IN THE SINGAPORE INTERNATIONAL COMMERCIAL COURT
OF THE REPUBLIC OF SINGAPORE
[2022] SGHC(I) 9
Originating Summons No 6 of 2022 (Summons No 5882 of 2021)
Between
| 1) 2) 3) | The Government of the Lao People’s Democratic Republic San Marco Capital Partners LLC Kelly Gass ... Plaintiffs |
And
| (1) | Sanum Investments Limited | |
| (2) | Lao Holdings NV | ... Defendants |
Originating Summons No 7 of 2022
Between
| (1) | Sanum Investments Limited | |
| (2) | Lao Holdings NV | ... Plaintiffs |
And
| (1) | San Marco Capital Partners LLC |
|
| (2) | Kelly Gass | |
| (3) | The Government of the Lao People’s Democratic Republic |
... Defendants |
[Arbitration — Award — Recourse against award — Setting aside]
[Arbitration — Enforcement]
[Page i]
Singapore International Commercial Court — Originating Summons No 6 of
2022 (Summons No 5882 of 2021) and Originating Summons No 7 of 2022
Philip Jeyaretnam J, Vivian Ramsey IJ and Douglas Jones IJ
18 May 2022
1 June 2022
Judgment reserved.
Philip Jeyaretnam J (delivering the judgment of the court):
1 This matter principally concerns an arbitral tribunal’s invocation of the
doctrine of collateral estoppel under New York law, which precluded the
reopening of certain issues in a Singapore seated arbitration. We consider, in
accordance with established case law, that even if the tribunal had been wrong
to do so, this would amount to no more than an error on the merits of the claim,
and would not ground any challenge to the award. In this judgment, we explain
why we have concluded this, as well as deal with arguments put forward to resist
enforcement of part of the costs order made by the tribunal.
[Page 2]
2 Lao Holdings NV (“LH”) and Sanum Investments Ltd (“Sanum”)
(collectively, the “Investors”) took out SIC/OS 7/2022 (“OS 7”) to set aside an
arbitral award (the “Award”) which found in favour of the Government of the
Lao People’s Democratic Republic (“GOL”), San Marco Capital Partners LLC
(“SM”) and Kelly Gass (“Gass”) (collectively, the “GOL Parties”). The
Investors also filed a related application in SIC/OS 6/2022 (“OS 6”), HC/SUM
5882/2021 (“SUM 5882”), to set aside an ex parte order of court (HC/ORC
4993/2021 (“ORC 4993”)) which granted the GOL Parties leave to enforce the
Award.
3 OS 7 and SUM 5882 are continuations of a long-running dispute relating
to the Investors’ investments in the Lao People’s Democratic Republic
(“Laos”), which has been the subject of numerous decisions from the Singapore
courts: see, eg, Government of the Lao People’s Democratic Republic v Sanum
Investments Ltd [2015] 2 SLR 322, Sanum Investments Ltd v Government of the
Lao People’s Democratic Republic [2016] 5 SLR 536, Sanum Investments Ltd
v ST Group Co, Ltd and others [2020] 3 SLR 225, ST Group Co Ltd and others
v Sanum Investments Ltd and another appeal [2020] 1 SLR 1 and Lao Holdings
NV v Government of the Lao People’s Democratic Republic and another matter
[2021] 5 SLR 228 (“Lao Holdings (HC)”). The lengthy and fraught history
between parties has been described at length in these prior decisions, and we
will only set out the salient facts which provide context to and have a bearing
on the present applications.
4 Sanum, a company incorporated under the laws of the Macau Special
Administrative Region of China (“Macau”), is a wholly-owned subsidiary of
[Page 3]
LH. LH is incorporated in the Netherlands.1 Both companies made investments
in gaming assets (the “Gaming Assets”) in Laos. The Gaming Assets included
the Savan Vegas Hotel and Casino Complex (“SV Casino”).2
5 Prior to events in 2015, the SV Casino was operated by a Laotian joint
venture company, Savan Vegas and Casino Co. Ltd. (“SVCC”), which was 80%
owned by Sanum and 20% owned by GOL.3 Following the breakdown of the
relationship between GOL and the Investors, GOL appointed SM in 2015 to
manage, sell and market the Gaming Assets, including the SV Casino. Gass is
the President of SM.4
6 On 14 August 2012, the Investors each commenced arbitration against
GOL pursuant to a PRC-Laos bilateral investment treaty and a Laos-
Netherlands bilateral investment treaty respectively. The arbitral proceeding
between Sanum and GOL was administered by the Permanent Court of
Arbitration (“PCA”) while the arbitral proceeding between LH and GOL was
administered by the International Centre for Settlement of Investment Disputes
(“ICSID”). These arbitrations are collectively referred to as the “BIT
Arbitrations”.5
1 Case Management Bundle dated 14 March 2022 (“CMB”) at p 238 (John K. Baldwin’s ↩
1st Affidavit dated 12 November 2021 (“JKB-1”) at para 2).
2 CMB at p 241 (JKB-1 at para 12). ↩
3 CMB at p 241 (JKB-1 at para 12). ↩
4 CMB at pp 243–244 (JKB-1 at para 22), pp 516–530 (the “Management and Sales and ↩
Marketing Contract”) and p 1243 (Tan Yuan Kheng’s 1st Affidavit dated 20 December
2021 (“TYK-1”) at para 10).
