The Singapore Law Gazette

Thou Shalt Not Sue? Recent Developments to the Scope of Anti-suit Injunctions in Singapore and England

This article analyses two recent developments in the law relating to anti-suit injunctions to enforce arbitration agreements: (i) the first stems from the decision of the Singapore International Commercial Court (SICC) in Gate Gourmet Korea Co. Ltd. and others v Asiana Airlines, Inc. [2023] SGHC (I) 23 (Gate Gourmet), and involves an anti-suit injunction to restrain foreign tort proceedings, including against non-parties to an arbitration agreement; (ii) the second stems from the decision of the English Court of Appeal (EWCA) in UniCredit Bank GmbH v RusChemAlliance LLC [2024] EWCA Civ 64 (UniCredit), and involves an anti-suit injunction granted by a court which is not the court of the jurisdiction where the arbitration is seated.

A. Introduction

1. As its name suggests, an anti-suit injunction (ASI) is a type of mandatory injunction granted by one court which prohibits a party from commencing or continuing proceedings before another court.
2. ASIs are a common feature of international commercial litigation. As the volume and proportion of disputes with connections to more than one jurisdiction increases, litigants are frequently divided over the issue of which would be the proper court to determine a dispute. Even more polarising are the partisan considerations of which would be the most advantageous court for each side to seek resolution of the dispute. In these circumstances, litigants seek ASIs to prevent their opponents from referring the dispute to another forum which they consider illegitimate or disadvantageous.
3. In particular, ASIs are routinely granted to restrain a party from continuing proceedings in breach of an arbitration agreement. In such cases, the Court need not feel diffident about granting an ASI as it would only be enforcing a contractual promise and the question of international comity is not as relevant.¹Kirkham at (29). Hence, an ASI would ordinarily be granted unless there are strong reasons to the contrary.²Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd (2019) 1 SLR 732 (Sun Travels) at (68). The developments discussed in this article relate to two such cases. We turn to the first case, Gate Gourmet.

B. Gate Gourmet: ASIs to Restrain Foreign Tort Proceedings, Including Against Non-parties

Summary

4. The SICC’s decision in Gate Gourmet is the latest chapter in a long running dispute between Asiana Airlines and Gate Gourmet relating to the provision of catering facilities by the latter to the former. The salient facts were as follows:
   1. The 1^st Applicant Gate Gourmet Korea (GGK) was a joint venture between the 2^nd Applicant Gate Gourmet Switzerland (GGS) and the Defendant Asiana Airlines (Asiana), whereby GGS would own 60% of the share capital of GGK and Asiana would own the remaining 40% pursuant to a Joint Venture Agreement between GGS and Asiana (JVA). The 3^rd Applicant Mr. Christoph Schmitz (Mr. Schmitz) and the 4^th Applicant Mr. Xavier Rossinyol Espel (Mr. Rossinyol) are respectively the current and former Chief Executive Officers of the Gate Gourmet group of companies which GGK and GGS belong to (Gate Group).
   2. Pursuant to a Catering Agreement between GGK and Asiana (CA), GGK was to provide airline catering and handling services to Asiana for 30 years on an exclusive basis commencing 1 July 2018. In return for the exclusivity, GGK agreed to pay Asiana KRW 53.33 billion. The CA and the JVA were governed by Korean law and contained arbitration agreements in substantially the same form, requiring parties to submit any dispute to ICC arbitration seated in Singapore.
   3. In May 2021, Park Sam-Koo, the Chairman of the Kumho Asiana Group which Asiana was part of (Chairman Park) was indicted for embezzlement and breach of trust. Specifically, Chairman Park was accused of entering into a “Package Deal” whereby Asiana would grant the exclusive catering business license to GGK at a significant undervalue in exchange for the Gate Group funding another subsidiary of the Kumho Asiana Group (Kumho & Co). Chairman Park was tried and convicted and in August 2022, Chairman Park was sentenced to 10 years of imprisonment.
   4. As a result of the investigations against Chairman Park, Asiana commenced civil suits in the Courts of South Korea (i) against GGK seeking a declaration that the CA is invalid due to GGK’s participation in the “Package Deal” which amounted to a breach of trust against Asiana (Korean CA Proceedings); and (ii) against GGS, Mr. Schmitz, and Mr. Rossinyol for damages for participating in the “Package Deal” which amounted to a breach of trust against Asiana (Korean Compensation Proceedings).
   5. The Applicants applied to the Singapore Court for anti-suit injunctive relief in relation to the Korean CA Proceedings and Korean Compensation Proceedings, including in respect of the tortious claims against Mr. Schmitz and Mr. Rossinyol in the Korean Compensation Proceedings. Mr. Schmitz and Mr. Rossinyol were not parties to the JVA (and the arbitration agreement therein). We will focus on this last-mentioned aspect.

