Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 14 March 2018
• Neutral Citation: [2018] SGHC 56
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 845 of 2017
• Year: 2018
• Published date: 16 February 2019
• Hearing Date: 20 November 2017,24 October 2017,02 November 2017,27 October 2017
• Plaintiff Counsel: Toby Landau QC (instructed), Paul Tan, Alessa Pang and David Isidore Tan (Rajah & Tann Singapore LLP)
• Defendant Counsel: Andre Maniam SC, Jenny Tsin and Koh Jia Wen (Wong Partnership LLP)
• Subject Matter: Arbitration,Agreement,Breach,Scope,Award,Recourse against award
• Citation: [2018] SGHC 56

Belinda Ang Saw Ean J: Introduction

Originating Summons No 845 of 2017 (“OS 845”) dated 24 July 2017 (which was subsequently amended on 20 November 2017) is an application for a permanent anti-suit injunction to restrain a party from instituting or continuing with proceedings in a foreign court in breach of an arbitration agreement. Besides seeking a permanent anti-suit injunction, the plaintiff also applied for various declaratory orders from this court. In this case, OS 845 was taken out after arbitration proceedings between the plaintiff and defendant (“the Arbitration”) had concluded and the Partial Award dated 27 May 2015 (“Partial Award”) and the Final Award dated 17 August 2015 (“Final Award”) (collectively “the Awards”) had been issued in favour of the plaintiff, but the defendant (as the losing party in the Singapore-seated arbitration) successfully obtained, on 9 March 2017, judgment in a civil action that it commenced on 16 October 2016 in the Maldivian High Court on the same issues raised and argued in the arbitration (“the March Judgment”). The plaintiff has appealed against the March Judgment, which effectively contradicts the outcome of the arbitration; this appeal is pending before the Maldivian appellate court at the time OS 845 was heard before me (see [19] below). In the meantime, the plaintiff’s latest effort to enforce the Singapore award in Maldives has failed; the Maldivian court cited the existence of the March Judgment as the reason for the court’s refusal to enforce the Awards.

The plaintiff argued that by commencing the Maldivian civil action in October 2016 (“the Maldivian action”), the defendant breached the arbitration agreement between the parties, namely its negative obligation not to seek relief in any other forum, and sought the relief in OS 845 to restrain the defendant from pursuing and/or continuing proceedings in the Maldives begun in breach of the arbitration agreement contained in the hotel management contract signed on 27 February 2009 (“the Management Agreement”) and/or the Terms of Reference in ICC Arbitration Case Number 19482/TO dated 27 September 2013 (“the Terms of Reference”). The defendant claimed that the Maldivian action was simply part of the defendant’s efforts to resist enforcement of the Awards in the Maldives, as it was entitled to do, and the plaintiff was simply coming to this court to aid its enforcement of the Awards. The defendant further argued that the court had no jurisdiction over the defendant, and in the alternative, that there were good reasons why a permanent anti-suit injunction should not be granted in this case.

During the course of the hearings, the parties were directed to address the additional issue of whether the defendant’s commencement of the civil action in Maldives post arbitral award was an attempt to circumvent the Awards. If so, would the Maldivian action be a breach of the arbitration agreement between the parties, in particular a breach of its negative obligation not to commence proceedings in another forum and/or not to set aside or otherwise attack the Awards in a jurisdiction other than the seat of the Arbitration? These written grounds will discuss the implied promises identified in two English cases, namely Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35 (“AES UST”) and C v D [2007] EWCA Civ 1282 (“C v D”), and will also consider whether either breach could amount to, inter alia, a collateral attack on the Awards and/or an abuse of the Maldivian court process in the context of an application for a permanent anti-suit injunction. Underpinning this inquiry is the question as to whether or not the doctrine of abuse of process can apply where the decision under attack is that of an arbitral tribunal.

The following limited orders were made on 20 November 2017: The defendant is hereby permanently restrained (whether by its officers, servants, agents or any of them or otherwise howsoever) from taking any steps in reliance on the ruling in the March Judgment by the courts of the Republic of Maldives, or any decision upholding the March Judgment.¹ It is also declared that: The Awards are final, valid and binding on the parties;² and The defendant’s claim before the courts of the Republic of Maldives in the Maldivian action is in respect of disputes between the plaintiff and defendant that have arisen out of or in connection with the Management Agreement, and any consequential proceedings resulting therefrom (including any appeals) are in breach of the arbitration agreement in the Management Agreement and/or the Terms of Reference.³ It is further ordered that: Nothing in this order shall prevent the defendant from objecting to the recognition or enforcement of the Awards, and The defendant is to pay the plaintiff the costs of and incidental to this application to be taxed on a standard basis, if not agreed.