5 CMB at p 241 (JKB-1 at para 13). ↩
[Page 4]
7 To put an end to these disputes, a settlement deed (the “Settlement
Deed”) was executed on 15 June 2014 under which the Investors agreed to take
steps to sell the Gaming Assets, including the SV Casino, to a third party.6 The
sale was to be effected within ten months after 15 June 2014 (ie, by 15 April
2015), failing which a third-party gaming operator could be appointed to (a)
manage and operate the Gaming Assets and (b) complete the sale.7 The
Settlement Deed also provided for the suspension of the BIT Arbitrations and
their revival on certain conditions.8
8 The Investors failed to sell the Gaming Assets by 15 April 2015.
Pursuant to the Settlement Deed, GOL entered into a contract (the “Contract”)
with SM on 16 April 2015 for the management, sale and marketing of the
Gaming Assets. The Contract, which was effective from 15 March 2015, was
signed by Gass on behalf of SM.9 On 28 September 2015, GOL issued a decree
transferring all the assets owned by the SVCC to Savan Lao, a new entity that
was solely owned by GOL, in order to accomplish the sale of the SV Casino.
The SV Casino was eventually sold to Macau Legend on 30 August 2016 for
US$42 million.10
9 The Settlement Deed failed to resolve parties’ differences and itself
spawned protracted legal battles in multiple forums.
7 CMB at pp 358–359 (Clauses 11–12). ↩
8 CMB at pp 364–365 (Clauses 31–32). ↩
9 CMB at p 243–244 (JKB-1 at para 22), pp 516–530 (the Contract) and p 1243 (TYK- ↩
1 at para 10).
10 CMB at p 244 (JKB-1 at para 23) and p 272 (SIAC 414 Award at para 81). ↩
[Page 5]
(a) On 11 August 2014, GOL initiated SIAC Arbitration Case No.
ARB 143/14/MV (the “Prior SIAC Arbitration”) against the Investors
for alleged breaches of the Settlement Deed. In turn, the Investors
advanced counterclaims against GOL for allegedly breaching the
Settlement Deed.11 SM and Gass were not parties in this arbitral
proceeding.12 A final award (the “Prior SIAC Award”) was rendered on
29 June 2017. By a majority, the tribunal found in favour of GOL and
dismissed the Investors’ counterclaims in their entirety.13 On 2 August
2019, the Prior SIAC Award was enforced as a judgment of the
Singapore court.14
(b) On 3 May 2016, the Investors commenced a lawsuit against SM
and Gass in the United States District Court for the District of Delaware
(the “Delaware District Court”), asserting, inter alia, claims for breach
of fiduciary duties in the course of their management of the SV Casino
(the “Delaware Action”).15 On 21 June 2016, SM and Gass filed a
motion to dismiss the Delaware Action on the ground that the disputes
should be submitted to SIAC arbitration in Singapore pursuant to the
Settlement Deed.16 In support of their motion to dismiss, Gass filed a
declaration which contained the following statement:17
11 CMB at p 1243 (TYK-1 at para 9). ↩
12 CMB at p 243 (JKB-1 at para 20). ↩
13 CMB at p 243 (JKB-1 at para 21), p 1244 (TYK-1 at para 13) and pp 547–719 ↩
(dissenting opinion at 686–719).
14 CMB at p 239 (JKB-1 at para 7), p 243 (JKB-1 at para 21) and p 1244 (TYK-1 at para ↩
13).
15 CMB at p 244 (JKB-1 at para 24) and p 1244 (TYK-1 at para 12). ↩
16 CMB at pp 22–23 (Gerui Lim’s 1st Affidavit dated 16 August 2021 (“GL-1”) at para ↩
14) and pp 436–471.
17 CMB at p 380 (Clause 29). ↩
[Page 6]
I, in my individual capacity and as the sole member and
manager of [SM], consent and submit to SIAC
arbitration in Singapore, where [the Investors] agreed to
arbitrate disputes pursuant to the Settlement Deed.
The Delaware District Court granted SM’s and Gass’ motion to dismiss
on 12 July 2017, holding that the Investors’ claims were intertwined with
the Settlement Deed, which required those claims to be submitted to
arbitration.18
(c) The BIT Arbitrations were subsequently revived on 15
December 2017, resulting in two arbitral awards each rendered by the
respective PCA and ICSID tribunal. These two arbitral awards are
presently the subject of setting aside proceedings before the Singapore
courts: see Lao Holdings (HC) (which is currently on appeal).
These form the backdrop of SIAC Arbitration Case No. ARB 414/17/QW
(“SIAC Arbitration 414”), which gave rise to the Award in question.
10 SIAC Arbitration 414 was commenced by the Investors on 19 December
2017. In this proceeding, the Investors asserted claims for breach of fiduciary
duty, breach of contract and conversion of property against SM and Gass.19
11 GOL filed an application for joinder on 3 February 2018. This
application was granted by the Court of Arbitration of the SIAC on 9 April 2018
(despite the Investors’ opposition) and GOL was thereafter joined as the third
respondent.20 After the tribunal (the “Tribunal”) for SIAC Arbitration 414 was
18 CMB at p 1244 (TYK-1 at para 12) and pp 384–393. ↩
19 CMB at p 1244 (TYK-1 at para 14) and pp 411–422. ↩
20 CMB at p 1244 (TYK-1 at para 15). ↩
[Page 7]
constituted, the Investors raised a jurisdictional objection to the joinder of GOL,
claiming that the Tribunal did not have jurisdiction over GOL. This was met
with opposition from SM and Gass.21 After hearing both sides, the Tribunal
issued its decision on 25 October 2018 concluding that it had jurisdiction over
GOL.22
12 A procession of pleadings followed:
(a) the Investors filed their Statement of Claim on 29 March 2019;23
(b) the GOL Parties filed their Statement of Defence on 16 October
2019;24
(c) the Investors filed their Reply on 10 April 2020;25 and
(d) the GOL Parties filed their Rejoinder on 22 May 2020.26
13 In between the filing of the Statement of Claim and Statement of
Defence, the GOL Parties filed an application for security for costs on 22
21 CMB at pp 398–399 (Tribunal’s Decision on Jurisdiction over GOL at Section II and ↩
at para 18).
