The facts

The original dispute between parties arose out of a management agreement which contained an arbitration agreement. Hilton International Manage (Maldives) Pvt Ltd (‘Hilton’) commenced ICC arbitration proceedings in 2013, with Singapore fixed as the seat of the arbitration. Hilton was successful in the arbitration, with the arbitral tribunal issuing two awards against Sun Travels & Tours Pvt (‘Sun Travels’).

Following its success before the arbitral tribunal, Hilton took steps to enforce the awards in the Maldivian Civil Court and, at the same time, Sun Travels commenced a separate civil action against Hilton in Maldives seeking damages arising from claims similar to those it had raised as respondent in the arbitration (the ‘Maldivian action’). Hilton filed a procedural objection highlighting that Sun Travels' claims had already been heard and dismissed by the arbitral tribunal. The Maldivian judge hearing those claims indicated that he would determine the procedural matters at the same time as the merits of the case, and subsequently issued an order that Hilton pay damages to Sun Travels (the ‘Maldivian Judgment’).

Notwithstanding the issuance of this judgment, Hilton sought to enforce the awards before the Maldivian Civil Court, but enforcement was denied on account of the Maldivian Judgment. Hilton appealed against the Maldivian Judgment and applied for an anti-suit injunction before the seat court in Singapore.

At first instance, the Singapore court1 found that the Maldivian action was 'already too far advanced to warrant an anti-suit injunction' and instead granted an anti-enforcement injunction to prevent Sun Travels from relying on the Maldivian judgment.

Hilton's delay in applying for an anti-suit injunction

Sun Travels appealed against inter alia the High Court Judge's decision to grant the injunctive relief preventing Sun Travels from relying on the Maldivian judgment. The Court of Appeal thus had to decide whether, despite Hilton's delay in filing the application (which had resulted in the existence of a foreign judgment in favour of Sun Travels), injunctive relief against Sun Travels was nevertheless warranted.

The Singapore Court of Appeal2 acknowledged that Sun Travels, in commencing the Maldivian action and making claims that had already been dismissed in the arbitration, was attempting to 'rectify the outcome in the unfavourable Awards', which was an 'impermissible way of challenging the Awards'. However, the Court of Appeal found that it was Hilton's delay in seeking injunctive relief from the Singapore courts that indirectly led to the Maldivian court's refusal to enforce the awards (on account of the Maldivian judgement). This delay in seeking injunctive relief was significant and was ultimately a key factor in the Court of Appeal's denial of the anti-enforcement injunction.

In refusing to uphold the anti-enforcement injunction, the Court of Appeal highlighted the following:

  1. There is a need to exercise great caution in granting anti-enforcement injunctions – even more so as compared to anti-suit injunctions restraining ongoing court proceedings – because of the way they interfere with foreign proceedings where the foreign court has already issued a judgment.
  2. Therefore, in seeking anti-enforcement injunctive relief, it would not be sufficient to simply demonstrate the existence of factors which would justify an anti-suit injunction, e.g. a breach of a legal right, or vexatious or oppressive conduct.
  3. Exceptional circumstances tied to the notion of unconscionability would have to be shown to warrant an anti-enforcement injunction – i.e. where the judgment has been procured by fraud, or where the applicant lacked knowledge of the foreign proceedings until the delivery of the foreign court judgment.

Comity considerations particularly apply where there is a delay in seeking anti-suit relief

It is clear from the Singapore Court of Appeal's decision that where there has been a delay in seeking anti-suit relief, the court will have some hesitation in granting the injunction sought and the usual circumstances justifying an anti-suit injunction will not suffice. In other words, even if the applicant can show that there was a breach of an arbitration agreement or an exclusive jurisdiction clause, the court will nevertheless require additional evidence of unconscionable conduct if the injunction was not sought promptly and the foreign proceedings are too far advanced.

The reason for this is the Court of Appeal’s desire to give due regard to comity considerations. It examined a number of cases across the Commonwealth and highlighted that comity involves 'respect for the operation of different legal systems' and requires, where possible, 'the avoidance of wastage of judicial time and costs that would inevitably be occasioned by the abandonment of proceedings or when a party is precluded from relying on the judgment of the rival court'. Therefore, the objection to granting injunctive relief where an application has been filed with significant delay is based on the 'sound basis that to allow such an approach is not a sensible method of conducting curial business’.

