Recently, in Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd  SGHC 56, the Singapore High Court dealt with the issues of whether a foreign defendant’s commencement of the civil action in his own country post arbitral award was an attempt to circumvent the awards. If so, would the Foreign Court action be a breach of the arbitration agreement between the parties, in particular a breach of such defendant’s negative obligation not to commence proceedings in another forum and/or not to set aside or otherwise attack the arbitral awards in a jurisdiction other than the seat of the Arbitration? More specifically the central issue was whether the Singapore court has the power to grant a permanent anti-suit injunction for an arbitration seated in Singapore where arbitration proceedings have already concluded and the award issued? The Court concluded that commencement of court proceedings in foreign Court was a breach of the defendants’ obligation not to sue in another forum, rather than an attempt to set aside or otherwise attack the award. Therefore, the defendant’s conduct was not only a breach of the arbitration agreement, but was also vexatious and oppressive, which is a separate ground on which a permanent anti-suit injunction can be granted. Under Section 18(2) read with paragraph 14 of the First Schedule of the Supreme Court of Judicature Act of Singapore, the Court has powers to “grant all reliefs and remedies at law and in equity”, which necessarily includes the equitable remedy of a permanent injunction. The Court also addressed the issue of whether the grant of a permanent anti-suit injunction or other court intervention following the conclusion of arbitral proceedings is a matter governed by the Model Law and held that Art 5 does not prevent the court from issuing a permanent anti-suit injunction as the grant of a permanent injunction or other remedy is not a matter governed by the Model Law. This is especially so if arbitration proceedings have concluded, as there is no concern over excessive judicial interference into ongoing arbitral proceedings. In coming to this conclusion, the Court cited the Delhi High Court ruling of Indian Oil Corporation Ltd v Atv Projects India Ltd and Anr LNIND 2004 DEL 486.
The Maldivian entity of a worldwide hotels and resort company Hilton International Manage (Maldives) Pvt Ltd (Hilton) entered into a Management Agreement (the Agreement) with Sun Travels & Tours Pvt Ltd (Sun) according to which Sun agreed that its Hotel located in Maldives would be managed under Sun’s management and brand name for an initial period of 20 years. Being dissatisfied with Hilton’s management, Sun terminated the Agreement. This termination was termed as ‘wrongful repudiation’ by Hilton and it triggered arbitration with International Chamber of Commerce (ICC). The arbitration clause read as follows:
… the Parties irrevocably agree that any dispute, controversy or claim arising out of or in connection with this [Management Agreement], or the breach, termination or invalidity thereof shall be finally settled under the Rules of Arbitration of the [ICC] by one (1) or more arbitrators appointed in accordance with said Rules. Any arbitration proceedings shall be conducted in English. The venue of the arbitration shall be Singapore International Arbitration Centre.
ICC fixed Singapore as the seat of arbitration as it was empowered by a subsequent Terms of Reference signed by both the parties to do so.
Parties’ contention in Arbitration
Hilton’s claim in the Arbitration was that Sun was not entitled to terminate the Agreement either by virtue of the Hilton’s alleged contractual breaches or misrepresentations, and Sun was thus liable to pay damages.
Sun claimed that Hilton had made certain fraudulent misrepresentations as to the financial projections provided before the parties entered into the Agreement, inducing the Hilton to enter into the Agreement, and that the Hilton had committed various breaches of the Agreement while operating the Hotel, justifying termination of the Agreement.
The Tribunal issued the Partial Award finding that Sun’s claims of contractual breach and negligent and/or fraudulent misrepresentation had not been made out and Sun had thus not been entitled to terminate the Agreement. It dismissed Sun’s claims and awarded Hilton US$599,095.66 with interest for pre-termination and GBP 1,051,230.10 for legal and expert’s fees and expenses. It also awarded the Hilton damages and costs in relation to the Tribunal and ICC’s expenses, with the decision on quantum to be reserved to a further award.
Sun stopped participating in the Arbitration after the issuance of the Partial Award. Later, Hilton made submissions to the Tribunal on the quantum of damages that the Sun should be liable for. Sun did not respond to the Hilton’s submissions and the Tribunal issued the Final Award determining the damages and ordering that Sun to Hilton damages in the sum of US$20,945,000 at simple interest of 3.4% per annum, and US$342,500 for the ICC and Tribunal’s administrative expenses.
Court proceedings in the Maldives
Two sets of proceedings were commenced in the Maldives following the issuance of the Final Award. They were as follows:
- Enforcement proceedings started by Sun against Hilton (proceedings for the enforcement of the Awards) and
- Civil proceedings (the Sun’s commencement of the Maldivian action in the Maldivian courts against the Hilton for damages).
