Application to adjourn enforcement proceedings dismissed (Singapore High Court)

by Hogan Lovells
Contact

The Singapore High Court has refused an application to challenge the enforcement of a Danish Institute of Arbitration award, and dismissed an alternate argument for the adjournment of the enforcement proceedings. The applications to challenge enforcement were made pursuant to section 31(2)(c) and section 31(4)(b) of the International Arbitration Act (IAA) (Cap 143A, 2002 Rev Ed), on the basis that the applicant had been unable to properly present its case in the arbitration and that enforcement of the award would be contrary to the public policy of Singapore because of allegations of fraud committed by the respondent. However, the court found that no case for fraud had been made out and that the award should be immediately enforced.
For the first time the Singapore court also considered the application of section 31(5)(a) of the IAA, that the enforcement of the award should be adjourned pending determination of an application to set aside the award at the seat, which in this case was Denmark. The court concluded that no adjournment should be granted and noted that the approach in Singapore to an application under section 31(5)(a) is to strike a balance between the competing interests of the parties; the court will come down on the side of an outcome that is the most just or the least unjust. (Man Diesel Turbo SE v I.M. Skaugen Marine Services Pte Ltd [2018] SGHC 132, 28 May 2018).

Background

Section 31(2)(c) of the International Arbitration Act (IAA) provides:

“2. A court so requested may refuse enforcement of a foreign award if the person against whom enforcement is sought provides to the satisfaction of the court that –

(c) he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case in the arbitration proceedings.”

Section 31(4(b) of the IAA provides:

“4. In any proceedings in which the enforcement of a foreign award is sought by virtue of this Part, the court may refuse to enforce the award if it finds that –

(b)enforcement of the award would be contrary to the public policy of Singapore.”

Section 31(5)(a) of the IAA provides:

“31 (5) – Where, in any proceedings in which the enforcement of a foreign award is sought by virtue of this Part, the court is satisfied that an application for the setting aside or for the suspension of the award has been made to a competent authority of the country in which, or under the law of which, the award was made, the court may and may –

(a) if the court considers it proper to do so, adjourn the proceedings or, as the case may be, so much of the proceedings as relates to the award.

Facts

The claimant in the arbitration, Man Diesel & Turbo SE (Man Diesel), a German manufacturer of marine engines, commenced arbitration proceedings in Denmark to compel the respondent, a Singaporean subsidiary of the Norwegian LNPG carrier group IM Skaugen SE (Skaugen), to fulfil its outstanding contractual obligations under sale and purchase agreements (SPAs) for four marine diesel engines and propellers (Shipsets). In 2008, Skaugen took delivery and paid for the first two Shipsets. However, Skaugen made several attempts at postponing the delivery for the remaining two Shipsets for various reasons. Separately, technical problems arose in relation to the first two Shipsets, and further issues arose when irregularities relating to Factory Acceptance Tests (FATs) on the diesel engines in those Shipsets came to light in 2011. Man Diesel maintained that Skaugen had simply lost interest in Shipsets 3 and 4 as a result of the 2008 global financial crisis, which affected the shipping industry, and instead viewed Skaugen’s allegations of irregularities in the FATs as an excuse to get out of the SPAs with Man Diesel.

Skaugen argued that it was not obligated to take delivery of the remaining two Shipsets as:

  • It had been fraudulently induced by Man Diesel to enter into the SPAs.
  • The SPAs had been terminated in 2012 by mutual agreement of the parties.
  • The SPAs were terminated for cause, namely for defects relating to two of the Shipsets.

Man Diesel argued in response that the defects occurred long after the expiry of the warranty period in the SPAs and that the irregularities in the FATs were irrelevant. Skaugen also applied to include a new counterclaim regarding excessive fuel consumption relating to the engines in the first two Shipsets. In support of its new counterclaim, Skaugen sought disclosure of documents relating to Man Diesel’s internal investigations of fuel consumption tests and also sought to adduce an expert report that showed that Man Diesel had manipulated the fuel consumption tests of its engines. Skaugen also requested a postponement of the oral hearing. The tribunal rejected Skaugen’s application to postpone the oral hearing. It also declared as inadmissible, and struck from the record, both Skaugen’s new counterclaim and the expert report prepared in support of the new counterclaim, and disallowed any further disclosure.

The Award

The final award was rendered with a majority decision finding that the SPA for the diesel engines had been terminated by Man Diesel on the account of Skaugen’s refusal to take delivery of engines 3 and 4, and to pay the outstanding price. It also determined that the SPA for the propellers remained valid and binding, and Skaugen was ordered to take delivery of propellers 3 and 4. Skaugen made an application to the Singapore High Court to challenge enforcement of the award, or alternatively to stay or adjourn the enforcement of the award pending the determination of Skaugen’s application in the Danish courts to set it aside.

