In the realm of international trade and commerce, contracting parties from different jurisdictions commonly agree to resolve any disputes by way of international arbitration. However, when your counterparty chooses to commence litigation in a national court instead, taking the right steps at once to obtain an anti-suit injunction to restrain such conduct is crucial to preserve your rights. Choosing the wrong strategy and undue delays can be costly and may compromise your right to bring a dispute to arbitration.
In STS Seatoshore Group Pte Ltd v Wansa Commodities Pte Ltd [2024] SGHC 266, the Singapore High Court set aside an interim anti-suit injunction and dismissed an application by a Singapore company for a permanent anti-suit injunction to restrain another Singapore company from continuing foreign proceedings in the courts of the Republic of Guinea, even though there was an arbitration agreement between the parties to arbitrate their contractual disputes in Singapore. The High Court held that the applicant had been guilty of undue delay which allowed the Guinean court proceedings to progress to an advanced stage, and considerations of comity meant that anti-suit relief would be refused. The Court further held that the applicant’s material non-disclosure at the ex parte stage justified a discharge of the interim injunction.
Why does this matter?
This decision demonstrates that anti-suit injunctive relief should be sought as soon as possible, and in any event before the court proceedings have progressed too far. In this case, as will be seen below, the applicant chose to fight numerous rounds of litigation in the Guinean courts before applying to the Singapore courts for relief, which proved fatal to its application. It is also a salutary reminder to commercial parties that being upfront with the court the injunction is sought from is also imperative.
Prolegis LLC successfully acted for the defendant, Wansa Commodities Pte Ltd, to set aside the interim anti-suit injunction and to resist the application for the permanent anti-suit injunction.
Background
In STS v Wansa, two Singapore companies were embroiled in a dispute over an alleged breach of a contract of affreightment for the transhipment of bauxite in the Republic of Guinea. The contract of affreightment contained an arbitration clause for parties to resolve disputes by arbitration in Singapore in accordance with Singapore Chamber of Maritime Arbitration terms.
When contractual disputes arose, the defendant commenced litigation proceedings in Guinea. Instead of immediately applying for anti-suit relief, the claimant vigorously contested these proceedings, filed appeals against various decisions and orders, and even launched proceedings of its own, culminating in at least seven sets of proceedings between the parties.
After more than 3 months of Guinean court proceedings and after the Guinean courts had issued numerous judgments and orders, the claimant finally applied, without notice to the defendant, to the Singapore High Court for an anti-suit injunction. This was granted by the High Court on an interim basis without the defendant being notified or present. Subsequently, the defendant applied to set aside the interim anti-suit injunction on, among others, the grounds that (i) the applicant was guilty of undue delay and (ii) the applicant had failed to disclose the extent of the Guinean court proceedings to the Court at the without notice hearing.
The judgment
Dismissing the application for a permanent anti-suit injunction: delay and comity
The High Court held that even assuming a best-case scenario for the claimant – that all the Guinean court proceedings pursued by the defendant were in breach of the arbitration agreement – the application for a permanent anti-suit injunction had to be dismissed for two reasons.
First, the claimant’s undue delay in obtaining anti-suit relief allowed the Guinean proceedings to progress to an advanced stage – some of which were before the Guinean Supreme Court. Given the vast amount of the Guinean courts’ time and costs that would potentially be wasted if the permanent anti-suit injunction was granted, considerations of comity and respect for the Guinean legal system militated against the grant of anti-suit relief.
Second, given that the Guinean courts had issued final and binding judgments in the litigation, any anti-suit relief granted would in substance amount to an anti-enforcement injunction. Such injunctions are only granted in exceptional circumstances, which the claimant failed to establish. The Court further observed that the claimant was seeking anti-suit/anti-enforcement relief while its appeals were still pending in the Guinean courts – granting an injunction restraining the defendant from continuing litigation would have had the practical effect of allowing the claimant to advance its appeals without allowing the defendant to defend itself, which was undesirable.
The High Court also made several key observations:
Setting aside the interim anti-suit injunction for material non-disclosure
The High Court further decided that in any event, it would have set aside the interim anti-suit injunction obtained by the claimant on the basis of material non-disclosure to the Court hearing the initial without notice application for the injunction. The Court highlighted “the paramount importance of [an applicant’s] duty to make full and frank disclosure in ex parte applications so as to avoid abuse of the process of the court“.
The High Court found that the claimant had failed to disclose material facts at the urgent without notice hearing, which were serious enough to justify discharging the injunction. First, it failed to bring to the attention of the Court that a Guinean court had issued a final and binding judgment on the merits of the parties’ dispute, which was still in force. Second, the claimant failed to disclose to the Court that it was (at the time of the without notice hearing) pursuing its own claims and appeals against the defendant in the Guinean courts. The High Court found that the claimant had given no or no good explanation in respect of these material non-disclosures, and had “little choice but to infer that they were deliberately not disclosed“.
Key Takeaways for Commercial Parties
Where a party is faced with foreign litigation proceedings in breach of an arbitration agreement, it needs to expeditiously assess its options and take appropriate steps to preserve its rights and interests.
On one hand, it is open for a party to accept the breach of the arbitration agreement and litigate the merits of the dispute in the foreign courts. However, as this case demonstrates, parties are not allowed to take a second bite at the cherry and try to arbitrate the dispute if the outcome of such litigation is unfavourable.
On the other hand, if a party wishes to preserve the right to arbitrate:
Further to the above, this was a rare instance where an interim anti-suit injunction was set aside on the grounds of material non-disclosure, serving as a good reminder for all litigants as to what is expected by the Courts. Such actions may also result in adverse cost orders.
How we can help you protect your interests
Prolegis LLC has substantial experience in commercial litigation and resolving disputes that span multiple jurisdictions. We frequently act for parties in arbitration-related court proceedings, including setting aside applications, enforcement applications and anti-suit injunction applications.
To find out more about protecting your interests and our disputes capabilities, please contact the authors, Yanguang Ker and Damian Tan, or your usual Herbert Smith Freehills Prolegis contact.
Prolegis LLC and Herbert Smith Freehills LLP (www.herbertsmithfreehills.com) are members of a Formal Law Alliance in Singapore marketed as Herbert Smith Freehills Prolegis (https://www.herbertsmithfreehills.com/content/herbert-smith-freehills-prolegis).
Yanguang Ker |
Damian Tan |
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