PT First Media TBK v Astro Nusantara International BV

• Judgment Date: 31 October 2013
• Date: 31 October 2013
• Docket Number: Civil Appeals Nos 150 and 151 of 2012
• Court: Court of Appeal (Singapore)

PT First Media TBK (formerly known as PT Broadband Multimedia TBK)

Plaintiff

and

Astro Nusantara International BV and others and another appeal

Defendant

[2013] SGCA 57

Sundaresh Menon CJ

,

VK Rajah JA

and

Judith Prakash J

Civil Appeals Nos 150 and 151 of 2012

Court of Appeal

Arbitration—Arbitral tribunal—Jurisdiction—Enforcement—Singapore award—Whether international arbitration award made in Singapore could be refused enforcement under s 19 International Arbitration Act (Cap 143 A, 2002 Rev Ed) —Whether arbitral tribunal had improperly exercised its power to join third parties pursuant to r 24 (b) 2007 Singapore International Arbitration Centre Rules—Section 19 International Arbitration Act (Cap 143 A, 2002 Rev Ed) —Rule 24 (b) 2007 Singapore International Arbitration Centre Rules

The dispute arose out of a joint venture (‘the JV’) between on the one side, companies belonging to an Indonesian conglomerate (‘the Lippo Group’), and on the other, certain companies within a Malaysian media group (‘the Astro Group’), for the provision of multimedia and television services in Indonesia. The appellant (‘the Appellant’), FM, is a member of the Lippo Group and was one of its guarantors in the joint venture. FM was also amongst the members of the Lippo Group who entered into a subscription and shareholders' agreement (‘the SSA’) with the first to fifth respondents (‘1st to 5th Respondents’), which contained the terms of the JV. The sixth to eighth respondents (‘6th to 8th Respondents’), who were not party to the SSA, provided funding and services to the JV in anticipation of its closing. As it became apparent that the closing of the JV would not materialise, a dispute arose over the continued provision of funding. One of the Lippo Group companies commenced court proceedings in Indonesia against the 6th to 8th Respondents in relation to this dispute. The Respondents, including the 6th to 8th Respondents, then commenced arbitration proceedings pursuant to cl 17.4 of the SSA (‘the Arbitration’) against the Lippo Group companies. At the same time that the notice of arbitration was filed, an application to join the 6th to 8th Respondents as parties to the arbitration was also filed by the 1st to 5th Respondents (‘the Joinder Application’).

The three-member arbitral tribunal (‘the Tribunal’) conducted a preliminary hearing to determine the Joinder Application and, pursuant to r 24 (b) of the 2007 Singapore International Arbitration Centre Rules (‘2007 SIAC Rules’), ordered the joinder of the 6th to 8th Respondents to the Arbitration, over the objections of the Lippo Group companies. The Tribunal's decision was contained in an award on preliminary issues. The Lippo Group companies did not file an appeal to the Singapore court against the Award on Preliminary Issues as permitted by s 10 of the International Arbitration Act (Cap 143 A, 2002 Rev Ed) (‘IAA’) read with Art 16 (3) of the 1985 Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (‘the Model Law’), though they did reserve their position on the Tribunal's jurisdiction over the dispute concerning the 6th to 8th Respondents. The Arbitration then proceeded to the determination of the substantive merits of the dispute, whereby the Tribunal rendered four further awards in favour of the Respondents. Subsequently, the Respondents sought to enforce all five awards in Singapore (‘the Awards’). FM objected to the enforcement of the Awards on the basis that r 24 (b) of the 2007 SIAC Rules did not permit the Tribunal to join the 6th to 8th Respondents to the Arbitration (‘the Joinder Objection’) and the Awards were therefore made in excess of jurisdiction.

Before the High Court, FM's application to set aside the enforcement of the Awards was dismissed on the ground that the provisions of the IAA read with the Model Law did not permit FM to resist enforcement of the Awards on the basis of the Joinder Objection. The High Court held that the Singapore courts had no power to refuse enforcement of an international arbitral award made in Singapore (hereinafter referred to as a ‘domestic international award’) which had not been set aside or successfully challenged previously under Art 16 (3) by the party resisting enforcement. FM appealed against the High Court's decision.

