ANTI-SUIT INJUNCTIONS IN AID OF INTERNATIONAL ARBITRATIONS

• Date: 01 December 2015
• Author: Michelle LEE LLB (National University of Singapore); LLM Candidate (Columbia University); Advocate and Solicitor (Supreme Court of Singapore).
• Published date: 01 December 2015

A Rethink for Singapore

In An Effort To Enforce Arbitration Agreements That Provide For International Arbitrations Seated In Singapore, The Singapore Courts Have On Occasions Granted Interim Or Permanent Anti-suit Injunctions To Restrain Parties From Commencing Or Continuing Foreign Court Proceedings. At First Blush, The Grant Of Such Anti-suit Injunctions In Aid Of International Arbitrations Seems To Be A Pro-arbitration Move. However, This Article Calls For A Rethink On The Source Of The Court's Power To Grant Such Anti-suit Injunctions And Suggests That The Singapore Courts Do Not Have The Power To Grant Such Injunctions, For The Existence Of Such Power Would Be Contrary To The Design Of The Model Law And The Doctrine Of Kompetenz-kompetenz Enshrined In Art 16 Of The Model Law.

Anti-suit injunctions are not to be encouraged in any type of litigation. In the context of international arbitration, they constitute even more of a nuisance.[1]

I. Introduction

1 Where a plaintiff commences proceedings in a foreign court and the defendant to those proceedings seeks an anti-suit injunction from the Singapore courts to restrain the plaintiff from continuing the foreign court proceedings, on the basis that there is an arbitration agreement between the parties to arbitrate their disputes in Singapore, do the Singapore courts have the power to grant the anti-suit injunction sought? This is an issue that frequently arises in practice and a review of the relevant Singapore jurisprudence is likely to lead one to the conclusion

that the Singapore courts do have such a power, given that they have on occasions granted such anti-suit injunctions, in interim or permanent form, as a remedy for breach of an arbitration agreement.2

2 This current position in Singapore seemingly corresponds with our judicial policy on international arbitrations,3 as the grant of such anti-suit injunctions would at first blush appear to be a pro-arbitration move because it seeks to enforce arbitration agreements.4 However, as Axel Baum opined, this is an overly simplistic view and the grant of such anti-suit injunctions is just “one more door opening for court interference in what is supposed to be a non-court, private procedure; it is the thin end of a new and dangerous wedge”.5 In a similar vein, this article questions whether the Singapore courts indeed have such a power to grant the anti-suit injunction sought in order to enforce an arbitration agreement to arbitrate disputes in Singapore (hereinafter referred to as “Singapore arbitration agreement”).6 Through an analysis of the travaux préparatoires of the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration (“Model Law”),7 this article shows that the Singapore courts do not have the power to grant such anti-suit injunctions because doing so goes against the fundamental principles of modern international arbitration law embodied in the Model Law.

3 This article comprises five parts. It begins with a description of the anti-suit injunction in the context of international arbitrations, followed by a review of the relevant Singapore jurisprudence. The third and fourth parts of the article address the question of whether, as a remedy for breach of Singapore arbitration agreements, the Singapore courts have the power to grant the permanent anti-suit injunction, and interim anti-suit injunction, respectively. In the final analysis, this article concludes that the Singapore courts do not have the power to grant any type of anti-suit injunction as a remedy for breach of a Singapore arbitration agreement, for doing so would be contrary to the design of the Model Law and derogates from the doctrine of Kompetenz-Kompetenz enshrined in Art 16 of the Model Law.

II. Nature of an anti-suit injunction in aid of international arbitrations

4 The anti-suit injunction is an equitable remedy and its history can be traced all the way back to the 16th century in England.8 It was originally developed by the Courts of Chancery to restrain proceedings at common law.9 Today, it is widely used to restrain a party from commencing or continuing foreign court proceedings, either in breach of an exclusive jurisdiction clause or arbitration agreement, or in an oppressive or vexatious fashion.10 In granting the anti-suit injunction, the objective of the court is to protect its jurisdiction over the same parties and cause(s) of action from interference by foreign courts.11 However, the term “anti-suit injunction” is somewhat of a misnomer because it does not restrain the foreign suit or the foreign courts per se, as the name suggests.12 Rather, the restraint is directed at a party to the foreign suit in

question.13 Nevertheless, its apparent affront to principles of international comity has generated much debate and attracted its fair share of critics who see the use of an anti-suit injunction as an interference with, and undermining of, the jurisdiction of the foreign court.14 Despite this, the use of anti-suit injunctions is now accepted as an established court practice in both the common law and civil law jurisdictions.15