5. After canvassing the relevant local and foreign authorities, the SICC held that there was an interest in preventing “forum fragmentation” in bringing separate claims in contract and tort on essentially the same issue in different jurisdictions,³Gate Gourmet at (46)-(48). and that where substantially the same claims are pursued against related defendants, the ends of justice are generally best served by a single composite trial within which all the claims can be determined.⁴Ibid at (49).
6. Accordingly, the SICC set out the following test to be applied where a party to an arbitration agreement seeks an anti-suit injunction to restrain foreign tort proceedings (including against non-parties):⁵Ibid at (50).
   1. The Court should first interpret the arbitration clause to determine whether it extends to (i) tort disputes and (ii) tort disputes against non-parties.
   2. If it does, the court must decide whether bringing the tort claim against the party breaches the arbitration clause.
   3. If it does, the party is prima facie entitled to an anti-suit injunction in its favour.
   4. If the party has a sufficient interest in the tort claim (such as a liability for damages), it is also prima facie entitled to an anti-suit injunction in its favour to restrain the continuation of the claim as against the non-parties.
   5. If the party does not have a sufficient interest in the tort claim, the non-party can seek a non-contractual anti-suit injunction on the basis that the foreign proceedings are vexatious or oppressive.

7. The SICC also endorsed the decision of the Supreme Court of the United Kingdom (UKSC) in Republic of Mozambique v Privinvest Shipbuilding SAL (Holding) and others [2023] UKSC 32 (Mozambique), which set out a two-stage process to determine what “matters” must be referred to arbitration: first, the Court must determine what the matters are which the parties have raised or foreseeably will raise in the court proceedings; second, the Court must determine whether each such matter falls within the scope of the arbitration agreement. In this regard, a “matter” refers to a substantial issue that is legally relevant to a claim or defence in the legal proceedings and is susceptible to be determined by an arbitrator as a discrete dispute.⁶Ibid at (159).
8. On the facts of the case, the SICC found that:
   1. Clause 34.2 of the JVA stated that “[a]ll disputes, controversies or claims arising out of or in connection with [the JVA]” shall be referred to arbitration (the JVA Arbitration Agreement) (at [137]). On its true construction under Korean law, the JVA Arbitration Agreement was wide enough to include tort disputes between the parties;⁷Ibid at (145).
   2. Applying stage 1 of the Mozambique test, the Korean Compensation Proceedings were brought to address two “matters”: First, was there a “conspiracy” between the Directors and Chairman Park to create an imbalance of the shareholdings in GGK which caused loss to Asiana? Second, if there was, what award of damages would properly redress that imbalance?;⁸Ibid at (170).
   3. Applying stage 2 of the Mozambique test, both matters together constituted a dispute which seeks to undermine the way in which the JVA was negotiated and concluded and therefore constituted a dispute which is closely related to the formation or performance of the JVA within the meaning of the JVA Arbitration Agreement;⁹Ibid at (173).
   4. Accordingly, the bringing of the Korean Compensation Proceedings was prima facie a breach of the JVA Arbitration Agreement;¹⁰Ibid at (177).
   5. GGS would be jointly and severally liable for the claims against Mr. Schmitz and Mr. Rossinyol (at [163]) and the JVA Arbitration Agreement was wide enough to cover tort claims against Mr. Schmitz and Mr. Rossinyol;¹¹Ibid at (179). and
   6. Accordingly, GGS was entitled to an anti-suit injunction including to restrain the tortious claims against Mr. Schmitz and Mr. Rossinyol. Any other conclusion would likely lead to undesirable forum fragmentation.¹²Ibid at (179).

