* Kohe Hasan is a Partner in Reed Smith's Singapore office and a Director of Resource Law LLC. Justine Barthe-Dejean is an Associate in Reed Smith's Singapore office.
Speedread:
The Singapore Court of Appeal has refused to order an anti-enforcement injunction restraining a party from enforcing, in a foreign jurisdiction, a judgment issued by a court of that jurisdiction.
The respondent (Hilton) attempted to enforce two arbitration awards in the Maldives. The appellant (Sun), against whom the awards were made, commenced Maldivian court proceedings that essentially re-litigated the dispute to which the awards related. In parallel to its efforts to enforce the awards, Hilton participated in those Maldivian court proceedings, not just challenging the court’s jurisdiction but also responding on merits. The Maldivian court eventually issued a judgment in favour of Sun.
Pending its appeal of the Maldivian court judgment, Hilton sought an anti-suit injunction in Singapore, being the seat of the arbitrations. In first instance, the High Court noted that the Maldivian proceedings were already too far advanced to warrant an anti-suit injunction and awarded Hilton an anti-enforcement injunction instead. This would prevent Sun from acting on the Maldivian court judgment in the Maldives.
Sun appealed from the High Court decision. The Court of Appeal carried out a thorough review of the authorities and a careful analysis of the principles commanding its discretion to order an injunction in these circumstances. In particular, it compared the requirements for granting an anti-suit injunction with those for granting an anti-enforcement injunction, and the principles of comity and equity, which underpinned them both.
The Court of Appeal agreed that the Maldivian court proceedings were brought in breach of the arbitration agreements, and were both vexatious and oppressive. However, the Court of Appeal found that Hilton's delay in seeking an anti-suit injunction was particularly detrimental to its case. An anti-enforcement injunction seriously impinges on the comity between courts of different jurisdictions. There has to be exceptional circumstances, in equity, to justify granting one.
This decision is a stark reminder that parties must take a pro-active stance when faced with multiple and parallel proceedings in foreign courts, in breach of an exclusive jurisdiction or arbitration agreement. A "wait and see" approach will not be viewed sympathetically in Singapore, as the seat of an arbitration. (Sun Travels & Tour Pvt Ltd v Hilton International manage (Maldives) Pvt Ltd [2019] SGCA 10 (12 February 2019).)
Facts:
An arbitral tribunal seated in Singapore issued two arbitration awards for damages in favour of Hilton International Manage (Maldives) Pvt Ltd (Hilton), against Sun Travels & Tours Pvt Ltd (Sun).
Hilton took various steps to enforce the awards against Sun in the Maldives. This was a slow process: Sun resisted enforcement on public policy grounds, whilst the Maldivian courts hesitated as to which division was competent to hear enforcement matters.
At the same time, Sun commenced court proceedings in the Maldives, essentially re-litigating the issues which had already been decided in the two arbitrations (the Maldivian Proceedings). Hilton unsuccessfully challenged the Maldivian Proceedings on jurisdictional grounds, and the Maldivian court issued a judgment on both jurisdiction and the merits, awarding damages to Sun (the Maldivian Judgment). The court’s findings were, in short, the complete opposite of the arbitral tribunal’s findings. Hilton appealed against the Maldivian Judgment. This appeal was still pending at the time of the Singapore Court of Appeal’s judgment.
In parallel to the Maldivian Proceedings, Hilton continued its attempts to enforce the awards in the Maldives. This was eventually refused by the Maldivian court, on account of the Maldivian Judgment.
In this context, Hilton turned to Singapore, as the seat of the arbitrations, and applied for an anti-suit injunction preventing Sun from pursuing the Maldivian Proceedings (the Singapore Proceedings). The Singapore High Court found that the Maldivian Proceedings were “already too far advanced to warrant an anti-suit injunction". Instead, it granted an anti-enforcement injunction preventing Sun from acting on or relying on the Maldivian Judgment in the Maldivian Proceedings.
Sun appealed to the Court of Appeal. Three issues arose on appeal:
- Whether the Maldivian Proceedings were ‘bound up’ with Sun’s efforts to resist the enforcement of the awards in the Maldives.
- Whether the Singapore High Court was correct in granting the anti-enforcement injunction.
- Whether the High Court was correct in granting declaratory relief.
Decision
The Singapore Court of Appeal reversed the High Court’s decision to grant Hilton an anti-enforcement injunction.
Were the Maldivian Proceedings ‘bound up’ with Sun’s efforts to resist the enforcement of awards’ in the Maldives?
