By Adeline Chong, Singapore Administration College
Introduction
In two choices determined inside a fortnight of one another, the Singapore Court docket of Enchantment thought of anti-suit injunctions pursued to restrain proceedings allegedly introduced in breach of arbitration agreements. The primary case, Asiana Airways, Inc v Gate Connoisseur Korea Co, Ltd (‘Asiana Airways’)[1] handled whether or not A might depend on an arbitration settlement between A and B to restrain B’s proceedings towards C, a 3rd occasion. The second case, COSCO Transport Specialised Carriers Co, Ltd v PT OKI Pulp & Paper Mills (‘COSCO Transport’)[2] thought of whether or not an arbitration settlement lined a tortious declare. To place it in one other method, Asiana Airways primarily involved the ‘occasion scope’ of an arbitration settlement whereas COSCO Transport involved the ‘material’ scope of an arbitration settlement.[3] The place the anti-suit software is to restrain international proceedings introduced in breach of an arbitration or alternative of court docket settlement, ordinarily it might be granted except ‘robust trigger’ is proven by the respondent.[4] This gives a better path for the anti-suit claimant in comparison with the choice requirement of creating that the international proceedings are vexatious or oppressive in nature.
In each judgments, the Court docket emphasised that discussion board fragmentation was typically inevitable and that the crux was to establish events’ intentions as to the ambit of the arbitration settlement. Whereas each choices canvassed different non-public worldwide regulation points, the first focus of this remark is the Court docket’s strategy to construing the scope of dispute decision clauses. Though each choices concerned arbitration agreements, the identical reasoning applies to alternative of court docket agreements.[5] Additional, the rules apply equally whether or not the applying considerations a keep of proceedings or an anti-suit injunction.[6]
Asiana Airways
Asiana Airways (a Korean firm) entered right into a three way partnership settlement with Gate Connoisseur Switzerland GmbH (GGS). This three way partnership resulted within the institution of Gate Connoisseur Korea (GGK). Asiana entered right into a catering settlement with GGK. Each the three way partnership and catering agreements contained arbitration agreements. It transpired that the chairman of Asiana had organized for the 2 agreements to learn his personal private pursuits, in breach of his obligations to Asiana. The chairman was later convicted in Korean proceedings.
Asiana commenced proceedings in Korea towards GGK for a declaration that the catering settlement was null and void underneath Korean regulation as a result of its chairman’s breach of belief, and consequently, the arbitration settlement was equally null and void. It additionally superior an argument that the dispute was non-arbitrable as a result of Korean public coverage; all related stakeholders have been members of the Korean public and the end result of the proceedings would have an effect in Korea. Subsequently, Asiana additionally pursued actions towards GGS and the administrators of the Gate Connoisseur Group. It alleged that the administrators have been actively concerned within the chairman’s illegal conduct and subsequently liable in tort underneath Korean regulation, and GGS was vicariously liable for his or her actions. The identical factors on nullity and public coverage have been raised.
Gate Connoisseur utilized for anti-suit injunctions in Singapore to restrain the Korean proceedings. Central to the anti-suit functions was the arbitration agreements within the three way partnership and catering agreements. The Court docket of Enchantment, listening to the attraction from a call of the Singapore Worldwide Business Court docket (SICC), held that it was an abuse of course of for Asiana to argue that the arbitration agreements have been null and void on condition that it had not pursued earlier alternatives to lift this level. Not surprisingly, Asiana’s public coverage argument obtained brief shrift; it was too broadly framed because it was inevitable that proceedings involving large corporations would have an effect on their residence nations. Thus, the Court docket held that the Korean proceedings towards GGK was in breach of the arbitration settlement within the catering settlement and the anti-suit injunction restraining the Korean proceedings towards GGK was upheld.
