ReSolution Issue 12, Feb 2017 | Page 25

In allowing First Media to resist enforcement, the Singapore Court of Appeal confirmed the principle of “choice of remedies”, under which passive remedies will still be available to an award debtor who did not utilise its active remedies, is fundamental to the UNCITRAL Model Law which Singapore adopted in 1994. Astro argued that Lippo had breached the principle of good faith by participating in the arbitration and only raising objections at the enforcement stage of the awards granted. The Singapore Court of Appeal disagreed, finding that the ‘choice of remedies’ principle meant that First Media’s failure to pursue active remedies to challenge the preliminary ruling or set aside the award did not prevent it from resisting enforcement by passive means, and was not a breach of good faith based on the following principles:
• ‘Active remedies’ means taking positive steps to invalidate an arbitral award such as by an application to challenge a preliminary ruling on jurisdiction, or to set aside an award; and
• ‘Passive remedies’ means resisting the recognition or enforcement of an award in the jurisdiction where and when the award is sought to be enforced.
Hong Kong Court of First Instance
In 2010 the Hong Kong Court (Court of first instance) granted Astro leave to enforce the awards in two orders (Hong Kong Orders). Initially, Lippo did not apply to have the orders set aside within the required 14-day timeframe, and judgment was entered in favour of Astro. It later came to light that Lippo’s inaction was due to a mistaken belief that it did not have any assets in Hong Kong which could be levied against in any enforced award. In July 2011, Lippo realised its error when Astro obtained a garnishee order to attach a US$44 million debt due to First Media, from a Hong Kong listed company.
In January 2012, First Media commenced proceedings for an extension of time to set aside the Hong Kong Orders, as well as substantive orders to set aside the Hong Kong Orders and garnishee order. First Media’s applications were dismissed at first instance. The Court found that First Media’s delay in taking any action against the awards amounted to bad faith, and declined to aid First Media to get out of its self-inflicted predicament. The Court also held that it could not rely on its discretion (under section 44(2) of the Ordinance) to allow enforcement as it was precluded by the good faith principle. The Court considered that to grant an extension of time in the circumstances would undermine the principle of finality, against the background of which questions of fairness fall to be judged. First Media appealed the decision.
Hong Kong Court of Appeal
The Court of Appeal declined to interfere with the Court of first instance decision against not extending the time limit for First Media’s application. However, the Court of Appeal found that the lower court’s decision on the principle of good faith was incorrect. The CA considered the lower court had misdirected itself on the exercise of discretion in relation to the good faith principle, and had not given sufficient weight to the findings of the Singapore Court of Appeal. In considering the purpose of the good faith principle, the CA considered the law of the seat of arbitration and the ruling of the supervisory court of the seat of arbitration, being Singapore, as particularly relevant.
The CA held that First Media was not in breach of good faith by reserving its right to resist enforcement despite not actively challenging the awards. This aligned with the ‘choice of remedies’ principle endorsed earlier by the Singapore Court of Appeal. The CA considered that the two principles: good faith and choice of remedies were not mutually exclusive but complementary, meaning that a party’s’ actions in line with one were not necessarily in detriment to the other.