United States: Need For Speed: Get Your Anti-Suit Injunction Fast!

Introduction

Parties entering into arbitration agreements ordinarily abide by their contractually chosen dispute resolution mechanism and proceed accordingly. Sometimes, one encounters a counter-party who takes it upon himself to start proceedings in a foreign jurisdiction in breach of an arbitration clause. How does an innocent party restrain such conduct? The Court of Appeal (SGCA) in Sun Travels & Tours Pvt Ltd v Hilton Manage (Maldives) Pvt Ltd (Sun Travels) laid down firm guidance that a party who finds itself in this scenario should act as fast possible to restrain the counter-party by way of an anti-suit injunction (ASI). The SGCA clarified that once a judgment (including one subject to appeal) has been issued in the foreign court, it is too late for an ASI to be sought or obtained in the seat court. The question remains as to when one attempts to obtain ASI relief before a judgment has been handed down in the foreign proceedings. Seeing as an ASI is an equitable relief, and dilatoriness and unconscionable conduct can bar one from obtaining such relief, one should proceed promptly and before the proceedings are too far advanced in the foreign jurisdiction to secure such relief. In other words, move fast (and as soon as practicable) once the breach of the arbitration agreement is discovered, to seek the ASI in the Singapore courts.

Facts

Sun Travels & Tours Pvt Ltd (Sun) is a resort operation that owns a hotel in Maldives. Hilton International Manage (Maldives) Pvt Ltd (Hilton) is a Maldivian incorporated company in the hotels and resort industry.

Sun and Hilton entered into a hotel management agreement in February 2009. Sun was later dissatisfied with Hilton's performance of the Hotel and gave notice in 2013 to terminate the management agreement. Hilton accepted the termination on the basis that it was a wrongful repudiation of the agreement.

Hilton later commenced arbitration proceedings pursuant to the arbitration clause in the management agreement. In 2013, the ICC Court of Arbitration fixed Singapore as the seat of arbitration. Mid-way through the arbitration proceedings, and after a Partial Award was issued, Sun stopped participating in the proceedings even though it was given several opportunities by the Tribunal to do so. The Tribunal later issued an award ordering Sun to pay Hilton damages amounting to US$20,945,000 plus interest, and US$342,500 of legal fees incurred.

After the Final Award was issued, Hilton commenced enforcement proceedings in the Maldivian courts in relation to the Arbitral Awards. After some procedural hiccups around the proper court to commence the enforcement proceedings, Hilton obtained a judgment in its favour and commenced proceedings in the Enforcement Division of the Maldivian Courts to start the second enforcement proceedings.

Before the appeal in the Enforcement Division was heard, Sun commenced a civil action in Maldives against Hilton. The civil suit essentially concerned the same issues and disputes as that decided by the arbitral tribunal in the Partial and Final Award.

In January 2017, the Maldivian Civil Court decided that it would determine both the procedural and jurisdictional matters at the same time when it hears the merits of the case on Sun's civil suit. The court later delivered a judgment in March 2017, holding that Sun had made out its claims against Hilton. This March judgment was later relied upon by the Enforcement Division Civil Court to refuse Hilton's second enforcement proceedings (the March Judgment). Hilton appealed against the March Judgment and the appeal was still pending at the time the SGCA delivered its judgment in the Singapore courts.

In July 2017, Hilton filed an application in the Singapore High Court against Sun. One of the reliefs sought was a permanent anti-suit injunction to restrain Sun from taking any steps in reliance on the March Judgment. The SGHC judge decided in Hilton's favour. Sun appealed against the order to the SGCA.

(i) Anti-suit injunction

The SGCA confirmed that the jurisdiction to grant ASI relief is an equitable one. In cases involving an arbitration agreement or an exclusive jurisdiction clause, it would suffice to show breach of such an agreement, and ASI relief would ordinarily follow, unless there are strong reasons not to allow such relief. This is however subject to an important caveat that the court must not feel diffident in granting an anti-suit injunction. For example, this may be as a result of the applicant's delay in not seeking ASI relief promptly, resulting in the foreign proceedings being too advanced.

