Bloomberry Resorts and Hotels Inc and another v Global Gaming Philippines LLC and another

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 16 February 2021
• Neutral Citation: [2021] SGCA 9
• Year: 2021
• Docket Number: Civil Appeal No 14 of 2020
• Published date: 19 February 2021
• Hearing Date: 07 August 2020
• Plaintiff Counsel: Yeo Khirn Hai Alvin SC, Leo Zhen Wei Lionel and Wong Zheng Hui Daryl (WongPartnership LLP)
• Defendant Counsel: Bull Cavinder SC, Ong Chee Yeow and Kong Man Er (Drew & Napier LLC) (instructed), Lee Teck Chye Aaron, Marc Wenjie Malone and Chong Xue Er Cheryl (Allen & Gledhill LLP)
• Court: Court of Appeal (Singapore)
• Citation: [2021] SGCA 9
• Subject Matter: Award,Arbitration,Enforcement,Recourse against award,Setting aside,Challenge

Judith Prakash JCA (delivering the judgment of the court):

The present appeal arises out of the decision of the High Court judge (“the Judge”) in Bloomberry Resorts and Hotels Inc and another v Global Gaming Philippines LLC and another [2020] SGHC 01 (“the Judgment”) dismissing the appellants’ applications to set aside an arbitral award dated 20 September 2016 (“the Award”) and to resist its enforcement. These applications were brought on the basis that the making of the Award was induced or affected by fraud and was thus contrary to the public policy of Singapore. The appellants argued that the arbitration would have proceeded on a wholly different basis and resulted in a materially different outcome if the respondents had not concealed evidence of fraud that was later revealed by investigations carried out in the United States into the activities of an American casino operator, Las Vegas Sands Corp (“LVS”).

In so contending before the Judge, the appellants relied on what they claimed was evidence of fraud and/or corruption that was not discoverable until months after the Award was issued. This evidence took the form of two documents: the 17 January 2017 Non-Prosecution Agreement (the “DOJ Agreement”) between the US Department of Justice (“DOJ”) and LVS, an entity which was not involved in either the arbitration or the present proceedings; and the 7 April 2016 Order by the US Securities and Exchange Commission (“SEC”) instituting cease-and-desist proceedings against LVS (the “SEC Order”). Collectively, we refer to the DOJ Agreement and the SEC Order as the “FCPA Findings” and to the DOJ and the SEC as the “US Authorities”. The appellants relied in this appeal on the FCPA Findings largely in the same way as they did before the Judge and have put forward similar arguments as a basis for reversing the Judgment.

Background facts

The dispute between the parties arose out of a Management Services Agreement (“Management Agreement”) entered into between the appellants and the first respondent, Global Gaming Philippines LLC (“GGAM”), on 9 September 2011. By cl 19.3 thereof, the Management Agreement was governed by the law of the Republic of the Philippines. Pursuant to the Management Agreement, GGAM was to manage the development and operation of the Solaire Resort and Casino (the “Solaire Casino”), an integrated resort and casino located in Manila, Philippines. GGAM subsequently assigned and conveyed all of its rights and obligations under the Management Agreement to the second respondent, GGAM Netherlands BV (“GGAM Netherlands”). GGAM is the sole owner of GGAM Netherlands.

At the material time, the respondents had four senior executives who are of relevance to the present appeal (see Judgment at [11]) (collectively, the “GGAM principals”), namely: Mr William P Weidner (“Mr Weidner”), who was Chairman and Chief Executive Officer; Mr Bradley Stone (“Mr Stone”), who was President; Mr Garry W. Saunders (“Mr Saunders”), who was Executive Vice President; and Mr Eric Chiu (“Mr Chiu”), who was President for Asia.

Before GGAM’s formation, Mr Weidner was the President and Chief Operating Officer of LVS. He resigned from LVS in March 2009 in acrimonious circumstances. Mr Chiu was a director of LVS during Mr Weidner’s tenure.

Prior to his resignation from LVS, Mr Weidner and Mr Chiu were involved in three transactions for LVS that were subsequently investigated by the US Authorities and the audit committee of LVS for possible breaches of US law. When the appellants became aware of the investigation, an e-mail was sent to Mr Saunders by Ms Estela Tuason-Occena (“Ms Tuason-Occena”) on behalf of the appellants on 14 August 2012 asking him about the status of the investigation, how he thought it would go, and how it would impact Mr Weidner, Mr Stone, and GGAM.

