and void under Korean law. Accordingly, the Tribunal should have had regard to the principle of effective interpretation and interpreted the Agreement as contended for by Asiana so as to render it valid.

The potential or actual invalidity of the Agreement if considered as part of a package was due to the doctrine of abuse of power of representation through the application of Art 107(1) of the Civil Act of Korea and also possibly Art 103 of the Civil Act of Korea, although emphasis was placed in oral argument on Article 107.

This doctrine was considered in detail in at paras 41–53 of the Kwon Report and was well summarised in para 42 as follows:

Asiana’s contention is that, on the facts, if the Agreement was to be interpreted as contended for by GGK so as to give what Asiana contended were unreasonable returns to GGK, this could only be justified on the basis that this provided reasonable commercial returns when viewing the three agreements as a unitary whole. However, GGK was not a party to the other two agreements: see above at [6].

Asiana summarises its submissions on the abuse of power of representation in paras 95–98 and 103–105 of its Written Submissions, as follows:

Drawing all this together, on the interpretation aspect Asiana contends that not only was the Tribunal wrong in its analysis of Korean law, which it accepts is not a ground for setting the Award aside, but that the reason the Tribunal erred was due to its failure to consider fully or at all the unchallenged expert evidence of Professor Kwon. Had the Tribunal done so, it would have appreciated that Korean law mandated a more nuanced approach to interpretation which did not afford primacy to the wording of the Agreement but required the intention of the parties to be discerned by reference to other factors including the avoidance of invalidity.

Finally, Asiana asserts that if, notwithstanding the above, the Tribunal was satisfied that the interpretation of the Agreement was as contended for by GGK and as found by the Tribunal, the Tribunal should have gone on to declare that the Agreement was null and void. Asiana acknowledges that it did not seek a declaration to this effect and, indeed, that its counterclaim was predicated on the Agreement being valid. However, basing itself on the reasoning in CKG and on appeal in CKH, it contends that the Tribunal would not be acting in excess of its jurisdiction in granting of such a declaration since it was a necessary consequence of the adopted interpretation. The issue of invalidity in the event of such an interpretation was raised before the Tribunal and thus came within the scope of the issues which the Tribunal should have decided.

Further, in this case, it submits that the Tribunal had express power to decide the issue pursuant to term 29 of the Terms of Reference of the Arbitration dated 28 November 2019.

Term 29 provides:

It is however also necessary to note term 30 which provides:

GGK’s contentions on interpretation

For its part, GGK contends that the Tribunal’s analysis of Korean law in para 7.1.2 is accurate and that the principles of Korean law there set out were common ground. It asserts that the wording of the Agreement does have primacy if the objective meaning of the language used is clear and the various secondary indicia prayed in aid by Asiana only become relevant in circumstances where there is ambiguity in the language used. Whilst it is accepted that the principle of effective interpretation exists, it is denied that the principle can be invoked so as to displace the clear meaning of the language used so as, in effect, to rewrite the contract with other language which has a contrary meaning.

GGK does not accept that on the interpretation preferred by the Tribunal the Agreement would be null and void but asserts that the issue of validity did not arise for decision in the Arbitration. Asiana’s case was the antithesis of this since the counterclaim was predicated on the Agreement being valid. In the Rejoinder Asiana made it clear that it was not disputing the fact that the pricing mechanism set out in the Agreement was binding. What it was seeking was that the Tribunal should determine the correct application of the pricing mechanism which was “consistent with the Parties’ agreed contractual terms and the commercial purpose for which those terms were entered into”. Accordingly, Asiana’s case was based on the premise that the Agreement was not void (see the transcript extract at [52] above).

GGK contrasts the facts in this case with those in CKH. It asserts that a proper review of the five sources referred to at the end of [16] of CKH in relation to the facts of this case demonstrates clearly that neither party had invited the Tribunal to decide the question of validity. The contrary was asserted in the Rejoinder and that position has been maintained in the submissions.

In those circumstances, GGK contends that the Tribunal had neither the power nor the obligation to make a finding in relation to the validity of the Agreement.

The Kwon Report

With that background, I can turn to consider the Kwon Report.

The crucial paragraphs are paras 9 and 10 which read as follows:

It is clear from the italicised sentence in para 9 that the first task when seeking to identify the objective intention of the parties is to have regard to the wording used. If the objective meaning of the words is clear, then it is “likely” that the words will be given that meaning. The Report did not go on to consider the “unlikely” circumstances in which the words will not be given that meaning.

