Background

In the case of R1 International Pte Ltd v Lonstroff AG [2014] 3 SLR 166, the Singapore High Court stated obiter that although its powers under sections 12 and 12A of the International Arbitration Act were limited to granting interim injunctive relief, it had the general power under section 4(10) of the Civil Law Act to grant injunctive relief on a permanent basis. For further discussion of this, see Legal Update, Singapore Court of Appeal finds arbitration agreement contained in standard terms incorporated into a contract made by email.

Section 18(2) of the Supreme Court of Judicature Act states:

”Without prejudice to the generality of subsection (1), the High Court shall have the powers set out in the First Schedule”

Paragraph 14 of the First Schedule of the Supreme Court of Judicature Act provides the High Court:

”Power to grant all reliefs and remedies at law and in equity, including damages in addition to, or in substitution for, an injunction or specific performance”.

In order for an anti-suit injunction to be granted over a foreign defendant, the Singapore High Court must have in personam jurisdiction over the defendant, either by way of the defendant’s submission to jurisdiction or by valid service of the originating process on the defendant outside Singapore.

As set out in the case of Siemens AG v Holdrich Investment Ltd [2010] 3 SLR 1007, for the court to grant leave for service outside the jurisdiction, the following requirements must be made out:

• The plaintiff’s claim must fall within the scope of O 11 of the Singapore Rules of Court (Rules of Court), which stipulates cases in which service out of Singapore is permissible.
• The plaintiff’s claim must have a sufficient degree of merit.
• Singapore must be the most appropriate forum.
• Article 5 of the Model Law (having the force of law in Singapore pursuant to section 3 of the International Arbitration Act) states: “In matters governed by this Law, no court shall intervene except where so provided in this Law.”

Facts

Arbitration was commenced in 2013 between Hilton International Manage (Maldives) Pvt Ltd (plaintiff) and Sun Travels & Tours Pvt Ltd (defendant). The parties brought various claims and counterclaims against each other in relation to contractual breaches under a management agreement.

The arbitration agreement provided that disputes would be submitted to arbitration under the International Chamber of Commerce (ICC) arbitration rules, and that the “venue of the arbitration shall be Singapore International Arbitration Centre.” The ICC Court of Arbitration fixed Singapore as the place (or seat) of the arbitration, as did the subsequent Terms of Reference signed by the parties.

The arbitral proceedings were concluded by way of a partial award and a final award issued in 2015 (Awards), both in favour of the plaintiff. The plaintiff commenced enforcement proceedings in the Maldives on the basis of the Awards.

Following the conclusion of the arbitration proceedings and the plaintiff’s commencement of enforcement proceedings in the Maldives, the defendant commenced civil proceedings in the Maldivian High Court on the same issues raised in the arbitration. Ultimately, in March 2017, the defendant successfully obtained judgment in the Maldivian civil proceedings, contradicting the outcome of the arbitration. The plaintiff appealed the Maldivian judgment.

The plaintiff applied to the Singapore High Court in July 2017 for a permanent anti-suit injunction to restrain the defendant from commencing or proceeding with any action against the plaintiff in the Maldivian courts, a declaration that the Awards were final, valid and binding on the parties, and a declaration that the defendant’s actions were in breach of the arbitration agreement.

The plaintiff’s position

The plaintiff argued that by commencing the Maldivian proceedings, the defendant had breached the arbitration agreement between the parties.

The plaintiff further argued that the defendant had submitted or agreed to submit to the jurisdiction of the Singapore courts or that the claim was under a contract which contained a term to the effect that the Singapore court would have jurisdiction to determine any action.

The defendant’s position

The defendant argued that the Maldivian action had simply been commenced to resist enforcement of the Awards in the Maldives.

It further contended that:

• The Singapore High Court did not have jurisdiction over the defendant as parties had not expressly agreed on Singapore as the seat of the arbitration and thus had not agreed to submit to the jurisdiction of the Singapore courts order to grant leave for service out of jurisdiction should be set aside.
• The service of originating process out of the jurisdiction was invalid. The requirements for service in a foreign jurisdiction had not been complied with, because Maldivian process was to be served by a court official, which was not done in this case.
• There had been undue delay on the part of the plaintiff in making its application for an anti-suit injunction.

The key questions for the court to consider were whether:

• The Singapore High Court had jurisdiction over the defendant.
• The court had the power to grant a permanent anti-suit injunction.
• That power should be exercised in this case.

Decision

While the court ruled that it had jurisdiction over the defendant and the power to grant a permanent anti-suit injunction as a matter of Singapore law, considering the advanced stage of the Maldivian civil proceedings, it considered that it should not exercise such power in this case. Instead, the court granted the plaintiff a limited anti-suit injunction. However, the court made it clear that the limited anti-suit injunction would not affect the defendant’s right to defend enforcement proceedings pursuant to Maldivian law.

Whether the Singapore High Court had jurisdiction over the defendant

The court agreed with the plaintiff’s contention that the grant of an anti-suit injunction of the kind sought depends on the seat of the arbitration, rather than the governing law of the arbitration agreement.

By agreeing to arbitrate under the ICC Rules, even without an agreement as to seat, the parties had agreed to allow the ICC Court to fix the seat. Therefore, the court found it had jurisdiction over the defendant. The court accepted that the issues dealt with a breach of the arbitration agreement, and also found that the other requirements for leave to serve outside of jurisdiction had been made out.

