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15 February 2024

Thank you June and Intellitrain, welcome CMA

 

 

 

 

 

 

 

Happy Lunar New Year to all of our fellows, members, colleagues and friends of the SIArb who celebrate. 

May the Year of the Dragon bring you joy, success, good health and abundance! 

The Lunar New Year is customarily a time for reunions with loved ones, to give thanks and to celebrate new beginnings.  In this connection, this season marks a time of thanksgiving and transition for SIArb as we onboard a new secretariat team following the retirement of Intellitrain as SIArb's secretariat services provider. 

As a volunteer led organisation with an extremely busy annual programme, SIArb has been fortunate to have had the support of June Tan and her fantastic team at Intellitrain over the past decade.  Intellitrain has contributed as a true stakeholder of SIArb, seeing through milestone after milestone, including our 40th anniversary Gala Dinner in 2022, digitalising and taking our Fellowship and International Entry Courses to the next level during the unprecedented pandemic years, launching the Singapore Arbitration Journal and not least organising innumerable successful lectures, symposia, seminars and social events that our members and friends have enjoyed year after year.  Despite a challenging handover years ago, Intellitrain leaves SIArb on strong foundations with three consecutive years of growth and a solid financial position.

In these respects, June and her team over the years (including Joy, Lynn, Cheryl, Linh, Daphne, Shandy, Keerthi, Gabriel and others who have worked behind the scenes) will always be fondly remembered as part of the SIArb family.

June Tan collage

On behalf of SIArb, Council wishes to convey our utmost gratitude to June and her team (present and past) for their contributions to SIArb’s development and evolution.  Many of our members will have interacted with June at some point and we will all miss her. 

Sadly, the time has come to bid farewell to Intellitrain as secretariat, but we will continue to count them as friends and look forward to welcoming June and her team as special guests of SIArb on future occasions. 

Effective 15 February 2024, directors Allison Law and Beatrice Goh and their team at CMA International Consultants will be taking over in providing secretariat services for SIArb.  CMA was founded in 1995 and has over 25 years of experience in providing secretariat services to professionals-led associations as well as conference and event management.  Their contact details will be published on SIArb's website and LinkedIn page.  The new SIArb enquiries hotline will be +65 6336 4970.

2024 got off to a cracking start with two CPD events already, including the ever popular annual 'Developments in Singapore Arbitration' hybrid seminar by Professor Lawrence Boo and Delphine Ho, which again attracted over 100 registrations in Singapore and abroad. 

Given the transition in the secretariat team, Council foresees that we are likely to have to moderate the number of events organised by SIArb in the initial few months.  Thank you in advance for your understanding and patience as we welcome CMA to the SIArb family.  Our priority is to ensure a smooth transition so that our governance and cornerstone activities, in particular our membership and fellowship courses, will not be impacted.  We plan to pick up the pace of events again later in the year and will continue to hold our flagship events such as the SIArb Lecture, Annual Symposium and Annual Dinner.

If you have any questions or concerns, please feel free to reach out to me or any of the Council Members.  

Thank you and I look forward to seeing everyone at our upcoming events.

Tay Yu-Jin

President, SIArb 2023-2025
 
 
 
 
 
 
 
 

By Justin Gan, Sarah Kuek and Tan Yi Lei – Stephenson Harwood (Singapore) Alliance

The last quarter has seen a number of arbitration decisions reported. We focus on 2 decisions in this edition of the newsletter

-   Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd [2018] SGHC 56

-  Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Private) Limited [2018] SGHC 78

 

Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd [2018] SGHC 56

Hilton v Sun Travels clarifies the basis of the Court's power to grant permanent anti-suit injunctions in support of an arbitration agreement, and is an example of the Court exercising discretion to cure irregular service out of jurisdiction. It also emphasises the need for an otherwise meritorious applicant to seek relief expeditiously.

Background

Under a hotel management agreement, the Defendant (Sun Travels) agreed to let a hotel it owned in the Maldives be managed by Hilton under Hilton's brand for an initial period of 20 years. Sun Travels became dissatisfied with the hotel’s performance under Hilton's management. In April 2013, Hilton gave Sun Travels notice terminating the agreement with immediate effect. On 2 May 2013, Sun Travels accepted Hilton's termination as repudiation of the agreement.

