Case Update: Court of Appeal grants permanent anti-suit injunction in R1 v Lonstroff

In an earlier post regarding the case of RI International Pte Ltd v Lonstroff AG[2014] SGHC 69, we wrote about how the Singapore High Court confirmed (albeit in obiter) that the Singapore courts have the power to grant a permanent anti-suit injunction in aid of international arbitration proceedings seated in Singapore. The High Court also expressed a tentative view that such powers would extend to foreign arbitration proceedings as well (see Case Update: Power of the Singapore Court to grant permanent anti-suit injunction in aid of arbitration proceedings).

However, on the facts of the case, the High Court held that there was in fact no arbitration agreement between the parties and that Lonstroff AG (“Lonstroff”) was therefore entitled to commence proceedings in the Swiss Court.

The Singapore Court of Appeal in R1 International Pte Ltd v Lonstroff AG, [2014] SGCA 56 has reversed the decision of the High Court. The Court of Appeal held that “a set of terms containing an agreement to arbitrate in Singapore, which is found in a detailed contract note that was sent by the Appellant [R1] to the Respondent [Lonstroff] shortly after the deal had apparently been agreed, was incorporated as part of the contract between the parties” (see paragraph [3]).

The Court of Appeal noted that “the arguments in the appeal did not focus on the power of the court to grant an anti-suit injunction to support the arbitration”. Nonetheless, the Court of Appeal did grant R1 the anti-suit injunction it had sought on the basis that there was a valid and binding arbitration agreement between the parties (see paragraph [77]).

Background and decision of the High Court Continue reading

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Singapore High Court rejects attempt to set aside an award for breach of an alleged agreed arbitral procedure

The Singapore High Court recently delivered another pro-arbitration, pro-enforcement decision in Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd, [2014] SGHC 220 (“Triulzi v Xinyi”).

The plaintiff’s i.e. Triulzi Cesare SRL (“Triulzi”) decision to challenge an adverse ICC award arose chiefly out of a dispute as to whether “witness statements” include expert reports/opinions and whether the parties had agreed not to file expert reports.

Triulzi argued that the Tribunal’s conduct during the arbitral proceedings gave rise to “a number of serious breaches…which had caused it prejudice”. The Singapore High Court summarised the alleged breaches as follows (see paragraph [17]):

“…(a) on the basis of Art 34(2)(a)(iv) of the Model Law in that the Tribunal’s decision to admit Xinyi’s expert witness statement was in breach of the parties’ agreed arbitral procedure (“Issue 1”);

(b) on the basis of Art 34(2)(a)(ii) of the Model Law and s 24(b) of the IAA in that Triulzi was, inter alia, not afforded a reasonable opportunity to be heard in respect of expert evidence (“Issue 2”); and

(c) on the basis of Art 34(2)(b)(ii) of the Model Law in that the decision of the Tribunal not to apply the United Nations Convention on the International Sale of Goods (“the CISG”) as the applicable law of the three contracts does not accord with the public policy of Singapore (“Issue 3”).”

The High Court considered that “the nub of the complaints for Issues 1 and 2 [were] the same in that they [were] challenges to the procedural orders or directions made in the course of the arbitral proceedings rather than a challenge to the making of the Award” (see paragraph [19]). The High Court also considered that Issue 1, and in particular, whether there was an agreement to dispense with expert evidence, was a threshold issue (see paragraph [70]).

This post will therefore focus on the challenge under Article 34(2)(a)(iv) of the Model Law given the novelty of this issue before the Singapore courts.

Background to ICC arbitration and Triulzi’s complaint Continue reading

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Singapore Law Gazette – Myanmar Draft Arbitration Bill to Further Bolster Foreign Investor Confidence

We are pleased to announce that the Singapore Law Gazette has just published an article that we recently wrote for them. The article Myanmar Draft Arbitration Bill to Further Bolster Foreign Investor Confidence is now available online.

The Myanmar Draft Arbitration Bill is an important next step in the liberalisation of the Myanmar economy and following its accession to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. The article explores some of the details of the Draft Arbitration Bill including certain novel features not found in the UNCITRAL Model Law.

We look forward to the Bill being enacted and the future developments on this front.

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Challenge to Arbitrator for Apparent Bias – What happens if the final award is rendered before the court determines challenge?

