In a decision that underscores the Singapore courts’ pro-arbitration approach, the Singapore Court of Appeal recently allowed an appeal against a decision ordering a permanent restraint against the respondent relying on a foreign judgment obtained after the parties attained arbitral awards.

In Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd [2019] SGCA 10, the Singapore Court of Appeal held that anti-suit injunctive relief would ordinarily be granted in circumstances where there is a breach of an arbitration agreement or exclusive jurisdiction clause unless there are compelling reasons. However, the injunctive relief had to be sought promptly and before foreign proceedings are too far advanced. In the present case, decided on February 12, injunctive relief was sought at a late stage after the issuance of a foreign court judgment, and the court of appeal allowed an appeal against the decision ordering a permanent restraint against the respondent relying on such judgment.

Background

A dispute between Sun Travels & Tours Pvt Ltd (Sun Tours) and Hilton International Manage (Maldives) Pvt Ltd (Hilton) was arbitrated before a tribunal seated in Singapore. The arbitral tribunal determined the dispute in Hilton’s favor, and in 2015, issued two awards against Sun Tours.

In December 2015, Hilton attempted to enforce the awards in the Maldives but was unsuccessful due to confusion as to the proper court in the Maldives vested with jurisdiction to hear enforcement matters. In October 2016, Sun Tours commenced an action in the Maldivian courts to relitigate issues that had already been decided in the arbitration (Maldivian suit).

Hilton did not immediately apply for anti-suit relief from the Singapore High Court. Instead, it sought to challenge the Maldivian suit on jurisdictional grounds and failed.

In March 2017, the Maldivian court issued a judgment awarding substantial damages to Sun Tours (March judgment). Hilton’s appeal against the March judgment is currently pending.

In April 2017, Hilton attempted to enforce the arbitral awards again.

In June 2017, the Maldivian courts refused enforcement on account of the March judgment in Sun Tour’s favor (June judgment).

In July 2017, Hilton took out an application in the Singapore High Court seeking the following:

  • A permanent anti-suit injunction to restrain Sun Tours from taking any steps in reliance on the March judgment or any decision upholding the March judgment
  • A declaration that the arbitral awards are final, valid, and binding on the parties (First Declaration)
  • A declaration that Sun Tour’s claims in the Maldivian suit and any consequential proceedings are in breach of the arbitration agreement (Second Declaration)

The Singapore High Court decided in Hilton’s favor.

Decision by the Singapore Court of Appeal

Injunctive Relief

On appeal by Sun Tours, the Singapore Court of Appeal did not uphold the injunctive order granted by the Singapore High Court on the basis of Hilton’s delay in bringing the application and the lack of any exceptional circumstances justifying the grant of injunctive relief.

The Singapore Court of Appeal held that where there has been extensive delay in seeking injunctive relief, the foreign court would have expended vast amounts of judicial time and costs. Respect for the operations of foreign legal systems would require caution in the exercise of the court’s jurisdiction to prohibit a party from relying on the foreign court’s decision.

On the facts, by the time Hilton sought anti-enforcement relief from the Singapore High Court, the Maldivian courts had delivered the March and June judgments and an appeal against the March judgment was afoot. There were no exceptional circumstances, such as fraud or cases where the applicant had no knowledge that a judgment was being sought until after the judgment was rendered, at issue.

The Singapore Court of Appeal held that the mere fact that Hilton was making jurisdictional objections in the foreign court does not excuse the delay in Hilton seeking injunctive relief from the Singapore court. Further, if injunctive order were upheld, Sun Tours would not be able to meaningfully participate in the pending appeal in the Maldivian suit without relying on the March judgment and breaching the injunctive order at the same time.

Declaratory Relief

In upholding the First and Second Declarations, the Singapore Court of Appeal held that discretion ought to be exercised in favor of granting the declarations regarding the validity and effect of the arbitral awards, given that the declarations had real value and were based on real facts. The First Declaration reiterates Section 19B of the International Arbitration Act (Cap 143) and confirms the finality, validity, and binding nature of the arbitral awards. The Second Declaration would signify that Sun Tours had breached the arbitration agreements by instituting civil proceedings in the Maldivian courts when arbitral awards had already been issued.

Observations

This case underscores the importance of commencing an anti-suit injunction in good time following commencement of foreign court proceedings in breach of an arbitration agreement, as failure to take action in a timely manner may deny an applicant the opportunity for equitable injunctive relief. Parties must also be cognizant of the Singapore court’s stance in preserving international comity, particularly whether foreign proceedings have progressed to an advanced stage.

By the same token, the upholding of the declarations reaffirms the pro-arbitration approach embraced by the Singapore courts, particularly in recognizing the finality, validity, and binding nature of arbitral awards. The pro-arbitration approach is aligned with Singapore’s objective to be the preferred seat and forum for resolving international disputes. According to the latest Queen Mary University of London International Arbitration Survey released on May 9, 2018, Singapore was ranked as the most preferred seat for arbitration in Asia and the Singapore International Arbitration Centre as the most preferred arbitral institution in Asia.

Morgan Lewis Stamford LLC is a Singapore law corporation affiliated with Morgan, Lewis & Bockius LLP