Subsequently, on 15 August 2012, Mr Weidner sent Ms Tuason-Occena a statement that he claimed had been fully vetted by his lawyers. He said in this statement that while he was with LVS, he set a standard that required all business relationships and agreements under his purview to be thoroughly reviewed and vetted by legal and accounting professionals to ensure compliance with both US and foreign law. The appellants responded by noting that Mr Weidner’s statement did not address their concerns, including the question as to whether or not he had been involved in the three transactions being investigated. Eventually, on 18 August 2012, Mr Weidner replied with a formal statement which indicated that he had participated at a “strategic level” in many transactions, including those that Ms Tuason-Occena “may have read about”. He claimed that:

… My participation in those transactions was consistent with the role of any Chief Operating Officer and President of a large public company. The transactions were presented to and reviewed thoroughly by the board of directors of [LVS] and thoroughly reviewed and vetted by legal counsel and accounting professionals to ensure the company was complying with both U.S. and foreign law. I was not involved in the transfer or accounting of funds related to the transactions, nor did I structure those transactions. My participation in those transactions and the subsequent course of events at the company ended with my resignation from the [LVS] in March 2009. While I was at [LVS], I was not aware of nor was I complicit in any alleged wrongdoing regarding the referenced transactions.

In their submissions before us, the appellants referred to the 18 August 2012 statement as the “August 2012 Lie” but we prefer to refer to that statement and the earlier one on 15 August 2012, collectively and more neutrally, as the “2012 Statements”.

The Solaire Casino began operations in mid-March 2013. On 12 July 2013, the appellants wrote to the respondents alleging that the latter had failed to comply with their obligations under the Management Agreement to provide the “required prudent management services”. Amongst other breaches, the appellants alleged that the respondents had failed to bring in any foreign VIPs or junket operators in the four months during which the Solaire Casino had been operational. The appellants thus stated that they were exercising their right under cl 15.1(a) of the Management Agreement to terminate it because of a material breach. On 12 September 2013, the appellants issued a formal Notice of Termination of the Management Agreement on the basis of cl 15.1(a), ie, that GGAM had committed a material breach of the Agreement that was either incapable of remedy, or, if capable of remedy, had not been remedied within 30 days of notice or such longer period not exceeding 60 days. As the appellants described it before the Judge, the termination was largely due to the respondents’ “perceived non-performance with respect to delivering junket operators and foreign VIPs to [the Solaire Casino]”.

The arbitral proceedings

Practically immediately thereafter, the respondents commenced arbitration proceedings against the appellants for wrongful termination. The arbitration proceedings were bifurcated into liability and damages tranches and the Award pertained only to liability. Among the issues the arbitral tribunal (“the Tribunal”) was asked to determine were: (a) whether the respondents had perpetrated “causal fraud” by making false representations to the appellants which induced them into entering the Management Agreement; and (b) whether the appellants’ termination of the Management Agreement was justified: see the Judgment at [59]. The appellants brought counterclaims in the arbitration but these are not relevant for present purposes.

In the Award, the Tribunal held that under Philippines’ law, “causal fraud” may justify the rescission of a contract where the fraud is serious (meaning that it is sufficient to impress or to lead an ordinarily prudent person into error), is present at the time of “birth or perfection of the contract”, and the evidence of it is full, clear and convincing. The appellants relied on a number of representations which had allegedly been made by the respondents, including that the GGAM principals had falsely projected an “image equating [GGAM] with [LVS]”, and that through their collective experience at LVS, they had strong relationships with junket operators and data regarding individual foreign VIP players who they would bring into the Solaire Casino: see Judgment at [60].

The Tribunal rejected the claims of misrepresentation and causal fraud. Among other things, the Tribunal found that there was no evidence to support the appellants’ allegation that the respondents had represented they were the same entity as LVS. The Tribunal also held that, given the standing of the GGAM principals in the gaming industry, they did have access to “high rollers”. There was ample evidence that both parties planned not to seek “high rollers” until the Solaire Casino was sufficiently able to provide them with a pleasant experience, but the appellants terminated the Management Agreement before that point arrived. Similarly, the Tribunal rejected the appellants’ contention that the respondents had represented they had operating policies, procedures and systems ready to be implemented. Rather, the respondents were contractually obliged to formulate the written policies and procedures through and in collaboration with the Solaire Casino. In fact, such policies were prepared by the Solaire Casino’s staff in collaboration with the respondents and, in any event, any representation on the policies and procedures would not have been serious enough to falsely induce the appellants to enter into the Management Agreement.

Before the Tribunal, the appellants submitted that the termination of the Management Agreement had been justified because of various irremediable breaches by the respondents. They asserted that even if the breaches were capable of being remedied, the appellants had...