First Enforcement Proceedings
This was initiated under Section 72 of the Maldivian Arbitration Act. Sun resisted the enforcement, arguing that enforcement of the Awards would be contrary to Maldivian public policy as the Agreement upon which the Awards were based was void for misrepresentation. The Maldivian held that the matter was beyond the jurisdiction of the division.
Hilton then transferred the proceedings to the enforcement division of the Maldivian Civil Court, but the judge declined jurisdiction on the basis that only the Maldivian High Court had the jurisdiction to enforce arbitral awards. Hilton successfully appealed against this decision to the Maldivian High Court, which found that the Civil Court had jurisdiction under the Maldivian Arbitration Act.
Second Enforcement Proceedings
Hilton then re-commenced enforcement proceedings in the Maldivian Civil Court. Sun made the same arguments it had made in the First Enforcement Proceedings to refuse enforcement. The Maldivian Civil Court held that the Hilton could not enforce the Awards because of another existing judgment issued by the Maldivian Civil Court in favour of the Sun in its civil action against the Hilton.
Sun’s Civil Proceedings
Sun commenced the Maldivian action after the First Enforcement Proceedings had begun and the Property and Monetary Large Claims Division of the Maldivian Civil Court had declined jurisdiction. In that action, Sun claimed against Hilton for damages totalling US$16,671,000 arising from breaches of the Agreement. Hilton filed a procedural objection relying on the arbitration clause in the Agreement, and argued that the Tribunal had already determined and dismissed Sun’s misrepresentation claims.
At this point, Sun had not disputed that its claims in the Maldivian action were the same as those raised in the Arbitration (breach and misrepresentation). It stated in its response to the Hilton’s procedural objection that its claims for fraudulent misrepresentations “[could] be determined in the Maldivian courts as a separate matter even though the same subject matter of the [Agreement] has already been decided by an [arbitral tribunal]”. In its statement of claim for the Maldivian action, it also referred to the documents submitted for the Arbitration as support for its claim. The court directed that it would determine the procedural and/or jurisdictional matters together with the merits of the case. In particular, Sun explained in its written statement that its claims in the Maldivian action were different from those determined by the Tribunal as the Tribunal had dealt with the validity of the Agreement whereas the Maldivian action related to the Hilton’s fraudulent misrepresentations.
Judgment of the Maldivian Civil Court
The Court held that Sun had made out its cause of action of misrepresentation, the Agreement was hence void and unenforceable in its entirety and Hilton was liable to pay US$16,671,000 to Sun in damages. The Court relied on an earlier Maldivian Court judgment to refuse the Hilton’s enforcement of the Awards in the First Enforcement Proceedings. Hilton appealed against the First Enforcement Proceedings (“the Civil Appeal”) and, at the time the Singapore High Court heard the application, two hearings before the appellate court had been conducted and the parties expected a further hearing before the appellate court.
Proceedings before Singapore High Court for Anti-Suit Injunction
Hilton applied to Singapore High Court for a permanent anti-suit injunction to restrain Sun from commencing and/or proceeding with any action against Sun in the Maldivian courts in relation to disputes arising from the Agreement; a declaration that the Awards are final, valid and binding on the parties; and a declaration that Sun’s actions were in breach of the arbitration agreement.
The central issue before the Singapore High Court was whether the court has the power to grant a permanent anti-suit injunction for an arbitration seated in Singapore in the overall circumstances of this case where arbitration proceedings have already concluded and the award issued?
Contentions before Singapore High Court
Hilton argued that by virtue of the Agreement on Singapore as the seat of the Arbitration, Hilton had submitted or agreed to submit to the jurisdiction of the Singapore courts (under Order 11 Rule 1(r) of the Rules of Court of Singapore) and/or that the Hilton’s claim was under a contract (ie, the arbitration clause in the Agreement) which contained a term to the effect that the Singapore court would have jurisdiction to hear and determine any action in respect of it (Order 11 Rule 1(d)(iv) of the Rules of Court of Singapore).
Sun argued that as the ICC had fixed the seat of the Arbitration, the parties could not be taken to have expressly agreed on Singapore as the seat of the Arbitration and thus the Sun had not agreed to submit to the jurisdiction of the Singapore courts. It further argued that under Order 11 Rule 1(d)(iv) of the Rules of Court of Singapore), which requires the claim to involve a breach of contract, Hilton was not truly trying to enforce the arbitration clause as a matter of contract but to prevent Sun from legitimately resisting enforcement of the Awards under Maldivian law.
The Singapore High Court held:
- 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.
