Deal Street

December 24, 2018

P&A Law Offices secures victory for Daiichi Sankyo in the Singapore High Court


Anand-Pathak-Gopal-Subramaniam

In yet another victory for Daiichi Sankyo Company Limited (a global pharmaceutical company and the second largest pharmaceutical company in Japan), represented by P&A Law Offices, against the Singh brothers, on December 21, Justice Belinda Ang of the Singapore High Court upheld the Singapore-seated ICC Arbitral Award of INR 4000 crores ($750 Million) in favor of Daiichi Sankyo.

The case dates back to 2008, when Malvinder Singh and family, including his brother Shivinder Singh, had sold their entire stake of about 35 percent in Ranbaxy Laboratories Limited for $2.4 billion to Daiichi Sankyo. However, in 2013, Daiichi Sankyo had filed an arbitration case in Singapore accusing the Singh brothers of concealment and misrepresentation of facts after Ranbaxy paid $500 million to the US Department of Justice as settlement for misrepresenting facts.

Thereafter, in April 2016, a Singapore Arbitral Tribunal had asked the Singh brothers (Malvinder & Shivinder Singh) and their family, the erstwhile promoters of Ranbaxy Laboratories Limited, to pay damages of INR 2,500 crores to Daiichi Sankyo for concealing and misrepresenting information during Ranbaxy stake sell. The Tribunal had then concluded that Malvinder and his associates were aware of an incriminating internal document called the Self-Assessment Report that chronicled the fabricated regulatory filings in over 40 countries in relation to over 200 products made by Ranbaxy; yet, they misled, actively concealed and fraudulently misrepresented to Daiichi about the SAR, its genesis and severity and its possession by the US authorities.

Considering the facts of the present case, Justice Ang dismissed the application to set aside the award against the Singh brothers and family, except the minors (“Sellers”).

On January 31, 2018, Justice Jayant Nath of the Delhi High Court had issued the decision in favour of Daiichi Sankyo, dismissing objections under Section 48 of the Arbitration and Conciliation Act, 1996 (“DHC Judgment”).

A bench of Justices Ranjan Gogoi and R Banumathi of the Supreme Court of India had upheld the decision of the High Court of Delhi by dismissing the Special Leave Petitions in limine on February 16, 2018. Thus, the Award became final and binding in India. The setting-aside proceedings under Section 24 of the International Arbitration Act, commenced on April 9, 2018 and continued for four days until April 13, 2018 in the High Court of Singapore.

Senior Advocates Gopal Subramanium and Harish Salve had been granted leave by the High Court of Singapore to appear and argue on certain aspects of Indian Law which were essential for the adjudication of the case. This was the first time that two senior counsel from India had been granted leave to appear and argue in the High Court of Singapore.

Justice Ang placed extensive reliance on the observations made by Justice Nath in the DHC Judgment:

“..The present case concerns a de novo review of the award in the face of jurisdictional challenges to the powers of the Tribunal. Given the essence of the challenges, I am of the view that issue estoppel should not feature. Nevertheless, the decision of the Indian enforcement court may have persuasive effect, especially because the proper law of the Arbitration Agreement is Indian law…”

On the issue of fraud, Justice Ang observed that the High Court of Singapore was precluded from reviewing the finding of fact by the Award:

“..The decision of the Majority in holding the Non-Management Sellers liable on the ground that the fraudulent misrepresentations made were within the apparent authority of their agents is in line with the position under Singaporelaw, and cannot be contrary to the public policy of Singapore. What the Non- Management Sellers are seeking to accomplish in fact is to reopen the Majority’s finding that the fraudulent misrepresentations made by BBA and the other agents were within their apparent authority. The court is precluded from reviewing the finding of fact by the Majority…”

Justice Ang reiterated the scope of setting aside or refusal of recognition/enforcement on the ground of public policy of Singapore in the following manner:

“..Ultimately, the fact that the Non-Management Sellers were made jointly and severally liable despite the size of their shareholding smacks of an error made by the Majority that this court cannot review, rather than a public policyobjection. The scope of setting aside or refusal of recognition/enforcement on the ground of public policy is very narrow, and courts have to be cautious of a back-door appeal on the merits through this ground.”

Justice Ang allowed the Award to be set aside as regard the minors while upholding Award which imposed joint and several liabilities on the Sellers for fraud and active concealment. Daiichi Sankyo is presently in the midst of execution of the Award in the High Court of Delhi.

In a nutshell, this decision has paved way for Daiichi Sankyo to continue execution proceedings against Malvinder Singh and his associates for recovery of the Award amount. As on date, the Award amount stands at approximately INR 4000 crores, including interest.

The Buyer/Plaintiff, Daiichi Sankyo, was represented by Senior Advocate Gopal Subramanium briefed by Pavan Bhushan and Jayavardhan Singh from GS Chambers, P&A Law Offices; Anand S Pathak, Amit Kumar Mishra, Abhijeet Sinha, and Samridhi Hota along with Singapore-based law firm, Oon & Bazul LLP.

The Sellers/Defendants, Malvinder Singh and others, were represented by Senior Advocate Harish Salve, Alvin Yeo, SC briefed by WongP LLP. The Minors were represented by Lee Eng Beng, SC briefed by Rajah and Tann LLP and DMD Advocates.

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