Commentary

9. Gate Gourmet is the first known instance where the Singapore courts have issued an anti-suit injunction on the basis of an arbitration agreement which restricts proceedings against non-parties to the arbitration agreement. Following in the footsteps of the UK courts, it sounds a clarion call that in appropriate cases, Singapore courts will not shy away from granting anti-suit relief to enforce an arbitration agreement based on technical objections that the cause of action advanced in the foreign proceedings is not contractual, or that the defendants in the foreign proceedings are not parties to the arbitration agreement. Instead, the decision demonstrates the Singapore courts’ continuing commitment to robust and commercially sensible interpretations of the scope of arbitral jurisdiction to enforcing parties’ agreements to arbitrate.
10. Underlying the SICC’s decision is a strong policy aversion to undesirable “forum fragmentation”, i.e., bringing separate claims on essentially the same issue in different jurisdictions. We agree with the SICC that preventing undesirable “forum fragmentation” is important for several reasons:
    1. First, we note the comments of the court in Clearlake Shipping Pte Ltd and Gunvor Singapore Pte Ltd v Xiang Da Marine Pte Ltd [2019] EWHC 284¹³Cited in Gate Gourmet at (46). that “forum fragmentation” is contrary to what the parties are likely to have objectively intended. This is consistent with the principle recognised by the UK House of Lords in Fiona Trust & Holding Corporation and others v Privalov and others [2007] 4 All ER 951¹⁴Which has been followed in Singapore in inter alia Larsen Oil and Gas Pte Ltd v Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) (2011) 3 SLR 414 at (14)). (at [13]) that in construing an arbitration clause, the courts should start from the assumption that “the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal“;
    2. Second, the litigation of related matters before different forums is likely to create a risk of inconsistent judicial outcomes and result in wasted time and costs. Parties would have to re-canvass the common elements of their case before each forum and may do so in different ways each time, spawning satellite litigation on res judicata issues; and
    3. Third, where there is significant asymmetry in financial resources between the parties, “forum fragmentation” may result in the better resourced party obtaining unfair tactical advantages as the party with less resources is forced to spread its limited resources across various fronts.

11. Nonetheless, while preventing undesirable “forum fragmentation” is undoubtedly a salutary goal, it is respectfully suggested that the Singapore courts should remain vigilant not to let the notion of uniting all related proceedings under one roof be taken too far. In this regard, it must be recalled that the starting point is that a plaintiff is entitled to choose whom it wants to sue and where (Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373 (Tomolugen) at [188]). A departure from this principle would only be warranted where the plaintiff is suing in breach of an arbitration (or jurisdiction) clause.
12. On the facts of Gate Gourmet, the SICC found that the dispute in the Korean Compensation Proceedings fell squarely within the JVA Arbitration Agreement (see: paragraph 14(c) above). Hence, it was appropriate and necessary for the SICC to grant an anti-suit injunction preventing Asiana from continuing with the entirety of the Korean Compensation Proceedings.
13. However, it is conceivable that there may be future cases where the foreign proceedings sought to be restrained involve a mix of claims, some of which are referable to arbitration and others which are not. In such a case, it is respectfully suggested that the Singapore courts should be slow to issue an anti-suit injunction requiring the party to refrain from pursuing all of its claims in service of the ideal of preventing “forum fragmentation”. Instead, taking inspiration from the Singapore Court of Appeal’s approach in Tomolugen at [190] (in the context of a case management stay of Singapore court proceedings), it is respectfully suggested that a court can consider adopting the following approach:
    1. The Court should first permit the plaintiff in the foreign proceedings to decide whether it is willing to forgo its claims in the foreign proceedings which are referable to arbitration;
    2. If the plaintiff decides to forgo its claims, there will be no need for any anti-suit injunction;
    3. If the plaintiff decides to pursue its claims, then the Court should issue an anti-suit injunction requiring the plaintiff to refrain from pursuing claims which are referable to arbitration (and any other claims which are contingent on the claims referable to arbitration); and
    4. The plaintiff should also consider whether it is willing to offer to arbitrate the claims which are referable to arbitration against any non-parties to the arbitration agreement.

