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

• Judge: Sundaresh Menon CJ
• Judgment Date: 04 October 2021
• Neutral Citation: [2021] SGCA 94
• Citation: [2021] SGCA 94
• Hearing Date: 06 April 2021
• 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)
• Published date: 07 October 2021
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 98 of 2020
• Subject Matter: Enforcement,Award,Arbitration,Challenge,Singapore-seated award,Setting aside,Recourse against award

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

This is the second appeal arising out of arbitration proceedings seated in Singapore between the parties over the termination of a casino management contract (the “Arbitration”). As in the first appeal, the appellants are, essentially, challenging the decision of the arbitral tribunal (the “Tribunal”) appointed to resolve their disputes. The first appeal dealt with a partial arbitral award dated 20 September 2016 (the “Liability Award”) in which the Tribunal had held that the appellants were liable to the respondents for breach of contract. In Bloomberry Resorts and Hotels Inc and another v Global Gaming Philippines LLC and another [2021] 1 SLR 1045 (the “CA Judgment”), this court held that the appellants’ efforts to have the Liability Award set aside lacked merit and, accordingly, upheld the Liability Award. In the meantime, the Tribunal had heard the parties’ evidence and submissions on the issue of remedies for breach of contract and issued its final award on 27 September 2019 (the “Remedies Award”).

The appellants’ applications to set aside the Remedies Award and to resist its enforcement were heard by the High Court judge (the “Judge”). She dismissed the applications for the reasons given in her decision published as Bloomberry Resorts and Hotels Inc and another v Global Gaming Philippines LLC and another [2020] SGHC 113 (the “Judgment”) The applications were brought on several grounds, namely: (a) that the Remedies Award dealt with matters beyond the scope of submission to arbitration; (b) that the Tribunal made the Remedies Award in breach of natural justice; and (c) that the enforcement of the Remedies Award would be contrary to the public policy of Singapore.

The present appeal, like its predecessor, raises several pertinent legal questions, chief amongst which is whether an arbitral tribunal’s powers to fashion relief are limited or restricted in any way. In order to understand the challenges that the appellants have mounted to the Remedies Award, it is necessary not only to set out a short history of the parties’ relationship but also to give a rather lengthy account of various steps that were taken in the Courts of the Philippines and before the Tribunal in the period shortly after that relationship broke down.

Background The parties

The first appellant, Bloomberry Resorts and Hotels Inc (“Bloomberry”), is wholly owned by the second appellant, Sureste Properties, Inc (“Sureste”). Both are companies incorporated in the Republic of the Philippines. The appellants own the Solaire Resort & Casino (the “Solaire Casino”), a luxury hotel and casino in the Philippines. Bloomberry operates the Solaire Casino and Sureste manages the hotel and non-gaming aspects of the Solaire Casino. Sureste is wholly owned by Bloomberry Resorts Corporation (“BRC”), a listed company in the Philippines. BRC’s Chairman and Chief Executive Officer is Mr Enrique K Razon, Jr (“Mr Razon”). Prime Metroline Holdings Inc (“PMHI”) is the majority shareholder of BRC and hence the controlling shareholder of the appellants. PMHI is itself wholly owned by Mr Razon.

The first respondent, Global Gaming Philippines LLC (“GGAM”), a company incorporated in the State of Delaware in the United States of America, is the sole owner of the second respondent, GGAM Netherlands B.V. (“GGAM NL”), which is a company incorporated in the Netherlands. At the material time, Mr William P. Weidner (“Mr Weidner”) was the respondents’ Chairman and Chief Executive Officer. GGAM is a wholly owned subsidiary of Global Gaming Asset Management LP, a firm that develops, invests and advises hospitality companies and projects, with an emphasis on the casino sector.

The dealings between the parties

On 9 September 2011, the appellants and GGAM entered into a Management Services Agreement (the “MSA”). Under the terms of the MSA, GGAM was to provide management and technical services for the development of the Solaire Casino and to supervise its operation for two periods of five years after its construction (“Post-Opening Services”). Under cl 1.3 of the MSA, GGAM possessed the unilateral right to either allow the first five-year term to lapse or to continue the performance of the MSA for a second five-year term. The MSA is governed by Philippine law, pursuant to cl 19.3 of the MSA. The parties do not dispute that the same law also governs the arbitration agreement contained in cl 19.2 of the MSA (the “Arbitration Clause”).

