The Singapore International Commercial Court (SICC) has rejected an application by ONI Global Pte Ltd and LAC Global (Singapore) Pte Ltd (the “Franchisees”) to set aside the enforcement of an arbitral award in favour of GNC Holdings LLC (the “Franchisor”).
The three-judge bench of Justice Chua Lee Ming, International Judge Simon Thorley, and International Judge James Allsop, found that the arbitral tribunal had acted within its jurisdiction and had not breached natural justice in ordering the franchisees to assign the leases of 54 GNC stores in Singapore to the franchisor, as required under the franchise agreement. However, the SICC varied the enforcement order slightly, declining to enforce subparagraphs (ii) and (iii) of the specific performance directions, which had been made without giving the franchisees an opportunity to make submissions and were likely to invite unnecessary debate and supervision.
The dispute arose from the termination of GNC’s Singapore franchise agreements after the franchisee decided to rebrand 54 retail outlets following a breakdown in their relations. Both parties invoked the arbitration clause.
In its Final Award, the arbitral tribunal in Pittsburgh, Pennsylvania, in August 2024, directed the Franchisees to assign 54 GNC-branded store leases in Singapore back to the Franchisor, along with damages and post-termination obligations. It gave detailed steps for lease transfer, employee retention, and landlord consent. The franchisees argued this went beyond the scope of arbitration and denied them natural justice, as such detailed terms were neither pleaded nor debated. The Franchisees, therefore, sought to set aside enforcement of that award in Singapore.
The SICC rejected all four grounds raised by the Franchisees to set aside the enforcement of the Final Award, while slightly varying the scope of specific performance.
On the allegation of spoliation of evidence, the franchisees claimed that GNC’s executive had destroyed key documents, making the award contrary to Singapore’s public policy. The Court found no merit in this claim, noting that the arbitral tribunal had “carefully examined and addressed the issue” and drawn adverse inferences where warranted. The misconduct, the Court said, did not affect the outcome, and thus raised no public policy concern. Reference was made to Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [1998] 4 All ER 570 & Europcar Italia, S.P.A. v Maiellano Tours 156 F.3d 310 (2nd Cir. 1998).
On the second ground alleging a breach of natural justice, the franchisees argued that the tribunal failed to consider their key contention that GNC, through its executive Mr Wong, had secretly planned to “take back Singapore” by replacing them as franchisees. The SICC dismissed this argument, applying the framework laid down by the Court of Appeal in DKT v DKU [2025] 1 SLR 806, which requires four elements to be shown before a natural justice claim can succeed. The Court found that none of those conditions were met. The so-called critical argument had barely been raised as a distinct issue, and was not essential to the dispute. The SICC held that, read fairly, the tribunal had considered and implicitly rejected the claim that GNC planned to take over the Singapore stores, finding no prejudice or breach of natural justice.
The third ground concerned the franchisees’ complaint about the tribunal’s approach to post-termination damages. GNC had introduced a new and unpleaded claim for post-termination damages in its Post-Hearing Brief, which they said fell outside the scope of the arbitration. The SICC, however, held that this was not apprehended bias, where the law requires an immediate objection. However, by not raising the damages complaint with the tribunal when they could have, the franchisees’ later argument that they were denied a fair opportunity became unconvincing, even though it technically wasn’t a formal “waiver” in law.
The fourth ground concerned the franchisees’ challenge to Order 3 of the arbitral award, which directed them to assign the leases of 54 Singapore GNC stores to the franchisor under detailed terms governing property transfer, employee retention, and landlord consent. They argued that this went beyond the tribunal’s mandate and denied them a fair opportunity to respond. The SICC rejected the challenge, holding that the tribunal was empowered to fashion equitable relief in a just and workable form and that its order fell squarely within Clause 13.4 of the Franchise Agreement, which set out post-termination obligations.
However, subparagraphs (ii) and (iii) of the order should not be enforced because they were made without giving the Franchisees an opportunity to make submissions and were of a character likely to generate unnecessary debate and ongoing court-like supervision, the SICC held.
Appearances
Toby Landau KC (Duxton Hill Chambers) (instructed), Rachel Low (Rachel Low LLC) (instructed), Adrian Aw, Ian Choi and Tessa Lim (Resource Law LLC) for the claimant.
Davinder Singh SC, David Fong and Ng Shu Wen (Davinder Singh Chambers LLC) for the defendants.