The recent Singapore High Court decision of PT Central Investindo v Franciscus Wongso and others and another matter, [2014] SGHC 190 involved a rare challenge to an arbitrator for apparent bias. The case also addressed a novel legal issue: what would happen when a party seeks to disqualify and remove a sole arbitrator, but that sole arbitrator then renders her/his final award before the courts determine the removal application? Continue reading

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SIAC-CII Bangalore Conference 2014

The SIAC, in conjunction with the Confederation of Indian Industry (CII) will be jointly conducting a conference on Protecting Business Interests through International Arbitration in an Evolving Indian Economy on Friday, 26th September 2014 in Bangalore, India. The conference will be held at Vivanta, By Taj in Bangalore, India from 9:30am to 6:00pm.

The conference will examine the challenges for businesses in an evolving Indian economy and arbitration as a mode of dispute resolution for Indian parties in various sectors. The detailed programme can be found here.

Olswang Partner, Jonathan Choo, will be presenting together with Vyapak Desai (Partner, Nishith Desai Associates) on “Does International Arbitration Work For The Technology Sector?” – a topic which will be of particular relevance to businesses in the thriving technology sector within Bangalore.

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Time limited obligations to engage in “friendly discussions” before proceeding to arbitration may be binding

[We are grateful for the following guest post from Charlotte Bamford, a Trainee Solicitor currently sitting in the Commercial Litigation Group of our London office.]

In Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm), the Commercial court considered whether a contractual clause requiring the parties to “first seek to resolve the dispute or claim by friendly discussion” before proceeding to arbitration was enforceable, and – if it was – whether it would constitute a condition precedent to issuing arbitration proceedings.  In a departure from the existing stance demonstrated by the courts, Teare J’s judgment proclaims that such an obligation is indeed both enforceable and likely to constitute a condition precedent.

The clause in question reads as follows: Continue reading

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Case Update: Unavailability of a particular source may operate to frustrate contracts

[Thanks to Daniel Jung, Associate, Olswang Asia LLP for a summary of the case and the first draft of this post]

We previously discussed  the case of Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd, [2013] SGHC 127 (see our previous post: “The Interpretation of Force Majeure Clauses and Frustration in Singapore”) in which the Singapore High Court examined the issues of frustration and the interpretation of force majeure clauses in relation to the so-called “Sand Ban” which affected the construction contract between parties (the “Supply Agreements”).

On the facts of that case, the High Court found that the plaintiff appellant, Alliance, had not been rendered incapable of performing its obligations under the Supply Agreements at the material time and furthermore, nothing had occurred that radically altered the obligations undertaken by Alliance under the Supply Agreements. The High Court, therefore, held that the Supply Agreements were not frustrated by the Sand Ban and, therefore, Alliance should not be discharged from its contractual obligation to supply concrete to Sato by way of the doctrine of frustration. Alliance appealed.

In Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd, [2014] SGCA 35, the Singapore Court of Appeal reversed the decision of the High Court.  The main issues in the appeal were whether Alliance was discharged from its contractual obligation to supply concrete to Sato by way of the doctrine of frustration and whether Alliance was in breach of the relevant contracts.

This post will only focus on the Court of Appeal’s holding on frustration. Continue reading

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Contract drafted without legal advice was unenforceable “piece of legal nonsense”

We enter into contracts, many of them in fact, every single day. At its heart, a contract is a series of legally enforceable promises and obligations between the parties to that agreement. It can be as simple as a sale and purchase of a pen from a stationery shop, or as complex as a long term sourcing contract for the provision of global IT services to an MNC. The length of a written contract will often reflect the complexity and importance of that particular contract.

What happens when contracts are badly drafted, for example, with key terms and conditions missing? Sometimes, the law does step in to assist the parties. One such example is the Sale of Goods Act (Cap. 393) which applies to any contract for the sale of goods in Singapore. In most instances, the failure to set out the purchase price of the goods would be fatal to an agreement between the parties. However, section 8 of the Sale of Goods Act provides that the Singapore courts are entitled to look to the course of dealings between parties or failing which, the buyer must pay a reasonable price for the goods.

However, the recent Singapore Court of Teo Chong Nghee Patrick and others v Han Cheng Fong and another appeal, [2014] SGCA 29, provides an important warning to commercial parties that the courts may not strain themselves to rescue parties from their bad drafting. Continue reading

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Case Update: Seat of Arbitration and Implied Choice of Governing Law of Arbitration Agreement

[Update: the paragraphs on the Singapore High Court’s analysis of the arbitration clause and its implications has been updated to more closely reflect the language at paragraph [17] of the Singapore High Court’s decision.] 

