ST Group Co Ltd and others v Sanum Investments Limited and another appeal

• Court: Court of Appeal (Singapore)
• Judge: Sundaresh Menon CJ
• Judgment Date: 18 November 2019
• Neutral Citation: [2019] SGCA 65
• Citation: [2019] SGCA 65
• Defendant Counsel: Alvin Yeo SC, Wendy Lin, Monica Chong and Teh Zi Ling, Stephanie (WongPartnership LLP),Christopher Tan and Vanessa Claire Koh Yuet Feng (Lee & Lee)
• Published date: 12 December 2019
• Plaintiff Counsel: Francis Xavier SC, Tee Su Mien and Edwin Tan (Rajah & Tann Singapore LLP) (instructed),Thomas Tan and Tan Xue Ting (Haridass Ho & Partners)
• Hearing Date: 07 June 2019,10 May 2019
• Date: 18 November 2019
• Docket Number: Civil Appeals Nos 113 and 114 of 2018
• Subject Matter: Scope,Conflict of laws,Enforcement,Seat of the arbitration,Arbitration,Action,Agreement

Judith Prakash JA (delivering the judgment of the court): Introduction

We have before us two related but cross appeals arising, in the first instance, out of a court order made by an Assistant Registrar granting leave for the enforcement of an arbitration award against the award debtors (“the Leave Order”). The award debtors mounted a challenge against the Leave Order and this eventually came before a High Court judge (“the Judge”). The Judge affirmed the Leave Order in respect of three of the award debtors but allowed the application to set aside that order in respect of one of them. Neither side was completely happy with the decision, hence the appeals to this Court seeking to reverse the Judge’s decision on both points.

The parties to the arbitration proceedings were as follows. The claimant was Sanum Investments Limited (“Sanum”), a company incorporated in Macau and carrying on business in the gaming industry. Sanum obtained an arbitration award in its favour and subsequently obtained leave to enforce the same in Singapore. It is the appellant in Civil Appeal No 114 of 2018 (“CA 114”) and seeks to overturn the Judge’s order reversing the Leave Order in respect of ST Vegas Enterprise Ltd (“STV Enterprise”).

STV Enterprise is a company incorporated in Laos. It was a respondent to the arbitration proceedings brought by Sanum together with two other associated Laotian companies and an individual. The companies were ST Group Co, Ltd (“ST Group”) and ST Vegas Co, Ltd (“ST Vegas”) while the individual was Mr Sithat Xaysoulivong (“Mr Sithat”), a Laotian citizen who was the moving spirit behind all the Laotian companies involved in the dealings with Sanum that led to the arbitration. ST Group, ST Vegas and Mr Sithat are the appellants in Civil Appeal No 113 of 2018 (“CA 113”) and they are appealing against the Judge’s decision to affirm the Leave Order in respect of the enforcement of the award against them.

For convenience, we shall sometimes hereafter refer to the Lao companies and individual involved in the two appeals as, collectively, the “Lao Parties”.

The parties

ST Group owns business interests in various industries in Laos, including the gaming and entertainment industry. Mr Sithat is the President of ST Group. One of his sons, Mr Xaya Xaysoulivong (“Mr Xaya”) is the Vice President of ST Group and ST Vegas. Another of his sons, Mr Xaysana Xaysoulivong (“Mr Xaysana”), manages ST Vegas and STV Enterprise which are affiliated with ST Group.

ST Vegas and STV Enterprise own gaming licenses to operate certain clubs in Laos. In particular, ST Vegas holds the gaming licence to operate a slot machine club located at the Vientiane Friendship Bridge. The parties referred to this club as the “Thanaleng Slot Club”. The dispute between the parties that was eventually submitted to arbitration (“the Dispute”) arose out of arrangements involving the Thanaleng Slot Club.

Background to the Dispute – the agreements

Mr John Baldwin (“Mr Baldwin”) is Chairman of Sanum’s Board of Directors. In 2007, Mr Baldwin was exploring opportunities for investing in Laos. He met Mr Sithat and Mr Xaya on 26 May 2007 to discuss potential business collaboration between Sanum and Mr Sithat’s group. Mr Sithat and Mr Xaya possessed valuable concessions for hotel and casino projects and owned several slot machine clubs, but lacked the necessary funds and expertise to develop those assets. Sanum, with its expertise and experience in the gaming industry, appeared to be a good fit.

The parties thus negotiated and entered into a joint venture arrangement under which Sanum would eventually come to hold 60% of all present and future gaming businesses of the joint venture. Pursuant to this, a Master Agreement was executed on 30 May 2007. There is no dispute that ST Group and Sanum were parties to the Master Agreement, but there is a dispute over whether STV Enterprise, ST Vegas and Mr Sithat were parties to the Master Agreement. The Master Agreement contained a dispute resolution clause, cl 2(10), which reads: 10) If any dispute shall arise, the Parties agree to conduct an amicable negotiation. If such dispute cannot be settled by mediation, the Parties may submit such disputes to the Resolution of Economic Dispute Organization or Courts of the Lao PDR according to the provision and law of Lao PDR in accordance with this Agreement. All proceedings of the arbitration shall be conducted in Lao and English Languages.

