“A stitch in time saves nine” – Singa­pore em­phas­ises the im­port­ance of seek­ing timely anti-suit re­lief

1 March 2019

Singapore’s Court of Appeal has held in Sun Travels & Tours v. Hilton International [2019] SGCA 10 that undue delay in seeking anti-suit relief is potentially fatal, particularly when a foreign court had already issued a judgement.

1. Background

Anti-suit injunctions restrain counterparties from breaching arbitration agreements by pursuing parallel court or arbitration proceedings.

The use of anti-suit injunctions is often controversial, particularly when it involves courts interfering with the judicial processes in other jurisdictions. In such circumstances, the courts are required to balance the competing interests of protecting an arbitration agreement and respecting the jurisdiction of a foreign court.

The Court of Appeal in Singapore has now clarified that unreasonable delay in seeking anti-suit relief in Singapore would invariably tip the scale in favour of the foreign court’s jurisdiction, especially when the proceedings have progressed to an advanced stage.

2. Facts

An ICC arbitration in Singapore, between the appellant (“Sun”) and the respondent (“Hilton”), in relation to a Management Agreement, resulted in two awards against Sun. Hilton attempted to enforce the awards in Maldives. However, Hilton was not immediately successful as there was confusion regarding which Maldivian court had jurisdiction over enforcement matters.

Amidst this confusion, and in breach of the arbitration agreement, Sun commenced a Maldivian court action to re-litigate the issues decided in the arbitration (“Maldivian Action”). Hilton chose to challenge the Maldivian Action on jurisdictional grounds. However, the Maldivian court rejected Hilton’s challenge and found in Sun’s favour. Hilton subsequently appealed against the judgment.

In the meantime, Hilton attempted to enforce the awards again, but failed because of the Maldivian court judgment passed pursuant to the Maldivian Action. This finally prompted Hilton to seek anti-suit relief from the Singapore High Court, which granted an anti-enforcement injunction (as it was too late for an anti-suit injunction) to prevent Sun’s reliance on the Maldivian judgment.

The High Court also granted declaratory reliefs. First, it found that the arbitration proceeding in Singapore and the subsequent award were valid and binding on the parties. Second, since Sun’s claims in the Maldivian courts arose out of the same Management Agreement (under which the arbitration was commenced), any consequential proceedings – including appeals – would be in breach of the arbitration agreement between the parties.

Sun appealed against the High Court’s decision.

3. The Court of Appeal’s Decision

No injunctive relief for Hilton

The Court of Appeal allowed Sun’s appeal against the High Court’s order of injunctive relief, making the following observations:

  • An anti-suit injunction against foreign court proceedings can be granted if there is a breach of an arbitration agreement or an exclusive jurisdiction clause.
  • However, anti-suit relief can be refused if there is extensive delay, on the grounds of comity, as the foreign courts would have expended vast amounts of judicial time and costs in hearing the matter. Respect for the operations of foreign legal systems requires caution in exercising the jurisdiction to restrain a party from relying on the foreign court’s decision.
  • This consideration is amplified when an anti-enforcement injunction is sought after the issuance of a foreign court judgment. This would preclude other foreign courts from considering whether the judgment is enforceable and it indirectly interferes with the execution of the judgment in the enforcement jurisdiction.
  • It is therefore not enough to demonstrate a breach of an arbitration agreement to justify an anti-enforcement injunction. Instead, “exceptional circumstances” must exist that warrant the exercise of jurisdiction. Recognised exceptions include instances of fraud and if the applicant had no knowledge that a foreign proceeding was afoot, until after the judgement.
  • On the facts, Hilton had “ample opportunity” to seek assistance from the Singapore courts to stop the Maldivian action. Instead, Hilton chose to wait until the Maldivian court pronounced the judgment. As there were no exceptional circumstances justifying this course of action, the Court of Appeal was not inclined to uphold the High Court’s injunctive relief given to Hilton.

Declaratory reliefs necessary to uphold integrity of the arbitration agreement and award

The Court of Appeal, however, upheld the declaratory reliefs granted by the High Court, in support of the finality of the arbitration awards and the sanctity of the arbitration agreement contained in the Management Agreement. The Court observed that these orders served to uphold the integrity of the arbitration agreements and the awards.

It was also observed that these declarations could be relied on by Hilton in its appeal against the Maldivian court judgment.

4. Key Takeaways

Sun Travels re-emphasises the importance of promptly taking legal recourse to protect one’s rights. This is especially so when seeking anti-suit relief, since the odds of obtaining such relief gradually decreases as the foreign court action progresses. It is thus advisable to seek anti-suit relief at the earliest possible time, once it becomes apparent that a counterparty to an existing arbitration intends to or has filed concurrent foreign court proceedings.

The decision also clarifies that anti-enforcement injunctions will rarely be granted, since the applicant must show exceptional circumstances, tied to notions of unconscionable conduct that are difficult to satisfy. This is unsurprising, as granting anti-enforcement relief is comparable to nullifying and stripping the foreign judgment of its practical legal effect, both in the jurisdiction it was made and in other potential enforcement jurisdictions.