Astro Nusantara International BV v PT Ayunda Prima Mitra

• Judgment Date: 22 October 2012
• Date: 22 October 2012
• Docket Number: Originating Summons No 807 of 2010 (Registrar's Appeal No 278 of 2011 and Summons No 4065 of 2011) and Originating Summons No 913 of 2010 (Registrar's Appeal No 279 of 2011 and Summons No 4064 of 2011)
• Court: High Court (Singapore)

Astro Nusantara International BV and others

Plaintiff

and

PT Ayunda Prima Mitra and others

Defendant

[2012] SGHC 212

Belinda Ang Saw Ean J

Originating Summons No 807 of 2010 (Registrar's Appeal No 278 of 2011 and Summons No 4065 of 2011) and Originating Summons No 913 of 2010 (Registrar's Appeal No 279 of 2011 and Summons No 4064 of 2011)

High Court

Arbitration—Award—Finality of award—Final preliminary award on jurisdiction given—No appeal under Art 16 (3) UNCITRAL Model Law on International Commercial Arbitration—Whether defendant permitted to reopen jurisdictional award at enforcement stage—Article 16 (3) UNCITRAL Model Law on International Commercial Arbitration

Arbitration—Enforcement—Singapore award—Arbitral tribunal joined three plaintiffs to the arbitration who were not party to arbitration clause—Defendant challenging award on jurisdictional grounds—Whether defendant permitted to raise such grounds against Singapore award to resist enforcement

Civil Procedure—Service—Envelope containing enforcement orders sent to registered address—Envelope returned unopened—Whether there was service of enforcement orders—Whether any defects in service could be cured

This dispute arose out of a failed Joint Venture between two groups of companies, the Astro group (‘Astro’) and the Lippo Group (‘Lippo’), to provide direct-to-home multi-channel digital satellite pay television services in Indonesia. A Share Subscription Agreement (‘SSA’) was signed on or about 11 March 2005 and contained an arbitration clause. Closing was subject to conditions precedent. Only the first to fifth plaintiffs were party to the SSA, although all the plaintiffs were directly or indirectly owned by the sixth plaintiff. From about December 2005 and in anticipation of closing, the sixth, seventh and eighth plaintiffs (‘P6 to P8’) began providing supporting services and funding (‘the Services’) to the Joint Venture vehicle (‘the JVV’) at the second defendant, PT First Media TBK's (‘FM’) request. The service agreements were never concluded. By August 2007, after attempts at re-negotiation failed, it became clear to the parties that the Joint Venture would not close. While exploring exit options, P6 to P8 continued to provide the Services to the JVV, subject to Astro's warnings that it would cut off such services and funding if the parties were not able to reach an agreement on the new proposals offered by Astro. A dispute subsequently arose over the provision of the Services. Astro claimed that Lippo owed Astro US$250 m incurred for the Services, while Lippo claimed that the Services came free as part of an oral joint venture agreement.

During arbitration, Lippo argued that the dispute over the Services could not be arbitrated because P6 to P8 were not parties to the SSA and the arbitration clause thereunder. In a final preliminary award dated 7 May 2009 (‘the 7 May 2009 award’), the arbitration tribunal (‘the Tribunal’) found that it had jurisdiction over the dispute over the Services and exercised its power to join P6 to P8 to the arbitration. Lippo did not appeal the 7 May 2009 award under Art 16 (3) of the UNCITRAL Model Law on International Commercial Arbitration (‘the Model Law’) and fully participated in the arbitration on merits, albeit under protest. Four other final awards were subsequently made in favour of Astro.

The plaintiffs applied ex parte to enforce all five awards (‘the Awards’). Enforcement orders (‘the Orders’) were made which were purportedly served on FM on 14 January 2011 at its registered office in Jakarta, Indonesia. Believing that FM had been properly served with the Orders, the plaintiffs entered the 2011 Judgments against FM on 24 March 2011, after expiry of the period to set aside the Orders. FM applied by way of Summons No 1911 of 2011 and Summons No 1912 of 2011 to set aside the 2011 Judgments and for leave to apply to set aside the Orders for improper service. On 22 August 2011, the assistant registrar made an order setting aside the 2011 Judgments and granted FM leave to apply to set aside the Orders within 21 days from the date of the decision. The plaintiffs disagreed with the decision and duly filed Registrar's Appeal No 278 of 2011 (‘RA 278’) and Registrar's Appeal No 279 of 2011 (‘RA 279’). FM also applied by way of Summons No 4064 of 2011 and Summons No 4065 of 2011 to resist enforcement of the Awards on the basis that the Tribunal lacked jurisdiction to join P6 to P8 to the arbitration. RA 278, RA 279 and Summonses Nos 4064 and 4065 of 2011 were heard together.