Paragraph 10 went on to consider what approach should be taken in circumstances where the wording is not sufficiently clear such that primacy cannot be given to the words used. This will occur either when the wording is not clear on its face or where, although the meaning is fairly clear, there is a dispute between the parties as to what they intended by the words used. The former poses no difficulty; if both parties have proposed differing interpretations both of which are tenable, then the wording is ambiguous and recourse necessarily has to be had to other means to resolve the ambiguity. A measure of care, however, has to be taken in approaching the latter, where the meaning of the words tends to support one interpretation but there is a dispute as to whether the parties intended the words to have that meaning. First, there must be a credible alternative meaning that the wording could be given, otherwise the wording would be clear. There must therefore be a measure of ambiguity in the wording used even if, on balance, the wording used favours one particular interpretation. Secondly, there must be a credible dispute as to what the parties intended.

The starting point, however, is a lack of clarity in the wording. It is insufficient that one party should merely raise an argument on ambiguity; it must be a tenable argument. As the Kwon Report has made clear from the opening words of para 11, “[i]n such cases”, it is only in those circumstances that Korean law requires that the parties’ intent should be discerned by reference to external factors. This is reinforced by the last sentence of para 12:

Read in context, it is clear that the italicised words are a reference back to the primacy of the meaning of the wording used where that meaning is objectively clear as set out in para 9. If that meaning is clear it will be unnecessary to have recourse to external factors.

The Kwon Report goes on to consider the principle of effective interpretation in paras 20–26. In order for the principle to be invoked it is necessary that there should be two rival interpretations, one of which would render the contract null and void (see para 20).

A common example which Professor Kwon gave in para 22 relates to an indemnity clause (which, in its plain language, places no limitation on the scope of its application) where one party was contending for a wide meaning of the word which would render the contract void and the other for a narrower meaning which would render it valid. The court will then give the word the narrower meaning which both accorded with the intention of the parties and rendered the contract valid.

In so doing, the court is placing a meaning on the words used because there are two tenable alternative meanings, one of which would have the effect of invalidating the contract. Professor Kwon did not suggest that where the objective meaning of the words used clearly expresses the intention of the parties the principle of effective interpretation requires the court to rewrite the contract so as to cure any possibility of invalidity. Rewriting is not interpretation.

From the above analysis of the reasoning in the Kwon Report, I am satisfied that Professor Kwon was not suggesting that recourse must be had to the external factors referred to in paras 11–13 of the Kwon Report in circumstances where the objective meaning of the words used is clear from the language actually used. They are interpretational tools for use where there is an element of ambiguity in the meaning of those words.

More specifically, Professor Kwon did not suggest that the principle of effective interpretation has overriding effect or is required to be taken into account where the objective meaning of the words used is clear, such that the principle becomes a mechanism for rewriting a contract where the clear objective meaning of the words used could lead to a conclusion that the contract is void. As counsel for Asiana accepted, where the intention is clear from the wording and that wording cannot mean anything else then the parties are left with the consequences of the wording they have chosen.

The Award and the Kwon Report: General principles of interpretation

Reverting to para 7.1.2 of the Award, (see [56] above), whilst the principles of interpretation there stated were derived from the parties’ early pleadings and not from the Kwon Report, there is no material difference between the principles set out in paras 7.1.2 (a)–(c) and those which I have identified in the Kwon Report. In both cases it is clear that the wording used has primacy where its objective meaning is clear. Recourse to subsidiary means of interpretation is only required where the objective meaning of the text is ambiguous.

In para 7.1.2(d), the Award identified the principle of effective interpretation but did not consider its impact further. I shall consider this further below (see [94] to [100]).

The Tribunal concluded that in all contested respects the objective meaning of the wording used in the Agreement was clear on its face (see paras 8.1.6; 8.2.7; 8.2.12; and 8.3.10). It went on to consider various subsidiary means of interpretation in the event that its primary conclusion on the clarity of meaning was wrong, not because it felt obliged to do so when the wording was clear (see paras 8.1.12; 8.2.3; 8.2.13; 8.2.30; and 8.3.3).

It is correct to say that in reaching those conclusions the Tribunal did not expressly refer to the Kwon Report. This might be due either to the fact that it did consider the Kwon Report but concluded that it added nothing or that it overlooked the need to consider it having reached the conclusion from reading the pleadings that the principles of interpretation under Korean law were common ground.