Sun argued that the Maldivian Proceedings were part of its efforts to resist the enforcement of the awards. At their core, it argued, both proceedings considered the same underlying public policy issues, namely Sun’s allegation that the arbitration agreements had been entered into as a result of “deceit and misrepresentation” and were void.
The Court of Appeal unreservedly rejected this argument, and found that in commencing the Maldivian Proceedings, Sun had “clearly gone beyond what would ordinarily be considered to be permissible attempts to resist the enforcement of the Awards".
Was the Singapore High Court correct to grant the anti-enforcement injunction?
The Court of Appeal revisited the English and Singaporean case law on anti-suit and anti-enforcement injunctions, and their interaction with the general principles of comity and equity.
As a starting point, the Court of Appeal found that Hilton had not acted promptly in the Singapore Proceedings. Instead, it participated in the Maldivian Proceedings and continued to do so even after the Maldivian court informed the parties that it would not just rule on its jurisdiction but consider the merits of Sun’s claims altogether.
The Court of Appeal restated a number of established principles governing anti-suit injunctions:
- They should be granted when this is required by the “ends of justice”.
- They are not directed against the foreign court, but against the parties proceeding or threatening to proceed in the foreign court.
- They should only be issued if this would represent an effective remedy.
Anti-suit injunctions, delay and comity
Although anti-suit relief operates in personam on the parties to which it applies, it nonetheless indirectly interferes with foreign proceedings. For this reason, it was for a long time perceived as requiring “to be exercised sparingly and with great caution” in the name of comity (Millett LJ in Aggeliki Charis Compania Maritima SA v Pagnan SpA (The “Angelic Grace”) [1995] 1 Lloyd’s Rep 87 at p.96).
From this initial position, the case law evolved to consider that anti-suit relief should be granted to restrain foreign proceedings in breach of an arbitration “on the simple and clear ground that the defendant had promised not to bring them” (Millett LJ in The “Angelic Grace” at page 96). In such a case, an injunction “is not regarded as a breach of comity, because it merely requires a party to honour its contract“ (Deutsche Bank AG and another v Highland Crusader Offshore Partners LP and others [2010] 1 WLR 1023).
The Court of Appeal noted that this evolution in the case law meant that comity has lost some significance in cases involving exclusive jurisdictional clauses and arbitration agreements.
It is now well established that, where there is a breach of an exclusive arbitration agreement, anti-suit relief will be granted, unless there are strong reasons not to (see Donohue v Armco Inc and others [2002] 1 All ER 749, or Morgan Stanley Asia (Singapore) Pte and others v Hong Leong Finance Ltd [2013] 3 SLR 409). Crucially, those reasons will include the failure to seek an anti-suit injunction before the foreign proceedings are too far advanced (The “Angelic Grace”).
The delay in seeking an injunction relates to comity, which in turn, relates to equity. In Ecobank Transnational Incorporated Ltd v Tanoh [2016] 1 WLR 2231 (Ecobank), the court reminded that an injunction is an equitable remedy. The court must consider whether it is appropriate to grant an injunction having regard to all relevant considerations, which will include the extent to which the respondent may have incurred expenses prior to the application being made, and the interests of third parties including the foreign court. The court in Ecobank noted that it is:
"not concerned with judicial amour propre (…). If successful, [anti-suit injunctions] often mean that time, effort, and expenses (…) will have been wasted (…). Comity between courts, and indeed considerations of public policy, require, where possible, the avoidance of such waste".
The Court of Appeal concluded that comity is relevant where there is a delay in bringing an application for anti-suit relief, even if an exclusive jurisdiction clause or an arbitration agreement is involved. The more advanced the foreign proceedings, the more comity is relevant.
Jurisdictional objections in the foreign court
Hilton argued that prior to commencing the Singapore Proceedings, it had made jurisdictional objections in the Maldivian Proceedings. The Court of Appeal noted that this could not justify Hilton’s delay in commencing the Singapore Proceedings. If anything, it would be “patronising and would achieve the reverse of comity” (The “Angelic Grace”). A defendant should not participate in years of foreign proceedings and, “when they felt that matters were turning against them", seek anti-suit relief to prevent or pre-empt a foreign determination.
Anti-enforcement injunctions
As the Singapore High Court had noted, anti-enforcement injunctions are logically more appropriate than anti-suit injunctions when a foreign court has already issued a judgment.
The Court of Appeal agreed, although it noted that the authorities have consistently expressed the need to exercise much greater caution in granting anti-enforcement injunctions, because of their far greater interference with comity.