The Court of Appeal also gave further guidance on the extent to which comity should be taken into account where there had been delay in the application for anti-suit relief:

  • The longer the delay and the more advanced the foreign court proceeding, the stronger the considerations of comity. This is because more time, effort and expense would be wasted by an abandonment of proceedings which would result from compliance with anti-suit injunction. Therefore, where a foreign judgment has already been delivered as a result of delay, exceptional circumstances would have to be shown in addition to the usual requirements for anti-suit relief.
  • Delay cannot be justified on the basis that jurisdictional objections are being raised in the foreign court. The rationale for this is to prevent the applicant from having two bites at the cherry – the court would not condone an applicant, who without seeking or making attempts to obtain injunctive relief, attempts to resist the foreign proceedings on jurisdictional grounds, only to seek an anti-enforcement injunction when its challenge fails.

The fact that Hilton was making jurisdictional objections in the Maldivian action did not excuse its delay. The Court of Appeal did not condone Hilton's conduct, which it termed the 'reverse of comity' in that such conduct, if encouraged, would allow litigants to participate in the foreign proceedings until the foreign court had reached a conclusion on jurisdictional matters and then seek injunctive relief if that decision was unfavourable.

At certain critical points during the pendency of the Maldivian action, Hilton should have been seized by the need to seek assistance from the Singapore courts to stop that action in its tracks, but instead Hilton chose to wait until there were two Maldivian judgments against it and a pending appeal. The Court of Appeal found that Hilton's application was simply too late and deemed it clear that Hilton was not planning to take any steps to seek injunctive relief in the seat court before the outcome of the Maldivian action was known. The Court of Appeal therefore found that Hilton's delay meant that 'the dispute [had] been taken out of the hands of the Singapore courts'.

Anti-enforcement injunctions call for special consideration

Given the significance of comity, the Court of Appeal justifiably found that where the foreign court has already issued a judgment, the general position should be that any application to prevent a party from relying on or enforcing that foreign judgment should generally be refused on the basis that such an injunction would necessarily not have been sought promptly.

In addition to the comity considerations mentioned above, the Court of Appeal found that there are other considerations underpinning the need for caution in anti-enforcement injunction cases:

  • The existence of such an anti-enforcement injunction (if enforced in other countries) would denude foreign courts of their prerogative to consider whether the judgment in question should be recognised or enforced.
  • An anti-enforcement injunction would be an indirect interference with the execution of the judgment in the country of the court which pronounced the judgment and where one can expect the judgment to be obeyed.

In effect, granting an anti-enforcement injunction would be comparable to 'nullifying the foreign judgment or stripping the judgment of any legal effect when only the foreign court can set aside or vary its own judgments'.

Given the inherent nature of the anti-suit injunction as an equitable relief, the Court of Appeal found that the circumstances in which an anti-enforcement injunction may be granted and the impact that an applicant's delay has on the court's discretion to award such an injunction must be informed by equitable considerations. Such equitable considerations would include comity, which was one of the factors that the Court of Appeal considered when granting equitable relief.

The Court of Appeal also identified an additional requirement to show that there are exceptional circumstances that would justify the granting of such equitable relief. Such recognised exceptions include cases of fraud and cases where the applicant had no knowledge that the judgment was being sought until after the judgment was rendered.

Implications

At first, sympathies lie with Hilton when one considers the unenviable bind in which Hilton found itself in despite the fact that it had two arbitral awards in hand. One can also understand the decisions that Hilton chose to take in the Maldivian action in challenging the jurisdiction of the Maldivian court on the basis that the same issues had been litigated in the prior arbitration instead of turning to the seat court for assistance in the first instance.

However, when one considers that Hilton's conduct had permitted the Maldivian action to advance to the point where there were two judgments against it and a pending appeal, it becomes clear that the Singapore court could not simply disregard the findings rendered by the foreign court - particularly when Hilton could have sought on multiple occasions assistance from the Singapore courts and chose not to. Indeed, the Singapore Court of Appeal highlighted the instances at which it ought to have been clear to Hilton that urgent injunctive relief was required from the seat court, i.e. (i) when the Maldivian court directed that the jurisdictional matters and the merits of the case be heard together, or (ii) as soon as the Maldivian judgment was issued.

This judgment from Singapore's highest court is a cautionary tale to parties to avoid trapping themselves in foreign litigation, particularly when the issues being litigated are the same as those in the prior arbitration proceedings. A party resisting entrenched foreign proceedings (e.g. on jurisdictional grounds), especially those that run to an advanced stage, may well find itself on the back foot despite a favourable arbitral award.


1
See Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd [2018] SGHC 56 (14 March 2018), available at https://www.singaporelawwatch.sg/Portals/0/Docs/Judgments/[2018]%20SGHC%2056.pdf.

2
Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd [2019] SGCA 10, available at https://www.singaporelawwatch.sg/Portals/0/Docs/Judgments/2019/[2019]%20SGCA%2010.pdf.