Skaugen argued:

  • It had a strong case in the setting aside proceedings before the Danish courts. An immediate enforcement of the award would pre-empt the decision of the court of the seat.
  • The setting aside proceedings before the Danish courts would be disposed within a relatively short period of time.
  • There would be no prejudice to Man Diesel if an adjournment were granted as there were no assets in the jurisdiction against which enforcement could be sought.

Decision

The Singapore High Court rejected the application to adjourn the enforcement proceedings. A decision regarding an adjournment of the enforcement proceedings is a matter of discretion for the enforcing court and therefore, when faced with a section 31(5)(a) application, there is no threshold test. Rather, the enforcing court is required to strike a fair balance and come down on the side of an outcome that is the most just or least unjust. The court also noted that the applicant must at least show, from the strength of its arguments, that it is demonstrably pursuing a meritorious setting aside application before the court of the seat. This is aimed at guarding against attempts at frustrating or delaying the enforcement of a valid foreign award. It considered that if the setting aside application was lacking in merits, there would be little or no tangible prejudice to the award debtor if their application for an adjournment was refused. The court also noted that another factor the enforcing court is concerned with is the likely consequences of an adjournment; in particular, the likely length of delay. In this case, the court considered that the delay would be too long and the adjournment sought would therefore prejudice Man Diesel.

As there were no Singapore decisions on a section 31(5) adjournment application, the court considered it should therefore take guidance from English authorities. In this regard, the court noted that the English authorities show a number of factors that should be considered:

  • Whether the application to set aside before the court of the seat is bona fide and not simply a delay tactic.
  • The length of adjournment, the likely consequences of an adjournment and any resulting prejudice.
  • The specific circumstances of each case.

Ultimately, the court took the view that no adjournment should be granted.

The setting aside application before the seat-court

One of the factors raised by Skaugen in its application for an adjournment was that it had a strong case in the  setting aside proceedings before the Danish courts, and an immediate enforcement of the award would pre-empt the decision of the Danish courts. The substance of Skaugen’s application for setting aside the award in the Danish courts arose from the tribunal’s decision to disallow Skaugen’s new counterclaim and its related expert evidence. However, the court found that Skaugen had not shown that the tribunal had acted beyond the bounds of its discretion, nor shown how the tribunal’s rejection of the additional material was a denial of procedural justice. The court added that it is a well-accepted principle of arbitration that a tribunal is master of its own procedure and has wide discretionary powers to conduct the arbitration in any way it sees fit, subject to any procedure agreed to by the parties and that it is in a manner that is neither manifestly unfair nor contrary to natural justice.

Challenge to enforcement of the award

The grounds raised by Skaugen to resist enforcement were the same as the grounds relied upon in the setting aside application before the Danish courts. The court noted that for a challenge under section 31(4)(b) of the IAA, the court has to consider the public policy of Singapore, and the court found that Skaugen had not demonstrated that the public policy of Singapore was in any way engaged. It noted that the evidential threshold for establishing fraud is a high one as demonstrated in Prometheus Marine Pte Ltd v Ann Rita King [2018] 1 SLR at [55]. Further, the court referred to the recent decision of the English Court of Appeal in RBRG Trading (UK) Ltd v Sinocore International Co Ltd [2018] EWCA 838, (see Legal update, Enforcement of CIETAC award not contrary to public policy in case of possible attempted fraud (English Court of Appeal), which is illustrative of the high evidential requirement to prove fraud and further demonstrates the need to show a causal connection between the alleged fraud and the tribunal’s decision.

Comment

This is the first decision in Singapore concerning the application of section 31(5)(a) of the IAA. The Singapore High Court examined the circumstances in which proceedings for the enforcement of a foreign award may be adjourned and noted that whilst section 31(5)(a) does not provide a threshold test in respect of a grant of an adjournment, the approach in Singapore is to strike a balance between the competing interests and the court will come down on the side of an outcome that is the most just or least unjust. In this case, the applicant sought to set aside the award in Denmark, and if it failed in that challenge, to then resist enforcement of the award in Singapore. At the same time, it sought an adjournment of the enforcement proceedings in Singapore pending the outcome of the setting aside application in Denmark. Such conduct, the Singapore court said, brought to the surface the perennial tension between the notion of finality of an international arbitral award and the two remedies available to an award debtor, that is, to set aside an award at the seat and/or resist enforcement at the enforcement court. The court noted that the concern most often voiced is the award debtor’s deployment of one or both of these remedies as a delay tactic used when there is no valid reason to challenge the award at the seat or to resist enforcement in other jurisdictions. It is left to the enforcing court to decide whether or not to adjourn enforcement proceedings. Therefore, an applicant must therefore show that it is demonstrably pursuing a meritorious setting aside application at the seat so as to guard against delay tactics.

A version of this Legal update was first published on Practical Law and is reproduced with the kind permission of the publishers.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hogan Lovells | Attorney Advertising

Written by:

Hogan Lovells
Contact
more
less

Hogan Lovells on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.