Extra attention-grabbing was the anti-suit injunction restraining the Korean proceedings towards the administrators. Asiana argued that the administrators have been non-parties to the three way partnership settlement and the arbitration settlement contained therein and as GGS have been sued on the premise of vicarious legal responsibility, the proceedings weren’t associated to the settlement. The Court docket utilized Korean regulation, the right regulation of the settlement, to construe the arbitration settlement. It noticed that underneath Korean regulation, arbitration agreements might cowl non-contractual claims and that the tortious claims pursued have been carefully related with the three way partnership settlement. The anti-suit injunction restraining the Korean proceedings towards GGS was affirmed. The query which then arose was whether or not the anti-suit injunction restraining the proceedings towards the administrators may very well be maintained on the identical foundation of breach of the arbitration settlement or might solely be maintained if the Korean proceedings towards the administrators have been proven to be vexatious or oppressive in nature. Because the Court docket noticed, an anti-suit injunction based mostly on the primary floor meant that ‘GGS because the anti-suit claimant must present that if Asiana pursued the declare towards the [directors], it might breach GGS’s rights underneath the JVA Arbitration Settlement.’[7]
This query concerned the state of affairs the place A and B are events to the dispute decision clause and B commences proceedings towards C in a special discussion board from that named within the clause. Can A pursue an anti-suit injunction restraining B’s motion towards C on the bottom that that motion is in breach of the clause?[8] One other variant of this case is the place C applies for an anti-suit injunction restraining B’s motion towards C as being in breach of the jurisdiction clause. In a previous resolution VKC v VJZ,[9] the Court docket of Enchantment held that part 2(1)(b) of the Contracts (Rights of Third Events) Act 2001 didn’t cowl unique jurisdiction clauses.[10] In distinction, the New South Wales Court docket of Enchantment in International Companions Fund v Babcock & Brown[11] took the view that C might depend on the advantage of the jurisdiction clause underneath the widespread regulation offered C was a ‘non-party’ who was intimately concerned within the transaction between A and B.[12]
The UK Home of Lords in Donohue v Armco Inc[13] held that the place an unique English alternative of court docket settlement sure some, however not all, of the events within the international proceedings, the avoidance of discussion board fragmentation amounted to robust causes to not uphold the selection of court docket settlement. The requested anti-suit injunction in Donohue, nevertheless, concerned those that have been events to it: A sought an anti-suit injunction restraining B’s motion towards A. However, Lord Scott of Foscote had commented in obiter that A might in sure circumstances receive an anti-suit injunction restraining not solely proceedings towards itself but additionally proceedings towards C if there was a chance that A and C could be collectively and severally liable. That is offered the wording of the clause was sufficiently large to cowl the proceedings towards C and A had a ample curiosity in acquiring the anti-suit injunction, particularly, to keep away from incurring legal responsibility as a joint tortfeasor. The Singapore Court docket of Enchantment rejected Lord Scott’s feedback, because it thought that it might be overinclusive and prohibit reliable claims towards third events.[14] As an alternative it cited with approval the choice in Crew Y&R Holdings Hong Kong v Ghoussoub; Cavendish Sq. Holding BV v Ghossoub[15] to the impact that the Fiona Belief[16] precept that the intentions of rational businessmen could be to have a ‘one-stop store’ for litigation can’t apply with the identical drive when contemplating claims involving third events. Clear language is required earlier than an unique jurisdiction clause covers claims introduced by or towards third events.[17] The chance of discussion board fragmentation, which underscored Lord Scott’s suggestion in Donohue, shouldn’t be ‘overstated’.[18]
This extra slender building of the occasion scope of dispute decision clauses raises the chance of B manipulating the state of affairs and evading the dispute decision clause by pursuing claims towards C. Nonetheless, because the Court docket identified, it might be open for A to use for an anti-suit injunction on the premise that B’s proceedings towards C rendered the proceedings between A and B vexatious or oppressive. Moreover, C might additionally independently search an anti-suit injunction restraining the proceedings towards it on the vexation or oppression floor.[19]
On the info, the Court docket held that whereas the administrators had signed the three way partnership settlement, they’d completed so of their capability as representatives of GGS. There was nothing within the wording of the arbitration settlement to point that Asiana and GGS supposed the clause to use to claims towards the administrators. The anti-suit injunction restraining the motion towards the administrators couldn’t succeed on the premise of breach of the arbitration settlement; it might solely succeed on the vexation or oppression floor. Nonetheless, Gate Connoisseur failed to point out any dangerous religion on Asiana’s half in suing the administrators. Due to this fact, the anti-suit injunction was upheld in relation to the motion towards GGS as being in breach of the arbitration settlement whereas the anti-suit injunction restraining the motion towards the administrators was discharged.
