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( Source of the document: ICC Digital Library )
Associate, WongPartnership LLP
In a landmark decision in May 2017, the High Court of Singapore held that service on a foreign State of an order giving leave to enforce an arbitral award must be effected in accordance with the statutory procedure under the State Immunity Act.
In 2012, the plaintiffs and others commenced an arbitration against the Kingdom of Lesotho under Annex 1 of the Southern African Development Community (‘SADC’) Protocol on Finance and Investment. The arbitration concerned alleged breaches by Lesotho of obligations under the Treaty of the SADC and related protocols. The arbitration was administered by the Permanent Court of Arbitration and was seated in Singapore.
In 2016, the tribunal issued a partial final award on jurisdiction and merits, and thereafter a final Award on costs, in favour of the plaintiffs.
Lesotho applied to the High Court of Singapore to have the award on jurisdiction and merits set aside on the basis that the tribunal did not have jurisdiction over the claims in the arbitration. Following the hearing of Lesotho’s setting aside application, but prior to the handing down of judgment, the plaintiffs applied to enforce the award on costs in Singapore.
Under Singapore law, a party seeking to enforce an arbitral award must apply for an order granting leave to enforce the award (‘leave order’), and then serve the leave order on the respondent. The award may be enforced after the expiry of the prescribed period following service or, if the respondent applies to set aside the order within that period, after the application is finally disposed of.
Having obtained leave, the plaintiffs attempted to serve the leave order on Lesotho by service on its solicitors in the arbitration and in the pending setting aside proceedings in Singapore. Both sets of solicitors refused to accept service, and the plaintiffs applied for an order permitting substituted service of the leave order on Lesotho’s solicitors.
At first instance, Assistant Registrar Shaun Pereira rejected the plaintiffs’ application ( SGHCR 2). On appeal, the matter came before Kannan Ramesh J, who had also heard the setting aside application earlier.
In his landmark judgment ( SGHC 104), Kannan Ramesh J agreed with AR Pereira’s decision and held that service on a foreign State of an order granting leave to enforce an arbitral award must be effected in accordance with Section 14 of Singapore’s State Immunity Act (Cap 313, 2014 Rev Ed) (the ‘Act’).
Section 14(1) of the Act provides as follows:
[A]ny writ or other document required to be served for instituting proceedings against a State shall be served by being transmitted through the Ministry of Foreign Affairs, Singapore, to the ministry of foreign affairs of that State, and service shall be deemed to have been effected when the writ or document is received at that ministry.
Section 14(2) provides that any time for entering an appearance begins to run two months after the document is so received.
Kannan Ramesh J observed that Section 14 of the Act was in materially the same terms as Section 12 of the UK’s State Immunity Act 1978, and that the position in the UK, as decided in Norsk Hydro ASA v State Property Fund of Ukraine and others ( EWHC 2120 (Comm)), was that service on a State of an order granting permission to enforce an arbitral award must comply with the statutory procedure. He concluded that this was also the position in Singapore. In his view, the enforcement proceedings instituted by the plaintiffs were distinct, and the leave order was the document which was required to be served to institute the proceedings. As the plaintiffs had not complied with Section 14, their appeal was dismissed.
Separately, Kannan Ramesh J also clarified that Section 14 of the Act applied to service of process on States in general, notwithstanding any arguments of state immunity that may be made in the substantive application.
The Singapore Rules of Court (Cap. 322, R 5, 2014 Ed., in particular Order 69A Rule 6), previously left room for doubt as to the procedure for service of a leave order on a State. This decision has now made it clear that the relevant procedure is to be found in Section 14 of the Act, which must be complied with. The certainty in this regard is to be welcomed, and it is hoped that the necessary amendments will be made to the Rules of Court following this decision.
That said, investors seeking to enforce their hard-earned awards against a State may question whether these strict rules on service are truly necessary or appropriate. In practice, service through diplomatic routes may take months to achieve, with the investor having little control or visibility over the process. Service by registered post on the State’s Ministry of Foreign Affairs would inevitably be quicker, and serve the same objective of bringing the document to the notice of the person to be served. Further, it is doubtful whether diplomatic sensibilities would genuinely be offended merely because the document is sent through regular postal channels. Indeed, if an investor is permitted to commence an arbitration against the State by serving the Notice of Arbitration on the State directly (e.g. under the UNCITRAL Rules), it is hard to see how any greater offence would be caused by serving the necessary documents for enforcement of the resulting award in the same way.
It remains to be seen whether, in light of these considerations, Singapore and other jurisdictions will take a more liberal approach to service of leave orders on States.