22 CMB at p 24 (GL-1 at para 19) and pp 395–409 (Tribunal’s Decision on Jurisdiction ↩
over GOL).
24 CMB at pp 816–886 (SM’s and Gass’ Statement of Defence) and pp 887–930 (GOL’s ↩
Statement of Defence).
26 CMB at pp 996–1059 (SM’s and Gass’ Rejoinder) and pp 1060–1069 (GOL’s ↩
Rejoinder).
[Page 8]
August 2019.27 The Investors filed their response on 5 September 2019.28 On 23
September 2019, the Tribunal denied the application for security for costs.29
14 The merits hearing of SIAC Arbitration 414 took place from 26 July to
1 August 2020,30 and issues of costs were dealt with thereafter:
(a) On 25 September 2020, three sets of costs submissions – SM’s
and Gass’ costs submissions, GOL’s costs submissions and the
Investors’ costs submissions – were filed.31
(b) On 16 October 2020, the GOL Parties submitted a collective
reply submissions on costs, and so did the Investors.32
(c) On 31 May 2021, the Tribunal invited parties to update their
costs figures, and parties gave their replies on 7 June 2021.33
15 On 9 June 2021, the Tribunal closed the proceedings.34
16 On 11 August 2021, the Tribunal issued the Award dismissing the
Investors’ claims in their entirety.35 In particular, the Tribunal dismissed the
30 CMB at p 24 (GL-1 at para 20), p 267 (SIAC 414 Award at para 48). ↩
31 CMB at pp 1540–1547 (SM’s and Gass’ costs submissions), pp 1549–1553 (GOL’s ↩
costs submissions) and pp 1555–1570 (Investors’ costs submissions).
32 CMB at pp 1572–1580 (GOL Parties’ reply costs submissions) and pp 1582–1606 ↩
(Investors’ reply costs submissions).
33 CMB at pp 1608–1616; CMB at pp 269–270 (Award at paras 62–63). ↩
34 CMB at p 270 (Award at para 64). ↩
35 CMB at p 24 (GL-1 at paras 21–22) and p 352 (Award at para 350(i)). ↩
[Page 9]
Investors’ claims against SM and Gass for breach of fiduciary and contractual
duties, and a portion of their conversion claims (the “Estopped Claims”), on the
basis that they were barred by the defence of collateral estoppel under New York
law.36 The remaining conversion claims were dismissed on separate grounds.37
As for costs, the Tribunal ordered the Investors to pay USD513,655.00 in costs
to GOL, representing approximately 60% of GOL’s legal costs and
disbursements (the “GOL Costs Order”).38 The Tribunal also made other orders,
but they are not material to the present applications.39
17 On 16 August 2021, the GOL Parties filed HC/OS 834/2021 (which was
later converted to OS 6) seeking leave to enforce the Award,40 and on 2
September 2021, an ex parte order of court (ORC 4993) granted the GOL
Parties leave to enforce the Award.41
18 On 12 November 2021, the Investors filed HC/OS 1158/2021 (which
was later converted to OS 7) to set aside the Award in its entirety or in part,42
and on 20 December 2021, the same two parties filed SUM 5882 to set aside
ORC 4993.43
36 CMB at pp 320 and 341–342 (Award at paras 246, 318 and 322). ↩
37 CMB at pp 339–342 (Award at paras 311–323). ↩
38 CMB at p 352 (Award at para 350(iii)(b)). ↩
39 CMB at p 352 (Award at para 350). ↩
[Page 10]
19 The Investors sought orders for the anonymisation and redaction of
parties’ identities. Having invited written submissions from parties, we decided
on 18 May 2022 to dismiss those prayers. We considered that the dispute was,
in broad terms, already in the public domain, including by virtue of various prior
court proceedings.
20 In OS 7, the Investors seek to set aside the Award, in whole or in part,
on two grounds:44
(a) The Investors were not given a reasonable opportunity to be
heard on their claims against SM and Gass (Article 34(2)(a)(ii)
UNCITRAL Model Law on International Commercial
Arbitration (the “Model Law”) and/or s 24(b) International
Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”)).
(b) The Award was in conflict with Singapore’s public policy of
ensuring that parties to a dispute have fair access to justice
(Article 34(2)(b)(ii) Model Law).
21 The Investors’ case on both grounds are predicated on the same factual
substratum, on the basis that an award that is liable to be set aside for a breach
of natural justice under s 24(b) IAA necessarily falls within the wider public
policy ground in Article 34(2)(b)(ii) Model Law.45 It is the Investors’ case that
the Tribunal, on the erroneous basis that the doctrine of collateral estoppel under
New York law barred the Estopped Claims, failed to consider the merits of those
44 Investors’ Written Submissions dated 29 April 2022 (“Investors’ Written ↩
Submissions”) at para 5.
