Read the full judgment text of CACV 272/2015 on BabelCite. This Court of Appeal judgment was delivered on 5 December 2016 before Kwan JA, Lok J.
Civil procedure – Arbitration – Enforcement of foreign arbitral awards – New York Convention – Arbitration Ordinance, Cap 341, sections 42, 43, 44, 2GG – Extension of time to apply to set aside enforcement orders – 'Good faith' principle under section 44(2) – 'Choice of remedies' under Model Law – Article 16(3) UNCITRAL Model Law – Supervisory court findings – Stage 1 and stage 2 enforcement – Section 43 pre-conditions – Issue estoppel – The underlying dispute arose from a Subscription and Shareholders' Agreement dated 11 March 2005 between companies of the Lippo Group (Indonesia) and the Astro Group (Malaysia) for the provision of multimedia and television services in Indonesia through a joint venture vehicle, Direct Vision. The SSA contained an arbitration agreement referring disputes to SIAC arbitration under Singapore law. After the joint venture failed to close, the Additional Parties (the 6th to 8th applicants) provided funds and services to Direct Vision. Following commencement of Indonesian court proceedings by Ayunda, the Astro group commenced SIAC arbitration in October 2008. The Tribunal held it had power to join the Additional Parties under Rule 24(b) of the 2007 SIAC Rules and ultimately awarded over US$130 million, of which all but US$700,000 was payable to the Additional Parties as non-contractual restitutionary relief. Lippo did not challenge the Awards in Singapore, and they became final and binding. In 2013, the Singapore Court of Appeal refused enforcement of the Awards in favour of the Additional Parties against First Media on the ground there was no valid arbitration agreement. Astro obtained Hong Kong enforcement orders from Saunders J on 3 August and 9 September 2010, and judgment was entered on 9 December 2010. First Media did not apply to set aside the Hong Kong Orders or Hong Kong Judgment within the 14-day period specified. First Media's stance changed when Astro obtained a garnishee order nisi on 22 July 2011 attaching a US$44 million debt owed to First Media by AcrossAsia Limited. First Media issued a summons on 18 January 2012 seeking an extension of time to apply to set aside the Hong Kong Orders and Hong Kong Judgment, an order setting them aside, and discharge of the garnishee order nisi. Chow J refused the extension of time and held that in any event First Media could not rely on section 44(2) of the Arbitration Ordinance to resist enforcement on the ground of breach of the 'good faith' principle. First issue – whether First Media was precluded by the 'good faith' principle from relying on section 44(2) of the Ordinance: The Court of Appeal held that the judge erred. The 'good faith' principle established in China Nanhai Oil Joint Service Corporation Shenzhen Branch v Gee Tai Holdings Co Ltd and approved in Hebei Import & Export Corp v Polyteck Engineering Co Ltd primarily applies where a party conceals a procedural or jurisdictional objection and proceeds with the arbitration as if no irregularity existed. It should not be applied so as to conflict with the 'choice of remedies' principle recognised under the Model Law and Singapore law, under which an award debtor may reserve its position and raise jurisdictional objections at the enforcement stage even if it did not pursue active remedies such as a challenge under Article 16(3) of the Model Law. In exercising the discretion under section 44(2), the fundamental jurisdictional defect that the Awards were made without jurisdiction must be taken into account, and a Hong Kong court should give weight to the findings of the supervisory court of the seat of arbitration. Second issue – whether the judge erred in refusing to extend time to First Media: The Court of Appeal held that the judge did not err. The 14-month delay was substantial against the 14-day time limit in Order 73 rule 10(6) of the Rules of the High Court, and First Media's deliberate and calculated decision not to take any action in Hong Kong (taken in the belief that it had no assets here) was a factor telling against it. The judge's three factors (length of delay, deliberate and calculated decision, and the fact that the Awards remained valid and binding) were not irrelevant, and his weighing of the various factors was not 'plainly wrong'. The Terna Bahrain guidance on extensions of time in the arbitration context is of particular relevance given the policy of speedy finality underpinning section 2AA(1) of the Ordinance. Third issue – whether the section 43 pre-conditions to enforcement (stage 1) were satisfied: The Court of Appeal held that the judge correctly applied the law in Dardana Ltd v Yukos Oil Company and Rainstorm Pictures Inc v Lombard-Knight; under stage 1, the award creditor is only required to produce the original arbitration agreement and a duly authenticated award, and any argument about the validity of the arbitration agreement is a stage 2 matter under section 44. Outcome: Appeal dismissed; 60% of the costs of this appeal awarded to Astro with a certificate for three counsel.
Legal issues: Scope of 'good faith' principle in section 44(2) enforcement · Exercise of discretion to extend time for setting aside application · Stage 1 vs Stage 2 enforcement pre-conditions under section 43
Outcome: Appeal dismissed.
Cites 4 cases