5 The anti-suit injunction may take the form of either an interim anti-suit injunction or a permanent anti-suit injunction. The difference between the two forms lies essentially in the length of its lifespan; the interim anti-suit injunction is valid until the court determines the merits of the application for the permanent anti-suit injunction, which, in turn, is valid indefinitely, subject to the terms of the court order.16 In the context of international arbitrations, while it has been opined that the anti-suit injunction is permanent or final in nature,17 parties typically consider seeking an interim anti-suit injunction from the courts at the outset in order to maintain the status quo by restraining litigation of the substantive merits of the case in the foreign court until the preliminary issue of arbitral jurisdiction has been finally determined. This is so especially where the arbitral tribunal has not even been constituted. In turn, the permanent anti-suit injunction would ordinarily be sought from the arbitral tribunal in the hope that the injunction sought would form part of the arbitral award, which can then be enforced in any state that is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards18 (“New York Convention”). However, the existence of special circumstances may influence a party to seek the permanent anti-suit injunction from the courts instead of the arbitral tribunal, eg, where the enforcement of an arbitral award takes a long time due to the inefficiencies of the legal system of the enforcement country in

processing applications for service of process out of jurisdiction on a foreign party.

6 While seeking a stay of proceedings from the foreign court is typically the more straightforward and intuitive approach than seeking an anti-suit injunction from the Singapore courts, the defendant in those foreign proceedings may prefer to seek the assistance of the Singapore courts because of the following possible reasons: (a) the foreign court may not have the power to grant a stay of its proceedings;19 (b) an application for a stay may amount to submission to the foreign court;20 or (c) the expense and inconvenience of challenging the jurisdiction of the foreign court may outweigh that of seeking an anti-suit injunction in the Singapore courts.21

7 At this juncture, it would be appropriate to clarify the terminology used in this article. While some learned authors have used the term “anti-suit injunction” to refer to the restraint of foreign court proceedings as well as arbitral proceedings,22 confusion can be avoided if the latter restraint is referred to as the “anti-arbitration injunction” instead.23 Therefore, the term “anti-suit injunction” used in this article refers only to the restraint of foreign court proceedings.

8 Furthermore, a conceptual distinction should be made between the anti-suit injunction and the anti-arbitration injunction, which has been described as “one of the gravest problems of contemporary

international commercial arbitration” and even an “illegality”.24 While the aim of the anti-suit injunction in the context of international arbitrations is to enforce the arbitration agreement between the parties, the anti-arbitration agreement seeks to enjoin arbitration proceedings by effectively interfering with and restraining the jurisdiction of an arbitral tribunal.25 As with the anti-suit injunction, the anti-arbitration injunction is made in personam and may be directed at any party to the arbitration, the arbitral tribunal or even the arbitral institution.26

III. The current state of Singapore jurisprudence

A. Permanent anti-suit injunction

9 The latest word on the court's power to grant a permanent anti- suit injunction as a remedy for breach of a Singapore arbitration agreement lies in the High Court decision of R1 International Pte Ltd v Lonstroff AG27 (“R1 International”). In R1 International, Lonstroff AG commenced court proceedings in Switzerland to claim for breach of contract for the sale and purchase of rubber.28 R1 International Pte Ltd (“R1 International”) then commenced the Singapore court proceedings to obtain a permanent anti-suit injunction to restrain Lonstroff AG from continuing the Swiss court proceedings, which were allegedly brought in breach of a Singapore arbitration agreement.29 As the existence of an arbitration agreement between the parties was in dispute, the High Court had to determine that threshold issue first, before considering the application for the permanent anti-suit injunction sought.30 Having found that there was no arbitration agreement between the parties, the High Court held that there was no basis to grant the permanent anti-suit injunction sought.31 Nevertheless, as the parties had submitted

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