45 Investors’ Written Submissions at paras 34 and 51. ↩
[Page 11]
claims. This failure, according to the Investors, is a clear violation of their
respective rights to be heard.46 Had the Tribunal considered the merits of the
Investors’ Estopped Claims, the Award could reasonably have resulted in their
favour.47
22 The GOL Parties in turn contend that the Investors’ case on a breach of
natural justice is a thinly disguised complaint about the merits of the Tribunal’s
finding that the doctrine of collateral estoppel under New York law was
established.48 That doctrine was properly submitted to the Tribunal for
determination as a substantive defence, and the Tribunal did not breach natural
justice in the course of coming to its decision.49 In support of its case, the GOL
Parties cite the Court of Appeal’s decision in BTN and another v BTP and
another [2021] 1 SLR 276 (“BTN”).50 In reply, the Investors submit that this
court is entitled to examine the Tribunal’s reasons for not addressing an
important pleaded issue when assessing whether there had been a breach of the
right to be heard,51 and in this regard, the Tribunal’s reasons for shutting out the
Estopped Claims without considering the Investors’ submissions were not
reasonable and fair because there was no basis for the Tribunal to find that the
46 Investors’ Written Submissions at paras 36 and 46; Investors’ Reply Submissions dated ↩
13 May 2022 (“Investors’ Reply Submissions”) at paras 2(a)–(c).
47 Investors’ Written Submissions at paras 47–50. ↩
48 GOL Parties’ Written Submissions dated 29 April 2022 (“GOL Parties’ Written ↩
Submissions”) at para 37.
49 GOL Parties’ Written Submissions at paras 39–40. ↩
50 GOL Parties’ Written Submissions at paras 55–60. ↩
51 Investors’ Reply Submissions at paras 3–9. ↩
[Page 12]
Estopped Claims were barred.52 The Investors also contend that the decision in
BTN is distinguishable.53
23 As regards the Investors’ case on the public policy ground, the GOL
Parties make three points. First, there was no denial of the Investors’ right of
access to justice: the Tribunal found that the requirements for the doctrine of
collateral estoppel were satisfied because the determinative issues in SIAC
Arbitration 414 had already been considered and decided against the Investors
by another arbitral tribunal in a previous arbitral proceeding, ie, the Prior SIAC
Arbitration.54 Secondly, the Investors’ submission on the correctness of the
Tribunal’s decision is beyond the remit of the public policy ground under
Article 34(2)(b)(ii) Model Law.55 Finally, the Investors’ case fails to identify the
public policy allegedly breached by the Award, and in any event, the Tribunal’s
application of New York collateral estoppel law to dismiss the Investors’
claims, being a matter of foreign law and a specific finding of fact, would not
engage Singapore’s public policy.56
24 Turning now to SUM 5882, the Investors rely on the same two grounds
above to resist enforcement of the Award, along with the following additional
grounds which attacked the GOL Costs Order:57
(a) The Investors were unable to present their case on the GOL Costs
Order (s 19 IAA read with Article 36(1)(a)(ii) Model Law).
52 Investors’ Reply Submissions at paras 10–13. ↩
53 Investors’ Reply Submissions at para 12. ↩
54 GOL Parties’ Written Submissions at paras 79–80. ↩
55 GOL Parties’ Written Submissions at para 81. ↩
56 GOL Parties’ Written Submissions at paras 83–85. ↩
57 Investors’ Written Submissions at paras 6 and 53–54. ↩
[Page 13]
(b) The enforcement of the GOL Costs Order would be contrary to
the public policy of Singapore (s 19 IAA read with Article
36(1)(b)(ii) Model Law).
(c) The arbitral procedure was not in accordance with parties’
agreement (s 19 IAA read with Article 36(1)(a)(iv) Model Law).
(d) The GOL Costs Order was a decision on a matter beyond the
scope of the submission to arbitration (s 19 IAA read with Article
36(1)(a)(iii) Model Law).
25 On the first ground, the Investors claim that they were not given the
opportunity to address a belated assertion made in the GOL Parties’ reply costs
submissions dated 16 October 2020, viz, GOL was obliged to pay its attorneys
above the fee cap if it were “able to obtain and/or collect costs from the
[Investors]” [emphasis added].58 The Investors complain that this assertion
relating to GOL’s fee arrangement (“GOL’s Fee Arrangement”) was raised for
the first time, and represented a marked departure from the original position
taken in GOL’s costs submissions dated 25 September 2020, viz, GOL would
be liable for above-cap fees “if awarded and collected by piercing the corporate
veil” [emphasis added].59 In the Investors’ view, the Tribunal should have
therefore rejected this belated assertion, or alternatively, indicated that it
intended to accept or rely on that assertion and request for an additional response
from the Investors. These the Tribunal did not do, and they were taken by
58 CMB at p 1578 (GOL Parties’ reply costs submissions at para 14). ↩
59 Investors’ Written Submissions at paras 61–62; CMB at p 1550 (GOL’s costs ↩
submissions, footnote 1).
[Page 14]
surprise when the Tribunal accepted GOL’s belated assertion without having
parties address it on this issue.60
26 Against this, the GOL Parties submit that the Investors did not inform
the Tribunal that there was anything new or unexpected in the reply costs
submissions, or request for a third round of costs submissions.61 Moreover, the
Investors were able to and did in fact present their objections regarding GOL’s
Fee Arrangement. The Tribunal was not required to “warn” the Investors that
they were going to reject their argument on GOL’s Fee Arrangement.62 In the
GOL Parties’ view, the Investors are merely attacking the merits of the SIAC’s
decision to award GOL costs.63 In reply, the Investors contend that GOL’s
belated assertion was made so late in the proceedings that until the Award was
issued, there was no way of knowing whether the Tribunal had accepted that
assertion. Hence, the duty to object to any failure of process or give fair
intimation to the Tribunal did not arise.64
27 In relation to their second ground on public policy, the Investors rely on
the same alleged breach of their respective rights to be heard,65 and additionally
assert that the GOL Costs Order made pursuant to GOL’s Fee Arrangement is
contrary to Singapore’s laws and public policy on maintenance and champerty.66
This prompted a response from the GOL Parties, who contend that GOL’s Fee
60 Investors’ Written Submissions at paras 61(e) and 62–63; Investors’ Reply ↩
Submissions at para 26.
