Legal Update June 2014
SINGAPORE ARBITRATION UPDATE
An anti-suit injunction is an order by the Court that restrains a party from commencing or continuing with proceedings in a foreign country.
In this decision, the Singapore High Court considered the extent of its powers to grant anti-suit injunctions in support of an international arbitration (“IA”).
The defendants, a Swiss company commenced proceedings against the plaintiffs, a Singapore company, in the Swiss Courts. The plaintiffs alleged this was in breach of an arbitration agreement which designated arbitration in Singapore. The defendants on their part disputed that there was any arbitration agreement.
The Plaintiffs were granted an interim anti-suit injunction in aid of arbitration by the Singapore Courts. This prevented the defendants from continuing their action in Switzerland. The defendants applied to discharge the injunction, while the plaintiffs applied for the injunction to be made permanent.
In its judgment, the High Court found that the arbitration agreement relied on by the plaintiff was invalid. Accordingly, the plaintiff was precluded from relying on the arbitration agreement. Prakash J thus discharged the interim anti-suit injunction and consequently dismissed the plaintiff’s application for a permanent anti-suit injunction.
Nevertheless, Prakash J went on to consider whether the courts can grant permanent anti-suit injunctions to aid IAs.
Can the Singapore Courts grant permanent anti-suit injunctions to aid IAs in Singapore?
Prakash J observed that Section 12 read with Section 12A of the Singapore International Arbitration Act (IAA) clearly provides for interim injunctions in aid of IAs in and outside Singapore. However, the court’s powers under the IAA do not extend to granting permanent anti-suit injunctions. This power is conferred by Section 4 (10) of the Singapore Civil Law Act (CLA).
Prakash J was of the view that the Court’s general injunctive power under the CLA is the power which the Court generally exercises to grant permanent anti-suit injunctions in aid of local proceedings. Since no “clear language” exists in the IAA to circumscribe this general jurisdiction of the court to grant injunctive relief, the general injunctive powers under the CLA remain available to the Court. Accordingly, there is no reason why such power cannot be exercised to grant permanent anti-suit injunctions in aid of IAs in Singapore.
Can/Should the Singapore courts grant a permanent anti-suit injunction, to aid IAs outside Singapore?
Prakash J reasoned that the Courts already have power under the IAA to grant interim injunctions in aid of IAs outside Singapore. Thus, it would be “logical and consistent” for the Court to have general injunctive power under the wider-ranging legislation in Section 4 (10) CLA to grant permanent anti-suit injunctions in aid of IAs outside Singapore. However, she cautioned that “logic alone may not be a sufficient basis, to extend the court’s powers beyond what is in the IAA to parties who have agreed to arbitrate abroad” and that “strong reasons” must be present to justify intervention by the Singapore courts to support foreign IAs.
Prakash J however declined to express a concluded opinion on the issue.
Significance of the decision
The case is relevant to parties faced with litigation commenced in breach of an arbitration clause.
While the Court’s observations on anti-suit injunctions were made in passing, they remain persuasive and do provide clarification of the Court’s power to grant such injunctions in aid of international arbitrations in Singapore.
With regard to anti-suit injunctions in aid of international arbitrations outside Singapore, while the Court did not express a concluded opinion, the Judge’s reasoning does provide a legal basis for seeking such injunctions.
K. Murali Pany
JTJB Singapore Office