In addition, cl 18.3 of the MSA granted GGAM the option to purchase up to 10% of BRC’s shares for US$15m plus 10% of the equity that the appellants had injected into the Solaire Casino project. Exercising its rights under that clause, on 16 April 2012, GGAM signed an Equity Option Agreement (the “EOA”) with BRC and Prime Metroline Transit Corp (“PMTC”), the latter being the predecessor in interest of PMHI. By the EOA, PMTC granted GGAM the option to purchase 921,184,056 of PMTC’s shares in BRC (the “Shares”) at PHP 1.67 per share (the “Option”). The EOA also contained an arbitration clause. Immediately thereafter, the parties took part in a roadshow in relation to the shares of BRC. On 3 May 2012, when this exercise ended, they had achieved a price of PHP 7.50 per share.

On 20 December 2012, GGAM exercised the Option and purchased the Shares for approximately US$37.43m on the basis of the Option price of PHP 1.67 per share.

On 8 March 2013, GGAM assigned its rights, titles, benefits, privileges, obligations and interest under the MSA, in respect of the Post-Opening Services, to GGAM NL, pursuant to cl 16.2 of the MSA.

In mid-March 2013, the Solaire Casino officially opened for business. By July 2013, however, the parties’ relationship had soured. On 12 July 2013, Mr Razon sent an email to the respondents asserting that the appellants had come to the “firm conclusion” that the MSA had “failed” and that an “amicable parting of ways” would be in “everyone’s interest”. He enclosed an unsigned letter alleging that the respondents had breached their obligations under the MSA and stating the appellants’ intention to terminate the MSA.

On 12 September 2013, the appellants issued a formal Notice of Termination (the “NoT”) of the MSA to the respondents, pursuant to cl 15.1(a) of the MSA, on the basis that there had been a material breach of the MSA by the respondents 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. The NoT stated that it was to be effective that night at midnight.

Commencement of the Arbitration

On the same day, 12 September 2013, the respondents submitted a Notice of Arbitration to the appellants, requesting arbitration of their claims against the appellants “aris[ing] out of or related to the MSA”, pursuant to the Arbitration Clause and Art 3 of the UNCITRAL Arbitration Rules 2010 (the “UNCITRAL Rules”). In their notice, the respondents requested the Tribunal to make an award finding that the appellants had (a) materially breached their obligations under the MSA; and (b) wrongfully terminated the MSA. The respondents further asked the Tribunal to award them “an amount of damages to be determined at a final hearing”.

On 12 October 2013, the appellants served on the respondents their Response to Notice of Arbitration, making a counterclaim for damages for the respondents’ alleged breaches of the MSA. Additionally, the appellants stated at para 7.3 of their response that they would “reserve their rights to claim against the 921,184,056 shares in [BRC] that were granted under an option provided under Clause 18.3 of the MSA as part of GGAM’s compensation for services that it was to render to the [appellants] under the MSA”.

On 11 November 2013, the respondents filed their Defense to the appellants’ Counterclaims. Further pleadings were filed by both parties in the four years that followed, ending with the appellants’ Sur-Rejoinder Memorial on Damages and Other Remedies (the “Sur-Rejoinder”) filed on 31 August 2017.

GGAM attempts to sell the Shares

GGAM’s removal from the Solaire Casino’s operations was the impetus for its decision to completely sever its relationship with the Solaire Casino and therefore, to sell its equity stake in BRC. By 15 January 2014, GGAM had confirmed sale of the Shares to over 50 institutional investors at a price of PHP 8.05 per share, with the settlement of the transaction scheduled for 21 January 2014. GGAM’s proposed sale of the Shares provoked a number of steps by the appellants, PMHI and BRC aimed at preventing any sale from taking place.

First, on 15 January 2014, BRC requested the Philippine Stock Exchange (the “Exchange”) to suspend trading in respect of all BRC shares for one week. On 16 January 2014, the Exchange acceded to this request. In response, on the same day, GGAM submitted a letter to the President of the Exchange requesting that it lift the suspension and allow trading to continue. The Exchange subsequently granted GGAM’s request and trading of the counter generally resumed on 17 January 2014.

Next, on 17 January 2014, the appellants and PMHI filed an urgent petition with the Regional Trial Court of Makati City (the “Regional Court”) in the Philippines. They sought the issue of writs to preliminarily attach the Shares and injunct GGAM’s sale of the Shares, as well as a temporary restraining order.

On 20 January 2014, the Regional Court issued an order declaring that the petition was sufficient in form and substance and that the appellants (and PMHI) were entitled to the issuance of an immediately executory 20-day temporary order of protection. This was duly communicated to the Exchange, which stated in a letter to GGAM clarifying its 17 January 2014 decision to lift the trading suspension on the Shares:

Based on subsequent letters sent by [BRC], the...