61 GOL Parties’ Written Submissions at paras 127(f) and 131. ↩
62 GOL Parties’ Written Submissions at paras 128–130. ↩
63 GOL Parties’ Written Submissions at para 133. ↩
64 Investors’ Reply Submissions at para 27; Oral hearing on 18 May 2022. ↩
65 Investors’ Written Submissions at para 72. ↩
66 CMB at p 1433 (JKB-1 at para 23). ↩
[Page 15]
Arrangement is not champertous and does not savour of maintenance. Rather,
it ensured that GOL, which represent one of the world’s poorest sovereign
states, had access to justice to defend itself against the Investors’ legal
proceedings.67 Even if there were some uncertainty as to whether the GOL Costs
Order was permissible from a public policy standpoint, the GOL Parties submit
that the degree and consequences of any potential violation would hardly shock
the conscience, and the court, when weighing the pro-enforcement policy
against the public policy allegedly violated, should give effect to the former.68
28 As to their third ground, the Investors complain that the GOL Costs
Order obliged the Investors to bear a part of GOL’s fees which had not been
incurred by GOL. This is allegedly contrary to parties’ agreed arbitral procedure
as encapsulated in r 37 of the SIAC Rules of the Singapore International
Arbitration Centre (6th edition, 1 August 2016) (the “SIAC Rules”). Rule 37
only permits the Tribunal to order that the legal or other costs which have been
incurred by a party be paid by another party, and according to the Investors, that
means that the Tribunal can only order costs which the former party has incurred
a liability or obligation to pay.69
29 The GOL Parties on the other hand submit that the procedural agreement
as to costs does not limit the Tribunal’s authority to order only costs that have
been “incurred” in the narrow and technical sense as advocated for by the
Investors.70 Even if the Investors’ interpretation of r 37 of the SIAC Rule were
correct, the GOL Costs Order would not be contrary to r 37. The Tribunal was
67 GOL Parties’ Written Submissions at paras 138–143. ↩
68 GOL Parties’ Written Submissions at paras 144–147. ↩
69 Investors’ Written Submissions at paras 65–69. ↩
70 GOL Parties’ Written Submissions at paras 96–99. ↩
[Page 16]
correct in finding that GOL had incurred all the costs awarded in the GOL Costs
Order, and the Investors cannot reopen the Tribunal’s factual ruling on its
merits.71 In response to this particular point, the Investors claim that the
language of Article 36(1)(a)(iv) of the Model Law makes it plain that the court
must come to its own view on whether the arbitral procedure was in accordance
with the parties’ agreement, and this entails considering whether costs claimed
by GOL have in fact been incurred. The Investors also remark that it would be
illogical for this Court to not be able to review the Tribunal’s findings of fact
made in the course of applying the agreed procedure: if this were the case,
procedural challenges would virtually never succeed since the courts would
have to mechanically defer to the tribunals’ application of the procedural rules.72
30 The Investors’ fourth ground is connected to the third: the Tribunal’s
jurisdiction was limited to awarding only costs that were incurred by a party,
but it exceeded its jurisdiction by awarding costs that cannot be said to have
been incurred by GOL.73 In response to this, the GOL Parties reiterate that the
Tribunal was right in finding that GOL had incurred all the costs awarded in the
GOL Costs Order, and add that in any case, an error of fact and/or law is
insufficient to take the Tribunal outside the scope of submission. Further, and
taking a broader view of the matter, the issue of costs was expressly pleaded by
parties and GOL’s Fee Arrangement was put into issue by the Investors
themselves.74
71 GOL Parties’ Written Submissions at paras 93 and 100–114. ↩
72 Investors’ Reply Submissions at para 32. ↩
73 Investors’ Written Submissions at paras 70–71. ↩
74 GOL Parties’ Written Submissions at paras 122–125. ↩
[Page 17]
31 Therefore, the issues which the present applications raise are:
in relation to the Estopped Claims:
in relation to the GOL Costs Order:
[Page 18]
32 Under s 24(b) of the IAA, an arbitration award may be set aside if a
breach of the rules of natural justice occurred in connection with the making of
the award, by which the rights of any party have been prejudiced. As set out by
the Court of Appeal in Soh Beng Tee & Co Pte Ltd v Fairmount Development
Pte Ltd [2007] 3 SLR(R) 86 at [29], the party who challenges the award on this
ground must: (a) identify the rule of natural justice which was breached; (b)
establish how the rule was breached; (c) establish the way the breach was
connected to the making of the award; and (d) show that the breach prejudiced
its rights. The rule said to have been breached in the present case is the right to
be heard. This right requires each party to have a “full opportunity” of
presenting its case, subject to considerations of reasonableness and fairness. The
result is that what constitutes “full opportunity” is a contextual inquiry of
whether the proceedings were conducted in a manner which was fair, and the
approach a court should take is to ask itself if what the tribunal did (or decided
not to do) falls within the range of what a reasonable and fair-minded tribunal
in those circumstances might have done: China Machine New Energy Corp v
Jaguar Energy Guatemala LLC and another [2020] 1 SLR 695 at [104].
33 In light of the foregoing principles, it is evident to us that the Investors’
respective rights to be heard were not breached in the manner alleged. We
elaborate.
34 The Tribunal did not examine the merits of the Investors’ Estopped
Claims because it held that those claims were precluded by the doctrine of
collateral estoppel under New York law, a defence which was raised by the
GOL Parties and contested by the Investors during the arbitral proceedings.
[Page 19]
Collateral estoppel in New York law is a similar doctrine to that of issue
estoppel in Singapore law. As the Tribunal noted,75 parties were in partial
agreement concerning its nature, reach and effect:
The parties agree that, under New York law, collateral estoppel
is substantive in nature. The parties also appear to agree that
collateral estoppel prevents “re-litigation of an issue of law or
fact that was raised, litigated, and actually decided by a
judgment in a prior proceeding between the parties [...]
regardless of whether or not the two proceedings are based on
the same claim”. The Tribunal finds that these propositions
accurately reflect New York law.
