Challenge to grant of permission to enforce a provisional award
DFM and DFL had entered into a settlement agreement, pursuant to which they agreed to dissolve their business relationship. The settlement agreement contained an arbitration agreement which provided for disputes to be resolved by arbitration under the Dubai International Financial Centre – London Court of International Arbitration Rules, with a seat in London.
A dispute arose and DFL commenced arbitration in April 2022. DFL later made an interim relief application to the tribunal seeking a freezing order against DFM’s assets. DFM filed an answer to the interim relief application but stated that it was filed “without prejudice to any of [its] rights, defences, and objections, including, for the avoidance of doubt, objections to the jurisdiction of the Tribunal”.
In November 2022, the tribunal issued a provisional award allowing the interim relief application. DFL subsequently obtained permission from the Singapore court to enforce the provisional award. DFM then filed an application to set aside the permission on the basis that the composition of the arbitral authority or the arbitral procedure had not been in accordance with the agreement of the parties.
Decision of the Singapore Court of Appeal
The sole issue before the Court of Appeal was whether DFM, having raised objections to the tribunal’s jurisdiction to hear the arbitration on the merits, had nonetheless submitted to its jurisdiction at least for the purpose of determining the interim relief application. The Court of Appeal (agreeing with the first instance judge) found that DFM did not object to the jurisdiction of the tribunal to determine the interim relief application and had, in fact, challenged the application on its merits instead. He had therefore submitted to the tribunal’s jurisdiction for this purpose and had waived his right to rely on Section 31(2)(e) of the International Arbitration Act (improper composition of tribunal) in resisting enforcement. This finding was sufficient to decide the present appeal.
However, Menon CJ went on to note the “interesting conceptual question” of whether a finding that DFM had submitted to the tribunal’s jurisdiction in respect of the interim relief application could be consistent with a finding that he had not submitted to the jurisdiction of the tribunal in respect of the substantive arbitration. The Court found that there was nothing inherently inconsistent in DFM submitting to the jurisdiction of the tribunal for the purposes of the interim relief application while reserving his position in relation to the substantive dispute. This is because:
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The standard to which an applicant must establish the relevant facts in an interim relief application is typically different to that required for the resolution of the substantive dispute. Determinations in an interim relief application, on issues such as jurisdiction, are often made applying a prima facie standard. In certain types of applications, it may also be that the applicant is required to show that it has a prima facie or a good arguable case on the merits. This was precisely the situation in this case.
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Findings made on a prima facie basis are typically provisional in nature and subject to revision after a full hearing. They are not meant to be final and determinative. As a result, where a party accedes to an arbitral tribunal’s jurisdiction in respect of an interim relief application, even where that application involves some consideration of the merits of the claims, this does not necessarily evidence an unequivocal, clear and consistent intention to submit to the jurisdiction of the arbitral tribunal to finally determine the merits of the matters in dispute.
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Ultimately, each case will turn on its facts, given that the inquiry into whether a party has submitted to an arbitral tribunal’s jurisdiction is necessarily a fact-sensitive one. On the facts of this case, it was clear that the determination of the interim relief application (1) had been on a prima facie basis; (2) had not involved a final determination; and (3) had necessarily come well before the determination of the substantive dispute.
Comment
This case is significant as it is the Singapore court’s first pronouncement on whether a party can submit to a tribunal’s jurisdiction in respect of an interim relief application, while maintaining its objection to the same tribunal’s jurisdiction in the main arbitration.
Notably, the court took the view that DFM had submitted itself to the tribunal’s jurisdiction for the purposes of the interim application even though DFM had (1) caveated that its interim relief answer, including its skeleton argument, was filed “without prejudice to any of [its] rights, defences, and objections, including, for the avoidance of doubt, objections to the jurisdiction of the Tribunal”; and (2) submitted a Statement of Defence to the same tribunal setting out its jurisdictional objection.
This decision highlights the importance of a respondent identifying any jurisdictional objections as early as possible in any arbitration. Thus, should the claimant bring an early interim application, the respondent would be able to plead a thorough jurisdictional objection. Even if the tribunal finds against the respondent and grants the interim application, the respondent will have reserved its right to challenge the interim order on jurisdictional grounds at the enforcement stage.
That said, in some cases it could be more cost-effective for a respondent to focus on contesting the interim application on the merits and wait to contest the tribunal’s jurisdiction fully in its statement of defence. A respondent who wishes to do this should, however, make it very clear that it is reserving its right to contest the tribunal’s jurisdiction in the main arbitration, for example by including a strong and clear caveat in its submissions at the interim application stage.
As a final note, this is another case which confirms the Singapore court’s pro-arbitration stance. As noted by a senior Singapore judge, the judiciary’s approach has been one of “minimal judicial interference”. Particularly for setting-aside application, the court’s preferred approach is to read the award supportively and in a manner that is likely to uphold it rather than to destroy it. This gives parties a sense of certainty and finality, and reaffirms Singapore’s status as a leading arbitration hub.