The Court of Appeal noted that granting an anti-enforcement injunction is comparable to “nullifying” the foreign judgment or “stripping the judgment of any legal effect” (Ecobank). Anti-enforcement injunctions prevent other foreign courts from considering whether a judgment should be recognised or enforced. They also interfere with the execution of the judgment in the jurisdiction it was made and where it is expected to be obeyed.
Only in a handful of cases have anti-enforcement injunctions been granted including where:
- The foreign judgment was procured by fraud (Ellerman Lines Limited v Read and others [1928] 2 KB 144).
- Anti-suit relief could not be sought before the foreign judgment because the arbitration agreement was reached post-judgment (Bank of St Petersburg OJSC and another v Arkhangelsky and another [2014] 1 WLR 4360).
- Anti-suit relief could not be sought before the foreign judgment because the foreign judgment was sought and obtained too quickly or secretly to enable to a party to seek an injunction.
The Court of Appeal noted that in these cases the discretion to order an anti-enforcement injunction was guided by equity. An anti-enforcement injunction should be granted as a response to unconscionable conduct, such as fraud. It should also be granted where the delay in seeking an anti-suit injunction was not unconscionable because, for example, the applicant had no knowledge of the foreign proceedings.
The Court of Appeal found that Hilton had no proper justification for its delay in seeking anti-suit relief. Rather:
“It appeared to be quite content to wait until there were two Maldivian judgments against it and a pending appeal (…). It was clear that Hilton was not planning to take any step to seek injunctive relief in the seat court before the outcome of the Maldivian Suit was known.”
As to Hilton’s arguments that the Maldivian Proceedings were not properly conducted, the Court of Appeal reminded that this was not an issue for the Singapore courts to decide, but rather, for an appeal in the Maldives. The Court of Appeal rejected Hilton’s suggestion that the Maldivian Judgment, being a mere three pages long, should not be worthy of comity considerations because of the Maldivian court’s “negligible” efforts to produce it.
For the above reasons, whilst the Court of Appeal agreed that the Maldivian Proceedings were brought in breach of the arbitration agreements, and amounted to vexatious and oppressive conduct on the part of Sun, Hilton had taken the dispute out of the hands of the Singapore courts by failing to seek an anti-suit injunction in time.
Therefore, the Court of Appeal reversed the High Court’s decision to grant Hilton an anti-enforcement injunction.
Was the High Court correct to grant declaratory relief?
The High Court had granted two declarations in favour of Hilton:
- That the awards were final, valid and binding on the parties.
- That Sun’s claims in the Maldivian Proceedings were in respect of disputes that arose out of, or were in connection with, the contracts containing the arbitration agreements, and therefore any consequential proceedings would be in breach of the arbitration agreements.
The Court of Appeal agreed with Hilton that such declarations would be of value to Hilton as persuasive tools in the Maldivian Proceedings, and considered that the preconditions for granting declaratory relief (Salijah bte Ab Latef v Mohd Irwan bin Abdullah Teo [1996] 2 SLR(R) 80) were made out.
Somewhat as a consolation to Hilton, the Court of Appeal upheld the High Court’s orders for declaratory relief, on the basis that these orders “serve to uphold the integrity of the arbitration agreements and the Awards rendered on the basis of these agreements".
Comment
This decision is a stark reminder that parties must take a pro-active stance when faced with multiple and parallel proceedings in foreign courts, in breach of an exclusive jurisdiction or arbitration agreement.
A ‘wait and see’ approach will not be viewed sympathetically in Singapore, as the seat of an arbitration. Rather, it will be seen as an attempt to “have two bites at the cherry". As the Court of Appeal warned, a party cannot “without seeking or threatening injunctive relief, resist the foreign proceedings on jurisdictional grounds, only to seek an anti-enforcement when its challenge failed.”
An anti-enforcement injunction is not the simple ‘continuation’ of an anti-suit injunction under a different name, in the case where the foreign court has already issued a judgment. Anti-suit injunctions have gradually detached from comity considerations and have focussed on holding the parties to their word. On the contrary, comity remains a particularly strong constraint on anti-enforcement injunctions. For this reason, anti-enforcement injunctions will not be granted unless there are exceptional circumstances commanded by equity.
Case:
Sun Travels & Tour Pvt Ltd v Hilton International manage (Maldives) Pvt Ltd [2019] SGCA 10 (12 February 2019) Andrew Phang Boon Leong JA; Judith Prakash JA, Steven Chong JA
