2023年4月12日

The High Court of Singapore Gives Additional Insight in Relation to Enforcement of Foreign Arbitral Awards in Singapore

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Last week, in CZD v. CZE [2023] SGHC 86, the High Court of Singapore opined on several issues related to the enforcement of arbitration awards, including public policy, whether the award should not be enforced because it had allegedly already been satisfied, and whether the Claimant had provided full and frank disclosure in its application to enforce the award.

Key Takeaways 

  • Consistent with the High Court’s narrow and strict approach towards applications to set aside Singapore arbitral awards, Chua Lee Ming J strictly construed the grounds for refusing enforcement of a foreign award under section 31 of the IAA, which he noted provided an exhaustive list of grounds for refusal of enforcement. Although this was not the case on the facts of this case, even if a foreign award might have been satisfied in another jurisdiction, this would not amount to a ground for challenge under section 31 of the IAA.
  • Parties should note that where applications before Singapore courts relate to arbitration awards and involve questions of foreign law, approval to file expert evidence is likely to be given and such approval may be obtained retrospectively if it was impracticable to obtain approval before filing the expert evidence.

The Parties and Their Dispute

In September 2017, Claimant, Defendant, and a Chinese company entered into a loan agreement under which the Claimant was to lend money to the Defendant to restructure TargetCo and another related PRC company. There were several other ancillary agreements entered between the parties including a cooperation agreement between the Claimant and TargetCo. In 2020, the Claimant filed arbitration proceedings in the PRC alleging that the Defendant failed to repay the loans made by the Claimant under the loan agreement and an award was issued in 2021 in the Claimant’s favour. Later in 2021, a PRC court issued a notice of enforcement assistance to the China Securities Depository and Clearing Co. to freeze the Defendant’s bank account and his shares in a publicly listed company on the stock exchange from June 2021 to June 2024. The Claimant also sought enforcement of the Chinese award in Singapore. The Defendant applied to set aside the enforcement order (on jurisdictional grounds), but the Assistant Registrar of the High Court denied the Defendant’s request to file an additional, second affidavit in the proceeding. The Defendant challenged the Assistant Registrar’s decision.

The Court’s Decision

The High Court of Singapore rejected the Defendant’s appeal against the Assistant Registrar’s order rejecting his application to file a further affidavit. It also dismissed the Defendant’s application to set aside an enforcement order made by the High Court granting the Claimant permission to enforce the arbitration award made in the PRC. 
Defendant’s Appeal to File a Further Affidavit
The judge first discussed the Defendant’s appeal of the High Court Assistant Registrar’s order dismissing his application to file a further affidavit. After the Defendant filed his application to set aside the enforcement order, the parties submitted their respective affidavits. The Defendant sought permission to file another affidavit alleging that the Claimant’s affidavit contained new arguments by way of expert evidence to which the Defendant was not able to respond. In dismissing the Defendant’s appeal, the High Court stated that, after having filed a reply, a party should be allowed to file further affidavits only in “exceptional cases”. In dismissing the Defendant’s appeal, the High Court averred that both parties relied on the PRC’s expert evidence, that there were in fact no new issues raised, and that the Defendant simply had not addressed the existing issues through his own expert evidence. The judge also observed that practitioners should note that where an application relating to arbitration awards involve questions of foreign law, approval to file expert evidence would likely be given and that approval may be obtained retrospectively if it is impracticable to obtain approval before filing such evidence.

Whether the Tribunal Exceeded Its Jurisdiction

On the issue of excess of jurisdiction and whether the enforcement order should be set aside on this ground, the Defendant argued that the Tribunal found the Defendant liable under the ancillary agreements rather than the loan agreement containing the arbitration agreement. The judge opined that to determine whether a tribunal acted in excess of its jurisdiction, the court first determines what matters were within the scope of submission to arbitration, and then, whether the award involved those matters or a matter outside this scope. The judge said the award must be read in the context and said that the payments made under the ancillary agreements were disbursements of the loan given by the Claimant under the loan agreement and that the Tribunal awarded liquidated damages based on the loan agreement. He also stated that because the question of whether the Tribunal exceeded its jurisdiction was answered in the negative, he did not need to consider the Defendant’s argument that issue estoppel applied. Thus, he rejected this ground for setting aside the enforcement order.

Whether Enforcement of the Award Would Be Contrary to Public Policy

Next, the judge turned to the Defendant’s argument that the foreign award was procured through procedural fraud because the Claimant had maintained inconsistent evidential positions on the authenticity of a letter of undertaking. The judge quickly dismissed this ground noting that while procedural fraud may be a ground for declining enforcement, the Claimant in this case did not accept the contents of the letter of undertaking, and that the funds that were transferred to TargetCo were indeed from the Claimant as alleged. Therefore, there were no inconsistent evidential positions put forward by the Claimant, and no basis for the Defendant’s application to set aside the enforcement order based on procedural fraud and public policy grounds.

Whether the Award Should Not Be Enforced Because It Had Allegedly Been Satisfied

The Defendant also argued that the enforcement order should be set aside because the award had been fully and/or effectively satisfied in part as his shares in a publicly listed company had been frozen pursuant to the PRC enforcement proceedings. While the Defendant eventually withdrew this ground for challenge during oral submissions, the judge noted that this ground was a non-starter. The simple freezing of shares did not mean that the award had been satisfied, and in any event the fact that an award might have been satisfied is not a ground for challenge under section 31 of the IAA, which provides an exhaustive list of grounds for refusal of enforcement.

Whether the Enforcement Order Should Be Set Aside Because the Claimant Had Failed to Provide Full and Frank Disclosure of Material Facts

Finally, the High Court considered whether the enforcement order should be set aside because the Claimant failed to disclose the Defendant’s then pending application to the PRC court for civil supervision of the decision to enforce the award. The application for civil supervision, if granted, would have adjourned the proceedings. The Defendant noted that the Claimant’s application, which was made without notice, had failed to disclose this material fact and argued this should result in the enforcement order being set aside. The judge began by citing “The Vasiliy Golovnin” case for the proposition that facts are material when they are matters the Court should take into consideration in deciding whether to grant an application. He said that the language in section 31(5) of the IAA on refusing an award is broad enough to apply at the stage when the Court is considering an application without notice for permission to enforce an award. He also stated that it is logical that any decision to adjourn the proceedings, if warranted, should be made before permission to enforce the award is granted. While he ultimately agreed with the Defendant that the Claimant breached its duty to provide full and frank disclosure by not stating this material fact, he said that because the Defendant’s application was rejected by the time he heard the matter, the non-disclosure was rendered inconsequential. It was thus sufficient to penalise the Claimant for its breach by denying its costs claim in the present application, despite the Defendant’s challenge ultimately being dismissed.

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