35 The principal point of difference on the legal position under New York
law concerned whether and how it applied to entities that were not directly
parties to the earlier litigation.76 This was identified and determined by the
Tribunal under the heading: “Does the doctrine of collateral estoppel only apply
to parties to the prior action? Were [SM] and [Gass] ‘agents’ of GOL or
otherwise in privity with the result that the doctrine applies to them?”.77
36 After a review of the facts as well as several New York court decisions
relating to the doctrine of collateral estoppel,78 the Tribunal agreed with SM and
Gass that they were in privity with GOL for the purpose of that doctrine, and
that this was the case even on the assumption that they owed fiduciary duties to
the Investors as well as GOL.79
37 The Tribunal then considered the further requirements for the
application of the doctrine of collateral estoppel and concluded that they were
75 CMB at p 60 (Award at para 137). ↩
76 CMB at pp 55 and 58–59 (Award at paras 118–119 and 130–131). ↩
78 CMB at pp 61–64 (Award at paras 142–153). ↩
79 CMB at pp 64–65 (Award at paras 154–156). ↩
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all satisfied.80 When considering one of those requirements, namely identity of
issues, the Tribunal had regard to a preclusion chart that all parties provided
input on. It is worth quoting the Award on this aspect:81
As recounted in the procedural history, [SM] and [Gass]
presented a preclusion chart seeking to show the identity
between the issues in the Prior SIAC Arbitration and those in
this arbitration. The [Investors] inserted their comments into
the same chart, to which [SM and Gass] replied, after which the
completed Preclusion Chart was filed on 28 August 2020. An
examination of this Chart reveals that the issues before this
Tribunal are identical (identity being understood in the manner
just described) to those before the Prior SIAC Arbitration. The
content of the chart is discussed below.
38 It can be seen then that the Tribunal made determinations of law and fact
in relation to a doctrine of substantive law under the governing law, namely
New York law. It was these determinations that in turn led to the conclusion
that the doctrine of collateral estoppel applied so as to preclude the Investors
from arguing the merits of the Estopped Claims.
39 This is very different from a tribunal mistaking its procedural powers or
the scope of issues in play before it, and on the basis of such a mistake either
proceeding to an award without hearing one party or excluding evidence. It is
instead the Tribunal doing what it was tasked to do, namely, to determine the
dispute referred to it, including determining the application of any preclusionary
or exclusionary doctrines raised by a party before it. Whether the Tribunal made
an error of law or fact in its decision that the doctrine of collateral estoppel
applied goes only to the merits, and cannot found a challenge to the Award.
80 CMB pp 65–86 (Award at paras 157–223). ↩
81 CMB at p 66 (Award at para 161). ↩
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40 At this juncture, we reiterate the well-settled position that curial
intervention in arbitral proceedings is generally limited to process failures and
does not extend to a merits-based review of the award. It has been said time and
again that courts must resist the temptation to engage with what is substantially
an attack on the merits of an award, but which may be disguised or presented as
a challenge to process failures: see AKN and another v ALC and others and
other appeals [2015] 3 SLR 488 at [37]–[39] and BLC and others v BLB and
another [2014] 4 SLR 79 at [3]–[4]. In support of their case that this court is
entitled to review the Tribunal’s reasoning, the Investors brought our attention
to AJU v AJT [2011] 4 SLR 739 at [65] and Beijing Sinozonto Mining Investment
Co Ltd v Goldenray Consortium (Singapore) Pte Ltd [2014] 1 SLR 814 at [52].82
But these cases in fact reinforce this general principle on the limited extent of
curial intervention.
41 We agree with the Investors that when dealing with an allegation of a
breach of natural justice of the type in question, the court should inquire into the
Tribunal’s reasons for not addressing a pleaded issue which was at play (see
above at [22]).83 However, in light of the general principle expounded above,
where those reasons are premised on certain determinations of fact and law
made by the tribunal, those determinations must be taken as they are unless they
have been tainted by process failures. It is not open to the court to examine the
correctness of those determinations. Here, the Tribunal’s reason for not dealing
with the Investors’ Estopped Claims is that they have been precluded by the
New York doctrine of collateral estoppel, a finding underpinned by various
factual and legal determinations made by the Tribunal. The Investors are not
82 Investors’ Reply Submissions at paras 4–5. ↩
83 Investors’ Reply Submissions at paras 6–8. ↩
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alleging that they have not been heard on the collateral estoppel issue.84 The
applicability of this doctrine therefore supplies a proper and reasonable basis
for the Tribunal to not address the merits of the Estopped Claims.
42 Finally, the mere fact that the Investors were precluded by the collateral
estoppel doctrine from advancing the Estopped Claims cannot found a natural
justice challenge. In this connection, both counsel addressed the court on the
recent Court of Appeal decision in BTN.85 That case concerned an award in
which the tribunal had determined that res judicata applied in relation to
findings of the Malaysian Industrial Court (“MIC”) which therefore bound
parties in relation to the dispute in arbitration (at [33]). The Court of Appeal, at
[1], made the following opening observation:
... In brief, the appellants are aggrieved because the arbitral
tribunal before which they appeared held that they were
prevented by the doctrine of res judicata from litigating on a
vital component of their defence to the respondents’ claim in
the arbitration. They say there is nothing more repugnant to
the most basic notions of justice than to deny it to one party.
That may be so, but whether “denial of justice” is an appropriate
way in which to label what happened in the arbitration
proceedings is another matter. Litigants affected adversely by
the application of the res judicata doctrine, a long-established
common law doctrine, often consider themselves to have been
unfairly deprived of their right to a hearing.