14. We consider that such an approach would strike the right balance between protecting a plaintiff’s right to sue in the forum of its choosing, ensuring that the plaintiff is kept to the terms of its arbitration agreement, and respecting international comity. Nonetheless, it is likely that there are other viable solutions to this issue, and it remains to be seen how Singapore courts will deal with it when it comes before the courts.

C. UniCredit: ASIs to Restrain Proceedings in Breach of Arbitration Agreement Which Specifies a Foreign Seat

Summary

15. Turning to the UniCredit case, this is part of the deluge of litigation stemming from the sanctions imposed on Russia in the wake of its invasion of Ukraine. The salient facts were as follows:
    1. RusChemAlliance LLC (RCA) is a Russian company. RCA entered into two engineering, procurement and construction contracts with German companies, Linde GmbH and Renaissance Heavy Industries LLC (collectively, the Contractor) for the construction of liquefied natural gas and gas processing facilities in Russia (the EPC Contracts).
    2. Under the EPC Contracts:
       1. RCA was obliged to pay a total of approximately €10 billion to the Contractor in stages. The Contractor was entitled to advance payments of approximately €2 billion, which was paid by RCA.
       2. The Contractor was obliged to provide bonds guaranteeing the performance of its obligations and arranged for some of those bonds to be provided by UniCredit Bank GmbH, a German bank. UniCredit issued seven such bonds (the Bonds), all of which provided for English governing law and ICC arbitration in Paris (the Bonds Arbitration Agreements). Similar bonds were also provided by other financial institutions (the Other FIs).
    3. Following Russia’s invasion of Ukraine in February 2022, the European Union (EU) extended its existing sanctions and imposed new sanctions on Russia. Subsequently, the Contractor halted performance of the EPC Contracts on the instructions of the German authorities.
    4. In September 2022 and April 2023, RCA terminated the EPC Contracts on the ground that the Contractor had materially breached its obligations. RCA then demanded that UniCredit make payment under the Bonds. UniCredit rejected the demands for payment on the grounds that such payment was prohibited by EU sanctions. RCA disputed that the EU sanctions afforded a valid ground for UniCredit’s refusal to make payment under the Bonds.
    5. Instead of commencing ICC arbitration in Paris as provided under the Contracts, RCA commenced proceedings in the Arbitrazh Court of St Petersburg and the Leningrad Region on 5 August 2023 (the Russian Proceedings).
    6. UniCredit unsuccessfully challenged the jurisdiction of the Russian court. The Russian court held that it had exclusive jurisdiction by virtue of Article 248.1 of the Arbitration Procedural Code of the Russian Federation, which granted Russian courts exclusive jurisdiction over disputes arising from foreign sanctions.
    7. UniCredit commenced proceedings in the English courts seeking a final anti-suit injunction to restrain RCA from pursuing the Russian Proceedings. At first instance, the English High Court refused to grant a final anti-suit injunction (although it previously granted an interim injunction ex parte which was left in place pending appeal). The English High Court found that it did not have jurisdiction over UniCredit’s claim for an anti-suit injunction, as French law governed the Bonds Arbitration Agreements and the French court had supervisory jurisdiction over any arbitration commenced pursuant to the Bonds Arbitration Agreements. Dissatisfied with the outcome, UniCredit appealed to the EWCA.
    8. Separately, the Other FIs commenced proceedings in the English courts seeking interim anti-suit injunctions against RCA on materially the same facts (without notice to RCA). The English courts granted these interim anti-suit injunctions before UniCredit’s appeal was heard by the EWCA.

16. The EWCA allowed UniCredit’s appeal. The EWCA observed that as RCA was not domiciled in England or Wales and had no presence there, UniCredit had to satisfy two contested elements for the English courts to exercise jurisdiction over UniCredit’s claim for an anti-suit injunction against RCA:¹⁵UniCredit at (38)-(39).
    1. First, whether there was a good arguable case that the claim fell within one of the relevant jurisdictional gateways; and
    2. Second, whether England and Wales was the proper place in which to bring the claim.

