Singapore High Court: Anti-Suit Injunction Against Foreign Court Proceedings Initiated As A ‘Protective Net’ To Cure Possible Defects In Commencement Of Arbitration

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When parties agree to arbitration, they agree to pursue their disputes in arbitration, and not in court.[1] But can a party (defendant) legitimately trigger and maintain simultaneous court proceedings (‘Court Proceedings’) going against an express arbitration agreement as a fallback mechanism (‘Protective Safety Net’) to be on a safer side against

  • any possible defects in its commencement of arbitration;
  • anything it may have failed to do in relation to properly commencing arbitration within the limitation period;
  • any issue of non-arbitrability of the matters in the Court Proceedings, or with the availability in arbitration of the relief sought in the Court Proceedings.

The Singapore High Court decided this issue in CCH & 19 Ors v CDB & 3 Ors [2020] SGHC 143 wherein the Court granted an anti-suit relief of discontinuance of foreign Court Proceedings in favour of arbitration rejecting the Protective Safety Net argument of the defendant.

In this case, the question before the Court was whether an anti-suit injunction can be granted against a party which has triggered Court proceedings in violation of arbitration agreement as a “protective” safety net against any possible defects (such as meeting the limitation period) which it may have made in the commencement of arbitration?

While deciding this issue, the Court remarked that if a party fails to commence arbitration proceedings in time, or purportedly commences proceedings in time but only in a defective manner, he cannot use that as the basis for going to court instead. Further, these would not be grounds on which a stay of proceedings under Section 6 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) could be resisted; nor are they grounds on which an anti-suit injunction can be resisted. The Court held that the defendant breached the arbitration agreement by initiating Court Proceedings and that in turn justifies anti-suit relief in view of the law enunciated by the Singapore Court of Appeal in Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd[2] as under:

“[i]n cases involving an arbitration agreement … it would suffice to show that there was a breach of such an agreement, and anti-suit relief would ordinarily be granted unless there are strong reasons not to …”

In the present case, since such arbitration agreement was breached, the Court held that there were no strong reasons (indeed no reasons) not to grant anti-suit relief.

Nature of Anti-Suit of Relief

This led to the second issue as to whether anti-suit relief should only be prohibitory and not mandatory in nature i.e. whether it should be a stay, and not a discontinuance. In other word, whether the Court should only order that the defendant should not continue with the Court Proceedings, rather than order it to discontinue those proceedings?

While deciding this issue, the Court observed that the defendant at all material times had a forum to go to, namely arbitration, as agreed between the parties. If anything is the defendants’ undoing here, it is only what it has done or failed to do within the limitation period. In Court’s view that does not justify then pursuing its claims in court. As the Court had already rejected the defendants’ so-called “protective” justifications for the Court Proceedings, the Court further held that there is no scenario in which the defendant would legitimately be pursuing their claims in court.

On the nature of anti-suit relief to be granted i.e. whether it should be stay or discontinuance, the Court held that in some cases, it may be that a stay will suffice; but in others, discontinuance may be appropriate.[3] However, an order for discontinuance need not be justified by special circumstances. [4] Further, the Court noticed that it would cause the plaintiffs prejudice for the Court Proceedings merely to be stayed; it would not cause the defendants prejudice for the Court Proceedings to be discontinued, particularly as discontinuance would in effect be no more than the inevitable consequence of a prohibitory anti-suit injunction.” Further, the Court held that if the anti-suit relief in this case were merely in prohibitory terms, the Foreign Proceedings might yet continue to a hearing on the pending applications to have them discontinued or stayed. Thus, the plaintiffs should not have to continue being engaged in those proceedings.

Therefore, to meet the “ends of justice” and on applying principles governing the issue of anti-suit injunctions as set out in Sun Travels[5] and Koh Kay Yew v Inno-Pacific Holdings Ltd[6] in the case at hand, the Court held that that the ends of justice warrant discontinuance rather than just a stay of proceedings.

Disclaimer: The views expressed in this post are mine and do not reflect the views of the organisation(s) I am engaged with

[1] CCH & 19 Ors v CDB & 3 Ors, [2020] SGHC 143 at [7]

[2] [2019] 1 SLR 732 (“Sun Travels”) at [68]

[3] at [19]

[4] Ibid

[5] at [65]

[6] [1997] 2 SLR(R) 148 at [14]

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