[From Singapore Office] Court of Appeal Decision – Can Arbitration Award Debtor Re-Litigate Jurisdictional Issues in Another Court?

Background of the Dispute

This decision concerns an award issued by a tribunal against the appellant, the Republic of India, in a Switzerland-seated arbitration.

The respondent, Deutsche Telekom, a German company, commenced arbitration against India in 2013 pursuant to a bilateral investment treaty between Germany and India, alleging that India had wrongfully terminated a satellite leasing agreement between an Indian state-owned entity and a company of which Deutsche Telekom was a shareholder. Following the tribunal’s issuance of an interim award in favour of Deutsche Telekom on 13 December 2017, India made an unsuccessful application to the Swiss court (i.e., the seat court) to set aside the award. Subsequently on 27 May 2020, Deutsche Telekom obtained a final award of USD 93.3 million.

Subsequently when Deutsche Telekom proceeded to enforce the final award in Singapore, India applied to resist enforcement on the same grounds that had been rejected by the Swiss court.

In the first instance judgment, the Singapore International Commercial Court dismissed India’s application to resist enforcement on the premise that the Swiss seat court’s judgment had a res judicata effect precluding India from resisting enforcement in subsequent proceedings on the same grounds that were raised before the Swiss court. India then appealed to the SGCA.

Key Takeaways from the Judgment

The SGCA dismissed the appeal on the grounds of transnational issue estoppel.

The SGCA reiterated the requirements for transnational issue estoppel:

1. Generally under the doctrine of transnational issue estoppel, parties in Singapore court proceedings are estopped (i.e. prevented) from raising issues that have been decided in a prior foreign court judgment. The test for transnational issue estoppel is as follows:
   1. The foreign judgment must be capable of being recognised in Singapore, meaning that it must (1) be a final and conclusive decision on the merits; (2) originate from a court of competent jurisdiction that has transnational jurisdiction over the party sought to be bound; and (3) not be subject to any defences to recognition.
   2. There must be commonality of the parties to the prior foreign proceedings and the proceedings in Singapore.
   3. The subject matter of the estoppel must be the same as that which has been decided in the prior judgment.
2. There are some limited exceptions to transnational issue estoppel, including where the foreign judgment conflicts with the public policy of Singapore or the foreign judgment contains a sufficiently serious and material error.

The SGCA held that besides foreign judgments, the doctrine of transnational issue estoppel is also applicable to a seat court’s decision regarding the validity of an arbitral award. Transnational issue estoppel respects the parties’ choice of arbitral seat in a principled manner. By making that choice, the parties have chosen a jurisdiction that will have primacy in relation to many matters concerning the arbitration. In line with that, the enforcement court should ordinarily give effect to the prior decision of the seat court.

The SGCA added that transnational issue estoppel also alleviates the problem of inconsistent judicial outcomes between the enforcement and the seat courts, and limits the extent to which matters determined by a competent seat court can be re-litigated, thus reducing the wastage of time and resources.

In the present case, the SGCA found that the test for transnational issue estoppel was satisfied, and none of the exceptions applied. India was therefore precluded from bringing the same jurisdictional objections before the Singapore courts.

Comments

This case is a welcome decision for award creditors looking to enforce an award in Singapore as award debtors cannot frustrate or delay enforcement proceedings by re-litigating issues that have already been determined by the seat court, unless the limited exceptions apply.

Additionally, under this new precedent, it appears that whichever jurisdiction that first determines any challenge to an award would generally be the final arbiter on the issue. Accordingly, an award debtor seeking to challenge an award should therefore weigh the strategic and legal merits of doing so by way of a setting aside application in the seat jurisdiction, against that of waiting to resist enforcement before an enforcement court, before making a considered decision to take either course.