Held, allowing the appeal in part:

(1) Section 19 of the IAA, when construed in consonance with the underlying philosophy of the Model Law, permitted the award debtor to apply to resist enforcement of a domestic international award even if he had not actively challenged the award at an earlier opportunity. This system of ‘choice of remedies’, as evidenced by the travaux préparatoires of the Model Law (travaux for short), was not just a facet of the Model Law enforcement regime; it was atthe heart of its design: at [53] to [55] and [65] to [71] .

(2) Given that de-emphasising the seat of arbitration by maintaining the award debtor's ‘choice of remedies’ and alignment with the common grounds set out in the New York Convention were the pervading themes under the enforcement regime of the Model Law, the most efficacious method of giving full effect to the Model Law philosophy through the IAA was to recognise that the same grounds for resisting enforcement under Art 36 (1) of the Model Law were equally available to a party resisting enforcement of a domestic international award under s 19 of the IAA: at [84] .

(3) Section 3 (1) of the IAA could not be understood as having incidentally derogated from the clear philosophy of ‘choice of remedies’ under the Model Law. The exclusion of Arts 35 and 36 of the Model Law on account of s 3 (1) of the IAA did not militate against the interpretation of s 19 as permitting a party resisting enforcement of a domestic international award to do so on the same grounds as those found in Art 36 (1): at [86] to [90] and [99] .

(4) Nothing in the travaux on Art 16 (3) of the Model Law suggested that the remedy provided in Art 16 (3) was either an exception to the system of ‘choice of remedies’ or intended to operate as a ‘one-shot remedy’. The availability of recourse under Art 16 (3) was for the purpose of rendering the arbitration process more efficient as compared to the alternative that had earlier been mooted of only being able to challenge jurisdictional rulings after the award on the merits had been rendered: at [109] to [123] and [125] to [132] .

(5) Section 19 B (1) of the IAA had everything to do with the doctrine of res judicata which resulted in the arbitral tribunal being functus officio in relation to awards already made, and nothing to do with the availability of curial remedies. Section 19 B (4) of the IAA in fact clarified that awards which were final and binding might still be challenged by any recourse provided by law: at [137] to [142] .

(6) The issue of whether an arbitration agreement existed was capable of being subsumed under Art 36 (1) (a) (i) of the Model Law or Art V (1) (a) of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards. In the course of determining if the ground for refusing enforcement was established, the enforcement court was entitled to undertake a fresh examination of the issues which were alleged to establish that ground of challenge: at [152] to [158] and [162] to [164] .

(7) Rule 24 (b) of the 2007 SIAC Rules did not confer on the Tribunal the power to join third parties who were not party to the arbitration agreement. Accordingly, the Tribunal's exercise of its power under r 24 (b) to join the 6th to 8th Respondents who were not parties to the SSA to the Arbitration was improper with the corollary that no express agreement to arbitrate existed between the 6th to 8th Respondents and FM: at [178] to [185] , [191] to [193] and [197] to [198] .

(8) FM did not waive its rights or conduct itself in such a way that it was estopped from raising the Joinder Objection: at [205] to [222] .

(9) An arbitral award bound the parties to the arbitration because the parties had consented to be bound by the consequences of agreeing to arbitrate their dispute. Their consent was evinced in the arbitration agreement. Therefore, in a multiparty arbitration agreement, the vitiation of consent between two parties did not ipso facto vitiate the consent between other parties. In the present case, partial enforcement was viable because the orders in the Awards did not intertwine in such a manner as to impede severance of the orders made in favour of the 6th to 8th Respondents from those made in favour of the 1st to 5th Respondents: at [226] to [228] .

[Observation: It was doubtful whether an enforcement court might recognise and enforce a foreign award which had been set aside by the court in the seat of arbitration. The contemplated erga omnes effect of a successful application to set aside an award would generally lead to the conclusion that there was simply no award to enforce: at [76] and [77] .]

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Dallah Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2010] 2 WLR 805; [2009] EWCA Civ 755 (refd)

Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763 (folld)

Dalmia Cement Ltd v National Bank of Pakistan [1975] QB 9 (refd)

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