Singapore and English Courts Examine Availability of Anti-suit Injunctions in Claims Against Non-parties to Arbitration Agreements

Singapore and England & Wales have longstanding reputations as arbitration-friendly jurisdictions. Where parties have entered into an arbitration agreement but one party nonetheless commences court litigation over a claim covered by that arbitration agreement, the Singapore and English courts will typically lean towards granting an anti-suit injunction (“ASI”) to restrain that breach of the arbitration agreement.

Whether a third party who is a defendant in a court litigation can rely on an arbitration agreement it is not party to, so as to seek an ASI (and thereby stymie the relevant litigation against it), is not so straightforward. In the recent cases of Asiana Airlines, Inc v Gate Gourmet Korea Co, Ltd [2024] SGCA(I) 8 (“Asiana Airlines”) and Renaissance Securities (Cyprus) Ltd v ILLC Chlodwig Enterprises [2024] EWHC 2843 (Comm) (“Renaissance Securities”), both the Singapore and English courts considered whether to grant an ASI to restrain a claim brought by a party to an arbitration agreement against a third party. While both courts agreed that an ASI could in principle be available, they ultimately declined to grant the injunction sought on the facts. The potential availability of an ASI on these facts has considerable implications in context of multiparty transactions, particularly where not all parties may be signatories to all transaction documents or where the transaction documents may have different jurisdictional provisions.

Background to Asiana Airlines

Asiana Airlines, Inc (“Asiana”) entered into two agreements dated 30 December 2016: (1) a joint venture agreement with Gate Gourmet Switzerland (“GGS”) to create a new entity Gate Gourmet Korea (“GGK”) (the “JVA”); and (2) a catering agreement with GGK (the “CA”). Both the JVA and CA contained arbitration agreements specifying Singapore as the seat of arbitration.

A dispute arose between the parties as to the interpretation of the pricing mechanism within the CA. As a result, on 17 June 2019, GGK commenced an ICC arbitration against Asiana seeking payment of all outstanding invoices, and Asiana counterclaimed seeking an adjusted price mechanism and the repayment of excess sums having regard to the adjusted price. On 18 February 2021, the arbitral tribunal allowed GGK’s claims and dismissed Asiana’s counterclaims. Asiana subsequently applied to the Singapore courts to set aside the award, which was denied both at first instance and on appeal.

In the meantime, Asiana commenced two sets of court proceedings in Korea: the first was against GGK seeking, amongst other things, a declaration that the CA was null and void; and the second was against GGS and two of GGS’s directors (together with GGK, the “Gate Gourmet Parties”) on the basis that they were liable in tort under the Korean Civil Code. The two GGS directors were third parties as they were not signatories to the arbitration agreements in either the JVA or the CA.

The Gate Gourmet Parties then sought ASIs from the Singapore courts to restrain the Korean proceedings on the basis that they were in breach of the relevant arbitration agreement or, alternatively, they were vexatious and oppressive.

At first instance, the Singapore High Court granted ASIs restraining both sets of Korean proceedings.

Background to Renaissance Securities

Renaissance Securities (Cyprus) Limited (“Renaissance”) entered into investment service agreements with each of the defendants in similar terms (the “ISAs”). Under the ISAs, Renaissance held certain assets belonging to the defendants. The defendants requested the return of their assets. However, Renaissance refused to do so on the basis that each of the defendants was (directly or indirectly) sanctioned and therefore returning the assets would be in breach of sanction laws, which the defendants disputed.

Each ISA contained an arbitration agreement specifying London as the seat of arbitration and that the arbitration be conducted under LCIA Rules. Instead of referring the dispute to arbitration, however, the defendants commenced contractual claims against Renaissance in the Russian courts to demand the return of their assets. On 3 November 2023, Renaissance successfully obtained an ASI from the English court restraining those proceedings.

Later, the defendants commenced tortious claims against certain entities related to Renaissance (known as the Renaissance Russia entities or “RREs”) and applied to join the tortious claims to the contractual claims pending before the Russian courts. Notably, the RREs were third parties to the arbitration agreements: while they were part of the same corporate group as Renaissance, they were not themselves party to the ISAs.

Renaissance then obtained a series of orders from the English court restraining the continuation of Russian proceedings and the joinder of the tortious claims. Renaissance also applied to extend the ASIs previously obtained to restrain the defendants from pursuing or continuing the tortious claims against the RREs on the basis that those claims were within the scope of the arbitration agreement or that the claims were vexatious or oppressive.

