Summary

The Singapore International Commercial Court (“SICC”) has dismissed three applications filed by The Applicant Power Company Limited (the “Applicant”) challenging a USD 490.32 million SIAC arbitral award (together with interest and costs) in favour of Kleros Capital Partners Limited (the “Respondent”).

While the judgment is primarily concerned with the standards for challenging an arbitral award, it makes certain observations regarding the interpretation and enforceability of two non-disclosure agreements (“NDAs”) that may be relevant to Indian parties entering into English law-governed NDAs with foreign counterparties.

Factual background

The dispute arose out of two NDAs entered into between the Applicant and the Respondent in 2013 and 2014 (“Kleros NDAs”) in connection with a proposed coal mining project at the Krutogorovo deposit in Russia (‘Project’). The Kleros NDAs contained broad confidentiality obligations and provided for arbitration in Singapore under the SIAC Rules, 2016 with English law as the governing law. The relevant terms of the Kleros NDAs are summarized below:

(i) Definition of confidential information:

• The Kleros NDAs defined “Confidential Information” as “all information and know-how, regardless of the format whether or not in writing, of a private, secret or confidential nature that relates to the personal, business, technical or financial affairs of the Disclosing Party” and expressly included information “whether or not marked or otherwise designated as ‘Confidential’ or with any other legend indicating its Confidential nature.”

(ii) Non-use:

• The Kleros NDAs required the Applicant to safeguard and restrict disclosure of the confidential information to any third parties
• The NDAs further restricted the Applicant to using the confidential information “solely for the purpose of evaluating a potential business transaction with Kleros” and prohibited disclosure except as permitted.

(iii) Non-circumvention

• The Kleros NDAs restricted the Applicant from “directly or indirectly” making “any agreements, contracts, dealings, investments, or enter into any joint venture, merger, reorganization, vendor relationship, or other business combination or transaction, directly or indirectly, to exploit any aspect of the Confidential Information” or “enter into any transaction directly with any person introduced by the Disclosing Party, for which Disclosing Party may be entitled to receive any benefit.”

(iv) Good faith obligation:

• The Kleros NDAs imposed upon the Applicant: (a) to maintain confidentiality and not misuse the confidential information; and (b) an obligation of non-circumvention and good faith

The Respondent approached the Applicant as a potential co-investor in the Project. The relationship subsequently deteriorated over the proposed structure of the investment, including disagreements concerning the parties’ respective equity participation and the leadership of the proposed bid. The Respondent ultimately did not participate in the auction for the mining licence. Subsequently, Applicant, through a Russian subsidiary FENR, submitted a bid and obtained the mining licence in January 2018.

The Respondent commenced arbitration against Applicant in November 2020 claiming that Applicant had breached the Kleros NDAs by misusing the confidential information disclosed by the Respondent to the Applicant and by acting in bad faith in excluding the Respondent from the Project. The Respondent sought, as its primary claim, damages for the loss of the chance to invest and/or participate in the Project as the principal investor and shareholder, and to profit therefrom. The proceedings were bifurcated into a liability phase (i.e., whether Applicant had breached its obligations under the Kleros NDAs), and the second phase concerned causation and quantum issues. In the liability award dated 26 September 2023 (“Liability Award”), the Tribunal unanimously found that the Applicant had breached the Kleros NDAs. The Applicant did not challenge the Liability Award.

The quantum phase was subsequently decided by a majority of the arbitral tribunal comprising Prof. Lawrence Boo and Mr. Stuart Isaacs KC (‘Majority’), with Mr. A K Ganguli SA being the dissenting arbitrator (Minority’). The Majority, vide award dated 1 July 2025 (“Quantum Award”) awarded the Respondent USD 490.32 million for loss of opportunity, together with interest at 5.33% p.a. and costs amounting to USD 8.28 million. The Minority would have awarded negotiating damages of USD 13.5 million vide the dissenting opinion dated 1 July 2025 (‘Dissent’).

Tribunal’s finding on breach of the NDAs

The Tribunal found that the Applicant did not disclose confidential information to third parties given that the Applicant had put into place further NDAs when entering into discussions with other entities in connection with the Project. However, in the Liability Award, the Tribunal identified three categories of breaches of the Kleros NDAs by the Applicant. Firstly, the Applicant had misused the confidential information to advance the Project through dealings with various third parties and Russian officials without the Respondent, in breach of the non-circumvention obligation and contractual duty of good faith. Secondly, the Applicant made false statements to the Respondent in breach of the same contractual duty. Thirdly, the Applicant concealed from the Respondent its intention to exclude and supplant the Respondent in the Project.

Pertinently, the Tribunal found that the Kleros NDAs gave rise to an implied contractual duty of “mutual trust and confidence” requiring each party to “rely on the other in safekeeping each [other’s] interests as they explore possible future engagement in the [p]roject” and to “act in good faith vis-à-vis each other as understood in English law”. The Applicant breached this duty by making false statements to the Respondent, concealing its intention to exclude the Respondent, and misleading Kleros about the purpose of meetings.

Specifically, the Applicant drew on the Respondent’s local connections to secure site visits and meetings with Kamchatka government officials; conducted feasibility studies with Geosolutions LLC, ROSMORPORT and KPMG; concluded NDAs with Sistema JSFC, RDIF, Sberbank and FondVostok to exploit the confidential information without the Respondent’s consent; and was excluded from meetings with the Far East Development Ministry. Moreover, the Tribunal found that the Applicant worked with Russian officials to secure a direct allocation of the mining license to the Applicant and, when that proved unsuccessful, the Applicant engineered postponements of the auction while ensuring no competing bidder would participate.

The Majority, in the Quantum Award, applied the principle that loss of chance damages is recoverable under English law “if the essence of the breach of duty includes depriving the claimant of the chance or opportunity of securing a favourable outcome.” It observed that “where the deprivation of a lost opportunity is the very essence of the breach, it follows that the loss is reasonably foreseeable and therefore not too remote”. The claimant did not need to prove that it would have succeeded in the underlying opportunity, but only that it had a “real and substantial” chance.

The Majority found that the Project was to be valued objectively as at the date of the Applicant’s breach in 2016, based on expert valuations, at approximately USD 1.02 billion. Kleros’ loss of chance was fixed at 60%, reflecting the Majority view that, but for the Applicant’s breaches, the Respondent had an equal prospect of proceeding with the Project either on its own with pure off-take partners or alongside other joint equity partners. The Majority accordingly awarded the Respondent USD 490.32 million for loss of chance, i.e., the value of the opportunity to invest in and profit from the Project. This figure reflected the average of two scenarios (i) USD 612.9 million, being the value of the Respondent’s loss of chance had it developed the Project independently with pure off-take partners, and (ii) USD 367.74 million, being the value of the Respondent’s loss of had the Respondent held a 60% equity stake alongside a minority equity partner.

In the Dissent, the Minority found that the Applicant’s breaches of the NDAs did not deprive the Respondent of the chance to bid for the mining licence or to pursue the Project. The Minority was accordingly prepared to award the Respondent negotiating damages representing the sum the Respondent could have extracted to release Applicant from its obligations under the NDAs, which the Minority assessed to be USD 13.5 million together with interest at 5.33% per annum.

Applicant’s challenge before the SICC

While the Applicant did not challenge the Liability Award by the Tribunal, it challenged the Quantum Award and the final award passed by the Majority by filing three applications before the SICC alleging breaches of natural justice, the agreed arbitral procedure and that certain members of the Tribunal demonstrated apparent bias.

The Applicant  argued that the Majority abdicated their duty to analyse and failed to apply its mind to the essential issue of causation in the Quantum Award. Specifically, the Applicant argued that the Majority failed to (i) determine whether the Applicant’s breach had actually caused the Respondent the loss alleged; and (ii) properly address principles of remoteness and mitigation. According to the Applicant, this amounted to a failure by the Tribunal to decide matters submitted to it.

The SICC’s decision

• Causation

The Applicant had argued that the majority had failed to determine the essential issue of causation, in particular, by failing to consider what would have happened had the Applicant not breached the Kleros NDAs (termed in the arbitration as the “No Breach Scenario”). The SICC disagreed with this assertion and found that the Majority had undertaken a substantial analysis of the Respondent’s loss of chance claim and had considered the circumstances in which the Respondent would have pursued the Project in the absence of the Applicant’s breaches. The SICC found no “virtually inescapable” inference that the Tribunal had failed to address causation, which it had observed to be the standard.

The SICC also held that the Applicant’s complaint regarding the “No Breach Scenario” counterfactual amounted to a new ground of challenge that had not been raised in the originating application or supporting witness statement and was accordingly time-barred.

• Remoteness

On remoteness, the SICC reached a similar conclusion. The parties had addressed causation and remoteness together, and the Quantum Award demonstrated that the Tribunal had understood and applied the relevant legal principles governing loss of chance claims. The Quantum Award had expressly addressed the issue of remoteness at multiple points, and the Majority had applied the principle that loss of chance damages is recoverable wherever the essence of the breach includes depriving the claimant of the chance or opportunity of securing a favourable outcome, under English law.

• Mitigation

The SICC described the Applicant’s mitigation argument as a challenge on the merits of the matter being presented as a natural justice complaint. The Majority had identified the Applicant’s mitigation submissions, considered them and rejected them. The SICC stressed that the Applicant was entitled to a reasonable opportunity to present its case but was not entitled to have its arguments accepted. The SICC held that even if the Majority had reached the wrong conclusion on mitigation, that would not, without more, constitute a breach of natural justice.

