Singapore International Commercial Court Declines to Set Aside Award on Basis of Alleged Evidence Destruction, Procedural Unfairness, and Tribunal's Authority being Exceeded
In GNC Holdings, LLC v ONI Global Pte Ltd and another [2025] SGHC(I) 25, the Singapore International Commercial Court (the “SICC” or the “Court”) considered an application by ONI Global Pte Ltd and LAC Global (Singapore) Pte Ltd (collectively the “Franchisees” and severally the “Franchisee” and the “Related Company”) to set aside an order enforcing an arbitral award issued by a three-member tribunal (the “Tribunal”) under the auspices of the International Centre for Dispute Resolution under the American Arbitration Association.
GNC Holdings, LLC (the “Franchisor”), a US company operating health and supplement franchises globally, had maintained a franchise relationship with the Franchisees for, amongst other things, 54 retail stores in Singapore. Following the Franchisor’s emergence from Chapter 11 bankruptcy under new ownership in 2020, the relationship deteriorated, culminating in the Franchisees' unilateral termination of the Singapore franchise arrangements in May 2022 and overnight rebranding of all stores by the Franchisees.
The Tribunal rejected the Franchisees' material breach claims and awarded the Franchisor specific performance plus substantial damages. The Franchisees sought to set aside enforcement on public policy grounds, alleging, amongst other things, a breach of natural justice and a denial of opportunity to present their case. The SICC rejected most of the Franchisee’s challenges.
In the arbitral proceedings, the Franchisees argued that the Tribunal should dismiss the Franchisor's claims and defences on the basis that the Franchisor, particularly through one Mr Wong – the Franchisor's Executive Vice Chairman – had engaged in spoliation through the concealment and destruction of documents relevant to the arbitration. The Tribunal found that Mr Wong had indeed suppressed or deleted messages and acted with intent to harm the relationship between the Franchisor and Franchisee. The Tribunal took this misconduct into account when "weighing other factual questions where there is a lacunae or ambiguity in the evidence," assigning little weight to Mr Wong's testimony. However, the Tribunal ultimately declined to dismiss the Franchisor's claims, finding insufficient basis to conclude that the destroyed evidence would have altered the outcome of the proceedings.
We consider each of the four grounds of the Franchisees’ application to resist enforcement in the order in which they were presented.
Ground 4: The Specific Performance Order
The Franchisees argued that the Tribunal’s detailed specific performance order exceeded the scope of submission under s 31(2)(d) of Singapore’s International Arbitration Act 1994 (2020 Rev Ed) (“IAA”) and breached the rules of natural justice under s 31(2)(c) of the IAA because they were not heard on specific terms.
Clause 13.4 of the franchise agreement provided that "[The Franchisee] shall, at [the Franchisor's] option and within 3 days after [the Franchisor] gives notice to [the Franchisee], assign to [the Franchisor] any interest which [the Franchisee] has in any lease or sublease for the premises of any of the Franchised [Franchisor's] outlets" (hereinafter “cl 13.4”). Beyond this basic obligation, the Tribunal issued in its Award detailed provisions requiring the Franchisees to, inter alia, provide all lease documentation within ten business days; assign selected stores within specified timeframes; make reasonable efforts to secure landlord consent; inform the Franchisor twice-weekly of consent efforts; comply with all reasonable the Franchisor requests regarding consent; and refrain from obstructing implementation. The Franchisor was required to notify which stores it would reopen and provide written warranties to employ the Franchisees' store-level employees for twelve months.
The Franchisees claimed that these detailed provisions exceeded the scope of submission and breached the principles of natural justice by depriving them of an opportunity to be heard on the specific terms.
The SICC emphasised at the outset that the complaints raised two doctrinally distinct issues: whether the order exceeded the scope of submission to arbitration, and whether the order was made in breach of natural justice. Answering the first question does not resolve the second.
Both questions resist strict rule-based analysis or fine dissection of pleadings. The Court noted that errors within the scope of submission are for the Tribunal to decide. However, to the extent specific provisions suffered from procedural defects, the Court could decline to enforce those provisions without trenching upon the Tribunal's substantive authority.
