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

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JA
• Judgment Date: 12 February 2019
• Neutral Citation: [2019] SGCA 10
• Published date: 16 February 2019
• Date: 12 February 2019
• Year: 2019
• Hearing Date: 08 November 2018
• Subject Matter: Breach,Agreement,Anti-suit injunction,Arbitration
• Plaintiff Counsel: Andre Maniam SC, Jenny Tsin, Koh Jia Wen and Ayla Mark Shu'en (WongPartnership LLP)
• Defendant Counsel: Toby Landau QC (instructed counsel, Essex Court Chambers Duxton (Singapore Group Practice)), Paul Tan, Alessa Pang and David Isidore Tan (Rajah & Tann Singapore LLP)
• Court: Court of Appeal (Singapore)
• Citation: [2019] SGCA 10
• Docket Number: Civil Appeal No 221 of 2017

Steven Chong JA (delivering the judgment of the court): Introduction

This appeal raises an interesting issue: how a seat court should exercise its discretion in respect of an application for an anti-suit injunction when the foreign court has already issued a judgment in favour of the other party in a civil action where the issues litigated were the same as those in the prior arbitration. This judgment will examine whether a different approach is warranted in the treatment of the specific category of anti-enforcement injunctions in contradistinction to the usual form of anti-suit injunctions which restrain ongoing proceedings, and if so, what that approach should be and the principles that inform the difference. It will also engage a number of related considerations, including the significance that ought to be accorded to a party’s delay in seeking anti-suit relief and the different shades of meaning that comity can take on.

In the present case, a dispute between the parties was properly brought before an arbitral tribunal which led to two awards against the appellant, Sun Travels & Tours Pvt Ltd (“Sun”). The respondent, Hilton International Manage (Maldives) Pvt Ltd (“Hilton”), took various steps to enforce the awards against Sun in the Maldives. Initially, Hilton did not make much headway because there was some confusion as to which court in the Maldives is vested with the jurisdiction to deal with enforcement matters. In the midst of this confusion, Sun commenced an action in the Maldives essentially re-litigating the issues which had already been decided in the arbitration. Instead of immediately applying for anti-suit relief from the seat court, ie, the Singapore court, Hilton sought to challenge the Maldivian action on jurisdictional grounds. Hilton, however, failed in its jurisdictional challenge. Significantly, the Maldivian court, which invited the parties to submit on both jurisdiction and merits concurrently, issued a judgment awarding substantial damages to Sun. The findings were, in essence, the complete opposite of the findings by the arbitral tribunal. Notwithstanding the issuance of this judgment, Hilton sought to enforce the awards again, but this time, enforcement was denied on account of the Maldivian judgment. To add to the complication, Hilton has since appealed against the judgment. The appeal has been heard and is pending decision by the Maldivian appellate court.

It was against this background that Hilton applied for an anti-suit injunction before the High Court Judge below (“the Judge”). She correctly found that the Maldivian action was “already too far advanced to warrant an anti-suit injunction”. She instead granted an anti-enforcement injunction to prevent Sun from relying on the Maldivian judgment. In her view, the applicant’s delay went towards limiting the scope of injunctive relief granted, as opposed to denying any injunctive relief altogether in the light of the two Maldivian court judgments as well as the ongoing appeal.

The factual background

Sun was a resort operator that owned the Iru Fushi Beach & Spa Resort in the Maldives (“the Hotel”). Hilton was a Maldivian-incorporated company affiliated with a large hospitality company operating hotels and resorts worldwide.

In January 2009, Hilton and Sun began to discuss the possibility of entering into a management agreement.¹ In the course of these discussions, Hilton provided a set of projections on occupancy rates, room rates and gross operating profit. This was subsequently revised on 26 February 2009,² and this revised set of projections (“the Revised Projections”) was later relied on by Sun for its misrepresentation claims (see [11] below).

On 27 February 2009, the parties entered into a management agreement under which Sun agreed to let Hilton manage the Hotel (“the Management Agreement”). On 1 May 2009, the Hotel was handed over to Hilton, and on 1 July 2009, the Hotel officially opened for business under the management of Hilton.³

Between 2010 and 2012, the Hotel’s gross operating profit was 37% to 43.1% below the Revised Projections.⁴ Sun became dissatisfied with the performance of the Hotel as managed by Hilton.⁵

On 30 April 2013, Sun gave notice to Hilton that the Management Agreement was terminated with immediate effect. On 2 May 2013, Hilton accepted Sun’s termination on the basis that it was a wrongful repudiation of the Management Agreement, and it considered itself discharged from all further contractual obligations to Sun under the Management Agreement.

The arbitration proceedings

On 16 May 2013, Hilton commenced International Chamber of Commerce (“ICC”) arbitration proceedings (“the Arbitration”) pursuant to an arbitration agreement in the Management Agreement (cl 18.2). In a nutshell, Hilton contended that Sun was not entitled to terminate the Management Agreement and claimed damages for lost profit and for sums due and owing under the Management Agreement.

