By Tham Wei Chern, Daniel Lee – Fullerton Law Chambers LLC
A. Facts
1. Hilton obtained a Singapore-seated ICC award against Sun arising out of Sun’s repudiation of a hotel management agreement. Sun had counterclaimed for fraudulent misrepresentation and breach of duty of care and skill.
2. Hilton attempted to enforce the award in the Maldives (the “Maldives Enforcement”).
3. Sun simultaneously commenced court proceedings in the Maldives, essentially re-litigating the issues that had been decided in the arbitration (the “Maldives Suit”).
4. Instead of immediately applying (in the Singapore Courts) for an order for Sun to cease the Maldives Suit, Hilton instead challenged the Maldives Suit on jurisdictional grounds and failed before the Maldives Courts.
5. The Maldives Courts proceeded to issue a judgment (in the Maldives Suit) that was the complete opposite of the findings of the arbitral tribunal. The Maldives Court also ordered substantial damages in favour of Sun (the “Maldives Judgment”). Hilton’s Maldives Enforcement was stayed by the Maldives Court, and Hilton appealed against the Maldives Judgment (the “Maldives Appeal”).
6. Hilton then applied for an “anti-suit injunction” in the Singapore High Court. The Singapore High Court Judge decided the Maldivian action was already too far advanced to warrant an anti-suit injunction, and instead granted an anti-enforcement judgment to prevent Sun from relying on the Maldives Judgment.
7. Sun then appealed to the Singapore Court of Appeal.
B. Decision
Whether the Maldives Suit was bound up with resisting the Maldives Enforcement
8. Sun argued that the Maldives Suit was merely part of Sun’s effort to resist the Maldives Enforcement, and not an attempt to re-litigate issues decided by the arbitral tribunal.
9. The Court of Appeal rejected Sun’s argument. The Court of Appeal found that the Maldives Suit was clearly a separate set of proceedings to re-litigate the substantive merits of the arbitration for the following reasons: (i) the claims brought by Sun in the Maldives Suit were similar to those in the arbitration; (ii) the Maldives Suit was commenced after Hilton attempted to enforce the award; and (iii) Sun had taken the position that the tribunal’s decision could be subject to retrial in the Maldivian courts, and not merely that it was seeking non-recognition or non-enforcement of the award.
Whether an injunction should be granted
10. The Court of Appeal stated that, anti-enforcement injunctions would not be granted except in exceptional circumstances, for the following reasons:
- such injunctions offend comity and equity because a judgment has been rendered and considerable judicial time and effort would be wasted;
- they interfere with the foreign court where the judgment was granted by preventing that courts from enforcing a judgment properly made under that country’s laws;
- they interfere with foreign courts elsewhere by abrogating their prerogative to decide whether to enforce the foreign judgment; and
- it is no excuse that an applicant was contesting the foreign judgment on jurisdictional grounds, as granting an anti-suit or anti-enforcement injunction would be giving the applicant a second bite of the cherry.
11. Exceptional circumstances are determined on considerations of equity and unconscionability. Examples of exceptional circumstances include (i) where the other party had acted unconscionably by obtaining the foreign judgment by fraud; or (ii) where the applicant had not acted unconscionably by only applying for the injunction late because it had no knowledge of foreign proceedings until served with the foreign judgment.
12. In the present case, Hilton was not able to show any exceptional circumstances.
- Hilton’s excuse that it was contesting the Maldives Suit on jurisdictional grounds was rejected;
- Hilton had not been caught by surprise as it had enough warning and opportunity to seek an anti-suit injunction in Singapore before the Maldives Judgment but chose not to;
- Hilton’s argument that the Maldives Suit was improperly conducted was not for Singapore courts to decide; and
- an injunction would severely handicap Sun in the Maldives Appeal, thereby interfering with Maldives court proceedings.
13. The Court of Appeal therefore reversed the High Court’s decision to grant an anti-enforcement injunction. The result is that the Singapore Courts declined to Hilton any anti-suit or anti-enforcement injunction.
Whether declaratory relief should be granted
14. Hilton sought a declaration that (i) the arbitration award is final, valid and binding and (ii) that any proceedings consequential to the Maldives Suit would be in breach of the parties’ arbitration agreement.
15. The Singapore Court of Appeal allowed the declaration sought and dismissed Sun’s appeal.
16. The Singapore Court of Appeal decided that it had the power to grant the declaration and nothing in the Singapore International Arbitration Act prohibited it.
17. It found that the declaration would have value to Hilton as a persuasive tool in the Maldives Appeal.