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Singapore court's power to grant injunctions against a foreign state in support of arbitration
Practical Law UK Legal Update Case Report 3-525-2760 (Approx. 3 pages)
Singapore court's power to grant injunctions against a foreign state in support of arbitration
by Jonathan Leach (Partner), Paul Teo (Partner) and Edward Foyle (Associate), Hogan Lovells Lee & Lee
| Published on 20 Mar 2013 • Singapore |
In Maldives Airports Co Ltd and another v GMR Malé International Airport Pte Ltd [2013] SGCA 16, the Singapore Court of Appeal considered whether the Singapore court had the power to grant an injunction against a foreign state in support of arbitration and the enforceability of co-operation clauses.
The parties had entered into a 25 year Concession Agreement (CA) under which the respondent was to redevelop and maintain Malé International Airport. Clause 21.5 of the CA provided that the parties would continue to perform their obligations thereunder pending the resolution of any dispute. After the appellant commenced arbitration (Singapore seat), seeking a declaration that the CA was void ab initio, the respondent applied for and obtained an injunction from the Singapore High Court, barring the appellant from taking steps to interfere with the respondent's performance of its obligations under the CA, pending the outcome of the arbitration. The appellant appealed on the basis that:
- The Singapore court did not have the power to grant an injunction against a foreign sovereign state.
- The injunction had been wrongly granted in any event.
The first ground of appeal was refused, but the second upheld. Menon CJ found that the appellant had waived any protection under the Singapore State Immunity Act (Cap. 313, 1985 Rev. Ed.) through the wording of the dispute resolution clause. The common law doctrine of "act of state" did not apply, because the dispute was private in nature.
However, Menon CJ held that the balance of convenience lay in favour of not granting the injunction because:
- Damages were an adequate remedy (albeit they would be difficult to assess).
- The respondent's proposed cross-undertaking in damages was inadequate.
- The injunction would be difficult to enforce.
Menon CJ held that the interpretation and enforcement of clause 21.5 was a matter for the arbitral tribunal. However, he did note that the "deep degree of cooperation" required between the various authorities responsible for the running of an airport would make the clause difficult to uphold in practice.
The decision demonstrates the need for parties to be mindful that restrictive contractual provisions should be framed narrowly in order to increase the prospect of enforceability.