Singapore Court of Appeal affirms tribunal power to decide appropriate relief by refusing to set aside remedies award (Bloomberry Resorts and Hotels Inc v Global Gaming Philippines LLC)

This article was first published by Lexis®PSL on 19 October 2021.

Arbitration Analysis: In refusing to set aside a remedies award issued in a Singapore-seated ad hoc arbitration pursuant to the UNCITRAL Arbitration Rules, the Singapore Court of Appeal affirmed the arbitral tribunal’s powers to decide the appropriate relief as a pragmatic solution to the realities of a case in Bloomberry Resorts and Hotels Inc and anor v Global Gaming Philippines LLC and anor [2021] SGCA 94. This confirmed the tribunal’s broad remedial powers, which are akin to a court’s powers to grant all reliefs and remedies at law and in equity.

What are the practical implications of this case?

This case demonstrates that an arbitral tribunal has the power to fashion its own remedial relief in accordance with the appropriate circumstances of a case. For instance, a tribunal has the power to order a party to take steps vis-à-vis third parties to accomplish justice. This includes making an order for a corporate entity to direct a related party (such as an agent or subsidiary) to take specified actions to facilitate relief.

A tribunal’s remedial powers are broad and it may grant all reliefs and remedies at law and in equity, as akin to a court (Art 28, UNCITRAL Model Law on Commercial Arbitration (“Model Law”)). However, the tribunal cannot enforce its own arbitral awards, orders and directions, which are strictly within the courts’ domain (ss 12(6) and 19, International Arbitration Act (Cap. 143A) (“IAA”)).

What was the background?

Background

The appellants, Bloomberry Resorts and Hotel Inc (“Bloomberry”) and Sureste Properties, Inc (“Sureste”) (collectively, the “appellants”) were the owners of the Solaire Resort & Casino. Sureste is wholly owned by the Bloomberry Resorts Corporation (“BRC”), of which Prime Metroline Holdings Inc (“PMHI”) is the majority shareholder.

The first respondent was Global Gaming Philippines LLC (“GGAM”), sole owner of the second respondent, GGAM Netherlands B.V. (“GGAM NL”) (collectively, the “respondents”). The parties entered into a Management Services Agreement (“MSA”) relating to the development and operation of the Solaire Casino.

The termination of the MSA led to the commencement of arbitration, pursuant to the UNCITRAL Arbitration Rules and seated in Singapore, by the respondents against the appellants. Pursuant to a Liability Award, the tribunal found that the appellants wrongfully terminated the MSA. The MSA granted GGAM the option to purchase up to 10% of BRC’s shares (the “Shares”), which GGAM exercised by signing an Equity Option Agreement (“EOA”). GGAM’s subsequent attempts to sell the Shares after the termination of the MSA were repeatedly thwarted by Bloomberry. The sale of the Shares became a material issue of the arbitration.

The Remedies Award

In issuing the Remedies Award, the tribunal ordered the appellants to pay the respondents:

(a) US$ 85.2m as damages for lost management fees;

(b) US$ 391,224 as damages for pre-termination fees and expenses; and

(c) costs of US$ 14.9m plus interest.

The tribunal also ordered the appellants to pay the full value of the Shares as of 9 December 2014 in exchange for GGAM’s transfer of the Shares to the appellants (the “Constructive Remedy”).

The Constructive Remedy has two distinct components. In the event the appellants fail to pay PHP 10bn to the respondents in exchange for the Shares (“Payment Component”), GGAM is entitled to sell the Shares on the market, and the appellants are to direct PMHI to facilitate the Share sale (“Direction Component”).

Issues

Failing to set aside the Liability Award, the appellants challenged the Remedies Award before the Singapore court. The issues before the Court of Appeal (“Court”) were as follows:

1. whether the Constructive Remedy should be set aside under Art 34(2)(a)(iii) of the Model Law or refused enforcement under Art 36(1)(a)(iii) on the basis that it concerns a matter falling beyond the scope of submission to the arbitration.

2. whether the Remedies Award should be set aside on the basis that there was a breach of natural justice under s 24(b) of the IAA or because the tribunal denied the appellants an opportunity to present their case under Art 34(2)(a)(ii) of the Model Law.

3. whether the portion of the Remedies Award awarding the respondents US$ 85.2m in damages for lost management fees should be set aside under Art 34(2)(b)(ii) and/or refused enforcement under Art 36(1)(b)(ii) of the Model Law on the basis that its enforcement is contrary to Singapore’s public policy.

What did the Court decide?

The Court dismissed the appellants’ appeal.

The Shares issue was not beyond the scope of submission to the arbitration

The Court held that the Shares issue was not beyond the scope of submission to the arbitration:

  • The Shares issue fell within the ambit of the MSA’s arbitration clause, which covers any dispute that “arises out of or is related to” the MSA.
  • The Shares issue was a point put before the tribunal from the beginning of the arbitration. The parties made arguments on the Shares issue and the tribunal came to a considered decision on the same. The appellants submitted to the tribunal’s jurisdiction to hear the Shares issue until after the issuance of the Liability Award against the appellants.
  • The tribunal fashioned the Constructive Remedy as a compensatory remedy to the respondents for the loss occasioned by the appellants’ interference with the Share sale. The tribunal was not seeking to enforce its prior orders by doing so.
  • The tribunal did not make any orders that purport to bind PMHI. The Direction Component is directed at the appellants to take various steps to facilitate the Shares sale (including by procuring PMHI’s cooperation). The tribunal’s orders did not affect PMHI’s rights to commence arbitral proceedings under the EOA, if PMHI so wished.

No breach of natural justice as the tribunal did not refuse to consider the appellants’ evidence

The Court held that there was no breach of natural justice vis-à-vis the Remedies Award:

  • The appellants had adequate opportunity to present their case.
  • The tribunal did consider the appellants’ evidence relating to alleged fraudulent transactions at Las Vegas Sands and the Solaire Casino. However, the tribunal was correct to consider the evidence only insofar as they related to the issue of remedies, and not liability, for which the tribunal was functus officio.
  • There was a paucity of evidence to suggest any concealment of documents by the respondents and/or their counsel to deceive the tribunal.

The Remedies Award was not contrary to Singapore’s public policy

The Court rejected the appellants’ contention that the Remedies Award was contrary to public policy:

  • The appellants contended that the grant of US$ 85.2m in damages to the respondents for lost management fees ought to be set aside/refused enforcement as compliance with the Award “would require Bloomberry to violate Philippine tax laws”.
  • The Court held that nothing in the Remedies Award prevented the appellants from performing their alleged duties as withholding agents and paying taxes due on the award sums under Philippine tax law. The appellants were also not responsible for any tax gross up and have no obligation to indemnify the respondents for any taxes due on their fees or damages awarded by the tribunal. A public policy objection must involve either exceptional circumstances which would justify the court in refusing to enforce the award, or be a violation of the most basic notions of morality and justice (per AJU v AJT [2011] 4 SLR 739 at [38]).

This article may be cited as Wei Ming Tan, “Singapore Court of Appeal affirms tribunal power to decide appropriate relief by refusing to set aside remedies award (Bloomberry Resorts and Hotels v Global Gaming Philippines)” (19 October 2021) https://singaporeinternationalarbitration.com/2021/10/19/singapore-court-of-appeal-affirms-tribunal-power-to-decide-appropriate-relief-by-refusing-to-set-aside-remedies-award-bloomberry-resorts-and-hotels-inc-v-global-gaming-philippines-llc/

About Wei Ming Tan

International Disputes Lawyer
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