Case Note: INTERIM MEASURES IN AID OF FOREIGN ARBITRATION — A RE-THINK1
| Citation | (2008) 20 SAcLJ 769 |
| Date | 01 December 2008 |
| Published date | 01 December 2008 |
Swift-Fortune Ltd v Magnifica Marine SA [2007] 1 SLR 629
In Swift-Fortune Ltd v Magnifica Marine SA, the Court of Appeal held that courts have no power under s 12(7) of the International Arbitration Act to grant interim measures in aid of foreign arbitration (ie, arbitration held outside Singapore). The court’s decision contains suggestions that the position may well be different if interim measures of protection were the only relief or order that courts could grant in aid of foreign arbitration. The authors suggest that only interim measures can be granted and, accordingly, the courts should have power to grant interim measures in aid of foreign arbitration.
1 The Court of Appeal in Swift-Fortune v Magnifica Marine (“Swift-Fortune”)2 decided that the Singapore High Court does not have the power under s 12(7)3 of the International Arbitration Act (“IAA”) to grant a Mareva injunction in aid of foreign arbitration. By foreign arbitration, it is meant arbitration where the legal seat or place of arbitration is outside Singapore.4 The Court of Appeal, however, left open in Swift-Fortune the question as to whether s 4(10) of the Civil Law Act (“CLA”)5 provides an alternative basis for a grant of injunctive relief in aid of foreign arbitration.6
2 The decision of the Court of the Appeal came against a background of two conflicting decisions of the Singapore High Court. The first was that of Justice Judith Prakash in the High Court case of Swift-Fortune7 itself, where Prakash J decided that the High Court did not have the ability under s 12(7) to grant a Mareva injunction in aid of arbitration taking place in London.
3 Taking a contrary view, Justice Belinda Ang in Front Carriers Ltd v Atlantic & Orient Shipping Corp (“Front Carriers”)8decided that the
Singapore High Court had the ability under s 12(7) to grant a Mareva injunction in aid of a London arbitration. On the facts, however, Ang J decided not to grant the Mareva injunction but made it clear that the High Court’s decision was based on the merits of the case, and not because of the High Court’s lack of jurisdiction.9 It is also of note that Ang J identified s 4(10) of the CLA as supportive of the existence of the court’s power to grant a Mareva injunction.10
4 Appeals to the Court of Appeal were brought against both decisions. The appeal against the decision of Prakash J came out first (with the appeal against Ang J’s decision pending at the time) resulting in the abovementioned decision of the Court of Appeal in Swift-Fortune.
5 In the appeal decision of Swift-Fortune, the Court of Appeal stated that the primary11 reason why the Court of Appeal was reluctant to hold that s 12(7) enabled the court to grant a Mareva injunction in aid of foreign arbitration was because if the court had the power to grant such an injunction, it would by extension then have the power to grant all the orders set out in s 12(1) of the IAA.12 Bearing in mind that s 12(1) enables the court to grant various orders, such as for discovery and security for costs, it would have been too wide for a Singapore court to be able to grant such procedural orders in respect of foreign arbitration. Thus, the Court of Appeal said:
[A] plain reading of s 12(7) of the IAA would also give power to the court to grant any of the orders and reliefs mentioned in s 12(1) to any party to an international arbitration. It is true that Swift-Fortune is only seeking a Mareva injunction under s 12(1)(i) read with s 12(7). But if s 12(7) allows this, it must also allow the court to grant the other orders or reliefs in s 12(1). We do not think that Parliament could have intended s 12(7) to have such an exorbitant reach by the use of the inaptly drafted phrase “an arbitration to which this Part applies.13[emphasis added]
6 This article suggests that a different conclusion would have been reached had the court not proceeded on the basis that s 12(7) would
also give the court the powers to grant all the orders and reliefs in s 12(1). In the view of the authors, in the case of foreign arbitration, s 12(7) only confers the powers to grant interim measures of protection and no more. The conclusion that should then have been reached instead, this article suggests, is that there is power under s 12(7) for the court to grant interim measures of protection in aid of foreign arbitration.
