WHEN AN APPLICATION FOR DECLARATORY RELIEF IS IN SUBSTANCE AN ABUSE OF PROCESS
In Republic of India v Vedanta Resources plc [2021] SGCA 50, the appellant had put a question of law to a tribunal in an investment treaty arbitration, and after receiving an answer which it did not like, put the same question before a Singapore court (as the court of the seat) by way of an application for declaratory relief. The Court of Appeal agreed with the High Court’s ultimate decision in not granting the declaratory relief, but on different grounds and reasoning.
Facts. The appellant is the Republic of India and the respondent is Vedanta Resources plc, a company incorporated in the United Kingdom (at [4]). There were two relevant investment treaty arbitrations: the first between the respondent and the appellant seated in Singapore (“the Vedanta Arbitration”) and the second between members of the Cairn Group and the appellant seated in the Netherlands (“the Cairn Arbitration”) (at [4]-[5]). Both were separate but related arbitrations (at [6]). Given the potential overlap between the Cairn Arbitration and the Vedanta Arbitration, the appellant was concerned about the risk of inconsistent findings by the two tribunals and sought to implement a regime to permit cross-disclosure of documents between the two arbitrations (at [7]).
On the appellant’s application and the parties’ submissions, the Vedanta Tribunal considered three sources of law and developed the applicable cross-disclosure regime in Procedural Order No 3 (“VPO 3”) (at [9]-[10]).
Following the issuance of VPO 3, the appellant applied on two occasions to the Vedanta Tribunal for cross-disclosure of certain documents from the Vedanta Arbitration into the Cairn Arbitration (at [11]) but pursuant to Procedural Order No 6 and 7 (“VPO 6” and “VPO 7”), only one document was allowed while the rest were rejected (at [12]-[13]).
After the Vedanta Tribunal had issued VPO 6, and while waiting for the Vedanta Tribunal to issue VPO 7, the appellant filed HC/OS 980/2018 (“OS 980”) in the High Court, seeking the following declarations: (at [14])
“1. A declaration that documents disclosed or generated in [the Vedanta Arbitration] are not confidential or private;
2. A declaration that disclosure of documents disclosed or generated in the Vedanta Arbitration, including the documents set out in the Schedule herein, by the [appellant] in [the Cairn Arbitration] would not be in breach of any obligation of confidentiality or privacy; …”
The decision below. The High Court rejected the respondent’s preliminary objection that the application amounted to an abuse of process and a collateral attack on VPO 3, VPO 6 and VPO 7 (collectively, “the VPOs”) (at [15]), but declined to exercise its discretion to grant the declarations as the relief was not justified by the circumstances of the case (at [16]).
The appeal. The Court of Appeal held that this was not a matter of discretion, as “the appellant did not manage to get past the starting gate” (at [2]). The application was found to be an abuse of process on several levels. Firstly, there was no legitimate basis to invoke the court’s jurisdiction (at [19]-[34]). Secondly, the application was in substance a backdoor appeal against the Vedanta Tribunal’s decision (at [35]-[46]). Thirdly, the application was a blatant violation of the principle of minimal curial intervention (at [47]-[51]).
This article will focus on the Court of Appeal’s observations on the true purpose of the application, i.e. the second ground. The Court of Appeal held that regardless of whether the application was a backdoor appeal against the VPOs or an attempt to seek an advisory opinion from the court to put pressure on the Vedanta Tribunal, “both purposes were equally improper” (at [35]).
Backdoor appeal. Although framed as an application for declaratory relief, the nature of the relief as framed was essentially a backdoor appeal (at [36]). Both prayers “had already been decided by the Vedanta Tribunal in the VPOs. The declarations sought by the appellant targeted both the question of law underpinning the Vedanta Tribunal’s decision in VPO 3, as well as the Vedanta Tribunal’s decision on the facts in VPO 6 and VPO 7. If granted, they would effectively overrule the Vedanta Tribunal’s decisions in the VPOs.” (at [38]) This was improper because the appellant had no such right of appeal.
Advisory opinion to put pressure on the Vedanta Tribunal. The appellant also offered “an undertaking that if the declarations were granted, it would not unilaterally bypass the Vedanta Tribunal to make cross-disclosure of the relevant documents but instead it would rely on the declarations to request the Vedanta Tribunal to reconsider and revise the VPOs (“the Undertaking”)” (at [15(a)]).
But the Court of Appeal viewed “the offer of the Undertaking [as] the clearest indication that the granting of the declarations would amount to unwarranted judicial interference in the arbitral process. Otherwise, there would have been no need for the appellant to offer any such undertaking.” (at [39])
Even if the Undertaking was accepted, it nevertheless revealed that the appellant’s purpose was to “put pressure” on the Vedanta Tribunal to reconsider its decision in the VPOs (at [40]).
At the same time, the application was also an attempt to obtain an advisory opinion from the court where no such process exists under Singapore law (at [41]). This was “akin to a case stated procedure, whereby after a tribunal has taken a certain view on a point of law, a party can take that view to the court, invite the court to assess the correctness of that view, and if the court concludes that the view is wrong, the party can then go back and ask the tribunal to reconsider its initial position.”
On this second ground, the court thus concluded that “what had initially started out as a backdoor appeal had gradually morphed into an attempt to seek an advisory opinion from the court in order to pressure the Vedanta Tribunal to reconsider its decision in the VPOs. Either way, both were manifestly improper.” (at [46])
Costs. While the application in OS 980 and the appeal by extension amounted to an abuse of the process of the court, the Court of Appeal declined to award indemnity costs as it was not patently unreasonable for the appellant to have pursued the appeal given the High Court’s erroneous view that there was no abuse of process (at [57]-[58]).
Significance. This decision is an important reminder that parties to an arbitration should always seek to bring itself within the proper avenues of recourse available in arbitral proceedings (e.g. the appellant was at liberty to reapply to the Vedanta Tribunal for reconsideration of the VPOs, at [50]). The court will not intervene in the arbitration if there is no legitimate basis to do so, and such an application may amount to an abuse of process which could lead to the imposition of indemnity costs.
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