43 In BTN, it was first argued unsuccessfully that there was a breach of
justice concerning the hearing on the res judicata issue, for example whether the
tribunal had based its decision on res judicata on factual matters even though
parties had agreed that disputed matters of fact would not be taken into account
by the tribunal (at [44]). The challenge has not been mounted in this way in the
84 Investors’ Reply Submissions at para 11. ↩
85 GOL Parties’ Written Submissions at para 55; Investors’ Reply Submissions at para ↩
12.
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present case, and the Investors have confirmed that it is not their case that they
were not heard on the collateral estoppel defence.86 The Investors do not raise
any denial of justice in how the issue of possible preclusion was heard and
determined. Rather the Investors contend that the fact of preclusion gives rise
to the breach of natural justice. There is no merit in this argument. The
invocation of any preclusionary doctrine means that a party will not be heard on
the aspects of the case that it is precluded from re-opening. Such doctrines serve
the cause of justice by promoting finality in litigation, and their existence not
only in Singapore law but in many if not most legal systems demonstrates that
they are not in and of themselves objectionable.
44 Public policy was also raised in BTN and likewise in the present case.
We now turn to that ground of challenge.
45 It is helpful to start with BTN. In introducing the public policy challenge
in that matter, the Court of Appeal explained, at [56]:
The public policy ground for setting aside provided by Art 34(2)
of the Model Law is a narrow one. This court has held that the
ground should only succeed in cases where upholding or
enforcing the arbitral award would “shock the conscience”, or
be “clearly injurious to the public good or ... wholly offensive to
the ordinary reasonable and fully informed member of the
public”, or violate “the forum’s most basic notion of morality
and justice”: PT Asuransi Jasa Indonesia (Persero) v Dexia Bank
SA [2007] 1 SLR(R) 597 (“PT Asuransi”) at [59]. In this respect,
we reiterate that the doctrine of res judicata has long been part
of the law of Singapore and its invocation in cases brought in
the Singapore courts is not unusual. Accordingly, a decision
based on res judicata principles can never in itself be described
as shocking the conscience or wholly offensive to informed
86 Investors’ Reply Submissions at para 11. ↩
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members of the public. Recognising this, the appellants aim
their attack at erroneous applications of the doctrine.
Importantly, however, the general principle is that even if an
arbitral tribunal’s findings of law and/or fact are wrong, such
errors would not per se engage the public policy of
Singapore: AJU v AJT [2011] 4 SLR 739 at [66]; PT Asuransi at
[57].
46 Thus, an award that is made based on res judicata principles is not for
that reason contrary to public policy. The appellants in BTN raised two
arguments why the award in that case contravened public policy. The first rested
on the premise that they had not been aware of the MIC proceedings (at [57(a)]).
The second rested on the claim that the respondents had breached the arbitration
agreement by instituting the proceedings before the MIC (at [57(b)]). First of
all, the Court of Appeal was not persuaded on the facts, noting at [59] that the
appellants have been served with eight notices relating to the MIC proceedings
and at [63] that they had neither commenced arbitration proceedings themselves
nor sought to restrain the MIC proceedings.
47 The Court of Appeal went further, however, at [72] and [73], and held
that even an erroneous ruling of res judicata would not found a challenge to the
award on the basis of public policy. Such errors are not to be treated any
differently from other errors that a tribunal might make on the merits of the case
before it.
48 The Investors seek to distinguish BTN on the ground that they had not
had the opportunity to pursue their claims against SM and Gass in the Prior
SIAC Arbitration, as they were unable to join them without their consent. They
point out that the declaration filed by Gass in the Delaware Action does not
contain a specific consent to be joined to the Prior SIAC Arbitration,87 and note
87 Investors’ Written Submissions at para 41. ↩
[Page 25]
that the Tribunal had accepted this point in the part of the Award rejecting SM’s
and Gass’ reliance on the rule in Henderson v Henderson, which is sometimes
referred to as extended res judicata.88 For context, the Tribunal found that
Henderson v Henderson was a procedural doctrine under Singapore law,89
which applied by virtue of the choice of Singapore as the seat of the arbitration.90
However, the Tribunal held that one of the conditions for its application, namely
that the claim could have been brought in the prior proceeding, was not
established.91
49 The Investors’ argument conflates two distinct doctrines, namely
collateral estoppel under New York law and the rule in Henderson v Henderson
under Singapore law. They have different requirements. The Tribunal was
tasked to decide what the requirements were under each of the doctrines and
whether those requirements had been fulfilled. Not only was it within the
Tribunal’s purview to decide that it was not a condition for the application of
collateral estoppel that the claims against SM and Gass could have been brought
in the Prior SIAC Arbitration, the Investors never argued that it was.
50 Further, while it is true that the Investors did not have the opportunity to
pursue their claims against SM and Gass, this is beside the point. The collateral
estoppel that the Tribunal accepted concerned issues common to the Prior SIAC
Arbitration and to the dispute before it, as shown by the preclusion chart. The
Investors had had the opportunity to run their case regarding those common
88 Investors’ Reply Submissions at paras 10(a) and 12(a); 18 May 2022 Transcript at p ↩
10 line 4 to p 13 line 13 and 17 line 27 to p 18 line 9; CMB at pp 331–334 (Award at
paras 284–290).
89 CMB at p 101 (Award at para 272). ↩
90 CMB at p 102 (Award at paras 275–277). ↩
91 CMB at p 107 (Award at para 290). ↩
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issues in the Prior SIAC Arbitration. The effect of the finding of collateral
estoppel was that the Investors could not reopen those matters, and this finding
was based on the Tribunal’s view that SM and Gass were GOL’s privies for this
purpose. Thus, the Investors did argue those common issues, but only once, ie
in the Prior SIAC Arbitration. There is nothing repugnant about their not being
allowed to argue the same issues a second time.
