Why is this important? What happens when you realise that your opponent in arbitration has commenced parallel litigation? Or worse, what happens when you discover that judgment has already been obtained in the litigation and enforcement proceedings are now pending? Is there anything you can do to bring parties back to arbitration?
Key things to note
If you are aware that your opponent has commenced a parallel litigation action in breach of the arbitration agreement, you may seek an anti-suit injunction to enjoin the litigation. However, this remedy must be pursued as early as possible.
The Court of Appeal case in Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd [2019] SGCA 10 discusses the importance of timeliness in such applications. The key issues raised in this case are:
- Whether the supervisory court will be inclined to granting belated applications for anti-suit injunctions; and
- Whether an anti-enforcement injunction is suitable when judgment has already been obtained.
Background facts
The Respondent Hilton International Manage (Maldives) Pvt Ltd (“Hilton”) commenced a Singapore-seated ICC arbitration against Sun Travels & Tours Pvt Ltd (“Sun”) for wrongful termination of their agreement. The ICC tribunal issued two awards in favour of Hilton against Sun.
A few months later, Hilton commenced enforcement proceedings in the Maldives (the “Enforcement Proceedings”). Sun resisted enforcement on the basis that the underlying agreement was void because it was allegedly induced to enter into the agreement as a result of Hilton’s deceit and misrepresentations.
While the Enforcement Proceedings were ongoing, Sun commenced a concurrent court action before the Maldivian courts (the “Concurrent Civil Suit”) to hear essentially the same issues decided by the ICC tribunal. Before the Enforcement Proceedings concluded, a judgment was rendered in the Concurrent Civil Suit. The Maldivian court agreed with Sun and voided the agreement (the “Maldivian Judgment”). Enforcement of the two ICC awards was consequently refused.
Dissatisfied with the Maldivian Judgment, Hilton applied to the Singapore High Court for:
- A permanent anti-suit injunction to restrain Sun from taking any steps in relation to the Maldivian Judgment;
- A declaration that the two ICC awards are valid and binding; and
- A declaration that Sun’s action in the Concurrent Civil Suit and any related actions are in breach of the arbitration agreement
The Singapore High Court’s ruling
The Singapore High Court granted the declaratory reliefs. However, instead of granting the anti-suit injunction, the High Court Judge granted an anti-enforcement injunction to prevent Sun from relying on the Maldivian Judgment. The High Court Judge found that the Concurrent Civil Suit was “already far too advanced to warrant an anti-suit injunction”. There was a time lapse of nine months from the time Sun commenced the Concurrent Civil Suit in Maldives to the time Hilton applied for the anti-suit injunction.
The Singapore Court of Appeal’s ruling
Dissatisfied with the outcome, Sun appealed to the Court of Appeal. Sun’s main argument was that Hilton’s application should not be allowed because there had been a long delay in seeking this injunctive relief.
As a general rule, an anti-suit injunction would ordinarily be granted by showing that there has been a breach of an arbitration agreement, unless there are strong reasons not to. The court need not “feel any diffidence in granting an anti-suit injunction”, as long as it is sought promptly and before the foreign proceedings are too far advanced. Two key principles were fleshed out in the judgment:
- First, comity considerations are relevant when there has been a delay by one party in bringing an application for injunctive relief. The longer the delay, the more advanced the foreign proceedings, the more time, effort and expense will be wasted in abandoning/reversing the suit as a result of the anti-suit injunction; and
- Second, the delay cannot be justified on the basis that the party later seeking injunctive relief has raised jurisdictional objections in the foreign court (which Hilton did). This would be tantamount to allowing that party two bites at the cherry – first before the foreign court in challenging jurisdiction and second before the supervisory court in obtaining the injunctive relief.
Hilton’s anti-suit injunction was refused because the Concurrent Civil Suit was far too advanced. The Maldivian Judgment had been issued and parties were in the process of appealing the Maldivian Judgment. Further, there were no exceptional circumstances to justify the Singapore court’s intervention at a late stage in the proceedings.
The Court of Appeal also took the opportunity to clarify that anti-enforcement injunctions “call for special considerations”. This is because of the undue delay that naturally follows from such an application. Courts would exercise greater caution in granting an anti-enforcement injunction because of the way it interferes with foreign proceedings. An anti-enforcement injunction “is comparable to nullifying the foreign judgment or stripping the judgment of any legal effect when only the foreign court can set aside or vary its own judgment.”
What this means for parties
As a general rule, injunctive relief must be sought at the earliest opportunity. As regards anti-suit injunctions, when a party first becomes aware that their counterparty intends to or has commenced concurrent litigation proceedings, that party should seek legal advice and representation so that any applications for injunction can be made promptly.
If a party waits too long, the supervisory court may be unable to assist it in granting an anti-suit injunction, save in exceptional situations. This is because an anti-suit injunction has the effect of jeopardizing the foreign court judgment or order and any other related enforcement procedures.
An anti-enforcement injunction will not ordinarily be the fall-back option if a party is late in applying for the anti-suit injunction. This is because the anti-enforcement injunction has the draconian effect of unravelling a foreign judgment, something that the seat court would usually be reluctant to do. What a party would be left with may be mere declaratory reliefs. The recognition of these declaratory reliefs remains within the discretion of the enforcement court.
The full text of the Court of Appeal decision may be accessed here.
Eversheds Harry Elias International Arbitration Group
Eversheds Harry Elias regularly provides advice on complex international commercial disputes. We have extensive experience in advising and successfully representing multinational entities in international commercial arbitration. We have full rights of audience before all tiers of Singapore Courts. We are therefore well placed to advise and support our clients in any arbitration-related court applications before the Singapore Courts.
Authors:
Francis Goh
Partner & Head, International Arbitration
Shaun Leong
Of Counsel
Janice Lee
Foreign Legal Associate
Geraldine Toh
Legal Associate