ICC arbitration

Hilton commenced arbitration before the International Chamber of Commerce ("ICC") on 16 May 2013. The ICC Court of Arbitration fixed Singapore as the seat. Parties participated in the reference and following oral hearings in July 2014, Hilton obtained a Partial Award in its favour on 27 May 2015. Sun Travels ceased participating in the reference. On 17 August 2015, a Final Award was issued in Hilton's favour.

Maldivian proceedings

Hilton applied to the Maldivian Courts to enforce the Awards. Sun Travels resisted strenuously and succeeded on a jurisdictional point at first instance, before Hilton overturned the jurisdictional point on appeal. The enforcement question was remitted to the first instance Maldivian Court. In the meantime, Sun Travels commenced Maldivian proceedings against Hilton arising out of the same facts – and the Maldivian Courts found Hilton liable to Sun Travels (contrary to the Awards). Hilton appealed that decision (which appeal remained pending). Sun Travels then relied on that Maldivian decision to resist the Maldivian enforcement proceedings.

Singapore application

Hilton applied to the Singapore Courts for a permanent anti-suit injunction restraining Sun Travels from participating in the Maldivian proceedings, and for declaratory relief.

Judgment

Jurisdiction

An anti-suit injunction over a foreign defendant requires the Court to have in personam jurisdiction over that defendant i.e. if Sun Travels submitted to jurisdiction, or was served out of jurisdiction. For leave to serve out, Hilton needed to show its claim (i) was sufficiently meritorious, (ii) falls within ROC O11, and (iii) that Singapore is the most appropriate forum.

On each:
(i) Sun Travels' substantive Maldivian action was likely to breach the arbitration agreement.
(ii) By choosing to arbitrate under the ICC Rules without selecting a seat, parties effectively agreed to allow the ICC Court discretion to fix the seat. The ICC Court chose Singapore. The Singapore seat was also stated in the agreed Terms of Reference. So, parties had agreed to Singapore law as the curial law and had submitted to the Singapore Court's jurisdiction over matters arising out of the arbitration agreement – and ROC O11 r 1(d)(iv) or r 1(r) was met.
(iii) The Singapore Court as the Court of the seat is the most appropriate forum in which to seek an anti-suit injunction.

Sun Travels also alleged it had not been properly served in the Maldives, as Maldivian law requires service by a Court official, and ROC O11 r4(4) requires a local language (Dhivehi) translation to be served as well. Hilton had served the Singapore Court papers on Sun Travel by leaving them with Sun Travel's receptionist, and emailed them to Sun Travel's management. The Court held service on the receptionist was invalid but exercised its discretion to cure the irregularity – as Sun Travel was aware of the proceedings but had declined to accept service, and as the papers had been provided to Sun Travel's management in any event.

Power to grant a permanent anti-suit injunction

The Court held its power to grant a permanent anti-suit injunction arose from the Supreme Court of Judicature Act (Cap.322), s.18(2) read with First Schedule para.14. These provisions give the Court power to "grant all reliefs and remedies at law and in equity", including the equitable remedy of a permanent injunction.

Article 5 of the Model Law ("In matters governed by this Law, no court shall intervene except where so provided in this Law") was held to present no bar to the Court's power above. This is especially so if arbitration proceedings have concluded, as there is no concern over excessive judicial interference into ongoing arbitral proceedings.

For completeness, the Court found it had no such power under the (i) International Arbitration Act (Cap.143A), s.12A(2) read with s.12(1)(i), and (ii) Civil Law Act (Cap.43), s.4(10) – as both refer only to interim/interlocutory injunctions.

Exercise of discretion

While an anti-suit injunction is an equitable remedy, where the suit to be injuncted is in breach of a valid arbitration agreement, the Court will be ready to grant injunctive relief, unless good reason is shown. After all, the offending party had promised not to bring such a suit.

Sun Travels argued the anti-suit injunction sought was not in support of an ongoing arbitration, as the Final Award had been issued and the reference terminated. Sun Travels argued the Maldivian proceedings (that it had commenced on the merits) were simply the exercise of its right to resist enforcement, in the Maldives.