51 To recap, the Investors say that they were taken by surprise when the
Tribunal accepted the clarification in the GOL Parties’ reply costs submissions
that its obligation to pay costs over a certain fee cap was triggered so long as
costs were awarded in their favour and there was no need for such costs to
actually be collected. They complain that they did not have the opportunity to
address this clarification made in GOL Parties’ reply costs submissions.
52 The first difficulty in the Investors’ argument is that the issues of how
much costs should be awarded and whether any award was to be limited by
reason of funding arrangements were in play.92 The Tribunal afforded parties
the opportunity to exchange two rounds of submissions (see above at [14]). It is
not unexpected for reply submissions to clarify or refine a party’s position.
Upon receipt of the GOL Parties’ reply costs submissions, the Investors did not
92 CMB at p 814 (Investors’ Statement of Claim at paras 200–201), at p 886 (SM’s and ↩
Gass’ Statement of Defence at para 201), p 930 (GOL’s Statement of Defence at para
124(b)), pp 1540–1547 (SM’s and Gass’ costs submissions) and pp 1549–1553 (GOL’s
costs submissions), pp 1555–1570 (Investors’ costs submissions), pp 1572–1580
(GOL Parties’ reply costs submissions, in particular, paras 14–16), pp 1582–1606
(Investors’ reply costs submissions, in particular, paras 10 and 14) and p 1674.
[Page 27]
raise any issue about this allegedly belated assertion, make any request for
disclosure or seek any further round of submissions.
53 Secondly, and more fundamentally, the Investors have not fairly
represented the Tribunal’s decision on this point. In fact, the Tribunal noted that
GOL’s Fee Arrangement remained unclear, and included this lack of clarity as
one of the factors that it bore in mind in allocating only 60% of the costs.93 Thus,
it is not even correct that the Tribunal simply accepted what was said in the
GOL Parties’ reply costs submissions at face value. For the same reason, it
cannot be said that the alleged breach of natural justice had prejudiced the
Investors.
54 The Investors urge the court to find on the evidence before us that
GOL’s Fee Arrangement is champertous and savours of maintenance. First, we
do not accept that the concepts of champerty or maintenance are engaged by an
agreement between a defendant and its lawyer that the defendant need only pay
the lawyer’s costs above a certain fee cap to the extent that that defendant
succeeded in its defence and obtained a costs order in its favour. Champerty and
maintenance concern intermeddling that encourages lawsuits by financing
them, and are not engaged where defence of a lawsuit is concerned.
55 Secondly, the arrangement as described is in form much like a
conditional fee arrangement. Such arrangements are now permitted even for
Singapore lawyers representing parties in international arbitrations: ss 115A(1)
93 CMB at p 124 (Award at para 347). ↩
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and 115B(1) of the Legal Profession Act 1966 (2020 Rev Ed) read with reg 3(a)
of the Legal Profession (Conditional Fee Agreement) Regulations 2022. At the
second reading of the Legal Profession (Amendment) Bill on 12 January 2022,
the Second Minister for Law, Mr Edwin Tong Chun Fai, noted that conditional
fee arrangements “can also enhance access to justice”, and “can also discourage
the pursuit of weak cases and frivolous claims”: Singapore Parliamentary
Debates, Official Report (12 January 2022), vol 95 (Edwin Tong Chun Fai,
Second Minister for Law).
56 It must be kept in mind that the Tribunal did not award an amount of
costs that could by any measure be considered exorbitant, or not in keeping with
the scope and scale of legal work done for the arbitration. We do not accept that
GOL’s Fee Arrangement shocks the conscience or is otherwise contrary to
public policy.
57 This issue turns on whether the GOL Costs Order did not fall within the
Tribunal’s “authority to order in its Award that all or a part of the legal or other
costs of a party be paid by another party”: Rule 37 of the SIAC Rules.
58 The Investors argue that the costs of a party must be costs that it has
incurred in the sense of being obliged to pay. They say that to the extent that
GOL was not obliged to pay costs above the fee cap then those excess costs
could not be awarded by the Tribunal.
59 The parties agreed on the application of the SIAC Rules. The Tribunal
did not disregard the SIAC Rules but followed those rules on the basis of its
interpretation of them and its views and findings on the evidence before it. We
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do not agree that SIAC Rules Rule 37 is limited in the way contended for by the
Investors. GOL engaged lawyers who incurred time in its defence. The value of
that time spent forms part of GOL’s costs and so comes within Rule 37. Rule
37 vests arbitrators with a broad discretion to allocate and award costs.
60 This issue also depends on the Investors’ interpretation of Rule 37 as
outlined in the preceding issue. We do not accept the Investors’ interpretation
and thus reject the Investors’ contention under this head as well.
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61 We dismiss OS 7 and SUM 5882. Parties are to file written submissions
on costs limited to ten pages each, and unless either party requests an oral
hearing we will proceed to fix and award costs based on those written
submissions.
|
Philip Jeyaretnam |
Sir Vivian Ramsey |
Douglas Jones AO
International Judge
Lin Weiqi Wendy, Chong Wan Yee Monica (Zhang Wanyu), Leau
Jun Li (WongPartnership LLP) for the plaintiffs in Originating
Summons No 7 of 2022 and applicants in Summons No 5882 of
2021;
Lim Gerui, Tan Yuan Kheng (Chen Yuanqing) and Tan Sih Si (Chen
Shisi) (Drew & Napier LLC) for the defendants in Originating
Summons No 7 of 2022 and respondents in Summons No 5882 of
2021.