The doctrine of res judicata was developed to ensure finality in litigation, to prevent endless litigation over the same subject matter typically between the same parties. Over time, it was observed that litigants were circumventing the doctrine by strategically bringing claims in a piecemeal fashion to achieve an outcome more favourable in subsequent litigation than what had been achieved in the previous unsuccessful action.2
It was in this context that the doctrine was extended to cover situations where the claimant in the subsequent litigation relies on purportedly new claims premised on fresh evidence to mount a fresh action. If the court is satisfied that the new claims could and ought to have been raised in the earlier litigation, the fresh action could be barred by the extended doctrine of res judicata (the “extended doctrine”),the rationale being that a party should not be twice vexed over essentially the same claim.3
With the advent of arbitration as a popular forum for dispute resolution, the extended doctrine was also applied in situations where the prior proceedings were by way of arbitration as opposed to court litigation.4
The present appeal the Singapore Court of Appeal addressed a further permutation to the extended doctrine, the question of whether the extended doctrine could be invoked by a party who was neither a party to the earlier arbitration proceedings nor a party to the arbitration agreement.5
In brief the Court of Appeal ruled that the extended doctrine can be applied to the said permutation. It also analysed the differences between the application of the res judicata in respect of earlier arbitration as compared to earlier court proceedings. It found that that there were two glosses when the earlier proceedings was an arbitration:
- the invoking party would need to demonstrate that the claims come within the scope of the arbitration agreement, and if so, the other party would need to explain why those claims could not have been brought in the arbitration either because they were outside the scope of the arbitration agreement or that there was a good reason for not pursuing them in the arbitration.6
- the court must be satisfied that the claims and/or issues arising under the fresh court proceedings could and ought to have been raised in the earlier arbitration proceedings bearing in mind that a non-party to the arbitration agreement could not be joined to the proceedings without the consent of that non-party as well as all the other parties.7
Background Facts
A Buyer and Seller entered into a Sale and Purchase Agreement for the sale of shares in a Company. The shares were sold in 2 tranches, with the price of the second tranche to be determined by a valuation exercise. This valuation was to be done by an independent valuer.8. The parties agreed to the appointment of Phoenix as the valuer. On completion of the report Phoenix identified 28 market benchmarks that should be applied in determining the value.9. The parties could not agree on the benchmarks to be used.10
This disagreement, amongst other disputes relating to the calculation of the Final Valuation, led the Seller to refer the dispute with the Buyer to arbitration proceedings administered by the Singapore International Arbitration Centre (the “Arbitration”).11
Ultimately, in the Partial Award issued on 3 June 2020 (the “First Partial Award”), the Tribunal accepted the Buyer’s position as to the Phoenix Reports.12 The Seller unsuccessfully applied to set aside the Frist Partial Award.13 The Seller also applied to the Tribunal in the Arbitration to investigate allegations of corruption against Phoenix and the Buyer (the ”Corruption Application”).14
Having considered the parties’ submissions, on 18 August 2021, the Tribunal rejected the Seller’s request to investigate the allegations of corruption made against Phoenix, holding that such allegation could and ought reasonably to have been raised at the evidentiary hearing before the First Partial Award was issued.15
On 29 October 2021, having failed in both his appeal against the dismissal of his setting-aside application and the Corruption Application, the Seller commenced a suit against Phoenix alleging misrepresentation and misconduct on the part of Phoenix.16. The suit was dismissed both on its merits and as an abuse of process.17. The Seller appealed.
The Extended Doctrine of res judicata
The Court of Appeal did a detailed review of the policy and legal principles attendant on the extended doctrine of res judicata.
The policy behind the extended doctrine (as with the broader doctrine of res judicata) is that litigants should not be twice vexed in the same matter, and that the public interest requires finality in litigation.18 The essence of the extended doctrine thus concerns a collateral attack against prior decisions. In this regard, it is crucial to identify the relevant prior decision which is the subject matter of the collateral attack, the nature of the claim and the essential issues in the earlier proceedings.19. Accordingly, when applying the extended doctrine, it is necessary to determine the nature of the claim, and the essential issues in the earlier proceedings.20
For the extended doctrine to apply, there is no requirement that the claims in the earlier proceedings should be the same as those pursued in court. In fact, the doctrine is extended precisely to apply to situations of claims and/or issues which were not raised earlier but which could and ought to have been raised in the previous action.21
In the case where the prior proceedings were arbitral proceedings, the invoking party would need to demonstrate that the claims come within the scope of the arbitration agreement, and if so, the other party would need to explain why those claims could not have been brought in the arbitration either because they were outside the scope of the arbitration agreement or that there was a good reason for not pursuing them in the arbitration.22
On principle and on the authorities, the extended doctrine can apply to situations where:-
- the earlier decision was that of an arbitral tribunal. As such, a court may disallow a party to raise certain points in later court proceedings which it could and should have raised in the earlier arbitration proceedings.23
- the parties to the earlier (court) proceedings are different from those to the later (court) proceedings.24
Accordingly, the extended doctrine should apply in favour of a defendant who was neither a party to the earlier arbitration proceedings nor a party to the arbitration agreement.25
The critical inquiry is on the substance of the litigation and not its form, and that entails a consideration of all the circumstances of the case. That would typically require the identification of the essential issue(s) of the litigation. For this reason, it should not matter whether the duplicative or sequential litigation involved the same or different parties, or what fora the litigation took place in, so long as it involved essentially the same matter. It is thus clear that the extended doctrine can apply to situations where (a) there is no identity of parties and (b) where the earlier proceedings are in arbitration and the later proceedings are before a competent court.26
Despite the possibility of the extended doctrine applying to situations where the prior proceedings were in arbitration, there is one difference to court proceedings in that the arbitral tribunal does not have the power to join a non-party to the arbitration agreement and to the arbitration, without the consent of the parties to the arbitration and that non-party.27 Accordingly, in applying the extended doctrine in the context of prior arbitration proceedings, the court must be satisfied that the claims and/or issues arising under the fresh court proceedings could and ought to have been raised in the earlier arbitration proceedings bearing in mind these two limitations, the scope of the arbitration agreement, and the restrictions on joining non-parties to the arbitration.28
The Decision
Ultimately, the Court of Appeal ruled against the Seller and dismissed the appeal, as it found that the issue of the independence of Phoenix could and ought to have been raised in the arbitration prior to the issuance of the First Partial Award.29
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