SINGAPORE: An Introduction to Dispute Resolution: Arbitration: The Elite

Key Takeaways From Arbitration Decisions

Significant decisions reached by the Singapore courts in relation to international arbitration and the key takeaways from those decisions are summarised below.

Transnational issue estoppel

Transnational issue estoppel prevents the parties to a prior decision of a foreign court, in certain circumstances, from re-litigating points that were previously raised and determined in the Singapore courts. The Singapore courts have held that this doctrine applies in the context of international commercial arbitration.

The Republic of India v Deutsche Telekom AG

In The Republic of India v Deutsche Telekom AG [2023] SGCA(I) 10, India applied to set aside an order obtained by Deutsche Telekom for the enforcement of a foreign arbitral award. The seat was Switzerland. India had unsuccessfully applied to set aside the award before the Swiss courts, who dismissed arguments that were raised before the Singapore courts.

The Court of Appeal found that the doctrine of transnational issue estoppel applied to preclude India from relitigating arguments rejected by the Swiss courts.

The primacy principle

The court also considered the primacy principle, although it did not need to invoke it. The majority and the minority took different views on the applicability of the principle.

The majority observed that pursuant to the primacy principle, an enforcement court will act upon a presumption that it should regard a prior seat court decision on matters pertaining to the validity of the award as determinative of those matters and this presumption may be displaced.

In his minority concurring opinion, Lord Jonathan Hugh Mance did not support the recognition of the primacy principle, and observed that the tools of issue estoppel and Henderson v Henderson were sufficient to enable justice to be done where there is a prior decision by a seat or enforcement court.

This case concerned a situation where the Singapore enforcement court was considering the decision of a foreign seat court. The majority did not express a conclusion on whether transnational issue estoppel would apply in the reverse situation (ie, the Singapore seat court considering the decision of a foreign enforcement court).

Sacofa v Super Sea Cable Networks

That reverse situation arose in Sacofa v Super Sea Cable Networks [2024] SGHC 54. There, the Kuala Lumpur High Court had ordered the registration and enforcement of an award issued in an arbitration seated in Singapore. The Kuala Lumpur High Court had considered and rejected the claimant’s illegality and jurisdictional objections. The claimant then applied to set aside the award in Singapore.

The General Division of the High Court held that the doctrine of transnational issue estoppel applied to preclude the claimant from relying on its illegality objections, which were premised on issues of Malaysian law and public policy which the Malaysian courts were best placed to deal with.

However, the court found that the doctrine of transnational issue estoppel did not apply to the claimant’s jurisdictional objections in light of the principle of primacy of the seat court which underpins the scheme for recognition and enforcement of awards.

Conclusion

These decisions make it crystal clear that the Singapore courts are unlikely to permit a second bite at the cherry. They highlight the importance of choosing a seat that the parties have confidence in, since the seat court’s decisions will be given preclusive effect. They also show that the doctrine of transnational issue estoppel should feature heavily when a party faced with an award that is not in its favour, decides where and how to challenge the award.

Anti-suit injunctions involving non-parties

In Asiana Airlines v Gate Gourmet Korea [2024] SGCA(I) 8, the appellant appealed against the Singapore International Commercial Court’s decision to grant anti-suit injunctions restraining the appellant from continuing proceedings in South Korea against the respondents, on the ground that those proceedings breached an arbitration agreement.

One of the issues was whether the anti-suit injunctions could be granted against the third and fourth respondents, who were directors of the first and/or second respondents and were not parties to the arbitration agreement.

The Singapore Court of Appeal held that a party to a contract with an exclusive forum clause (such as an arbitration agreement) (“A”) may apply for an anti-suit injunction to prevent proceedings commenced by another party (“B”) against a non-party (“C”), where it can show either: (i) that the clause was also intended to cover the non-party in the sense that, upon its true construction, B agreed under it with A that B would only sue C, if at all, in the exclusive forum agreed as between A and B; or (ii) that the real purpose for suing the non-party is to bypass the exclusive forum clause in a manner that makes the foreign proceedings vexatious and oppressive between A and B.

The court found that these grounds did not apply to the facts in this case. There was nothing to suggest that the arbitration agreement was intended to cover the directors or that the Korean proceedings had the effect or purpose of frustrating or subverting the operation of the arbitration agreement. The court set aside the injunctions in respect of the directors.

This decision highlights that while the Singapore courts consider forum fragmentation to be a relevant consideration, that alone cannot be used to compel non-parties to arbitrate by any means available. 

Interpretation of “arising out of or in connection with this contract”

COSCO Shipping v PT OKI Pulp [2024] SGCA 50 provides helpful guidance on the interpretation of a commonly used phrase in arbitration agreements.

The contracts of carriage contained in bills of lading provide that “…any dispute arising out of or in connection with this Contract, including any question regarding its existence, validity or termination shall be referred to and finally resolved by arbitration in Singapore…”

After an incident in which a vessel allided with a trestle bridge, the owner of the port facility, including the trestle bridge, commenced a tortious claim in Indonesia against the vessel owner for damage to the bridge. The vessel owner commenced an arbitration and applied for an anti-suit injunction against the port facility owner in Singapore. The General Division of the High Court did not grant the injunction and the vessel owner appealed.

The issue was whether the tortious claim fell within the scope of the arbitration agreement.

The Court of Appeal observed that the inquiry did not start with any presumption that the parties must have intended for all their competing claims to be decided in the same forum. Instead, the court held that the two-stage test adopted in considering the “matters” in dispute in the context of stay applications should also apply to anti-suit injunctions: (i) at the first stage, the court should determine what are the matter(s) or dispute(s) which the parties have raised or foreseeably will raise in the foreign court proceedings; and (ii) at the second stage, the court must ascertain whether such matter(s) or dispute(s) falls within the scope and ambit of the arbitration agreement.

The court found that the tortious claim in the Indonesian proceedings fell within the scope of the arbitration agreement. It found that the parties must have contemplated that. Further, it found that the issue that arose in the tortious claim was the cause of the allision, which would have a direct impact on the competing claims and defences. On that basis, it allowed the appeal and granted the anti-suit injunction.