In the judgment, the SGCA justified its position on two bases. First, the longer the delay and the more advanced the foreign court proceeding becomes, the more unlikely Singapore court is to grant an ASI given the time, effort and judicial resources that will be wasted by the abandonment of the foreign proceedings, following the grant of an ASI. Second, what matters is the extent to which the delay has allowed the foreign court proceedings to have progressed. Pertinently, the SGCA clarified that delay cannot be justified on the basis that jurisdictional objections are being made in the foreign court proceedings. Indeed, allowing such conduct on the part of the applicant, would effectively give the applicant "two bites at the cherry"; to encourage one to seek an ASI when its challenge in the foreign court has failed.

(ii) Anti-enforcement injunction

The SGCA then went on to expound on the limited circumstances seen to be appropriate to grant an anti-enforcement injunction even after a judgment has been issued by the foreign court.

To this end, the authorities speak with one voice on the need to exercise great caution in granting such injunctions, because of the way they interfere with foreign proceedings.Two aspects stand out in this regard. First, such an injunction would preclude other foreign courts from considering whether the judgment in question should be recognised and enforced. Second, allowing such relief would be an indirect interference with the execution of the judgment in the jurisdiction where the judgment was given and where the judgment can expect to be obeyed.

The SGCA surveyed the considerations and cases where anti-enforcement injunctions have found to have been justified and concluded that they are few and far between and include (1) where the judgment has been procured by fraud in the foreign jurisdiction or (2) where the applicant had no means at all of knowing that judgment was being sought against him until it was served such as (a) where the judgment was obtained too quickly or (b) secretly to enable an injunction to be obtained.

(iii) Declaratory relief

On the facts, as elaborated on above, the SGCA did not approve of the applicant's conduct in seeking an anti-suit injunction only after the foreign proceedings had progressed substantially (even leading all the way to a judgment).

Notwithstanding that, the SGCA clarified that, as the court of the seat of arbitration, it has the discretion to grant declaratory relief (and did so grant such relief) to signify to the foreign court that the defendant breached the arbitration agreement by instituting civil proceedings in the foreign jurisdiction when arbitration award(s) on the same dispute had already been issued. In the SGCA's words "these orders serve to uphold the integrity of arbitration agreement and the awards rendered on the basis of such agreements."

Key Takeaways

This decision is significant to any party who has entered into an arbitration agreement, with Singapore as the seat of the arbitration. In light of Sun Travels, when the other contracting party has, in breach of the arbitration agreement, instituted civil proceedings in a foreign jurisdiction, the aggrieved party must act with speed in making an ASI application as soon as possible after it discovers the existence of the foreign proceedings. In particular, it should not seek to resist the foreign proceedings on the basis of an arbitration clause and only after that fails, move to restrain the counter-party by commencing ASI relief in the Singapore courts. The SGCA has clarified that after judgment is issued in the foreign proceedings, ASI relief is almost impossible save in very exceptional circumstances (as enumerated above).

The question remains where foreign proceedings have commenced, but the aggrieved party applies for an anti-suit injunction before a judgment is issued. While this situation was not specifically dealt with by the SGCA, the courts will conduct the usual balancing exercise by considering a multitude of factors, including how far advanced the foreign proceedings are, whether the aggrieved party's conduct in the foreign proceedings is inconsistent/incompatible with his rights to arbitrate the dispute under the arbitration agreement, reasons for the delay/not seeking the injunction earlier and whether there is any dilatory or unconscionable conduct on the aggrieved party that should deprive him of the equitable relief.

Our advice is simple: time is of the essence if the counter-party commences foreign proceedings in breach of an arbitration clause; move as fast as possible and as soon as practicable once you discover the breach of the arbitration agreement to seek the ASI relief in Singapore.

Dentons Rodyk acknowledges and thanks Practice Trainee Joel Leow for his contributions to the article.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions