Sanum Investments Ltd and another v Government of the Lao People's Democratic Republic and others and another matter

• Court: International Commercial Court (Singapore)
• Judge: Philip Jeyaretnam J
• Judgment Date: 01 June 2022
• Neutral Citation: [2022] SGHC(I) 9
• Citation: [2022] SGHC(I) 9
• Published date: 04 June 2022
• Hearing Date: 18 May 2022
• Docket Number: Originating Summons No 6 of 2022 (Summons No 5882 of 2021) and Originating Summons No 7 of 2022
• Plaintiff Counsel: Lin Weiqi Wendy, Chong Wan Yee Monica (Zhang Wanyu), Leau Jun Li (WongPartnership LLP)
• Defendant Counsel: Lim Gerui, Tan Yuan Kheng (Chen Yuanqing) and Tan Sih Si (Chen Shisi) (Drew & Napier LLC)
• Subject Matter: Arbitration,Award,Recourse against award,Setting aside,Enforcement

Philip Jeyaretnam J (delivering the judgment of the court): Introduction

This matter principally concerns an arbitral tribunal’s invocation of the doctrine of collateral estoppel under New York law, which precluded the reopening of certain issues in a Singapore seated arbitration. We consider, in accordance with established case law, that even if the tribunal had been wrong to do so, this would amount to no more than an error on the merits of the claim, and would not ground any challenge to the award. In this judgment, we explain why we have concluded this, as well as deal with arguments put forward to resist enforcement of part of the costs order made by the tribunal.

Background

Lao Holdings NV (“LH”) and Sanum Investments Ltd (“Sanum”) (collectively, the “Investors”) took out SIC/OS 7/2022 (“OS 7”) to set aside an arbitral award (the “Award”) which found in favour of the Government of the Lao People’s Democratic Republic (“GOL”), San Marco Capital Partners LLC (“SM”) and Kelly Gass (“Gass”) (collectively, the “GOL Parties”). The Investors also filed a related application in SIC/OS 6/2022 (“OS 6”), HC/SUM 5882/2021 (“SUM 5882”), to set aside an ex parte order of court (HC/ORC 4993/2021 (“ORC 4993”)) which granted the GOL Parties leave to enforce the Award.

OS 7 and SUM 5882 are continuations of a long-running dispute relating to the Investors’ investments in the Lao People’s Democratic Republic (“Laos”), which has been the subject of numerous decisions from the Singapore courts: see, eg, Government of the Lao People’s Democratic Republic v Sanum Investments Ltd [2015] 2 SLR 322, Sanum Investments Ltd v Government of the Lao People’s Democratic Republic [2016] 5 SLR 536, Sanum Investments Ltd v ST Group Co, Ltd and others [2020] 3 SLR 225, ST Group Co Ltd and others v Sanum Investments Ltd and another appeal [2020] 1 SLR 1 and Lao Holdings NV v Government of the Lao People’s Democratic Republic and another matter [2021] 5 SLR 228 (“Lao Holdings (HC)”). The lengthy and fraught history between parties has been described at length in these prior decisions, and we will only set out the salient facts which provide context to and have a bearing on the present applications.

The parties

Sanum, a company incorporated under the laws of the Macau Special Administrative Region of China (“Macau”), is a wholly-owned subsidiary of LH. LH is incorporated in the Netherlands.¹ Both companies made investments in gaming assets (the “Gaming Assets”) in Laos. The Gaming Assets included the Savan Vegas Hotel and Casino Complex (“SV Casino”).²

Prior to events in 2015, the SV Casino was operated by a Laotian joint venture company, Savan Vegas and Casino Co. Ltd. (“SVCC”), which was 80% owned by Sanum and 20% owned by GOL.³ Following the breakdown of the relationship between GOL and the Investors, GOL appointed SM in 2015 to manage, sell and market the Gaming Assets, including the SV Casino. Gass is the President of SM.⁴

Dispute history

On 14 August 2012, the Investors each commenced arbitration against GOL pursuant to a PRC-Laos bilateral investment treaty and a Laos-Netherlands bilateral investment treaty respectively. The arbitral proceeding between Sanum and GOL was administered by the Permanent Court of Arbitration (“PCA”) while the arbitral proceeding between LH and GOL was administered by the International Centre for Settlement of Investment Disputes (“ICSID”). These arbitrations are collectively referred to as the “BIT Arbitrations”.⁵

To put an end to these disputes, a settlement deed (the “Settlement Deed”) was executed on 15 June 2014 under which the Investors agreed to take steps to sell the Gaming Assets, including the SV Casino, to a third party.⁶ The sale was to be effected within ten months after 15 June 2014 (ie, by 15 April 2015), failing which a third-party gaming operator could be appointed to (a) manage and operate the Gaming Assets and (b) complete the sale.⁷ The Settlement Deed also provided for the suspension of the BIT Arbitrations and their revival on certain conditions.⁸

The Investors failed to sell the Gaming Assets by 15 April 2015. Pursuant to the Settlement Deed, GOL entered into a contract (the “Contract”) with SM on 16 April 2015 for the management, sale and marketing of the Gaming Assets. The Contract, which was effective from 15 March 2015, was signed by Gass on behalf of SM.⁹ On 28 September 2015, GOL issued a decree transferring all the assets owned by the SVCC to Savan Lao, a new entity that was solely owned by GOL, in order to accomplish the sale of the SV Casino. The SV Casino was eventually sold to Macau Legend on 30 August 2016 for US$42 million.¹⁰

