The recent Singapore High Court decision in Hai Jiang 1401 Pte Ltd v Singapore Technologies Marine Ltd [2020] SGHC 20 marks the first time that a Singapore Court has endorsed the principle that a non-party to a contract which contains an exclusive forum clause (e.g. an arbitration agreement) can obtain an anti-suit injunction against a respondent that had commenced proceedings abroad against him.

The Facts

The Plaintiff was the owner of a vessel, which was bareboat chartered to Lewek Champion Shipping Pte Ltd (“LCS”) on 19 February 2014 ("Charter"). The vessel was further sub-chartered to EMAS-AMC Pte Ltd (“EMAC”) on 17 February 2014 ("Sub-Charter").

On 26 February 2014, the Plaintiff, LCS and EMAC entered into a General Assignment, pursuant to which LCS assigned various rights and interests to the Plaintiff, including "all rights and interests which now or at any later time it has to, in or in connection with" the vessel.

Under the terms of the Charter and Sub-Charter, LCS undertook to, inter alia, remove an existing crane on the vessel, strengthen the vessel's structure and install a new higher capacity crane. Pursuant to the undertaking, LCS entered into a Crane Upgrade Agreement on 23 November 2015 ("CUA") with the Defendant, for the Defendant to carry out crane installation works on the vessel. Clause 13.9 of the CUA provided that the CUA was governed by Singapore law and that all disputes arising out of the CUA shall be "submitted exclusively to and finally resolved and amicably settled by arbitration in accordance with the rules of The Singapore Chamber of Maritime Arbitration" ("Arbitration Clause"). The Defendant completed the works on the vessel, but there were substantial sums outstanding to the Defendant in respect of these works when the vessel left the Defendant’s shipyard.

On 9 March 2017, due to various defaults by LCS, the Plaintiff terminated the Charter and demanded payment thereunder. Subsequently, as LCS failed to make the payment, it was wound up on 14 July 2017. The Defendant filed a proof of debt in the liquidation for the outstanding sums due under the CUA.

However, in parallel with filing its proof of debt, on 8 January 2018, the Defendant obtained an order from the Sharjah Federal Court of First Instance, UAE ("Sharjah Court") for a precautionary attachment against the vessel and subsequently arrested the vessel and detained it from leaving Port Khalid, Sharjah, UAE. Thereafter, on or about 15 January 2018, the Defendant commenced a substantive suit in the Sharjah Court against both Plaintiff and LCS for the outstanding debt owed under the CUA.

In this connection, the Plaintiff brought the present action in the Singapore High Court, and applied for an anti-suit injunction against the Defendant, restraining it maintaining the arrest of the vessel through the Sharjah proceedings on the basis that the Sharjah proceedings were oppressive and vexatious and/or that the Sharjah proceedings had been brought in breach of the Arbitration Clause.

After an ex-parte hearing before the Singapore High Court, the Plaintiff provided a letter of undertaking on the usual terms, and the vessel was released from arrest. What remained before the Singapore Court was therefore the question of whether the anti-suit injunction should be granted to prevent the substantive proceedings before the Sharjah Court from continuing.

Findings of Singapore High Court

The Singapore High Court granted the anti-suit injunction.

Amongst other things, the Singapore High Court held that on the facts of the case, the Plaintiff had succeeded in establishing that Singapore was clearly the natural and most appropriate forum for the resolution for the dispute and that there was vexatious and oppressive conduct on the Defendant's part, justifying the grant of the anti-suit injunction. It also held, on a prima facie basis, that there was a valid and binding arbitration clause covering the Defendant's claims, the benefit of which arguably had been assigned to the Plaintiff under the terms of the General Assignment. The High Court took pains to emphasize that its findings on the validity of the Arbitration Clause and its assignment were made on a prima facie basis, and that it was for the arbitral tribunal to ultimately decide the issue.

However, what is of wider interest is the High Court's alternative finding that even if the Arbitration Clause had not been assigned, the Plaintiff could nevertheless rely on the Arbitration Clause as a basis for the anti-suit injunction. In this regard, the High Court formally endorsed, for the first time in Singapore, the principle articulated in the Sea Premium line of cases (discussed below).

The Sea Premium principle

Sea Premium

The Plaintiff had argued that a claimant whose cause of action arises under a contract remains bound by the dispute resolution clause in that contract when pursuing a claim thereunder, albeit against someone who is not a party to that contact either by way of novation or subrogation. In this regard, the Plaintiff relied on the line of cases beginning with Sea Premium Shipping Ltd v Sea Consortium Pte Ltd [2001] EWHC 540 (Admlty) ("Sea Premium").

In the Sea Premium, Owner A chartered a vessel to a charterer, with the charterparty containing an arbitration clause for any disputes arising thereunder to be submitted to English arbitration. Thereafter, Owner B became owner of the vessel and transferred the benefits of the charter to the respondents. Owner B ran into financial difficulties and the mortgagee subsequently sold the vessel to the applicant. The vessel was towed to Dubai where it underwent extensive repairs at the applicant’s expense. Meanwhile, the respondent had hired a replacement vessel at a significantly higher rate of hire.

A dispute subsequently arose between the applicant (the third successor owner) and the respondent (the second successor charterer). The respondent felt that it was entitled to rely on the charterparty but the applicant, who had purchased from a mortgagee, felt it was free to return her into service at then-current market rates. The respondent arrested the vessel in Dubai and commenced substantive proceedings in Dubai against the past and present owners in damages for breach of the charterparty. The applicant applied to the English court for an anti-suit injunction against the respondent from continuing with the Dubai proceedings.

The English court granted the anti-suit injunction sought by the applicant. The court found that the respondent’s claim in Dubai was a "quasi-contractual" claim for damages for failing to abide by the terms of the charterparty, and in so doing, the respondent were bound by the arbitration clause vis-a-vis any claim arising between both the owner and the charterers.

The principle in Sea Premium, i.e. that a third party who wishes to take the benefit of a contract is bound by the burden of any exclusive jurisdiction or arbitration clause therein, was applied and endorsed in several subsequent English and HK cases (but until the present case, never in Singapore).

In the present case, the Singapore High Court held that reasoning in the Sea Premium line of cases was persuasive and found the principle to be applicable as part of Singapore law. The High Court formulated the principle thus: "This principle enables an ASI [anti-suit injunction] claimant, although claiming not to be a party to the contract which the ASI respondent sues upon in a foreign jurisdiction (which is inconsistent with an exclusive forum clause (or arbitration agreement) to which the ASI respondent's claim would be inherently subject under the contract), to be granted an ASI restraining the ASI respondent from bringing or continuing proceedings abroad (which is inconsistent with the exclusive forum clause to which his claims would be inherently subject if any contractual relationship subsists)."

Therefore, the Singapore High Court held that the Plaintiff had succeeded on this alternative line of argument as well. However, the Court recognized that this was a complex and unsettled area of law, which is still being tested.

Conclusion

The Singapore Court’s decision in Hai Jiang 1401 Pte Ltd v Singapore Technologies Marine Ltd [2020] SGHC 20 marks a significant development in the law of anti-suit injunctions as it confirms that as a matter of Singapore law, a party (even a non-party to the contract) who wishes to sue under a contract is bound by the burden of any exclusive jurisdiction or arbitration clause therein, and if he breaches that exclusive forum clause, the other party can apply for and obtain an anti-suit injunction.