7 The Court of Appeal also examined whether s 4(10) of the CLA could provide an alternative basis for the grant of a Mareva injunction in aid of foreign arbitration, and in doing so, made several observations. The Court of Appeal was, however, careful not to express any final views on the point given that at the time when the Court of Appeal reached its decision in Swift-Fortune, the appeal in Front Carriers was still pending. The Court of Appeal noted that, traditionally, s 4(10) may not have been available in aid of foreign arbitration, but without deciding the point, the Court of Appeal acknowledged that the decision of Ang J had the effect of amplifying or extending the scope of s 4(10) to apply to foreign arbitrations where the court had personal jurisdiction over the defendant and the cause of action was one justiciable in Singapore. In this respect, speaking for the Court of Appeal, Chan Sek Keong CJ noted that, except for one critical difference in fact, ie, the existence of a substantive claim recognisable by a Singapore court (which was present in the Front Carriers case but not Swift-Fortune), the material facts in both cases were substantially the same. Indeed, in both cases, the defendants had assets but no place of business in Singapore, and the parties had agreed to refer the contractual dispute to arbitration outside Singapore in accordance with English law.
8 As it turned out, the appeal against the decision in Front Carriers was not pursued. One, therefore, is left with the decision of Ang J in Front Carriers and the observations of the Court of Appeal in Swift-Fortune when determining the availability of s 4( 10) of the CLA as the basis to grant interim measures in aid of foreign arbitration.
9 It is implicit from the decision of the Court of Appeal in Swift-Fortune that the grant of interim measures of protection in support of foreign arbitration would be acceptable if there is no undue intrusion into the arbitration process or exercise of powers in excess of the purposes for which such interim measures are granted. Thus, the Court of Appeal after referring to what it regarded as the plain meaning of s 12(7) that would have conferred on the court the powers to grant all relief and orders under s 12(1) said:
In our view, this argument in favour of giving effect to the plain meaning of s 12(7) of the IAA would have taken on a different complexion if s 12(7) of the IAA were concerned solely with the power of the court to grant interim measures and nothing more. In that situation, s 12(7) may be said to operate only intra-territorially and would not intrude into the powers of the foreign arbitral tribunal (which would be the legitimate concern of the relevant foreign state). As explained by Lord Mustill in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd (“Channel Tunnel”):14
The purpose of interim measures of protection … is not to encroach on the procedural powers of the arbitrators but to reinforce them, and to render more effective the decision at which the arbitrators will ultimately arrive at on the substance of the dispute.
In such a situation, there should be no reason for a foreign state to object to s 12(7) providing assistance to international arbitrations conducted in its territory. However, serious objections would arise if s 12(7) has a greater reach than merely providing non-intrusive assistance to foreign arbitration.15 [emphasis added]
10 The Court of Appeal in Swift-Fortune was not alone on this point that it is acceptable for interim measures of protection to be granted in aid of foreign arbitration. For one, the House of Lords in the Channel Tunnel case, which the Court of Appeal relied upon, reached a similar conclusion. Similarly, support for the ability of the courts to grant interim measures in aid of foreign arbitration has also been found in the courts of India, Canada and Hong Kong.16
11 In addition, Art 9 read with Art 1(2) of the Model Law17 supports such a reading by making applicable to foreign arbitration the principle embodied in Art 9 that it is not incompatible with an arbitration agreement for the courts to grant interim measures of protection.
12 The Court of Appeal in Swift-Fortune also went so far as to say that if s 12(7) could be limited to only confer on the courts the power to grant interim measures of protection, the case for a grant of a Mareva injunction in aid of foreign arbitration would have been much stronger. The Court of Appeal said:
In our view, the proviso cuts the ground under Swift-Fortune’s case as a plain reading of s 12(7) of the IAA would also give power to the court to grant any of the orders and reliefs mentioned in s 12(1) to any party to an international arbitration.
…
If s 12(7) were applicable only to or could be read only to apply to the power in s 12(1)(i) the appellant might have a stronger card on its hands.18 [emphasis added]
13 A reading of the Swift-Fortune and Front Carriers cases do not reveal any deliberations on any arguments along the lines that s 12(7) has the effect of only empowering the court in respect of foreign arbitration to grant interim measures and no more. The authors suggest, however, that a correct interpretation to take would be that s 12(7) was intended to enable the court, when it comes to foreign arbitration, to grant only interim measures of protection and no more.
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