On 18 July 2013, the ICC Court of Arbitration fixed Singapore as the seat of the Arbitration.

The list of issues for the Arbitration were set out in the parties’ Terms of Reference, dated 27 September 2013. The focus of the Arbitration was on the two justifications that Sun provided for terminating the Management Agreement. First, Sun alleged that the Revised Projections constituted fraudulent misrepresentations. Secondly, Sun alleged that Hilton had breached its obligation to use the “skill, effort, care, diligence and expertise reasonably expected of a prudent international operator” (cl 3.1.3 of the Management Agreement) by failing to (a) maintain proper books and records (cl 7.1); (b) repair and maintain the Hotel (cl 6.1); and (c) maintain proper financial controls and corporate governance (cl 6.2).⁶ Hilton disputed all of the above.⁷

Both parties participated in the Arbitration, up until the date on which the Partial Award was delivered. The oral hearings took place during the period between 21 July 2014 and 31 July 2014.⁸ On 27 May 2015, the arbitral tribunal (“the Tribunal”) issued the Partial Award. The Tribunal dismissed Sun’s misrepresentation claims and found that Hilton was not in breach of the Management Agreement. The Tribunal awarded Hilton the sum of US$599,095.66 with interest for its pre-termination claims and £1,051,230.10 for legal and expert’s fees and expenses incurred in the Arbitration. It also awarded Hilton damages and costs of the Arbitration comprising the fees and expenses of the Tribunal and the ICC administrative expenses (both of which were to be reserved to a further award).⁹

Following the release of the Partial Award, counsel for Sun ceased to represent Sun in the Arbitration, and asked the Tribunal to direct further correspondence directly to Sun.¹⁰ On 10 June 2015, Hilton made submissions to the Tribunal on the quantum of damages that Sun should be liable for. Sun chose not to respond to Hilton’s submissions even after the Tribunal afforded Sun ample opportunities to do so.

On 17 August 2015, the Tribunal issued the Final Award ordering Sun to pay Hilton damages in the sum of US$20,945,000 plus interest, as well as US$342,500 for Hilton’s share of the fees and expenses of the ICC and the Tribunal.¹¹

The proceedings in the Maldives

We preface this section by noting that the proceedings in the Maldivian courts initially progressed along two different tracks before they converged in June 2017. The first related to proceedings by Hilton to enforce the Partial Award and the Final Award (collectively, “the Awards”), and the second related to a civil action commenced by Sun against Hilton. It is implicit in how we set out the facts below that we disagree with the suggestion made by counsel for Sun, Mr Andre Maniam SC, that all the proceedings in the Maldives were in fact bound up with the resisting of the enforcement of the Awards. We return to this point at [52] below.

The enforcement proceedings

In December 2015, Hilton commenced enforcement proceedings in the Large Property and Monetary Claims division of the Maldivian Civil Court (“the First Enforcement Proceedings”).¹²

Sun resisted Hilton’s application to enforce the Awards. In a Summary Statement dated 25 September 2016, Sun submitted that the Management Agreement was “a void and invalid/illegitimate agreement” because of the “deceit and misrepresentation” relating to the Revised Projections,¹³ and therefore the enforcement of the Awards would be contrary to Maldivian public policy under s 74(a)(2)(bb) of the Arbitration Act (Act No 10/2013) (Maldives) (“the Maldivian Arbitration Act”).¹⁴ In addition, Sun submitted that the court should award it US$19.2m as damages for fraudulent misrepresentation based on the Revised Projections.¹⁵

On 28 September 2016, Civil Court Judge Hathif Hilmy held that the matter was beyond the jurisdiction of the division, and that it should instead be brought directly to the Enforcement Division of the Civil Court.¹⁶ In his Summary Case Report, the judge also observed that none of the grounds listed for refusing recognition or enforcement of an arbitral award under s 74 of the Maldivian Arbitration Act requires a review of the merits.¹⁷

Hilton then proceeded to the Enforcement Division of the Maldivian Civil Court.¹⁸ However, on 29 November 2016, Civil Court Judge Hassan Faheem Ibrahim from the Enforcement Division declined jurisdiction, holding that enforcement proceedings ought to be commenced in the High Court of the Maldives instead.¹⁹

On or around 26 January 2017, Hilton appealed against Judge Hassan Faheem Ibrahim’s ruling.²⁰ It sought a determination that the Civil Court has the jurisdiction to enforce arbitral awards under the laws and regulations of the Maldives.²¹ On 14 February 2017, Sun submitted an Appeal Response Form. It did not dispute that the Civil Court ought to have jurisdiction to decide on the enforcement of the arbitral awards, but it...