Sanum Investments Limited v ST Group Co, Ltd and others

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 18 June 2018
• Neutral Citation: [2018] SGHC 141
• Plaintiff Counsel: Alvin Yeo SC, Wendy Lin, Monica Chong & Sean Poh (Wong Partnership LLP)
• Date: 18 June 2018
• Docket Number: Originating Summons No 890 of 2016 (Summons No 4933 of 2017)
• Hearing Date: 12 January 2018,11 January 2018,15 January 2018
• Subject Matter: Arbitration,Refusal of enforcement,Jurisdiction of tribunal,Award
• Year: 2018
• Citation: [2018] SGHC 141
• Defendant Counsel: Francis Xavier SC, Alina Chia, Tee Su Mien & Edwin Tan (Rajah & Tann Singapore LLP) (instructed),Thomas Tan & Benjamin Tan (Haridass Ho & Partners)
• Court: High Court (Singapore)
• Published date: 12 December 2019

Belinda Ang Saw Ean J: Introduction

Sanum Investments Limited (“Sanum”) previously obtained leave of court to enforce an arbitral award, dated 22 August 2016 (“the Award”), pursuant to s 19 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) and O 69A r 6 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed). On 23 November 2016, judgment was entered in terms of the Award. The arbitration in Singapore was administered under the auspices of the Singapore International Arbitration Centre (“SIAC”) and the eventual Award was rendered by a three-member tribunal that found in favour of Sanum. The sum is not insignificant; Sanum was entitled to US$200 million in damages alone.

Although ST Group Co., Ltd. (“ST Group”), Mr Sithat Xaysoulivong (“Mr Sithat”), ST Vegas Co., Ltd. (“ST Vegas Co”), and S.T. Vegas Enterprise Ltd. (“ST Vegas Enterprise”) (collectively, “the Lao disputants”) have commenced four applications concerning various matters relating to the enforcement of the Award, the parties have agreed that this court need only deal with Summons No 4933 of 2017 (“SUM 4933”), filed on 16 June 2017, presently. Consequently, Summons Nos 202, 1331 and 2274, all of 2017, were adjourned pending the determination of SUM 4933.

SUM 4933 is an application for the refusal of enforcement of the Award pursuant to Article 36(1) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) contained in the First Schedule of the IAA. In essence, the Lao disputants argue that: (a) the Award was made pursuant to an arbitration agreement (or agreements) to which not all the Lao disputants were a party to; (b) the Award deals with a dispute not contemplated by or falling within the scope of the submission to arbitration; and (c) the composition of the tribunal and the seat of the arbitration were not in accordance with the agreement of the parties. Points (a) and (b) are objections to the tribunal’s jurisdiction (“jurisdictional objections”). Point (c) is procedural in nature (“procedural objections”). There were two other objections, that of public policy and language of the arbitration, raised by the Lao disputants in their affidavits but these were not pursued in submissions. This court will treat them as abandoned.

Central to the determination of the jurisdictional objections raised in SUM 4933 is the interpretation and relevance of two dispute resolution clauses found in two agreements; namely Clause 2(10) of the Master Agreement, and Clause 19 of the Participation Agreement between Sanum and ST Vegas Enterprise (see [23]–[24] below). These two clauses are important. They formed the basis upon which the tribunal established its jurisdiction to adjudicate the dispute that was referred to arbitration under the auspices of the SIAC, and which led to the Award now binding on the Lao disputants. This judgment will also deal with the procedural objections raised in SUM 4933.

At the hearing of the present proceedings, Sanum was represented by Mr Alvin Yeo S.C. (“Mr Yeo”). The Lao disputants, on the other hand, were represented by Mr Francis Xavier S.C. (“Mr Xavier”).

Factual context of the present case The parties

Sanum is a company incorporated in Macau (Special Administrative Region), People’s Republic of China (“Macau”). It has extensive knowledge and experience in the gaming industry and was, at the material time, interested in pursuing business opportunities in the People’s Democratic Republic of Lao (“Lao”). Mr John Baldwin, Chairman of Sanum’s Board of Directors, testified in the arbitration on behalf of Sanum. He has affirmed affidavits that were used in these proceedings.

ST Group is a company incorporated in Lao. It owns diverse business interests across various industries, including the gaming and entertainment industry in Lao. Mr Sithat is the President of ST Group and has affirmed affidavits on behalf of ST Group and himself. His affidavits were used in these proceedings.

ST Vegas Co and ST Vegas Enterprise are also companies incorporated in Lao. They own certain gaming licences and operate certain slot clubs in Lao. ST Vegas Co, in particular, holds the gaming licence to operate a slot club located at the Vientiane Friendship Bridge along the Thai-Laos border (the “Thanaleng Slot Club”); the very slot club which the Award was concerned with. Both ST Vegas Co and ST Vegas Enterprise are managed by Mr Xaysana Xaysoulivong (“Mr Xaysana”), one of Mr Sithat’s sons. Mr Xaysana has filed affidavits on behalf of the two entities and they were used in these proceedings.