The Court rejected the proposition that the Tribunal faced a binary yes-or-no question on specific performance. Rather, the submission involved the equitable task of framing a just order. The Tribunal was required to "[look] to every connected circumstance that ought to influence its determination upon the real justice of the case".
Throughout the arbitration, the Franchisees had raised hardship arguments: the destruction of their business, the impact on over 300 employees facing retrenchment, and practical impossibilities where leases prohibited assignment or required landlord consent. These were competing equities properly before the Tribunal for balancing when fashioning an equitable remedy.
The Court also examined Pennsylvania law's good faith obligations, which require parties to take reasonable steps to support their bargain and not undermine it. This aligned with common law authorities establishing that where parties agree something shall be done requiring both parties' concurrence, each impliedly agrees to do all that is reasonably necessary to carry it out.
The Court found that most of the provisions of the Tribunal’s orders fell within the Tribunal's authority. They reflected reasonable steps to effectuate the fundamental assignment obligation, balanced competing equities regarding employee protections, and addressed practical realities like landlord consent requirements.
On natural justice, however, the Court found that three specific sub-provisions crossed the line as the Franchisees could not have anticipated that the Tribunal would include these particular terms.
The Tribunal’s orders required the Franchisees to inform the Franchisor twice-weekly of their consent efforts and comply with all reasonable requests by the Franchisor. While these derived from the general reasonable efforts obligation, they imposed specific mandates that could have been debated. The Franchisees were deprived of the opportunity to submit that these matters should remain at the general level rather than being specified. Enforcement of such detailed requirements risked generating unnecessary disputes and court supervision over compliance.
Similarly, the Tribunal’s order allowed the Franchisees to pursue remedies if the Franchisor breached its employment warranties. While connected to employee protection, this provision could prejudice the Franchisees by exposing them to claims from former employees—a concern that was not fanciful and on which the Franchisees should have been heard.
The Court concluded that no breach of natural justice occurs when there is no real practical injustice. Most of the Tribunal’s orders reflected proper enforcement of cl 13.4 in a practical and just manner, and parties should have anticipated such terms given the equities they themselves had raised. However, the three specific sub-provisions were made without opportunity for the Franchisees to be heard and were apt to lead to unnecessary debate and supervision. Accordingly, these provisions were not enforced by the SICC.
Ground 3: Post-Termination Damages
The Franchisees also sought to set aside the award on the basis that the post-termination damages issued by the Tribunal fell outside the scope of the parties' submission to arbitration and that the Tribunal had committed breaches of natural justice by preventing the Franchisees from presenting their case.
The Franchisees claimed that, in the Post-Hearing Brief, the Franchisor entirely changed its damages claim to raise a new claim that was not pleaded and fell outside the submission to arbitration. They argued that the Statement of Claim was from the beginning aimed at first obtaining specific performance—and if not granted, damages. They also claimed that having been denied disclosure by the Tribunal on the basis that the documents sought were irrelevant, the alleged unpleaded amendment in the Post-Hearing Brief made those previously refused documents relevant. The Franchisees were thus left to deal with the Franchisor’s new case without relevant documents and were significantly prejudiced. The SICC rejected this ground on two independent bases.
First, the claim was not new or outside the scope of submission. The Court found that the Franchisor's expert Mr Brophy's first report, filed with the Statement of Claim, had always calculated damages under three scenarios: (1) the Franchisees continuing, (2) the Franchisor operating recovered stores itself, and (3) a new franchisee operating said stores. While the primary case during the hearing assumed no re-entry, the alternative calculations were clearly present from the outset. The Franchisees' own pleadings and expert engaged with these alternative calculations. The Tribunal questioned Mr Brophy about them during the hearing without objection. Rather than introducing a new claim, the Post-Hearing Brief merely elevated an existing alternative case of the Franchisor’s to primary emphasis.
Second, even assuming that there was procedural irregularity, the Franchisees failed to raise their concerns during the arbitration. The SICC posed the determinative question: have the Franchisees been denied natural justice and treated unfairly where: (1) the Tribunal denied disclosure of documents relevant to an alternative damages case; (2) the Tribunal refused to strike out the Franchisor’s alternative case when it became the Franchisor’s primary case in the Post-Hearing Brief; and (3) the Tribunal did not revisit the disclosure ruling where it has not been asked to do so.