Whether a third party can benefit from an arbitration agreement is a matter of contractual interpretation.

Under both English and Singapore law, a party seeking to obtain an ASI to restrain a breach of an arbitration agreement must demonstrate that the arbitration clause covers such claims.

Both the English and Singapore courts emphasised in Renaissance Securities and Asiana Airlines respectively that the starting position is that, absent express language to the contrary, only disputes between the parties to the arbitration agreement are covered. However, an ASI may be available where, on a proper interpretation of the contract, the parties intended a third party to benefit from their arbitration agreement. 

In Renaissance Securities, the English High Court highlighted certain factors that evinced an intention that third parties be excluded from the arbitration agreement, such as: (1) the Contracts (Rights of Third Parties Act) 1999 being excluded; and (2) the terms, rights, and obligations in the arbitration agreement being defined by reference to the parties alone. In particular, the arbitration agreement provided that the award would be binding on the parties and the dispute should be escalated between the parties – therefore, disputes with third parties were not contemplated by the agreement. The English High Court therefore dismissed Renaissance’s application, holding that (a) the tortious claims against the RREs were not within scope of the arbitration agreement; and (b) given that the RREs were not party to any of the arbitration agreements and therefore the tortious claims against them could not be arbitrated, Renaissance’s argument that those claims being brought in the Russian courts were vexatious or oppressive could not succeed.

In a similar vein, the Singapore Court of Appeal in Asiana Airlines concluded that there was “nothing in the JVA Arbitration Agreement (in cl 34.2 of the JVA [i.e. the arbitration clause]) to suggest that it was intended by Asiana and GGS to apply to the directors [i.e. the third parties].” Therefore, on appeal, the Singapore Court of Appeal upheld the ASI in respect of the claim against GGK but set aside the ASI restraining the claims against GGS and its directors. The Singapore Court of Appeal held that (a) the claims against GGS and its directors were not within the scope of the arbitration agreement; and (b) in any event the claims were not vexatious or oppressive because they did not have the effect or purpose of circumventing the arbitration agreement, nor were the claims brought in bad faith.

Takeaways

As mentioned above, England & Wales and Singapore are widely regarded as jurisdictions that support arbitration. When parties enter into an arbitration agreement, the courts will typically lean towards enforcing it. The courts also often take a generous approach to the interpretation of arbitration agreements, at least as between the contracting parties.

However, these decisions suggest that neither the English nor the Singapore courts will extend the benefit or burden of arbitration to third parties unless the arbitration agreement clearly provides so. This emphasises the importance of clear and precise drafting in arbitration agreements, particularly in multi-party transactions or where group companies are involved in discharging a contracting party’s responsibilities:

• Renaissance Securities and Asiana Airlines have suggested that different courts may take different approaches to the interpretation of the arbitration clause where the claim against the third party is a joint tort committed by both the third party and a contracting party. Renaissance Securities (citing Clearlake Shipping Pte Limited v Ziang Da Marine Patient E Limited [2019] EWHC 2284 (Comm)) indicates that in such a scenario, the English courts may be inclined to conclude that the objective interpretation of an arbitration clause will tend to include a tort claim against a third party because that will help prevent forum fragmentation on essentially the same issues and such fragmentation is contrary to what the parties are likely to have objectively intended. On the contrary, the Singapore courts are unlikely to reach the same conclusion. The Singapore Court of Appeal in Asiana Airlines noted that the risk of forum fragmentation should not be overstated; in the context of arbitration agreements especially, disputes are inherently prone to forum fragmentation because the parties have chosen to remove such disputes from their natural forum – the national courts. The risk of forum fragmentation should not, therefore, prevail over principle. Parties should therefore take care to use precise and unambiguous drafting to ensure that the same clause will be interpreted consistently across various jurisdictions.

• It is conceivable that, in some situations, there are efficiencies in bringing claims against third parties in the same forum. Careful drafting can be used to ensure that claims against related parties (including a contracting party’s directors or employees where appropriate) are also within the scope of an arbitration agreement.

• The choice of arbitral rules may affect the analysis – the English court in Renaissance Securities suggested that where parties have selected arbitration rules which permit the joinder of third parties, such choice could affect the analysis of whether an ASI is available with reference to the arbitration agreement. However, because this was not a point argued before the judge, the English court did not provide any further guidance on this issue.