- The governing law of the arbitration agreement determines the construction of the agreement, as well as questions as to formation, validity, effect and discharge of such agreements, whereas the seat of the arbitration determines the relationship between the parties, and arbitrators and the supervisory courts.
- By choosing to arbitrate under the ICC Rules without any specific agreement as to the seat of the Arbitration, the parties had effectively agreed to allow the ICC Court the discretion to fix the seat of the Arbitration as per the ICC Rules, and were bound by the ICC Court’s decision. The parties had also agreed to the Terms of Reference, which expressly stated that Singapore was the place or seat of the arbitration.
- The parties had thus agreed to Singapore law as the curial law and to submit to the Singapore courts’ supervisory jurisdiction over matters arising out of or in relation to the arbitration agreement. The court thus possessed jurisdiction over the matter.
Breach of arbitration agreement
- The commencement of the Maldivian action in the Maldivian Civil Court was likely to be a breach of the arbitration agreement, either of the Sun’s obligation not to sue in any other forum or to attempt to set aside or otherwise attack the Award in places other than the seat of the Arbitration (ie, Singapore) and/or vexatious and oppressive conduct
- It also followed that Singapore, as the court exercising supervisory jurisdiction, was naturally the most appropriate forum in which an anti-suit injunction would be sought.
- Sun argued that Hilton had not disclosed the fact that there had been no express agreement on the seat of the Arbitration in the arbitration agreement and Hilton had actually argued as such before the ICC Court, proposing that the seat of the arbitration be London. The Court held that Hilton had disclosed these facts its supporting affidavit and therefore there was no breach of arbitration agreement on the part of Hilton.
Power to grant a permanent anti-suit injunction
- The Singaporean court had such a power, which stemmed from the court’s general power to give legal and equitable relief (s 18(2) read with para 14 of the First Schedule of the Supreme Court of Judicature Act), and that this power was not curtailed by Art 5 of the UNCITRAL Model Law on International Commercial Arbitration
Article 5. Extent of court intervention
In matters governed by this Law, no court shall intervene except where so provided in this Law.
Sources of such Power
- The court does not have the power under the International Arbitration Act (the IAA) to grant a permanent anti-suit injunction. Its power to grant injunctions under the IAA is only limited to granting an interim injunction under Sec 12A(2) read with Section 12(1)(i) of the IAA.
- The court does not have the power to grant a permanent anti-suit injunction by virtue of Section 4(10) of the Civil Law Act of Singapore. It only gives the court the power to issue an interim injunction and not a permanent injunction.
- The court’s power to issue a permanent anti-suit injunction properly stems from Section 18(2) read with paragraph 14 of the First Schedule of the Supreme Court of Judicature Act. This gives the court the power to “grant all reliefs and remedies at law and in equity”, which necessarily includes the equitable remedy of a permanent injunction.
- Art 5 of Model Law is concerned with court intervention in the arbitral process and is not intended to prevent courts from enforcing arbitration agreements by way of anti-suit relief. The grant of permanent anti-suit injunctions is not a matter regulated by the Model Law and thus Art 5 does not limit the court’s power to grant such injunctions.
- Where court proceedings are commenced outside the seat of the arbitration after the conclusion of arbitration proceedings and the issuance of the award, it seems contrived to view the litigation as a breach of the defendant’s negative obligation not to sue in any other forum as if arbitration proceedings had not commenced or were ongoing.
- Although permanent anti-suit injunctions are frequently said not to offend the principle of comity by virtue of being a restraint on the defendant and not the foreign court, the practical effect of such an injunction is nevertheless an indirect interference with the processes of the foreign court, especially in this case where the appeal in the Maldives is at a very advanced stage.
- Sun’s Maldivian action was squarely a breach of the Sun’s negative obligation not to set aside or challenge the Awards other than through setting aside procedures in accordance with the law of the seat court.
- Not only is the length of delay in filling an application for such injunction is relevant, the consequences of the delay will determine whether an injunction is appropriate.
- The Court declined to grant anti-suit injunction against Sun to restrain it from commencing or continuing with foreign proceedings against Hilton in disputes governed by the arbitration agreement.
- The Court granted Hilton a limited permanent anti-suit injunction in relation to the Second Enforcement Proceedings judgment of Maldivian Court, a declaration that the arbitral awards were final, valid and binding on the parties (as the period for setting aside of the awards had expired when the application was filed before the Singapore High Court), and a declaration that Sun’s claim in the Maldivian action was in respect of disputes between the parties that have arisen out of or in connection with the Agreement and any consequential proceedings (including appeals) would be in breach of the arbitration clause contained in the Agreement. It was also made clear that nothing in the order would prevent Sun from objecting to the recognition or enforcement of the arbitral awards in accordance with Maldivian law.