In writing these grounds, I noticed an error on costs in the order of court extracted by the parties. Whilst the plaintiff had asked for indemnity costs, the court was not minded to grant that and informed the parties that costs would be awarded on a standard basis. The position taken is recorded in the court’s Notes of Arguments. Thus, costs of and incidental to OS 845 were ordered to be taxed on a standard basis, if not agreed. I understand that an Assistant Registrar has drawn this mistake to the parties’ attention.

The defendant has appealed against all the orders made on 20 November 2017. I now publish the reasons for the orders made.

The dispute and the Arbitration

The plaintiff is a company incorporated in the Maldives and is affiliated with a large hospitality company operating hotels and resorts worldwide. It owns several resorts in the Maldives. In February 2009, the parties entered into the Management Agreement whereby the defendant agreed to convert a hotel it owned in the Maldives (“the Hotel”) to be managed by the plaintiff under the plaintiff’s brand for an initial period of 20 years. Over the next few years, the defendant was dissatisfied with the Hotel’s performance under the plaintiff’s management. Eventually, in April 2013, the plaintiff gave notice to the defendant that the Management Agreement was terminated with immediate effect. The defendant accepted the plaintiff’s termination a few days later on 2 May 2013 as a wrongful repudiation of the Management Agreement.

Around two weeks later, on 16 May 2013, the plaintiff commenced arbitration proceedings by submitting a request for arbitration to the International Chamber of Commerce (“ICC”) Secretariat relying on cl 18.2 of the Management Agreement (“the arbitration agreement”), which reads: 18.2 Arbitration

… the Parties irrevocably agree that any dispute, controversy or claim arising out of or in connection with this [Management Agreement], or the breach, termination or invalidity thereof shall be finally settled under the Rules of Arbitration of the [ICC] by one (1) or more arbitrators appointed in accordance with said Rules. Any arbitration proceedings shall be conducted in English. The venue of the arbitration shall be Singapore International Arbitration Centre.

On 18 July 2013, the ICC Court of Arbitration (“ICC Court”) fixed Singapore as the place of the Arbitration. The subsequent Terms of Reference signed by the parties stated that the ICC Court had fixed Singapore as the place or seat of the Arbitration.

The plaintiff’s claim in the Arbitration was that the defendant was not entitled to terminate the Management Agreement either by virtue of the plaintiff’s alleged contractual breaches or misrepresentations, and the defendant was thus liable to pay damages. The defendant claimed that the plaintiff had made certain fraudulent misrepresentations as to the financial projections provided before the parties entered into the Management Agreement, inducing the plaintiff to enter into the Management Agreement, and that the plaintiff had committed various breaches of the Management Agreement while operating the Hotel, justifying termination of the Management Agreement.

Both parties participated in the Arbitration, providing written submissions, witness statements, documentary evidence, and attended the oral hearings in July 2014 before a three-member arbitral tribunal (“the Tribunal”). On 27 May 2017, the Tribunal issued the Partial Award finding that the defendant’s claims of contractual breach and negligent and/or fraudulent misrepresentation had not been made out and the defendant had thus not been entitled to terminate the Management Agreement. It dismissed the defendant’s claims and awarded the plaintiff US$599,095.66 with interest for pre-termination and GBP 1,051,230.10 for legal and expert’s fees and expenses. It also awarded the plaintiff damages and costs in relation to the Tribunal and ICC’s expenses, with the decision on quantum to be reserved to a further award.

The defendant stopped participating in the Arbitration after the issuance of the Partial Award. On 10 June 2015, the plaintiff made submissions to the Tribunal on the quantum of damages that the defendant should be liable for. The defendant did not respond to the plaintiff’s submissions and the Tribunal issued the Final Award on 17 August 2015 determining the damages and ordering that the defendant pay to the plaintiff damages in the sum of US$20,945,000 at simple interest of 3.4% per annum, and US$342,500 for the ICC and Tribunal’s administrative expenses.

Court proceedings in the Maldives

Two sets of proceedings were commenced in the Maldives following the issuance of the Final Award. Counsel for the plaintiff, Mr Toby Landau QC (“Mr Landau”), characterises the two sets of proceedings as following two analytically distinct tracks, namely an “enforcement” track (proceedings for the enforcement of the Awards and a “civil” track (the defendant’s commencement...