INJUNCTIVE RELIEF FOR BREACH OF ARBITRATION AGREEMENT
In the recent Court of Appeal decision of Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd [2019] SGCA 10 (“Sun v Hilton”), the Court of Appeal dealt with, inter alia, when would anti-suit injunctions and anti-enforcement injunctions be granted when foreign proceedings were commenced in breach of an arbitration agreement.
Brief facts. The salient facts can be summarised as follows (see [2] Sun v Hilton).
1. The respondent, Hilton International Manage (Maldives) Pvt Ltd (“Hilton”) was in a dispute with the appellant, Sun Travels & Tours Pvt Ltd (“Sun”).
2. This dispute was brought before an arbitral tribunal, which led to two awards against Sun. The seat of the arbitration was Singapore.
3. Hilton took steps to enforce the awards against Sun in the Maldives.
4. In the meantime, Sun commenced an action in Maldives, which essentially re-litigated the issues that were addressed in the arbitrations.
5. Instead of immediately applying for anti-suit relief from the seat court, Hilton challenged Sun’s Maldivian action on jurisdictional grounds.
6. Hilton failed, and the Maldivian court issued an award in favour of Sun.
7. Hilton then appealed against the decision by the Maldivian court, and the appeal has been heard.
8. Hilton then applied for anti-suit injunction before the Singapore Court.
Too late to grant an anti-suit injunction. Both the High Court and the Court of Appeal did not grant the anti-suit injunction.
This is because Hilton’s delay in seeking injunctive relief had allowed the Maldivian Suit to reach an advanced stage: as such, it was much too late to warrant the anti-suit injunction.
While anti-suit injunctions operate in personam, they indirectly interfere with the foreign proceedings ([69] Sun v Hilton). As such, comity considerations are relevant where there is a delay in seeking anti-suit relief, even in cases involving exclusive jurisdiction clause or arbitration agreement ([81] Sun v Hilton). The longer the foreign court proceedings continue, the more time, effort and expense would have been wasted ([82] Sun v Hilton).
Furthermore, it must be noted that the delay cannot be justified by the fact that jurisdictional objections were, or are, raised in the foreign court ([83] Sun v Hilton): otherwise, the applicant would have two bites cherry by (a) resisting foreign proceedings on jurisdictional grounds, and (b) then seek anti-enforcement injunction when challenged failed ([86] Sun v Hilton).
Anti-enforcement injunction not granted. The Court of Appeal overturned the High Court’s decision to grant an anti-enforcement injunction.
The Court of Appeal made clear that since the granting of an anti-enforcement injunction is comparable to “nullifying the foreign judgment or stropping the judgment of any legal effect when only the foreign court can set aside or vary its own judgment” ([98] Sun v Hilton; emphasis by the Court of Appeal), it meant that there had to be “exceptional circumstances” to warrant the injunction, “over and above the usual requirements for the granting of an anti-suit injunction” ([99] Sun v Hilton).
Exception circumstances may occur when the judgment was procured by fraud ([100] Sun v Hilton), or where applicant he had no means of knowing that the judgment was being sought ([101] – [105] Sun v Hilton). These exceptional circumstances are tied to the notion of unconscionability, and will be informed by equitable considerations ([105] – [107] Sun v Hilton).
Breach of arbitration agreement and vexatious conduct? Turning to the facts, the Court of Appeal disagreed that “an anti-enforcement injunction should be granted simply because there was both a breach of the arbitration agreements as well as vexatious or oppressive conduct” ([116] Sun v Hilton).
Exceptional judgment? The Court of Appeal also rejected Hilton’s argument that the Maldivian judgment on merits was an “aberration” such that “the circumstances were sufficiently exceptional to warrant an anti-enforcement injunction” ([117] – [121] Sun v Hilton), stressing that Hilton should have sought anti-suit relief without delay.
Implications. Put simply, Sun v Hilton stands for the proposition that if proceedings are commenced in breach of an arbitration agreement, parties would do well to seek anti-suit relief without delay.
This is especially when there may be the temptation to resist a foreign proceeding that amounts to re-litigation of the issues dealt with an arbitral award on jurisdictional grounds in the foreign court. Sun v Hilton stands for the proposition that if a party chooses to do so, it may be too late for the party to then turn to the seat court to seek anti-suit relief.
Tags: Arbitration; International Arbitration; Anti-suit injunction; Anti-enforcement injunction
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