COSCO Transport
PT OKI (an Indonesian firm) had sub-chartered a vessel which belonged to COSCO Transport (a Chinese language firm). The pinnacle constitution and sub-charter contracts every contained a regulation and arbitration clause for English regulation and arbitration in Singapore. Additional to that, contracts of carriage have been entered into between the 2 corporations. These contracts, which have been evidenced by or contained in payments of lading, integrated the regulation and arbitration clause within the constitution contracts. Whereas loading PT OKI’s cargo on the port of Palembang, Indonesia, COSCO Transport’s vessel allided with the trestle bridge of the jetty, inflicting harm which allegedly amounted to US$269m. The bridge and port have been owned and operated by PT OKI. Numerous proceedings have been pursued by each events, essentially the most related of which have been: PT OKI commenced proceedings towards COSCO in Indonesia in tort for the harm to the trestle bridge; COSCO utilized for an anti-suit injunction in Singapore to restrain PT OKI from persevering with with the Indonesian motion; and COSCO commenced arbitration towards PT OKI earlier than the Singapore Worldwide Arbitration Centre (SIAC) in Singapore in search of declarations of non-liability and numerous reliefs arising out of the allision. COSCO alleged that PT OKI had breached the secure port guarantee underneath the pinnacle constitution settlement as integrated into the payments of lading and raised contractual defences additionally discovered within the head constitution settlement and integrated into the payments of lading.
The anti-suit software was based mostly on PT OKI’s alleged breach of the arbitration settlement. The Court docket of Enchantment thought of the which means of the phrase ‘arising out of or in reference to this contract’, used within the arbitration settlement and which is customary language in dispute decision clauses. At first occasion, the choose had referred to numerous tests-such because the ‘parallel claims check’,[20] ‘causative connection check’ and the ‘carefully knitted check’[21] to establish if the tort declare fell throughout the scope of the arbitration settlement. The Court docket of Enchantment emphasised that the varied assessments have been ‘merely labels and instruments developed to help the courts’[22] and pushed again towards any presumption that events should all the time have supposed for all their claims to be determined in the identical discussion board. The crux was the events’ intentions as encapsulated by the wording of the settlement; thus ‘[i]f upon inspecting the textual content of the settlement and the character of the competing claims, a declare shouldn’t be inside its ambit, then discussion board fragmentation is inevitable and the courts mustn’t steer away from that end result …’[23]
The Court docket adopted a two-stage check when ascertaining the scope of an settlement: first, the court docket ought to determine the matter or dispute which events have raised or foreseeably will increase within the international proceedings; and secondly, the court docket should then verify whether or not such matter or dispute falls throughout the scope and ambit of the settlement. On the first stage, the court docket is attempting to determine the substance of the dispute between the events. It mustn’t contemplate solely the claimant’s pleaded explanation for motion however also needs to consider defences or moderately foreseeable defences and cross-claims that will come up. The Court docket held that it was not vital for the claims or defences to be related to the contractual relationship. That is vital as a result of the tort motion in Indonesia was not based mostly on the contract between the events.[24] It concluded that the tort motion fell throughout the scope of the arbitration settlement. The events should have contemplated {that a} pure tort declare for harm to the trestle bridge induced through the efficiency of the contracts of carriage between the events and the place it was foreseeable that defences based mostly on the contract could be raised would fall throughout the scope of the arbitration settlement. Thus, the anti-suit injunction might correctly be based on breach of the arbitration settlement. There was no consideration if ‘robust trigger’ was proven by PT OKI to justify the breach of the arbitration settlement; it didn’t seem that arguments had been made on this level.