Whatever be the case, in the circumstances of this case any failure to address the contents of the Kwon Report does not amount to grounds for setting aside the Award whether under Arts 34 (2)(a)(ii) or 34 (2)(a)(iii) of the Model Law or by reference to the principles of natural justice since a review of the Kwon Report would not have given the Tribunal cause to reconsider its analysis of the legal principles in para 7.1.2 which it then applied in reaching its conclusions on the clarity of wording.

Accordingly, it cannot be said that the Tribunal missed a pleaded issue or that in considering the issue of interpretation it ignored evidence or arguments material to that issue which, if taken into account, would or might have influenced the outcome. Even if the Tribunal overlooked the need to review the Kwon Report, no prejudice has been caused to Asiana by this failure as it would not have caused the Tribunal to alter its conclusions on the applicable principles of interpretation.

For all these reasons, I conclude that Asiana has not made out a case for setting aside the Award on the ground that the “Tribunal failed to properly consider the expert evidence put before it on Korean Law and [Asiana’s] arguments on contractual interpretation” (see Asiana’s Written Submissions at sections IV(A)(1) and (2)).

The Award and the Kwon Report: The principle of effective interpretation

In Asiana’s Written Submissions at section IV(A)(3), Asiana asserts that the Tribunal failed to consider Asiana’s arguments on the principle of effective interpretation and the abuse of power of representation. It contends that it should have done so. It should have gone on to conclude that the Agreement would be invalid on the basis of the interpretation proposed by GGK and either preferred the interpretation proposed by Asiana or declared the Agreement to be void.

It is correct that the Tribunal did not consider these matters. Having set out the principle in para 7.1.2(d), it did not consider it further. I conclude that the Tribunal was correct not to do so. Certainly, having regard to the fact that the threshold for a finding of breach of natural justice is a high one, I am satisfied that Asiana’s arguments do not approach this threshold.

First, for the reasons given above, the Kwon Report does not support an argument that the principle should be applied when the objective wording of the provision in question is clear. It is not a licence to rewrite the contract.

Secondly, it formed no part of Asiana’s case at the Arbitration that the factual matrix was such that an interpretation which favoured GGK would render the Agreement void. Asiana’s case had to be that it was valid, regardless of the interpretation, in order to support its claim under the Counterclaim. It was consistent in its contention that the Agreement was not linked to the other two agreements and emphasised that it relied on the principle not because it would make the Agreement void but only that it could (see above at [68]). The first time that Asiana contended that there should be a finding of invalidity was in this OS. This is a classic case of a party seeking to challenge an award on a case which it did not make before the Tribunal.

Third, neither party sought relief of that nature. In particular, the relief Asiana sought was set out in term 27 of the Terms of Reference. It did not seek relief, in the alternative, in the form of a declaration that on the basis of GGK’s preferred interpretation the Agreement would be null and void. The issue of invalidity was thus not expressly raised.

Nonetheless Asiana contends that it was open to the Tribunal to consider the issue and, indeed, that it was obliged to do so since it was pleaded as a consequence in the Rejoinder and fell to be decided under the principles laid down in CKH. I do not accept this. The facts here are significantly different to those in CKH. I have considered all of the five sources set out in CKH: pleadings, agreed list of issues, opening statements, evidence adduced and closing submissions in the course of this judgment. I am satisfied that “viewing the whole position and the course of events objectively and fairly” it cannot be said that the parties in this case “accepted between themselves and before the Tribunal” (see CKH at [16]) that the issue of invalidity fell to be decided.

Accordingly, I conclude that Asiana has not made out a case for setting aside the Award on the ground that the Tribunal failed to consider “Asiana’s arguments on the Principle of Effective Interpretation and the Abuse of Power of Representation” (see Asiana’s Written Submissions at section IV(A)(3)).

Exhibit C-333

Asiana relies upon Exhibit C-333 (“C-333”) as supporting two further grounds for seeking to set aside the Award. C-333 was adduced not by Asiana but by GGK as an exhibit to the Rejoinder to Counterclaim, the final pleading. However, although adduced, it was not specifically referred to in either the text or the footnotes to the text. It was however referred to during the cross-examination of Asiana’s financial expert in an attempt to show that GGK’s prices complied with the requirements of both clause 6 and of Annex 1.4, that the prices for the services provided by GGK should be no less favourable to either party than the “current pricing paid by Asiana for any services … that are the same or similar to the Services” (the “NLF Clauses”).

The purpose of the cross-examination was to seek to demonstrate, using C-333, that the projected return on investment under the Agreement over the years would equate to that which notionally would have been achieved had the previous arrangement with LSGK been continued (see [5] above) whereas Asiana’s projections would generate less than half that return. Accordingly, GGK relied on C-333 in its closing submissions in support of its contention that GGK’s pricing did comply with the NLF Clauses.