Contractual framework governing the relationship of the parties

Sanum was, back in 2007, looking for business opportunities in Lao. Based on certain recommendations given by other business associates and Lao government officials, Sanum got in touch with the Lao disputants. According to Sanum, the Lao disputants lacked the resources to develop successfully its gaming enterprises and for this reason, needed a joint venture partner. As a result, Sanum and the Lao disputants negotiated and entered into a joint venture arrangement whereby Sanum would eventually come to hold 60% of all present and future gaming businesses of the joint venture. This arrangement was embodied in an agreement dated 30 May 2007 referred to by the parties as the Master Agreement. The Master Agreement has, at times, been indicated to be dated 31 May 2007, nothing turns on this difference. The date used in this judgment is the 30 May 2007 as this appears to be the date commonly adopted by the parties. As an aside, the problem with dates used to mark various documents and to describe different events plague this case. However, given the analysis in this judgment, nothing turns on these differences.

The Master Agreement envisioned that there would be three joint ventures created to hold and develop certain properties. Two of the joint ventures concerned the running of casinos whereas the third joint venture concerned the operation of slot clubs: (a) Savannahkhet Casino Joint Venture; (b) Paksong/Champasak Casino Joint Venture; and (c) Slot Club Joint Venture. Separate agreements known as participation agreements may have to be prepared for each of these joint ventures. As regards the Slot Club Joint Venture, the relevant slot clubs referred to in the Master Agreement are the slot clubs at the “Lao border at Lao Bao” and the “Savannakhet/Daesaven checkpoint” (also referred to by the parties as the Lao Bao Slot Club and Ferry Terminal Slot Club).

To execute the joint venture for two slot clubs, Sanum subsequently entered into a participation agreement with ST Vegas Enterprise on 6 August 2007 (“Participation Agreement between Sanum and ST Vegas Enterprise”) which indicated that the joint venture was to carry on for a term of 50 years.

There is a third slot club named the Thanaleng Slot Club. This slot club was not treated as immediately part of the Slot Club Joint Venture. This is because there were existing third party machine owners already involved in the Thanaleng Slot Club at the time the Master Agreement was concluded. However, the Master Agreement envisaged Sanum taking over the Thanaleng Slot Club upon the termination of the third party machine owners’ contracts (referred to by the parties as the “turnover” of the Thanaleng Slot Club). Mr Xaysana’s affidavit states the termination dates of these contracts as follows: (a) the contract with RGB Ltd, ending on 10 October 2011; (b) the contract with IndoPacific Gaming Australia Pty Ltd, ending on 31 March 2010; and (c) Thaimac Export-Import Pty Ltd, ending on 26 November 2007. The “turnover” of the Thanaleng Slot Club is given effect to in Clause 1(3)(d) of the Master Agreement. Given the language of Clause 1(3)(d), the “turnover” date would coincide with the expiry of the RGB Ltd contract. There is an inconsistency between the termination date of the RGB Ltd contract as stated by Mr Xaysana and in the Temporary Thanaleng Participation Agreement; the latter indicating that the RGB contract was to terminate on 11 October 2011 (see [14] below). For the purposes of the hearing, Mr Yeo used 11 October 2011 as the “turnover” date under the Master Agreement. This, to a large extent, was also the position adopted by Mr Xavier.

For context, the key portion of the Master Agreement relating to the slot clubs are reproduced as follows: 1. Joint Ventures:

The Joint Ventures shall represent and include all of 2nd Party’s present and future gaming businesss in Lao PDR.

The only exceptions are with the Vientiane Friendship Bridge location [also referred to as the Thanaleng Slot Club] where there are three contracts for slot machines with RGB that expires in less than 5 years, Australian Co with approximately 2 years remaining and the Thai Australian Co. with approximately 1 year left. The above mentioned contracts will be allowed to expire with no extensions given by 2nd Party, no expansion is allowed, and no new contracts involving gaming of any type entered into without 1st Party approval. Upon the expiration of the above entities’ participation agreements with 2nd Party, each entity may submit a proposal to 1st Party detailing how it may continue a relationship with the Vientiane Friendship bridge location, 2nd Party, 1st Party or the Joint Ventures. 1st Party has the sole discretion to approve or disapprove such proposals. (See also subsection 3d. of this Section).

It is presently contemplated that the Joint Ventures will be compromised of three separate joint venture entities. Some of these contemplated joint venture entities may already exist and 1st Party must be made a legal participant in such entities. As future gaming projects may evolve, additional joint venture entities may be developed between the Parties.

2nd Party shall not be involved in any present or future gaming activity without the direct participation of 1st Party. 1st Party shall thus...