The court further found that under the Rules of Court, personal service of process was available to the plaintiff overseas so long as it did not contravene the law of the foreign jurisdiction (which, on the Maldivian expert evidence before the court, it did not). However, such service had to be valid as a matter of Singapore law and it was insufficient under Singapore law to hand the cause papers to the receptionist at the defendant’s office and not serve them on an officer of the company as required under the Rules of Court.

The court found, however, that reasonable steps had been taken by the plaintiff to bring the originating summons to the defendant’s attention (by, inter alia, sending emails to the defendant’s chairman and managing director) and that the defendant had been aware of the originating summons. There would therefore be little prejudice to the defendant should the irregularity be cured. For that reason, the court exercised its discretion to cure the irregularity in service.

Whether the court has the power to grant a permanent anti-suit injunction

The court considered that it did have the power to grant a permanent anti-suit injunction in relation to foreign court proceedings in the context of arbitration.

The court held that this power stemmed from section 18(2) of the Supreme Court of Judicature Act, read with paragraph 14 of the First Schedule of that Act. In doing so, the court disagreed with the analysis of the High Court in R1 International Pte Ltd v Lonstroff AG which had stated obiter that the court had the power to grant permanent anti-suit injunctions by virtue of section 4(10) of the Civil Law Act. In the court’s view, the powers under section 4(10) of the Civil Law Act were only in relation to interlocutory, and not permanent injunctions.

The court also held that its powers to grant a permanent anti-suit injunction in relation to foreign court proceedings in the context of arbitration was not impeded by Article 5 of the Model Law. This is because the grant of a permanent injunction or other remedy is not a matter governed by the Model Law.

Whether the court should exercise such power

The court considered that, in this case, it should not exercise its discretion to grant the equitable remedy.

The court said that in Singapore, a court would readily grant an anti-suit injunction to restrain proceedings brought in breach of an arbitration agreement. An anti-suit injunction would be granted if:

• There was a valid arbitration agreement.
• The application was made without delay.
• The foreign action is not well-advanced.
• There is no other reason why the injunction should not be granted.

However, it was a novel issue as to whether the same proposition would apply when court proceedings are commenced after the arbitral proceedings had concluded and the award had been issued.

The court’s view was that there are at least two relevant implied negative obligations arising from an arbitration agreement.

First, there is a negative obligation not to commence court proceedings or pursue disputes in any other forum. The court accepted that this obligation existed even without ongoing arbitration proceedings, and therefore could exist before arbitration proceedings had been commenced or after they were complete.

Second, there is a negative obligation not to set aside or attack the award other than in the seat of the arbitration. This obligation, the court clarified, was distinct from the enforcement process where an award debtor is legitimately entitled to resist enforcement in any jurisdiction.

The court considered that the relevant question in this case was whether there had been a breach of the second obligation, by considering whether the foreign litigation sought to re-open matters decided in the arbitration. The court also observed that this can also often amount to vexatious and oppressive conduct and that the court ought to be circumspect in deciding whether to grant a permanent anti-suit injunction to restrain the defendant from continuing with the foreign proceedings in such cases. This is because the question of whether there had been an abuse of process is primarily a matter for the foreign court to determine.

The court held that the defendant’s actions in the Maldives were in breach of the negative obligation not to set aside or attack the award other than in the seat of the arbitration. The court was also unconvinced by the defendant’s argument that the Maldivian action was, in fact, intended to resist enforcement in that jurisdiction.

Delay

The court agreed with the defendant that the length of delay in making an application for an anti-suit injunction was relevant, and that the delay should also take account of the time during which the foreign judgment is challenged. The court opined that the general principle is that applications for anti-suit injunctions must be made promptly and before foreign proceedings are too far advanced, both to avoid prejudice to the defendant and for considerations of comity between courts in different jurisdictions.

Due to the delay in the plaintiff’s application, the court held that the appeal was already too far advanced to warrant an anti-suit injunction to restrain the defendant from involvement in the pending appeal.

On the grounds of the above, the plaintiff’s application for an anti-suit injunction to restrain the defendant from continuing with the proceedings in the Maldives was not allowed. Instead, the court considered that the more appropriate order to grant, in light of the status of the Maldivian proceedings, was one to restrain the defendant from relying on the Maldivian judgment.

Comment

This case confirms that the Singapore High Court has the power to grant a permanent anti-suit injunction, and clarifies the source of that power under the legislation. It also explores the implied positive and negative obligations under an arbitration agreement, and clarifies that the obligation on the parties not to commence court proceedings in breach of the arbitration agreement subsists even after the arbitration has concluded.

The court’s guidance on service of proceedings in an overseas jurisdiction is also worth noting, although this case shows the court’s willingness to cure irregularities in service where there is no prejudice to the defendant.

Finally, parties would do well to note the court’s guidance concerning undue delay in applying for an anti-suit injunction, whether or not it is permanent. A delay could be fatal to a party’s otherwise meritorious application, particularly as the Singapore courts are less likely to interfere with advanced foreign court proceedings in such a case.

Case

Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd [2018] SGHC 56, 14 March 2018.

Reed Smith Pte Ltd is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.