PT First Media TBK v Astro Nusantara International BV & Ors [2013] SGCA 57

In the recent judgment of PT First Media TBK v Astro Nusantara International BV & Ors, the Singapore Court of Appeal allowed PT First Media TBK’s (“FM”) appeal against the High Court’s decision. The key issue before the Court of Appeal was whether parties who did not challenge an arbitral tribunal’s jurisdictional ruling at an earlier stage were later prohibited from challenging an award on grounds of an alleged lack of jurisdiction on the part of the tribunal at the enforcement stage.

High Court held parties prevented from challenging jurisdictional rulings at a later stage when there was a failure to bring a challenge under Article 16(3) of Model Law

Article 16(3) of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”) provides that any party may request that the court decide on the arbitral tribunal’s ruling on the preliminary question of its jurisdiction. The High Court took the view that Article 16(3) was an “exclusive route”, such that once the time limit for bringing a challenge under Article 16(3) has elapsed without such an application being made, the preliminary ruling on jurisdiction becomes final and cannot be challenged subsequently, whether by way of setting aside or enforcement. On the basis that FM did not challenge the arbitral tribunal’s ruling on jurisdiction under Article 16(3), the High Court held that FM had lost its “sole and exclusive opportunity” to raise its jurisdictional objection before the Singapore courts.

Court of Appeal disagrees with High Court’s interpretation

The Court of Appeal disagreed with the High Court that Article 16(3) provides a “one-shot remedy”, such that FM’s failure to challenge the preliminary ruling precluded it from raising objections later on. After considering the working papers of the Model Law and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the New York Convention), and the legislative history of Singapore’s arbitration statutes, the Court of Appeal took the view that an award debtor has “a choice of remedies” which is at the “heart” of the entire design of the Model Law enforcement regime. In short, the award debtor may pursue the active remedy of setting aside or challenging a preliminary ruling under Article 16(3) or the passive remedy of challenging jurisdiction when resisting enforcement.

The Court of Appeal also considered the significant practical ramifications which would follow if the court did not recognise the “choice of remedies” for award debtors. The Court of Appeal was concerned that parties in international arbitrations in Singapore would be compelled to engage active remedies in Singapore i.e. by challenging a preliminary ruling under Article 16(3) or initiating setting aside proceedings under Article 34 because the option of exercising a passive remedy of resisting enforcement would not be open to them. The Court of Appeal took the view that this would have undesirable implications on the practice and flourishing of arbitration in Singapore.

Comments

The practical effect of the Court of Appeal’s decision is that award debtors can adopt a more strategic approach and choose to only expend resources to prevent enforcement of the award against their assets. This decision also evinces that while judicial intervention is limited in arbitration proceedings in Singapore, the Singapore courts will not hesitate to do so when it deems intervention to be appropriate.