The Court answered no to all three parts of the question. When the Post-Hearing Brief elevated the Franchisor’s alternative case to its new primary case, the Franchisees did not apply to reopen the hearing, renew their earlier unsuccessful disclosure application, seek further cross-examination, or lead additional evidence. The Franchisees only sought to strike out the claim as unpleaded, which the Tribunal correctly rejected. The Franchisees failed to raise any complaint to the Tribunal that they were being prejudiced or to seek remedies during the arbitration. The SICC emphasised that the courts do not sit on appeal from tribunals' procedural decisions, and parties bear responsibility for protecting their procedural rights during the arbitration.
Ground 1: Public Policy – Document Production
The Franchisees argued that the award should be set aside for being contrary to public policy pursuant to s 31(4)(b) IAA because the Franchisor, through Mr Wong, destroyed evidence and committed fraud on the Tribunal.
The SICC rejected the notion that the award was based on fraud and therefore contrary to public policy. The Court emphasised that the Tribunal had addressed the spoliation issue diligently and with appropriate care. Re-litigating the merits of an award based on alleged false evidence and defective disclosure would undermine the very foundations of the New York Convention and the Model Law, save in cases where the fraud could not have been discovered or corrected during the arbitral process.
The SICC found that the Tribunal had examined the proven document destruction in depth. The Franchisees' complaint centred on additional spoliation allegedly proving collusion against them. However, the Tribunal found that while Mr Wong's destructive intentions were proven, the Franchisor's actual conduct throughout the contractual relationship did not reflect implementation of those intentions. The Tribunal drew a critical distinction between Mr Wong's plans and actual conduct, noting that "despite substantial documentation of Mr Wong's efforts to terminate the Malaysia and Taiwan agreements, there is no evidence of actual conduct by [the Franchisor] to terminate – or even to prepare to terminate – the Singapore Agreements". The Court held that, even if additional texts or documents had been destroyed, they were unlikely to have affected the Tribunal's decision. In light of this, the SICC declined to set aside the award on public policy grounds.
Ground 2: Natural Justice - "Critical Argument"
The Franchisees argued that the award should be set aside for breach of natural justice under s 31(2)(c) IAA. They claimed that the Tribunal failed to address their "critical argument" that the Franchisor's plan to "take back" Singapore involved not just replacing them with another franchisee, but potentially taking over all 54 stores directly.
The SICC found no breach of natural justice as the Franchisees never actually raised this argument. The Franchisees' spoilation application sought six specific adverse inferences, none of which involved an inference of direct operation by the Franchisor. Indeed, the Franchisees’ counsel explicitly stated in their opening statement that the Franchisor "… is not going to take over the 54 stores" and consistently argued that the Franchisor 's plan was to replace them with other franchisees.
Applying the legal framework for natural justice challenges of an "infra petita" variety, i.e. whether (1) the issue was properly before the tribunal; (2) the point was essential to the dispute; (3) the tribunal completely failed to consider it; and (4) there was prejudice, the Court concluded that none of the four requirements were satisfied.
Indeed, the SICC noted that the Tribunal's findings contradicted any claim of a plan for direct operation. The Tribunal found that the Franchisor would not have terminated the Franchisees without arranging a replacement franchisee and would not have altered its long-standing franchise-based strategy.
Comment
This decision provides important guidance on challenges to the enforcement of arbitral awards in Singapore, specifically those addressing public policy violations for alleged evidence spoilation, breaches of natural justice on the basis of a party being unable to present its case, and awards exceeding the scope of submission to arbitration.
For practitioners, procedural discipline during arbitration is paramount. Objections must be raised when they arise in the arbitral proceedings, not reserved for enforcement. Claims should be pleaded comprehensively with supporting evidence, as tribunals have the discretion to consider matters fairly raised even if the emphasis shifts. The SICC's approach reflects Singapore's commitment to effective enforcement of arbitral awards while preserving genuine safeguards for fundamental fairness.
*The author would like to thank Jan Koester for his contribution to the publication of this article.
