The Singapore Court of Appeal has given its much-anticipated decision in the latest chapter of the long running Astro v Lippo dispute, allowing an appeal by PT First Media TBK (a Lippo company) against enforcement orders issued by the Singapore High Court in respect of arbitral awards worth US$250 million made in favour of eight companies belonging to the Astro group. (PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV and others and another appeal  SGCA 57.)
The arbitration proceedings related to the failure of a proposed joint venture, the terms of which were contained in a Subscription and Shareholders’ Agreement. That agreement contained an arbitration agreement and was signed by various Lippo group companies (including the appellant) and the first to fifth respondents (which were companies belonging to the Astro group). The sixth to eighth respondents (which were also companies belonging to the Astro group) were not party to the Subscription and Shareholders’ Agreement but had provided funds and services relating to the proposed joint venture. Astro commenced arbitration proceedings seeking recovery of, among other things, sums invoiced by the sixth to eighth respondents and obtained an “Award on Preliminary Issues” from the tribunal that those respondents be joined to the arbitration proceedings as co-claimants.
It was open to Lippo to challenge the tribunal’s “Award on Preliminary Issues” in the Singapore courts under Article 16(3) of the UNCITRAL Model Law (which, with the exception of Chapter VIII, is given the force of law in Singapore pursuant to section 3(1) of the Singapore International Arbitration Act (the “IAA”)), however Lippo chose not to do so. Similarly, it was open for Lippo to apply for the four further awards that the arbitral tribunal proceeded to make against it to be set aside under Article 34 of the UNCITRAL Model Law, however, Lippo again chose not to do so. The Singapore High Court proceeded to issue enforcement orders in respect of all five awards.
The Court of Appeal overturned the High Court’s decision, holding that Lippo’s election not to actively challenge the tribunal’s awards in the Singapore courts earlier in proceedings did not prevent it from challenging the tribunal’s jurisdiction before the Singapore courts at the enforcement stage. In reaching this decision the court found that the primary purpose of the IAA had been to give effect to the UNCITRAL Model Law, and that a respondent’s ability to either actively challenge a tribunal’s award (or preliminary ruling on jurisdiction) or resist enforcement of an award at a later stage under Article 36 of the UNCITRAL Model Law was fundamental to UNCITRAL Model Law. Although Article 36 of the UNCITRAL Model Law was not incorporated into the IAA pursuant to section 3(1) (as it fell within Chapter VIII of the UNCITRAL Model Law), the court found that its power to enforce an award under section 19 of the IAA had to be read consistently with UNCITRAL Model Law’s overall philosophy.
The court also rejected Lippo’s arguments that the appellant’s continued participation in the arbitration proceedings amounted to a waiver of its right to later challenge the arbitral tribunal’s jurisdiction or estopped the appellant from making the application. The court noted that the appellant had reserved its rights throughout.
The court proceeded to find that the arbitral tribunal had misinterpreted the SIAC Rules 2007 (to which the arbitration was subject) in ruling that it had the power, pursuant to Rule 24(b), to join the sixth to eighth respondents (all non-signatories to the arbitration agreement) to the proceedings. The court was influenced by the recent revisions of the SIAC Rules, which now expressly provide that parties can only be joined to arbitration proceedings if they are party to the same arbitration agreement.
By contrast, the court held that the tribunal did have jurisdiction over the first to fifth respondents. Therefore, the Singapore court orders in favour of those respondents had been validly made and could be enforced.
By confirming the key principle of an award debtor’s choice of actively applying to set aside an award or waiting to challenge an award in defence of enforcement proceedings, the Court of Appeal’s decision aligns Singapore with the UNCITRAL Model Law and brings it back more closely to the position under English law.
*A version of this article was originally published by Practical Law Arbitration http://uk.practicallaw.com/country/arbitration