Asiana however relied heavily on that cross-examination in its closing submissions as demonstrating the contrary when like with like was properly compared. On this basis GGK’s projected return would be more than twice as high as LSGK’s notional return, whereas on Asiana’s figures the two would be approximately the same. Hence, Asiana contended that this analysis served to support its contentions as to the proper interpretation of the Agreement and undermined GGK’s proposed interpretation.

Additionally, in its closing submissions Asiana sought alternative declaratory relief as is shown in Slide 65:

The Tribunal did not make any reference to C-333 in its award. Asiana contends that this demonstrates, first, that it failed to consider the arguments raised by Asiana as to the effect that it should or might have had on the interpretation of the NLF Clauses. Secondly, Asiana asserts that if it would or might have had an impact on the interpretation of the NLF Clauses, then, in turn, this would or might have had an impact on the question of the interpretation of scope of the “adjustments” to the Business Plan and the fixing of the net profits figures set out in Annex 1.4. Thirdly it caused the Tribunal wrongly to ignore the request for the alternative declaration.

For its part, GGK contends, first, that the Tribunal was entitled to disregard the request for alternative relief as it was made too late and was not accompanied by any request to introduce a new claim or seek new relief contrary to Article 23(4) of the International Chamber of Commerce (“ICC”) Rules and terms 29 and 30 of the Terms of Reference. Not only was the Tribunal entitled to disregard it, had it acceded to the request it would have exceeded its jurisdiction and would have acted in breach of natural justice in not providing GGK with the opportunity to respond to the request.

Secondly, it says that Asiana deployed its argument based on C-333 as a means of illustrating how its proposed interpretation of the NLF provisions would work. Since the Tribunal held that such an interpretation was inconsistent with the clear wording of the NLF Clauses, any further consideration of C-333 would be irrelevant and thus an academic exercise.

The nub of Asiana’s arguments based on C-333 amounts to this. C-333 demonstrated that the adoption of the net profit figures in Appendix 1 of the Agreement which were to be “preserved” by virtue of Annex 1.4 would lead to an outcome which was significantly less favourable to Asiana than would have been the case if, notionally, the agreement with LSGK had continued for the next 30 years. Hence, in order to pay due regard to the NLF Clauses, it would be essential to adopt Asiana’s proposed interpretation of Annex 1.4.

The flaw in this argument lies in the Tribunal’s findings on interpretation. In all respects it held that the relevant wording of the Agreement was objectively clear. This applied to the word “adjusted” in article 1.4 (see the Award at paras 8.1.4–8.1.11), that the net profit figures were fixed (paras 8.2.1–8.2.12) and, in para 8.3.10 that the NLF Clauses:

The arguments based on C-333 focused on the favourability, one way or the other, of the projected return to GGK over the full term of the Agreement as contrasted with the notional return to LSGK over the same period. This was irrelevant having regard to the way in which the Tribunal interpreted the NLF Clauses on a limited temporal basis. Asiana’s first contention set out at [105] above thus fails.

Further, in so far as it might be said that there was relevance in assessing the commercial common sense of the Agreement, such a consideration was irrelevant to interpretation when the objective meaning of the words used was clear. Asiana’s second contention thus also fails.

In para 12 of its Skeletal Reply Submissions Asiana does not dispute that if the Tribunal’s acceptance of GGK’s interpretation of the NLF Clauses was correct then the request for the alternative declaration was moot. I have held that it was. There was thus no need for the Tribunal to consider the request for the alternative declaration.

For all these reasons, I also conclude that Asiana has not made out a case for setting aside the Award on the ground that the Tribunal failed properly to address Exhibit C-333.

Conclusion

Costs

(a) An award of costs on an indemnity basis

(b) Pre-transfer costs at S$81,600.00 if assessed on an indemnity basis and S$40,000 if assessed on a standard basis.

(c) Post-transfer costs at S$95,336.00 if assessed on an indemnity basis and S$50,000 if assessed on a standard basis.

(d) Disbursements at S$17,285.00.

For its part, Asiana contends:

(a) That costs should not be awarded on an indemnity basis.

(b) That costs should not be granted for two firms of solicitors.

(c) That the quantum sought on a standard basis, both before and after transfer is excessive.

Indemnity basis

Clause 19.1 provides:

Pre-transfer costs

Post-transfer costs

Disbursements

GGK seeks an award of S$17,285.00. This is not challenged by Asiana.

Conclusion on costs