Held, dismissing the summonses and Registrar's Appeals:

(1) While expert evidence was necessary to decide whether service in Indonesia was in accordance with Indonesian law, validity of service was a matter for the Singapore court as the lex fori. The expert evidence of the plaintiffs was preferred as it provided careful analysis of the Indonesian Civil Procedure Code whereas the expert evidence of FM drew upon the commentaries of two other academics without more: at [46], [52] and [53].

(2) Service of the foreign documents by an Indonesian lawyer at the registered address of the corporate party sought to be served was in accordance with Indonesian law. However, service in the instant case was improper as the process server, one Mr Hariadi, took away unopened the sealed envelope addressed to FM containing the Orders, and there is no evidence that any of FM's employees opened the envelope. FM thus did not have notice of the terms of the Orders and in particular of its right to apply to the Singapore court to set aside the Orders within 21 days of the date of service. As there was effectively no service of the Orders, the irregularities in the service could not be cured under the Rules of Court (Cap 322, R 5, 2006 Rev Ed): at [53], [55], [58], [60] and [63].

(3) Although FM challenged all the Awards, the 7 May 2009 Award was the most important since the other four awards were premised on that award giving the Tribunal jurisdiction over the matter. The availability of a challenge to enforcement on the ground of jurisdiction was dependent on the type of award given, viz, a preliminary award on jurisdiction (ie, the 7 May 2009 Award), an award on jurisdiction and merits together, or an award on merits alone where jurisdiction had not been challenged: at [66], [126], [127], and [130] to [134].

(4) Domestic international awards, viz, awards made in Singapore were different from foreign international awards. Enforcement of a domestic international award was dependent on recognition, and any challenge to its enforcement had to also come as a challenge to its recognition: at [71] and [77].

(5) Refusal of recognition and enforcement could not be divorced from setting aside. Section 19B of the International Arbitration Act (Cap 143 A, 2002 Rev Ed) (‘the IAA’) recognised that for all practical purposes, judicial intervention in respect of domestic international awards was undertaken at the curial stage and s 19B thus made no distinction between a court sitting in its curial capacity and in its enforcement capacity. Once an award was ‘final and binding’ pursuant to s 19B (1) of the IAA, it would be recognised and enforced unless grounds under s 19B (4) existed for the court to refuse recognition of the award in question and set it aside instead; enforcement would then be moot. A court did not have ‘double control’ of a domestic international award both at the setting aside and enforcement stages. If the award was final and binding and there were no further exceptions to this result, then it might not be challenged: at [78], [79], [82], [89] and [93].

(6) The only way for FM to challenge the Awards was to claim that they were not final and binding but subject to grounds for setting aside and refusal of recognition prescribed in Art 34 of the UNCITRAL Model Law on International Commercial Arbitration (‘the Model Law’) and s 24 of the IAA. This required FM to take a positive step to challenge the award, which it did not do: at [79], [88] and [93].

(7) FM's claim, although couched as one of resisting enforcement, was in reality one of setting aside out of the time limits provided under Art 34. It could not revive its grounds for setting aside out of time as there was no legal basis to divorce the time limits from the grounds of challenge: at [73] and [95].

(8) Since FM's claim was jurisdictional, the grounds under s 24 of the IAA did not apply: at [122].

(9) The grounds under Art 36 of the Model Law were not available to FM as Art 36 and its grounds had been excluded from the IAA as part of Singapore's pro-arbitration stance: at [88] and [113].

(10) The effect of FM's failure to appeal the 7 May 2009 Award on jurisdiction under Art 16 (3) of the Model Law was to preclude it from reviving the point of jurisdiction at any later stage. Allowing a party to revive the point on jurisdiction with a view to refusing enforcement was against the concept of Art 16 (3) which did not envisage multiple court proceedings controlling one and the same arbitral decision on jurisdiction: at [151], [157] and [162].

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