28 March 2019
Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd  SGCA 10
In the recent case of Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd, the Singapore Court of Appeal considered how a seat court should exercise its discretion in an application for an anti-enforcement injunction where the foreign court has already issued a judgment in favour of the other party in a civil action where the issues litigated were the same as those in the prior arbitration.
In an instructive judgment, the Court of Appeal stressed the importance of comity and that comity considerations are stronger the more advanced the foreign proceedings become. The Court of Appeal was of the view that injunctions sought after the issuance of a judgment by the foreign court should generally be refused and there must be exceptional circumstances to warrant the exercise of the court’s jurisdiction.
On the facts of the case, although it was found that it was vexatious and oppressive for the relevant party to have brought proceedings in the Maldivian courts to litigate the same issues that were the subject of arbitration awards granted against it, the Court of Appeal held that by the time the injunction proceedings were brought in Singapore, judgment in the Maldivian proceedings had already been rendered and the proceedings were too far advanced to warrant an anti-enforcement injunction.
A dispute arising from a hotel management agreement (“Management Agreement”) between the appellant, Sun Travels & Tours Pvt Ltd (“Sun”), the owner of a hotel in the Maldives, and the respondent, Hilton International Manage (Maldives) Pvt Ltd (“Hilton”), led to an arbitral tribunal seated in Singapore granting two awards (“Awards”) against Sun in May and August 2015. Hilton commenced enforcement proceedings in the Maldives in December 2015 (“First Enforcement Proceedings”), but did not make much headway because there was some confusion as to which court in the Maldives was vested with the jurisdiction to deal with enforcement matters. The confusion was eventually resolved and, in April 2017, Hilton
re-commenced enforcement proceedings in another court (“Second Enforcement Proceedings”). Before the start of the Second Enforcement Proceedings, Sun commenced an action in the Maldives (“Maldivian Suit”) in October 2016 essentially re-litigating the issues which had already been decided in the arbitration. Instead of applying for anti-suit relief from the Singapore courts, Hilton challenged the Maldivian Suit on jurisdictional grounds. Hilton, however, failed in its jurisdictional challenge. The Maldivian court, which invited the parties to submit on both jurisdiction and merits concurrently, issued a judgment in March 2017 awarding substantial damages to Sun (“March judgment”). At the hearing of the Second Enforcement Proceedings in June 2017, enforcement of the Awards was refused on account of the March judgment (“June judgment”). Hilton appealed against the March judgment. The appeal was heard and was pending decision by the Maldivian appellate court.
It was against this background that Hilton commenced proceedings in the Singapore High Court for an anti-suit injunction in July 2017, some nine months after the commencement of the Maldivian Suit. The judge in the High Court (Judge”) found that the Maldivian Suit re-litigated the same issues and relief that were already determined in the arbitration. Hence, the commencement of the Maldivian Suit was a breach of Sun’s negative obligation not to set aside or challenge the Awards other than through the setting aside procedures of the seat court. It was also vexatious and oppressive conduct on Sun’s part. However, the Maldivian Suit was already too far advanced to warrant an anti-suit injunction. The Judge instead granted a permanent anti-enforcement injunction to prevent Sun from relying on the Maldivian judgment.
The Judge also granted two declarations in favour of Hilton: (i) first, a declaration that the Awards were final, valid and binding on the parties; and (ii) secondly, a declaration that Sun’s claim in the Maldivian Suit was in respect of disputes between Sun and Hilton that arose from the Management Agreement and that any consequential proceedings (including appeals) would be in breach of the arbitration agreements.
On appeal, the Court of Appeal set aside the anti-enforcement injunctions granted by the High Court but upheld the declarations made by the High Court.
In discussing the applicable law, the Court of Appeal highlighted that the issue of delay and how it relates to comity were key to the determination of this appeal. The Court of Appeal stressed that comity considerations are stronger the more advanced the foreign proceedings become, explaining that when there has been extensive delay, the foreign court would have expended vast amounts of judicial time and costs, and respect for the operations of foreign legal systems entails caution in exercising the jurisdiction to enjoin a party from relying on the foreign court’s decision.
The Court of Appeal explained that it would not feel any diffidence in granting an anti-suit injunction where there is a breach of an arbitration agreement or an exclusive jurisdiction clause, unless there are strong reasons not to. However, the application for an anti-suit injunction should be made promptly and before the foreign proceedings are too far advanced.
The Court of Appeal stated that an anti-enforcement injunction sought after the issuance of a judgment by the foreign court calls for special consideration and an anti-enforcement injunction would be granted only “very sparingly” because prima facie undue delay would be implicit from the very nature of such applications for injunctive relief. The Court of Appeal noted that considerations of comity are amplified when an anti-enforcement injunction is sought after the issuance of a foreign court judgment because the grant of such injunction would interfere with the powers of the foreign court.
Therefore, an application for an anti-enforcement injunction after the issuance of a foreign court judgment would generally be refused unless there are exceptional circumstances that warrant the exercise of the court’s jurisdiction. Such recognised exceptions include cases of fraud and cases where the applicant had no knowledge that the judgment was being sought until after the judgment was rendered.
Assessment of present case
In the present case, as the Maldivian Suit had reached an advanced stage, the Court of Appeal held that exceptional circumstances were required to justify an injunction to restrain Sun from relying on the March Judgment.
Although the Court of Appeal agreed with the Judge’s view that the Maldivian Suit was brought in breach of the arbitration agreements and amounted to vexatious and oppressive conduct on the part of Sun, the Court of Appeal held that the dispute had been taken out of the hands of the Singapore courts. As Hilton had delayed in applying for injunctive relief from the Singapore court and there were no exceptional circumstances shown, the Court of Appeal was unable to uphold the anti-enforcement injunction granted against Sun.
The Court of Appeal held that the mere fact that Hilton was making jurisdictional objections in the Maldivian Suit did not excuse Hilton’s delay in applying for an anti-suit injunction from the Singapore court. The Court said that Hilton should have simultaneously sought injunctive relief from the Singapore court, and its failure to do so allowed the Maldivian proceedings to reach an advanced stage.
The Court of Appeal upheld both declarations made by the High Court as the declarations would uphold the integrity of the arbitration agreements and the Awards rendered on the basis of these agreements, and may be of value to Hilton as a persuasive tool in the proceedings in the Maldives.
Regarding the first declaration (that the Awards were final, valid and binding on the parties), the Court of Appeal was prepared to uphold the declaration as it was merely a reiteration of section 19B(1) of the Singapore International Arbitration Act.
The Court of Appeal also found the second declaration (that the Maldivian Suit was a breach of the arbitration agreements) granted by the Judge to be appropriate as it would signify that Sun had breached the arbitration agreements by instituting civil proceedings in the Maldivian courts when arbitration awards on the same dispute had already been issued.
The judgment is significant because it explains the different standard applied for the grant of an anti-suit injunction in a typical case of a breach of an arbitration agreement or an exclusive jurisdiction clause and the grant of an anti-enforcement injunction after the foreign court has already issued judgment.
In particular, the judgment is a useful reminder of the importance of promptly seeking injunctive relief against the breach of an arbitration agreement. The decision of the Court of Appeal helpfully warns that making jurisdictional objections in the foreign court does not excuse any delay in applying for an anti-suit injunction from the seat court. Accordingly, litigants should not adopt a strategy of making jurisdictional objections in the foreign court and then seeking injunctive relief if the outcome in the foreign court was unfavourable to them. Instead, it would be prudent to simultaneously seek injunctive relief from the seat court while making jurisdictional objections in the foreign proceedings.