The Court rejected Sun Travels' arguments. An agreement to arbitrate contains at least 2 implied negative obligations: (i) not to commence Court proceedings to pursue claims which parties have agreed to refer to arbitration, and (ii) not to undermine the award apart from trying to set aside at the seat, or trying to resist enforcement. The distinction between trying to undermine the award and simply trying to resist enforcement lies in whether the foreign litigation seeks to re-open matters decided in arbitration. If so, it is a breach of (ii), impermissible, and may be considered vexatious and oppressive. That said, a Court will be sensitive to the risk of practically interfering with the processes of a foreign Court.

On the facts, Sun Travels' Maldivian proceedings breached negative obligation (ii). It re-litigated the same issues already determined in the Singapore arbitration. It was timed in the midst of Hilton's enforcement proceedings in the Maldives – and sought to re-visit the merits instead of being confined to the (usual) limited grounds for setting aside. It was vexatious and oppressive.

However, Hilton only applied for the permanent anti-suit injunction 9 months after commencement of Sun Travels' Maldivian proceedings. Only after Hilton's enforcement proceedings in Maldives failed, and while Hilton's appeal in Sun Travel's Maldivian proceedings was on foot, did Hilton pursue the permanent anti-suit injunction in Singapore. The Maldivian proceedings were too far progressed. As a result, Hilton was denied the permanent anti-suit injunction it sought.

Instead, the Court permanently restrained Sun Travels from taking any steps in reliance on the first instance decision in Sun Travel's Maldivian proceedings (or any decision upholding the first instance decision). The Court also declared the Awards final, valid, and binding – and declared Sun Travels' Maldivian proceedings to concern the same subject matter as the arbitration and so in breach of the arbitration agreement.

Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Private) Limited [2018] SGHC 78

Rakna Arakshaka Lanka Ltd ("RALL") v Avant Garde Maritime Services ("AGMS") is a recent illustration of the Court's attitude towards unmeritorious allegations of (a) failures of natural justice in the arbitration process, and (b) illegality/public policy. The decision also supports the position that a party wishing to challenge a tribunal's preliminary ruling on jurisdiction can: (1) actively apply for Court determination at the seat within 30 days: Model Law Art.16(3), or (2) raise the issue when exercising its passive remedy of resisting enforcement proceedings. Failure to do (1) does not preclude (2). However, a party cannot allow the deadline for (1) to lapse and then later try to challenge jurisdiction in the Courts of the seat in setting-aside proceedings.

Background

RALL provided comprehensive security services and issued arms, ammunition and related manpower for those services. The Defendant (AGMS) provided maritime security services. RALL is Sri Lanka state linked.

Parties entered into 6 agreements for various projects, subsequently consolidated as annexes under an umbrella agreement. One project was for the establishment of a floating armoury on the "MAHANUWARA" (Vessel). The umbrella agreement required RALL to provide "utmost assistance" vis-a-vis obtaining authorisations and approvals.

In January 2015, there was a regime change in Sri Lanka. Allegations were made against the floating armoury project and the Vessel was detained by Sri Lankan police. AGMS demanded RALL procure a Letter of Clearance from the new regime, but RALL said it could not do so as its board of directors (old regime appointees) had resigned.

Arbitration

On 9 April 2015, AGMS commenced arbitration. RALL sought extensions of time but ultimately did not respond to the Notice of Arbitration, file pleadings, pay its share of SIAC's fees, or nominate its arbitrator. On 22 July 2015, in the absence of a response or nomination from RALL, the SIAC appointed an arbitrator for RALL. On 21 August 2015, the SIAC directed that the reference would proceed.

On 21 August 2015 RALL's counsel wrote to the SIAC alleging the disputes were beyond the scope of the arbitration agreement and the arbitration conflicted with Sri Lankan public policy. No reasons were given. The Tribunal unanimously considered that this letter did not constitute a proper objection to the Tribunal’s jurisdiction.

On 20 October 2015, parties entered into a Memorandum of Understanding (MOU). On 12 November 2015, RALL informed the SIAC that settlement had been achieved and said it no longer needed to proceed with the arbitration.

On 15 November 2015, AGMS wrote to the SIAC indicating there was no longer any settlement (as RALL failed to ensure the continuity of the umbrella agreement), and there was an imminent threat that RALL would terminate the umbrella agreement. AGMS sought a preliminary hearing. RALL chose not to participate. The Tribunal found RALL failed to ensure the continuity of the umbrella agreement, which went to the root of the MOU, and therefore the dispute was still alive.

The arbitration proceeded. RALL did not participate but wrote to the SIAC twice asking about the status of the arbitration. A Final Award was rendered in AGMS' favour.

RALL applied to set the Final Award aside, for 3 reasons:

1. Jurisdiction: The MOU terminated the reference – so the Tribunal's mandate to arbitrate ended with the MOU, and the Final Award was on matters beyond the scope of submission to arbitration.
2. Natural justice: RALL did not have proper notice / was unable to present its case, as it was not copied into certain correspondence (mainly notes of evidence for the substantive hearing).
3. Public policy: The umbrella agreement had been procured by AGMS' bribery of RALL's ex-chairman – so the Final Award was infected by fraud or corruption.

Judgment

The application was dismissed.

Jurisdiction

The MOU did not terminate the reference to arbitration. First, the Tribunal found AGMS' agreement to withdraw was on the premise that RALL would ensure the continuity of the Master Agreement. That did not occur. Second, the MOU itself did not terminate the arbitration upon signing – instead AGMS had to take steps to withdraw.

The MOU did not withdraw parties' submission to arbitration or impact the Tribunal's jurisdiction. Clause 8 of the umbrella agreement contained an arbitration clause and applied the SIAC Rules, of which Rule 25.3 (2013) required objections to a Tribunal exceeding the scope of its jurisdiction to be raised promptly after the Tribunal indicated intent to decide on the matters said to be beyond its scope. After RALL told the SIAC the dispute was settled (12 November), AGMS disagreed and disputed that there was still any settlement (15 November). An interim hearing was held on the issue but RALL did not participate – and the Tribunal ruled it would continue with the arbitration.

Where a Tribunal rules on a plea that it has no jurisdiction, as a preliminary issue, that matter may be determined by the High Court if a party so applies within 30 days of the ruling: IAA s.10(3), Model Law Art.16(3). RALL's present application was out of time. RALL could not circumvent this deadline by attempting to set aside the Final Award at the seat on the basis of jurisdiction.

In reaching this conclusion, the Court:

- Declined to follow authority and commentary that where a party left the arbitral proceedings in protest, the 30-day deadline would not apply. In short, if a tribunal chooses to decide jurisdiction as a preliminary issue, a respondent cannot reserve its objections to the last minute (beyond the 30-day deadline) – for considerations of finality, certainty, practicality, cost, and preventing delay tactics.

- Highlighted the distinction between "active" (attacking the Award at its seat) and "passive" (resisting enforcement) remedies. The bar on circumventing the 30 day deadline applies only to jurisdiction challenges at the seat, where the applicant could have sought determination from the supervisory Court previously but opted not to do so.

Natural Justice

RALL's main complaint was that it did not get notes of evidence of the substantive hearing – and so was prevented from taking steps in the 5 months between the hearing and the Final Award. This was rejected. RALL chose not to participate in the arbitration. It was not prevented from doing so. In fact RALL only requested the notes of evidence some months after proceedings closed.

Public Policy

RALL alleged that RALL's and AGMS' former chairmen had procured the umbrella agreement by bribery and corruption. Trial on charges of corruption was pending in the Sri Lankan Courts. So, RALL said, the Final Award was tainted by fraud and corruption, and enforcement would be contrary to public policy.

This was rejected. The allegations of fraud and corruption did not touch on the Award, only the underlying umbrella agreement. Further, RALL's and AGMS' former chairmen were facing trial; they were not convicted at the time of hearing, and presumed innocent unless proven otherwise.

RALL also argued Clause 3.1 required RALL to perform an illegal act, namely to procure a Letter of Clearance, and so, RALL said, an award enforcing such performance was contrary to Singapore's public policy. The Tribunal had considered this and found no illegality – a finding of fact not open to question by the supervisory Court. Further, the umbrella agreement continues to operate and RALL/AGMS are still engaged in other joint ventures – which the Sri Lanka government would not allow to continue if the agreement was procured by bribery or tainted by illegality.

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