17. On the first element, UniCredit relied on the gateway that its claim was in respect of a contract governed by English law (namely, the Bonds Arbitration Agreements).¹⁶Ibid at (40). Applying the principles set out by the UKSC in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, the EWCA held that the Bonds Arbitration Agreements were governed by English law. This was because the parties had expressly chosen English law to govern the Bonds, which gave rise to an inference that the parties had also chosen English law to govern the Bonds Arbitration Agreements.¹⁷Ibid at (46). The EWCA noted that while the seat of arbitration was Paris, this did not displace the inference because French law does not contain any principle which indicates that where arbitration is subject to French law, the arbitration agreement will also be treated as governed by French law.¹⁸Ibid at (63).
18. On the second element, the EWCA observed that the issue of the appropriate forum is where the case can be suitably tried for the interests of all parties and for the ends of justice.¹⁹Ibid at (74). Parties had adduced evidence of French law that an anti-suit injunction could not be granted by a French court, but that the French court would recognise an anti-suit injunction granted by the English court and would not regard such an injunction as an undesirable interference in the dispute.²⁰Ibid at (75) read with (33). On this basis, the EWCA agreed with its previous decision in the case brought by one of the Other FIs that the English court was the appropriate forum.²¹Ibid at (75)-(76). Moreover, the suggestion that substantial justice could be obtained by UniCredit in France, whether in court or in arbitration was an illusion given that RCA could seek an injunction in Russia preventing UniCredit from pursuing any arbitration, and any orders made by the ICC tribunal would not likely be enforceable in Russia.²²Ibid at (76)-(77).
19. Having established that it should exercise jurisdiction over UniCredit’s claim, the EWCA held that a final injunction requiring RCA to terminate the Russian Proceedings was necessary for the following reasons:
    1. The starting point was that it was well established that English courts would generally grant an anti-suit injunction to prevent court proceedings from being brought in breach of an agreement to arbitrate, unless there are strong reasons not to do so²³Ibid at (81)..
    2. However, where the seat of arbitration is not England, the English court will need to be more cautious as the Court of the seat has primary responsibility for supervising any arbitration. For example, it may be inappropriate to grant an anti-suit injunction if the court of the seat would regard that as an unwarranted interference with its own jurisdiction, and this could be regarded as a strong reason not to grant an anti-suit injunction²⁴Ibid at (82)..
    3. Nonetheless, there was no reason in principle why the English court which has jurisdiction over a defendant pursuant to an English law contract should not grant an anti-suit injunction in support of an arbitration agreement providing for arbitration in a foreign seat. The relevant legislative framework suggested that Parliament saw no intrinsic objection to the English courts supporting foreign seated arbitral proceedings by granting anti-suit injunctions²⁵Ibid at (83)..
    4. There were no strong reasons why the anti-suit injunction should not be granted. Pertinently, the EWCA rejected RCA’s contention that the English court had no sufficient interest in or connection with the matter to justify the indirect interference with a foreign court which an anti-suit injunction entails. The EWCA found that there was sufficient interest or connection because the agreement to arbitrate is governed by English law, and there was a policy under English law that those who agree to arbitrate should adhere to their bargain.²⁶Ibid at (84).

