Injunctions against foreign rulings allowed in 'exceptional circumstances': Singapore court

Out-Law News | 20 Mar 2019 | 5:21 pm | 2 min. read

The use of anti-suit injunctions to stop foreign court rulings from interfering with arbitrations should be made early in the process, Singapore’s Court of Appeal (CoA) has said. But even if a foreign court case has run its course anti-enforcement injunctions can be made "in exceptional circumstances", it said.

The CoA said that a Maldives court case begun after a Singapore arbitration had come to a conclusion should not be binding on two companies which were in dispute over the operation of a hotel.

Arbitration expert Rakesh Nelson of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law.com, said the decision was helpful.

“The decision provides much needed clarity on when the Singapore courts will be inclined to grant anti-suit injunctions and anti-enforcement injunctions. In particular, the CoA emphasised that parties seeking anti-suit injunctions should do so promptly and that anti-enforcement injunctions would only be granted in exceptional circumstances.”

The CoA said in its judgment that anti-suit relief would “ordinarily be granted where there is a breach of an arbitration agreement or an exclusive jurisdiction clause, unless there are strong reasons not to”. However it added that anti-suit relief should be sought promptly, before any foreign proceedings were too far advanced.

Although the CoA held that granting an anti-enforcement judgment after a foreign judgment is obtained is comparable to nullifying the foreign judgment, it decided that anti-enforcement judgments can be granted in Singapore in exceptional circumstances.

“These exceptional circumstances are tied to the notion of unconscionability and not exceptional circumstances in the abstract. They include exceptional circumstances of fraud and the lack of knowledge of the foreign proceedings until the delivery of the foreign court judgment,” the CoA said.

The appeal was brought by Sun Travels & Tours, which was in a dispute with Hilton International Manage (Maldives) over an agreement concerning a Maldivian hotel owned by Sun that Hilton was going to manage under its brand.

After Sun Travels gave notice to terminate the agreement, Hilton began arbitration in Singapore to claim damages for wrongful termination. Sun Travels counter-claimed, alleging breaches of the management agreement and fraudulent misrepresentation.

The arbitration was heard in Singapore and the tribunal issued a partial award in Hilton’s favour. Sun Travels took counter-proceedings in the Maldives and the Maldives court found in its favour.

In April last year the Singapore High Court disagreed with previous authorities over the source of its ability to grant anti-suit injunctions. It granted a limited anti-suit injunction which prevented Sun Travels from relying on the Maldivian judgment, and made two declarations in Hilton’s favour.

The CoA found that Hilton should have sought injunctive relief in Singapore at an earlier stage of the Maldivian proceedings than it did, and its failure to do so allowed the case in the Maldives to reach an advanced stage.

However it upheld the High Court’s decisions declaring that the arbitral awards were binding, and that Sun Travels’ claim in the Maldives was in breach of the arbitration agreement in the management agreement between the two parties.