Conclusion
The choices in Asiana Airways and COSCO Transport shouldn’t be learn because the Singapore courts resiling from the Fiona Belief precept, which has been cited and utilized in quite a few different choices.[25] The core concept that one ought to undertake a common sense strategy when construing dispute decision clauses, taking into account that the events are rational businessmen, nonetheless underlines the 2 judgments. The clarification added by the Court docket of Enchantment was the place to begin should all the time be the wording of the dispute decision clause and the context by which it was entered into.[26] That is in distinction with the prior strategy the place typically the court docket tended to begin with the presumption that events supposed for ‘one-stop buying’ and to use the presumption within the absence of any opposite proof.[27] There may be now an vital shift in focus. The court docket mustn’t go to nice lengths to attain a building which helps ‘one-stop buying’ the place this isn’t borne out by the wording of the clause and the circumstances of the case. If which means that there could be parallel litigation throughout a number of jurisdictions, the courts mustn’t draw back from that conclusion.[28] Specifically, the place third events are involved, clear language have to be used to deliver third events throughout the scope of a dispute decision clause. Finally, Asiana Airways and COSCO Transport underscore the significance of clear and exact drafting of dispute decision clauses.
[1] [2024] SGCA(I) 8; [2024] 2 SLR 279.
[2] [2024] SGCA 50; [2024] 2 SLR 516.
[3] The phrases ‘occasion scope’ and ‘subject-matter scope’ was coined by the New South Wales Court docket of Enchantment in International Companions Fund Restricted v Babcock & Brown Restricted (in liq) [2010] NSWCA 196.
[4] Solar Travels v Hilton [2019] 1 SLR 732 (Singapore CA) [68], [78], [81]-[87].
[5] Asiana [80]-[83].
[6] COSCO [73].
[7] Asiana [58].
[8] See Thomas Raphael, The Anti-Swimsuit Injunction (2nd edn, OUP 2019) para 7.31.
[9] [2021] 2 SLR 753.
[10] This provision permits C to implement a time period of the contract if the time period purports to confer a profit on C.
[11] [2010] NSWCA 196 (famous A Chong, ‘The “Get together Scope” of Unique Jurisdiction Clauses’ [2011] LMCLQ 470).
[12] Cf Australian Well being & Diet Affiliation Ltd v Hive Advertising Group Pty Ltd [2019] NSWCA 61 [90] (President Bell) (within the context of a keep software).
[13] [2002] 1 All ER 749 (HL).
[14] Asiana [85]-[88].
[15] [2017] All ER(D) 81 (Nov) [82].
[16] Fiona Belief & Holding Company v Privalov [2008] 1 Lloyd’s Rep 254 (UKHL).
[17] Asiana [72]-[73].
[18] Asiana [88].
[19] Asiana [84].
[20] Japanese Pacific Chartering Inc v Pola Maritime Ltd [2021] 1 WLR 5475 (“The Pola Devora”) [37].
[21] Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87 (English CA) 89. The Court docket disagreed with the choose that the ‘carefully knitted check’ applies solely the place the non-contractual declare could also be recast as a contractual declare: COSCO [78]-[79].
[22] COSCO [3]
[23] COSCO [5].
[24] The court docket under had been troubled by the truth that the tort declare couldn’t be recast as a contractual declare. It didn’t grant the anti-suit injunction: [2024] SGHC 92.
[25] Eg, Vinmar Abroad (Singapore) Pte Ltd v PTT Worldwide Buying and selling Pte Ltd [2018] 2 SLR 1271 (Singapore CA), Allianz Capital Companions GmbH, Singapore Department v Goh Andress [2023] 1 SLR 1618 (Singapore HC(A)).
[26] See additionally Rals Worldwide Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpA [2016] 5 SLR 455 [34].
[27] Eg, Vinmar Abroad [79].
[28] See to comparable impact, Australian Well being [90].
[29] Eg, Vinmar Abroad (Singapore) Pte Ltd v PTT Worldwide Buying and selling Pte Ltd [2018] 2 SLR 1271 (Singapore CA), Allianz Capital Companions GmbH, Singapore Department v Goh Andress [2023] 1 SLR 1618 (Singapore HC(A)).
[30] Eg, Vinmar Abroad [79].
[31] See to comparable impact, Australian Well being [90].