• Technical challenges

 Breach of agreed procedure: The Applicant’s allegation that there was a failure by the Majority to decide matters submitted to it was consequently rejected. The SICC held that the Majority had applied its mind to the essential issues submitted to it. A complaint that the Majority’s reasoning was inadequate or incorrect could not be transformed into a challenge of the agreed procedure simply because the party disagreed with the result. Since there had been no breach of natural justice, the SICC also found no corresponding breach of the parties’ agreed arbitral procedure.

Apparent bias: The SICC rejected the Applicant’s allegations of apparent bias. Applying the established Singapore test, the question was whether the circumstances would give rise to a reasonable suspicion or apprehension of bias in the mind of a fair-minded and informed observer, assessed objectively on ascertainable facts rather than speculation or an unduly suspicious approach. The Applicant relied on appointments involving Prof. Boo and Mr. Isaacs KC in unrelated proceedings where Omni Bridgeway (the Respondent’s third-party funder) was involved, but the SICC rejected this, finding that those proceedings were unrelated to the present arbitration, that Omni Bridgeway had made none of the relevant appointments, and that automatically equating a funder with the funded party for disclosure purposes would effectively require piercing the corporate veil in every funded arbitration.

Key takeaways regarding NDAs

1. Choice of English Law: Parties should exercise caution when choosing English law to govern their NDAs. Under English law, a breach of an NDA may give rise to a claim for loss of chance damages, which is a potentially expansive remedy that may go beyond the recovery available under other legal systems. The Majority applied the principle that loss of chance damages are recoverable under English law “if the essence of the breach of duty includes depriving the claimant of the chance or opportunity of securing a favourable outcome.” The claimant did not need to prove that it would have succeeded in the underlying opportunity but only that it had a “real and substantial” chance to do so. Pertinently, even the more conservative Minority had awarded USD 13.5 million to Kleros as negotiating damages. Therefore, breach of an NDA can lead to damages if the party disclosing confidential information can demonstrate that it was deprived of a substantial commercial opportunity. This can have significant and unanticipated financial consequences, particularly in high-value transactions.

2. Scope of the NDA: It is important to carefully review whether an NDA is a simple confidentiality agreement, limited to protecting confidential information or whether it contains additional obligations, such as good faith, exclusivity, or lock-out provisions. In the present case, the Tribunal did not find a breach of the confidentiality obligation; rather, the liability arose from the breach of an ancillary good faith obligation embedded in the Kleros NDAs. As such, the Tribunal found that Tata breached the NDAs not by disclosing confidential information to third parties but by using the confidential information to advance the project without Kleros in breach of the non-circumvention obligation. Therefore, the non-circumvention clause was breached even though no confidential information was formally disclosed. Consequently, such additional obligations should be included only after careful consideration of their legal and commercial implications.

3. Definition of Confidential Information: The NDAs defined “Confidential Information” to include all information “whether or not marked or otherwise designated as ‘Confidential’” which was accordingly enforced by the Tribunal. As such, if the definition of confidential information in NDAs lack a requirement of marking the information as such, then there is a risk that any sharing of information that is not considered as confidential by the receiving party may be considered as a breach of the NDA. Therefore, from the perspective of the recipient of the Confidential Information, it is advisable to ensure that the NDA expressly requires the disclosing party to mark or identify information as confidential at the time of disclosure, so as to avoid inadvertent breaches

4. Conduct During the NDA Period: Where an NDA goes beyond simple confidentiality obligations, parties should be mindful of their conduct throughout the entire term of the NDA, i.e., not only in their dealings with the counterparty, but also in any parallel negotiations or discussions with third parties. Parties may assume that NDAs are concerned solely with the protection of confidential information and that substantive obligations only arise once a binding agreement is executed. In light of this judgment, that assumption may need to be revisited, and parties should seek legal advice on the full scope of their obligations during any NDA-governed negotiation.

TT&A Comment

Notably, the Applicant ultimately surrendered the mining license back to the Russian government and, prior to doing so, had offered the license to the Respondent. Despite these facts, the Majority awarded significant damages for the Respondent’s loss of chance. As such, the Quantum Award by the Majority raises certain questions when viewed against the broader factual backdrop where a party that was offered the very opportunity it claimed to have been deprived of, and eventually declined, can be said to have suffered a loss of chance valued at nearly half a billion dollars. In the circumstances, awarding negotiation damages may have been more reasonable, as done in the Dissent by the Minority. Therefore, in our view, the Majority’s findings arguably warrant closer scrutiny in the backdrop of the commercial reality of the Project.

Disclaimer: This publication only highlights key issues and is not intended to be comprehensive. The contents of this publication do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this publication should be considered an advertisement or solicitation of TT&A’s professional services.