A party may rely on a valid and enforceable arbitration clause to obtain a stay of court proceedings commenced by the counterparty to the arbitration agreement. The applicant party may even obtain an anti-suit injunction to prevent a party to the arbitration agreement from commencing court proceedings (see Power of the Singapore Court to grant permanent anti-suit injunction in aid of arbitration proceedings as well as English Court has power to issue an anti-suit injunction in support of non-existent arbitration).

On the other hand, if an arbitration clause is defective, then a party may resist the stay application on the basis that the arbitration agreement is unenforceable or that the dispute between the parties does not fall within the scope of the arbitration agreement. These issues of enforceability and scope of the arbitration agreement are determined  by the governing law of the arbitration agreement (see The Laws Governing an Arbitration as well as the case of Piallo GmbH v Yafriro International Pte Ltd[2013] SGHC 260, which is analysed here).

What happens then when parties do not expressly provide for the governing law of the arbitration agreement? The legal analysis can get complicated.

The Singapore High Court case of FirstLink Investments Corp Ltd v GT Payment Pte Ltd and others, [2014] SGHCR 12 had to deal with these two issues concurrently. Continue reading

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Draft Arbitration Bill in Myanmar

We have written about Myanmar signing up to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 as well as the Investment Regime and Arbitration in Myanmar. A key issue we had noted was the lack of a legal framework for the enforcement of international arbitration awards,

“…Myanmar’s Arbitration Act 1944 only provides for domestic arbitration and does not provide a framework for the recognition and enforcement of foreign arbitral awards. We anticipate that the Arbitration Act 1944 will either have to be revised or a new international arbitration act enacted in order to make the New York Convention operative. It is still unclear when such an act will be enacted in Myanmar.” 

In recent developments, we have become aware that there is now a draft Arbitration Bill that is being considered by the Myanmar parliament. In the latest issue of their newsletter, Polastri Wint & Partners’ Sebastian Pawlita and Thitsar Khine discuss the draft Arbitration Bill and its implications for foreign investors.

The passing of the Arbitration Bill will be a positive step in bringing Myanmar into the international arbitration community. An arbitration act would also provide reassurance to foreign investors that there is the option of enforceable arbitration proceedings – a neutral, independent and impartial tribunal to settle their disputes with Myanmar commercial parties, with the resulting arbitration awards being enforceable in Myanmar.

Some points for commercial parties to note:

  1. The Arbitration Bill is based on the UNCITRAL Model Law on International Commercial Arbitration (1985) with an expanded definition of what constitutes an arbitration agreement.
  2. The definition of an arbitration award includes interim awards for purposes of enforcement by the Myanmar courts. However, unlike the Singapore International Arbitration Act (Cap. 143A) (“IAA”), theArbitration Bill is silent on whether orders and directions issued by the arbitral tribunal are also encompassed in the definition of an arbitration award.
  3. The appointing authority for arbitrator(s) is the “chief justice of the Union”. It remains to be seen if the Chief Justice will delegate his powers to any other person or institution.
  4. There is an entire section that deals with how the Myanmar courts should deal with claims involving insolvency situations or insolvency related claims in arbitration. The section provides that the Myanmar courts have a discretion to refer such cases to arbitration on application by a party.
  5. Finally, the draft Arbitration Bill explicitly provides that the Myanmar courts have the power to extend a time bar to commence arbitration, but only for arbitrations seated in Myanmar. There is no similar provision in the IAA or in the Model Law.

By way of explanation, in a previous post, we had discussed the English case of Wholecrop Marketing Ltd v Wolds Produce Ltd, [2013] EWHC 2079 (Ch) and how contractual time limit to commence arbitration operates as a time bar to claim itself.

There remains work to be done. Even after the draft Arbitration Bill is passed into law, the Myanmar courts will have to introduce its own rules and court procedures for parties who seek the assistance of the Myanmar courts in obtaining interim relief in aid of arbitration, or for the recognition and enforcement of international arbitration awards. We look forward to these further developments and will update our readers accordingly.

We are very grateful to Polastri Wint & Partners and Sebastian Pawlita for providing us with an English translation of the draft Arbitration Bill. Readers who wish to obtain an English translation of the Arbitration Bill should contact Sebestian Pawlita directly at sebastian@pwplegal.com.

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