The Settlement Deed failed to resolve parties’ differences and itself spawned protracted legal battles in multiple forums. On 11 August 2014, GOL initiated SIAC Arbitration Case No. ARB 143/14/MV (the “Prior SIAC Arbitration”) against the Investors for alleged breaches of the Settlement Deed. In turn, the Investors advanced counterclaims against GOL for allegedly breaching the Settlement Deed.¹¹ SM and Gass were not parties in this arbitral proceeding.¹² A final award (the “Prior SIAC Award”) was rendered on 29 June 2017. By a majority, the tribunal found in favour of GOL and dismissed the Investors’ counterclaims in their entirety.¹³ On 2 August 2019, the Prior SIAC Award was enforced as a judgment of the Singapore court.¹⁴ On 3 May 2016, the Investors commenced a lawsuit against SM and Gass in the United States District Court for the District of Delaware (the “Delaware District Court”), asserting, inter alia, claims for breach of fiduciary duties in the course of their management of the SV Casino (the “Delaware Action”).¹⁵ On 21 June 2016, SM and Gass filed a motion to dismiss the Delaware Action on the ground that the disputes should be submitted to SIAC arbitration in Singapore pursuant to the Settlement Deed.¹⁶ In support of their motion to dismiss, Gass filed a declaration which contained the following statement:¹⁷

I, in my individual capacity and as the sole member and manager of [SM], consent and submit to SIAC arbitration in Singapore, where [the Investors] agreed to arbitrate disputes pursuant to the Settlement Deed.

The Delaware District Court granted SM’s and Gass’ motion to dismiss on 12 July 2017, holding that the Investors’ claims were intertwined with the Settlement Deed, which required those claims to be submitted to arbitration.¹⁸ The BIT Arbitrations were subsequently revived on 15 December 2017, resulting in two arbitral awards each rendered by the respective PCA and ICSID tribunal. These two arbitral awards are presently the subject of setting aside proceedings before the Singapore courts: see Lao Holdings (HC) (which is currently on appeal). These form the backdrop of SIAC Arbitration Case No. ARB 414/17/QW (“SIAC Arbitration 414”), which gave rise to the Award in question. Procedural history of SIAC Arbitration 414

SIAC Arbitration 414 was commenced by the Investors on 19 December 2017. In this proceeding, the Investors asserted claims for breach of fiduciary duty, breach of contract and conversion of property against SM and Gass.¹⁹

GOL filed an application for joinder on 3 February 2018. This application was granted by the Court of Arbitration of the SIAC on 9 April 2018 (despite the Investors’ opposition) and GOL was thereafter joined as the third respondent.²⁰ After the tribunal (the “Tribunal”) for SIAC Arbitration 414 was constituted, the Investors raised a jurisdictional objection to the joinder of GOL, claiming that the Tribunal did not have jurisdiction over GOL. This was met with opposition from SM and Gass.²¹ After hearing both sides, the Tribunal issued its decision on 25 October 2018 concluding that it had jurisdiction over GOL.²²

A procession of pleadings followed: the Investors filed their Statement of Claim on 29 March 2019;²³ the GOL Parties filed their Statement of Defence on 16 October 2019;²⁴ the Investors filed their Reply on 10 April 2020;²⁵ and the GOL Parties filed their Rejoinder on 22 May 2020.²⁶

In between the filing of the Statement of Claim and Statement of Defence, the GOL Parties filed an application for security for costs on 22 August 2019.²⁷ The Investors filed their response on 5 September 2019.²⁸ On 23 September 2019, the Tribunal denied the application for security for costs.²⁹

The merits hearing of SIAC Arbitration 414 took place from 26 July to 1 August 2020,³⁰ and issues of costs were dealt with thereafter: On 25 September 2020, three sets of costs submissions – SM’s and Gass’ costs submissions, GOL’s costs submissions and the Investors’ costs submissions – were filed.³¹ On 16 October 2020, the GOL Parties submitted a collective reply submissions on costs, and so did the Investors.³² On 31 May 2021, the Tribunal invited parties to update their costs figures, and parties gave their replies on 7 June 2021.³³

On 9 June 2021, the Tribunal closed the proceedings.³⁴

On 11 August 2021, the Tribunal issued the Award dismissing the Investors’ claims in their entirety.³⁵ In particular, the Tribunal dismissed the Investors’ claims against SM and Gass for breach of fiduciary and contractual duties, and a portion of their conversion claims (the “Estopped Claims”), on the basis that they were barred by the defence of collateral estoppel under New York law.³⁶ The remaining conversion claims were dismissed on separate grounds.³⁷ As for costs, the Tribunal ordered the Investors to pay USD513,655.00 in costs to GOL, representing approximately 60% of GOL’s legal costs and disbursements (the “GOL Costs Order”).³⁸ The Tribunal also made other orders, but they are not material to the present applications.³⁹

Procedural history of these proceedings

On 16 August 2021, the GOL Parties filed HC/OS 834/2021 (which was later converted to OS 6) seeking leave to enforce the Award,⁴⁰ and on 2 September 2021, an ex parte order...