Section 31(2)(d) of the International Arbitration Act (IAA) provides that enforcement of an arbitral award may be refused if the award deals with a dispute not contemplated by, or not falling within the terms of, or contains decisions on matters beyond the scope of, the submission to arbitration.

Section 31(2)(e) of the IAA provides that enforcement of an arbitral award may be refused if the arbitral procedure was not in accordance with the agreement of the parties.

Section 31(4)(b) of the IAA provides that the court may refuse to enforce an arbitral award if it finds that enforcement of the award would be contrary to the public policy of Singapore.

Glory Wealth Shipping Pte Ltd (GWS) chartered a vessel from Galsworthy Ltd of the Republic of Liberia (Galsworthy) for a period of 60 to 63 months (Head Charter). GWS in turn sub-chartered the vessel to Wordlink Shipping Limited (Wordlink) (Sub-Charter).

Neither charter was performed, which gave rise to two separate London arbitrations (one between Galsworthy and GWS pursuant to the Head Charter and one between GWS and Worldlink pursuant to the Sub-Charter). The tribunal hearing each dispute comprised the same set of arbitrators.

Galsworthy claimed against GWS for hire and damages. On 14 October 2009, the tribunal issued a final award against GWS for hire and damages based on the tribunal's finding of the applicable market rate.

On 23 December 2009, GWS applied to challenge the final award in the English court pursuant to section 68 of the English Arbitration Act 1996 (1996 Act), which provides that a party to arbitral proceedings may apply to the court to challenge an award on the ground of serious irregularity in the arbitration. GWS argued that the tribunal failed to comply with its general duty under the 1996 Act (section 68(2)(a)), exceeded its powers (section 68(2)(b)), and did not conduct the proceedings in accordance with the procedure agreed by the parties (section 68(2)(c)).

Galsworthy was granted security for its costs of responding to the application, but, as GWS failed to provide such security, the application under section 68 was dismissed without a hearing on the merits.

GWS also appealed against the final award pursuant to section 69 of the 1996 Act, which provides that unless otherwise agreed by the parties, a party to arbitral proceedings may appeal to the court on a question of law arising out of an award made in the proceedings. The appeal was dismissed.

On 6 April 2010, Galsworthy obtained leave in the Singapore court to enforce the final award. GWS applied to set aside the order but, on 2 July 2010, the Assistant Registrar dismissed the application.

In the hearing before the Assistant Registrar, a preliminary dispute arose as to whether GWS was entitled to make an application in Singapore when it had already made a similar application in England. As held in Newspeed International Ltd v Citus Trading Ltd [2003] 3 SLR(R) 1, and approved in Aloe Vera American v Asianic Food (S) Pte Ltd [2006] 3 SLR(R) 174 (Aloe Vera), a party seeking to challenge an arbitral award has two options - either to apply to the supervising court to set aside the award or to apply to the enforcement court to set aside any leave granted to the opposing party to enforce the award. These options were alternatives and not cumulative.

As GWS' application to the English court was not heard due to GWS' failure to provide security for costs, the Assistant Registrar allowed GWS to apply to set aside the order granting leave to enforce in the Singapore court. The application was, however, dismissed on the merits.

GWS appealed to the High Court of Singapore under section 31(2) of the IAA, arguing that:

Both parties agreed that GWS bore the burden of proof but disagreed as to the applicable standard. Citing Strandore Invest A/C and others v Soh Kim Wat [2010] SGHC 151 (Strandore) (see Legal update, Singapore High Court on principles governing stays of execution), which adopted the English Court of Appeal decision in Dallah Estate and Tourism Holding Company v Ministry of Religous Affairs of the Government of Pakistan [2009] EWCA Civ 755 (see Legal update, Court of Appeal upholds Dallah decision) (note that Dallah has since been upheld by the UK Supreme Court – see Legal update, Dallah Supreme Court decision: full update), GWS submitted that enforcement of an award is not automatic and a full hearing of the relevant issues ought to be allowed. Citing Aloe Vera, Galsworthy took the view that Singapore adopted a "mechanistic" approach to enforcement of foreign awards so the merits need not be considered.

Due to the arguments under section 31(2), GWS also argued that enforcement of the award would be contrary to public policy in Singapore (section 31(4)(b)).

The court dismissed the appeal.

The court disagreed with the Assistant Registrar's decision on the preliminary dispute and opined that, as an application had been made in the English court, the application in the Singapore court amounted to an abuse of process. Further, the application by GWS seemed to be a considered decision to avoid the need to provide security for costs to the English court.

The court held that the principle of comity of nations requires the Singapore courts not to undermine the orders made by other courts unless exceptional circumstances exist. No such circumstances existed here. Moreover, allowing the application could result in duplication or conflict of judicial orders.

Therefore, the court dismissed the appeal on the basis that GWS was not entitled to make the application.

In the alternative, the court was not convinced that GWS had sufficiently established the two grounds asserted under section 31(2) of the IAA as GWS itself submitted a figure for the market value and also adopted the submissions of the arbitration between GWS and Wordlink. As the public policy argument under section 31(4)(b) of the IAA was based on the first two arguments, this was also found to be without basis.

In relation to the applicable standard of proof, the submissions from each party implied that the decisions in Strandore and Aloe Vera were in conflict; however, the material parts of those decisions concerned different issues.

There are two stages regarding enforcement proceedings; the first relates to the initial grant of leave to enforce, which requires a "mechanistic" approach, and the second relates to resisting enforcement based on the grounds in the IAA, which requires proof on a balance of probabilities. The dispute in question concerned the second stage of enforcement proceedings and, as such, GWS bore the burden of proving the grounds in section 31(2) of the IAA on a balance of probabilities.

This case serves as a reminder to any party seeking to challenge an arbitral award that, in the eyes of the Singapore court, it may take one of two courses of action - either apply to the supervising court to set aside the award or apply to the enforcement court to set aside any leave granted to the opposing party to enforce the award.

In relation to the applicable standard of proof, the case also clarifies that different approaches are to be taken in the two stages of enforcement proceedings. In respect of the initial grant of leave to enforce, a "mechanistic" approach is required, whereas resisting enforcement based on the grounds in the IAA requires proof on a balance of probabilities.