Commentary

20. UniCredit is the first known decision of the English courts granting a final anti-suit injunction against a non-English party in support of a foreign seated arbitration, after a full inter partes hearing. Relying on English governing law as the jurisdictional gateway, it takes a robust and practical approach towards the issues of appropriate forum and upholding agreements to arbitrate – finding that justice would be illusory if it did not take jurisdiction over the matter and grant the relief sought.
21. In our view, the Singapore courts would likely follow the approach taken by the EWCA if faced with an application under similar circumstances. Starting with the jurisdictional issues, the Singapore courts apply the following test to determine whether an originating process can be served out of Singapore:²⁷Three Arrows Capital Ltd and others v Cheong Jun Yoong (2024) SGHC(A) 10 at (18); paragraph 63(2) of the Supreme Court Practice Directions 2021 (SCPD 2021).
    1. there is a good arguable case that there is sufficient nexus to Singapore; sufficient nexus may be shown by reference to any of the non-exhaustive list of factors set out in para 63(3) of the SCPD 2021;
    2. Singapore is the forum conveniens; and
    3. there is a serious question to be tried on the merits of the claim.
22. This test (which is in pari materia with the test applied by the English courts) is likely to be satisfied in the scenario under consideration:²⁸Putting aside element (c) for present purposes, as this turns on the facts and circumstances of each individual case.
    1. With respect to element (a), one of the factors under para 63(3) of the SCPD 2021 is that “the claim is brought to enforce … a contract … which is by its terms, or by implication, governed by the law of Singapore“. Accordingly, in a situation where the arbitration agreement is governed by Singapore law, this would likely satisfy the requirement of a good arguable case that there is sufficient nexus to Singapore. In this regard, we note that the Singapore courts also apply the presumption that where there has been no express choice of governing law of the arbitration agreement, the starting point in determining whether there is an implied choice of law is the governing law of the main contract.²⁹Anupam Mittal v Westbridge Ventures II Investment Holdings (2023) 1 SLR 349 at (62).
    2. As for element (b), the test of whether Singapore is the forum conveniens is likewise concerned with the ultimate question of whether Singapore is clearly the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice.³⁰MAN Diesel & Turbo SE and another v IM Skaugen SE and another (2020) 1 SLR 327 at (31). In circumstances where the court of the seat of arbitration lacks jurisdiction to grant anti-suit relief, it is likely that a Singapore court would consider itself to be the appropriate forum for which the case can be suitably tried for the interests of all the parties and for the ends of justice.

23. Turning to the discretionary exercise of whether the Singapore courts should grant an anti-suit injunction, the applicant in the scenario under consideration is presumptively entitled to anti-suit injunctive relief to restrain the respondent’s breach of arbitration agreement unless the respondent can show strong reasons why this should not be granted.³¹See: paragraph 3 above. Singapore courts have also held that issues of comity are less relevant in such a scenario since the courts are merely enforcing a contractual promise between the parties.³²See: paragraph 3 above. In the premises, it is likely that the Singapore courts would grant the anti-suit injunction, unless there is clear evidence that the court of the seat would consider this to be an interference with its jurisdiction.
24. We note that the UKSC has recently dismissed RCA’s appeal against the EWCA’s decision, thereby upholding the EWCA’s decision that English courts may exercise jurisdiction over claims for an anti-suit injunction where English law was chosen to govern the arbitration agreement. The UKSC’s judgment has so far only been delivered orally and in summary form³³The decision summary of the UKSC’s judgment rendered on 23 April 2024 can be viewed on the link: https://www.supremecourt.uk/watch/uksc-2024-0015/decision.html. It remains to be seen if the UKSC will provide additional nuances or guidance when it releases its full grounds of decision.

D. Conclusion

25. While the factual situations in Gate Gourmet and UniCredit were novel in their respective jurisdictions, they were both decided in accordance with the trite principle that parties should be held to their agreements (in this case, to arbitrate their disputes). By these decisions, the Singapore and English courts have demonstrated that they are committed to this principle not only in straightforward cases, but even where there are complications.³⁴Namely the existence of non-contractual claims against third parties in Gate Gourmet and the unavailability of interim injunctive relief from the court of the seat in UniCredit.
26. Legal disputes are growing ever more globalised and complex. Simultaneously, the international political order remains fractured by ongoing armed conflicts, strained diplomatic relations, and seemingly intractable competing interests. Against this backdrop, disputes over the proper forum to deal with international legal disputes will only intensify. As the primary custodians of dispute resolution processes, courts must continue to take a dispassionate, fair-minded approach towards having disputes heard in the appropriate forum – including the use of anti-suit injunctions, where necessary to properly direct and administer the conduct of the resolution of international disputes.

 

The views expressed in this article are the personal view of the authors and do not necessarily represent the views of their law firm, Baker McKenzie.Wong & Leow.