Before settlement by the arbitrator under the rules of the Resolution of Economic Dispute Organization, the Parties shall use all efforts to assist the dispute resolution in accordance with the laws of Lao PDR.

If one of the Parties is unsatisfied with the results of the above procedure, the Parties shall mediate and, if necessary, arbitrate such dispute using an internationally recognized mediation/arbitration company in Macau, SAR PRC.

The proper interpretation and scope of cl 2(10) of the Master Agreement is in dispute.

Clause 1(3) of the Master Agreement states that the joint venture between the parties would include various joint ventures in the gaming and entertainment industry. Of particular relevance to the present case is a “Slot Club Joint Venture”, which would involve two slot clubs. Clause 1(3) also stated that the Slot Club Joint Venture was not limited to the aforesaid clubs. Specific mention was made of the Thanaleng Slot Club in cl 1(3)(d) of the Master Agreement. The Thanaleng Slot Club would not, however, immediately form part of the Slot Club Joint Venture because of the then existing involvement of third party machine owners in that club. The last of the contracts with these third party machine owners was set to expire on 11 October 2011. The Master Agreement states, therefore, that Sanum was to take over the Thanaleng Slot Club upon the termination of the third party machine owners’ contracts. The parties referred to this event as the “turnover” of the Thanaleng Slot Club and referred to 11 October 2011 as the “turnover date”.

Clause 1(5) of the Master Agreement envisages that there would be separate “sub-agreements corresponding to the details of each Joint Venture”. On 6 August 2007, Sanum entered into one such sub-agreement with STV Enterprise: the Participation Agreement. The Participation Agreement referred to two slot clubs run by STV Enterprise (which were identified as the “Lao Bao” and “Ferry Terminal” slot clubs) and stated that STV Enterprise desired to engage Sanum as a business partner in those slot clubs. The Participation Agreement contained a dispute resolution clause, cl 19, which reads: 19. Applicable Law and Dispute Resolution (a) … (b) Any dispute, controversy or claim arising out of or relating to this Agreement, including any question regarding its existence, validity or termination, the parties agree to conduct an amicable negotiation. In the event such dispute cannot be settled by mediation, the unsettled dispute shall be referred to and resolved by, unless the parties otherwise agree, Resolution of Economic Dispute Organization or Courts of the Lao PDR according to the provision and law of Lao PDR. (c) If one of the parties is unsatisfied with the results of the decision or judgment of the above procedure, the Parties shall mediate and, if necessary, arbitrate such dispute using an internationally recognized mediation/arbitration at the Singapore International Arbitration Centre (SIAC), Singapore and the rules of SIAC shall be applied. (d) The tribunal shall consist of three arbitrators. Each of the parties to this Agreement (as a group) shall each be entitled to appoint one arbitrator and the third shall be nominated by the chairman of the arbitration in Singapore, but must be an arbitrator of a different nationality from that of the others. All proceeding of mediation or arbitration shall be conducted in English language.

On 4 October 2008, Sanum and ST Vegas entered into the first of three sub-agreements relating to the Thanaleng Slot Club (“the Temporary Thanaleng Participation Agreement”). The Temporary Thanaleng Participation Agreement allowed Sanum to supply slot machines to the Thanaleng Slot Club, and set a 40/60 split in the revenue generated from these machines in favour of ST Vegas. This agreement was concluded because one of the third party machine owners had left the Thanaleng Slot Club and Sanum was willing to provide additional machines to fill the gap left by that party. The Temporary Thanaleng Participation Agreement stated that it would terminate on 11 October 2011.

On 23 February 2010, Sanum entered into an agreement with ST Group in relation to the expansion of the Thanaleng Slot Club to adjacent premises owned by ST Group (“the First Expansion Agreement”). On 16 November 2010, Sanum, ST Vegas and ST Group entered into an agreement for the construction of an additional building to further expand the Thanaleng Slot Club (“the Second Expansion Agreement”). We shall refer to the Temporary Thanaleng Participation Agreement, the First Expansion Agreement and the Second Expansion Agreement as the “Thanaleng Agreements”. None of the Thanaleng Agreements contained a dispute resolution clause.

For convenience, the Master Agreement, the Participation Agreement and the Thanaleng Agreements are sometimes hereafter collectively called “the Five Agreements”.

The Dispute arises and proceedings are taken Proceedings in Laos

According to Mr Baldwin, over the three years following October 2008, Sanum invested heavily into the Thanaleng Slot Club, and the slot club had tripled its profits by 2011. However, less than two months before the 11 October 2011 turnover date, Sanum received an e-mail from ST Group claiming that the date on which the final contract with the third party machine owners was to expire was 12 April 2012 instead of 11 October 2011. This meant that the turnover of the slot club would be...