The recent Singapore Court of Appeal decision in Astro v Lippo confirms Singapore as an attractive venue for international arbitration, by interpreting Singapore arbitration laws in light of UNCITRAL Model Law on International Arbitration (''Model Law'') philosophies and bringing clarity to issues relevant to Singapore arbitral practice. We discuss the findings of this judgment below.

Introduction

The Singapore Court of Appeal in PT First Media TBK v Astro Nusantara International BV & others [2013] SGCA 47 (''Astro v Lippo'') found that parties to an arbitration seated in Singapore have a choice of active (setting aside) and passive (resisting enforcement) remedies when challenging tribunal awards, including on jurisdiction. The Court of Appeal also considered whether non-parties to an arbitration agreement can be joined to arbitral proceedings under the Singapore International Arbitration Centre's (SIAC) Rules, finding that the SIAC Rules do not provide for the so-called ''forced joinder'' of third parties, absent the parties' consent.

Option to challenge tribunal jurisdiction (and other) awards at multiple stages

The long-running Astro v Lippo dispute centred on a joint venture formed between companies from the Malaysian Astro group and the Indonesian conglomerate Lippo, for the provision of multimedia and television services in Indonesia.  The joint venture was governed by a shareholders' agreement (''SHA'') which contained a SIAC arbitration clause providing for arbitration seated in Singapore.  Certain subsidiaries of Astro, which were not parties to the SHA, provided initial funding and services to the joint venture (''6th to 8th Respondents'').

A dispute in relation to continued funding of the JV resulted in Lippo commencing an Indonesian court action against various Astro entities, including the 6th to 8th Respondents. In response, Astro commenced arbitration in Singapore against the JV, Lippo party and the guarantor of its obligations, arguing that the Indonesian proceedings were in breach of the arbitration agreement in the SHA.  Astro made a successful application to the tribunal for the 6th to 8th Respondents to be joined to the arbitral proceedings.  Lippo objected to the joinder application, but did not actively appeal the preliminary joinder award in Astro's favour in the Singaporean courts.  Lippo had the right to do so pursuant to Article 16(3) of the Model Law, adopted by Singapore (with some local modifications) via the Singapore International Arbitration Act 1994 (''IAA'').  In 2009 and 2010, the tribunal made substantive awards against Lippo, including in favour of the 6th to 8th Respondents.

When Astro obtained enforcement orders in relation to the awards, PT First Media TBK applied on behalf of the Lippo Group for the orders to be set aside on the grounds that the tribunal had no jurisdiction, as there was no arbitration agreement between Lippo and the 6th to 8th Respondents. Astro argued in response that by failing to make an application under Article 16(3) of the Model Law to challenge the preliminary ruling on joinder or apply to set aside the substantive awards under Article 34 of the Model Law, Lippo had lost the right to object to the tribunal's findings on its own jurisdiction at a later stage.

Although the Singapore High Court initially found in favour of Astro, Lippo appealed, and on 31 October the Court of Appeal reversed the High Court's decision. The most recent finding means that an application under Article 16(3) (where jurisdiction is determined as a preliminary question) or Article 34 of the Model Law to set aside an award is not the only route available to a party in Singapore to challenge the jurisdiction of an arbitral tribunal.  In its judgment the Court of Appeal held that in light of the Singapore  legislature's intent that ''the Model Law was to form the cornerstone of the IAA''1, the court's powers to enforce awards made in international arbitrations seated in Singapore under Article 19 of the IAA should be interpreted as offering the same grounds of challenge, recognition or enforcement of an arbitral award as Article 36(1) of the Model Law, despite the fact that Article 36 itself does not have force of law in Singapore. Consequently, as with the Model Law, under the IAA, parties have a choice of:

  1. the active route of applying to challenge a preliminary ruling on jurisdiction (Article 16(3), Model Law) or set aside an award (Article 34(1), Model Law); and
  2. the passive route of resisting enforcement under section 19 of the IAA on any of the grounds found in Article 36(1) of the Model Law, once an award is sought to be enforced.

Having held that the passive route was still available to Lippo, the Court of Appeal then held that leading English and Singapore case law on curial review of arbitration awards supported its de novo judicial review of the tribunal's decision to join the 6th to 8th Respondents to its proceedings.2

The Court of Appeal then found on the merits that contrary to the tribunal's findings, rule 24(b) of the 2007 SIAC Rules did not vest it with jurisdiction to join the 6th to 8th Respondents, as they were not parties to the arbitration agreement.  Although its wording was ambiguous, on a logical construction, rule 24(b) of the 2007 SIAC Rules (which have since been clarified on this point in the current 2013 SIAC  Rules) only allowed the joinder of signatories to the arbitration agreement that were not existing parties to proceedings.  Lippo's objection to the tribunal's assertion of jurisdiction over the claims of the 6th to 8th Respondents was thus upheld.

The awards in favour of the joined companies could not, therefore, be enforced by Astro (as the tribunal had no jurisdiction to make them), leaving Lippo liable for less than 1% of the sum awarded. 

This is an important decision which departs from the usual non-interventionist approach taken by the Singaporean courts in relation to arbitration.  It shows that in limited cases, the Singaporean courts are willing to consider the merits of arbitral awards, particularly on jurisdiction, de novo.

Conclusion

The Astro v Lippo decision provides clarification on an important procedural point for parties challenging the jurisdiction of an arbitral tribunal seated in Singapore in the Singaporean courts and ensures procedural flexibility. By its decision in this case, the Court of Appeal has importantly confirmed that in line with the position in England and the Model Law, where the seat of an arbitration is Singapore, a party is entitled under Article 19 of the IAA to wait until an award is made against it, before it challenges a tribunal's findings on jurisdiction by resisting enforcement of the award.