Vietnam Oil and Gas Group v Joint Stock Company: Dispute over EPC Contract Termination and Payment Obligations

In a dispute between Vietnam Oil and Gas Group (PVN) and Joint Stock Company (Power Machines – ZTL, LMZ, Electrosila Energomachexport) (PM) before the General Division of the High Court of Singapore on September 24, 2024, PVN challenged an arbitration award largely in favor of PM. The dispute arose from an EPC contract for a thermal power plant project, with PVN contesting the validity of the contract's termination and associated payment obligations. The court, presided over by Chua Lee Ming J, remitted the matter to the Tribunal for further consideration on the validity of the termination notices, while upholding the Tribunal's award on damages.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Setting aside proceedings suspended; matter remitted to the Tribunal for further consideration on the validity of the termination notices.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court addresses dispute between Vietnam Oil and Gas Group and Joint Stock Company over EPC contract termination, force majeure, and payment obligations.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Vietnam Oil and Gas GroupApplicant, RespondentCorporationPartialPartial
Joint Stock Company (Power Machines – ZTL, LMZ, Electrosila Energomachexport)Respondent, ApplicantCorporationPartialPartial

3. Judges

Judge NameTitleDelivered Judgment
Chua Lee MingJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Kronenburg Edmund JeromeBraddell Brothers LLP
Sim Wei Min StephanieBraddell Brothers LLP
Glenn AngBraddell Brothers LLP
Thio Shen Yi SCTSMP Law Corporation
Dr Colin Ong KCEldan Law LLP
Kevin ElbertTSMP Law Corporation

4. Facts

  1. PVN and PM entered into an EPC Contract for a thermal power plant project in Vietnam.
  2. The EPC Contract contained an arbitration agreement to refer disputes to arbitration in Singapore.
  3. The United States imposed sanctions on PM, leading to subcontractors suspending their obligations.
  4. PM issued two notices of termination: one based on force majeure and another based on non-payment.
  5. The Tribunal found that the first termination notice was ineffective but the second was valid.
  6. PVN challenged the Tribunal's findings, alleging breaches of natural justice and excess of jurisdiction.
  7. The court remitted the matter to the Tribunal to reconsider the validity of the termination notices.

5. Formal Citations

    6. Timeline

    DateEvent
    Project commenced
    PM placed on the United States Sanctions list
    PM gave notice to PVN that the US Sanctions amounted to a force majeure event
    PM gave PVN notice of its intention to terminate the EPC Contract on the ground of force majeure
    PM reiterated its demand for payment of the amounts due under the Outstanding Payment Applications
    PM issued a First Notice of Termination of the EPC Contract
    PM issued a Second Notice of Termination of the EPC Contract
    First Notice of Termination stated that the EPC Contract was to terminate
    Second Notice of Termination stated that the EPC Contract was to terminate
    PM issued a Notice of Arbitration
    PVN filed its Response to the Notice of Arbitration
    PM filed its Statement of Claim, and PVN filed its Statement of Counterclaim
    PVN filed its Statement of Defence, and PM filed its Statement of Defence to PVN’s Counterclaim
    PM filed its Statement of Reply to PVN’s Statement of Defence
    PVN filed its Statement of Reply to PM’s Statement of Defence to Counterclaim
    Court heard SUM 988 and OA 346 together
    Court gave its decision, rejecting PVN’s application with respect to the finding on damages and remitting the matter to the Tribunal
    PVN filed CA/CA 48/2024 appealing against the decision to remit the finding on liability to the Tribunal
    PM filed CA/CA 49/2024 appealing against the whole of the decision on the finding on liability
    Judgment issued

    7. Legal Issues

    1. Breach of Natural Justice
      • Outcome: The court found a breach of the rules of natural justice with respect to the finding on liability but declined to set aside the finding. Instead, the matter was remitted to the Tribunal.
      • Category: Procedural
      • Sub-Issues:
        • Failure to provide a fair hearing
        • Departure from pleaded cases without opportunity to be heard
      • Related Cases:
        • [2007] 3 SLR(R) 86
        • [2022] 1 SLR 1080
    2. Excess of Jurisdiction
      • Outcome: The court disagreed that the Tribunal exceeded its jurisdiction, finding that the question of the Second Notice of Termination's effectiveness was within the scope of the parties’ submission to arbitration.
      • Category: Jurisdictional
      • Sub-Issues:
        • Dealing with a dispute not contemplated by the submission to arbitration
        • Decisions on matters beyond the scope of the submission to arbitration
    3. Validity of Contract Termination
      • Outcome: The court remitted to the Tribunal the question of whether the Second Notice of Termination overrode, superseded, replaced or supplemented the First Notice of Termination such that the Second Notice of Termination was effective to terminate the EPC Contract.
      • Category: Substantive
      • Sub-Issues:
        • Effectiveness of termination notices
        • Force majeure
        • Non-payment

    8. Remedies Sought

    1. Setting aside of arbitration award
    2. Enforcement of arbitration award

    9. Cause of Actions

    • Breach of Contract

    10. Practice Areas

    • Arbitration
    • Commercial Litigation

    11. Industries

    • Oil and Gas
    • Construction

    12. Cited Cases

    Case NameCourtAffirmedCitationJurisdictionSignificance
    Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte LtdHigh CourtYes[2007] 3 SLR(R) 86SingaporeCited for the twin pillars of natural justice: the rule against bias and the fair hearing rule.
    BZW another v BZVHigh CourtYes[2022] 1 SLR 1080SingaporeCited for the requirements of a fair hearing rule, specifically regarding the chain of reasoning adopted by the tribunal.

    13. Applicable Rules

    Rule Name
    No applicable rules

    14. Applicable Statutes

    Statute NameJurisdiction
    International Arbitration Act 1994Singapore

    15. Key Terms and Keywords

    15.1 Key Terms

    • EPC Contract
    • Force majeure
    • US Sanctions
    • Notice of Termination
    • Arbitration
    • Rules of natural justice
    • Excess of jurisdiction
    • Remission
    • International Arbitration Act
    • UNCITRAL Model Law

    15.2 Keywords

    • arbitration
    • contract
    • termination
    • force majeure
    • natural justice
    • jurisdiction
    • EPC contract
    • international arbitration

    17. Areas of Law

    Area NameRelevance Score
    Recourse against award95
    Arbitration95
    International Commercial Arbitration90
    International Arbitration Act85
    Foreign arbitral award80
    Recognition and Enforcement of Foreign Arbitral Awards75
    Natural justice70
    Jurisdiction60

    16. Subjects

    • Arbitration
    • Contract Law
    • Construction Dispute