In depth

The factual background to this case is summarized below:

• Cooperativa Muratori and Cementisti — CMC di Ravenna, Italy ("CMC") entered into a contract with Melamchi Water Supply Development Board ("MB") (a state-related entity in Nepal) ("Contract") to provide certain construction services for a project to alleviate chronic water shortage in Kathmandu Valley, Nepal.
• The Contract contained an arbitration agreement, which provided, among other things, for the "place of arbitration" to be Singapore ("Arbitration Agreement"). Disputes subsequently arose between the parties, and CMC commenced an arbitration against MB administered by the Singapore International Arbitration Center ("Arbitration").
• As the parties did not agree on the seat of the Arbitration (CMC maintained that the seat was Singapore while MB argued that the seat was Nepal), the issue was submitted to the tribunal for determination.
• The tribunal found in favor of CMC and issued a decision determining that the seat of the Arbitration was Singapore ("Seat Decision").
• Dissatisfied with the Seat Decision, MB applied to the Patan High Court in Nepal for the Seat Decision to be set aside (termed the "Second Annulment Application" in the SICC's judgment).
• In response, CMC applied for an interim anti-suit injunction to restrain MB from pursuing or continuing to pursue the Second Annulment Application or any other foreign proceedings to challenge the Seat Decision on account of the seat of the Arbitration being Singapore, among others.

Test for an anti-suit injunction

In addition to noting the well-established general principles applicable to the issue of anti-suit injunctions, the SICC began an analysis by noting the distinction between the following:

• A contractual anti-suit injunction, i.e., an injunction granted to restrain the defendant from pursuing foreign proceedings in breach of a jurisdiction clause or arbitration agreement unless there are strong reasons not to grant the injunction
• A noncontractual anti-suit injunction, i.e., an injunction granted to restrain the defendant from pursuing foreign proceedings that (i) unduly interfere with the process, jurisdiction or judgments of the forum court; or (ii) amount to vexatious or oppressive conduct

In the present case, CMC was seeking a contractual anti-suit injunction to restrain MB from breaching the Arbitration Agreement. In an application for a contractual anti-suit injunction, the applicable test may be condensed to the following requirements:

• The defendant is amenable to the jurisdiction of the court.
• The foreign proceedings are in breach of an exclusive jurisdiction clause or arbitration agreement between the parties.
• There are no strong reasons to decline enforcement of the parties' agreement.

This contrasts with an application for a noncontractual anti-suit injunction, where, in lieu of showing that the institution of foreign proceedings was or would be in breach of an agreement between the parties, the applicant will generally also have to address the court on the following matters:

• Whether Singapore is the natural forum for the resolution of the dispute between the parties.
  • This consideration is superseded where there is a contractual agreement between the parties to submit to the jurisdiction of the Singapore courts.
• Whether the foreign proceedings would be vexatious or oppressive to the applicant if they are allowed to continue.
  • This consideration does not directly feature in an application for a contractual anti-suit injunction as the enforcement of contractual right is a separate inquiry distinct from the requirement of vexatious or oppressive conduct. Although this factor may be relevant to the determination of whether there are strong reasons to decline enforcement of the parties' agreement.
• Whether the anti-suit injunction would cause any injustice to the defendant by depriving the defendant of legitimate juridical advantages sought in the foreign proceedings.
  • As above, this consideration does not directly feature in an application for a contractual anti-suit injunction.

On the facts of the case, the SICC found that the contractual anti-suit injunction sought by CMC should be granted for the following reasons:

• MB was amenable to the jurisdiction of the SICC. This is because the effect of the designation of Singapore as the "place of arbitration" in the Arbitration Agreement was either an express or implied agreement by the parties for Singapore to be the seat of the Arbitration. It is well-established that choosing a seat embodies the parties' agreement to submit to the curial jurisdiction of the courts of the seat.
• MB's Second Annulment Application breached the Arbitration Agreement. This is because a choice of seat by the parties is generally construed as a choice of the exclusive jurisdiction in which the parties can challenge decisions made by an arbitral tribunal. Therefore, MB's Second Annulment Application was a breach of its negative obligation that it would not challenge the Seat Decision other than before the Singapore courts.
• There were no strong reasons not to grant an anti-suit injunction to restrain MB's breach of the Arbitration Agreement. One example of such "strong reasons" premised on comity would be an excessive delay in bringing the injunctive application, causing the foreign proceedings to become far too advanced. However, this was not the case here.

In coming to its decision, the SICC also noted the well-established principle that when granting an injunction, the court does not contemplate that it will be disobeyed. Therefore, the potential futility of the anti-suit injunction due to MB's noncompliance and CMC's inability to enforce it in Nepal, was not a reason for the SICC to refrain from granting the injunction.

Relevance of sovereign immunity where a state or state-related entity is involved

The SICC also considered whether MB enjoyed sovereign immunity from the jurisdiction of the Singapore courts pursuant to Section 3(2) of the State Immunity Act 1979 (SIA), which provides that:

… [a] court is to give effect to the immunity conferred by [Section 3 of the SIA] even though the State does not file and serve a notice of intention to contest or not contest in the proceedings in question.

In so doing, the SICC held as follows:

• The issue of sovereign immunity relates to the court's jurisdiction and there is a duty on a domestic court to consider the issue on its own motion. This is also because if a court exercises jurisdiction over a foreign state that is entitled to state immunity, there is a breach of international law.
• There is a distinction between the court's "adjudicative jurisdiction" (i.e., jurisdiction to adjudicate upon claims against foreign states) and "enforcement jurisdiction" (i.e., jurisdiction to enforce by legal process judgments pronounced and orders made in the exercise of the court's adjudicative jurisdiction).
• The grant of an anti-suit injunction to enforce an arbitration agreement falls within the court's enforcement jurisdiction rather than its adjudicative jurisdiction. The submission to the court's adjudicative jurisdiction does not equate to submission to the court's enforcement jurisdiction. The former requires a specific reference to a waiver of sovereign immunity or a clear and unambiguous reference to the state's consent to an award being wholly enforceable.
• As such, without a specific waiver or clear and unambiguous reference to the state's consent, no anti-suit injunction may be issued against a state.

Specifically for this case, the SICC held as follows:

• As there was no specific waiver or clear and ambiguous reference to MB's consent for an anti-suit injunction being wholly enforceable against it, no anti-suit injunction may be issued or maintained against MB if MB enjoyed sovereign immunity.
• In this regard, the SICC determined that MB was a separate entity from the state of Nepal and that, pursuant to Section 16(2) of the SIA, MB would only enjoy sovereign immunity from the court's enforcement jurisdiction if, among other things, the present proceedings related to anything done by MB in the exercise of sovereign authority.
• However, on the facts, the SICC determined that the Contract, being a contract for the supply of services by CMC, was a commercial transaction as defined under Section 5(3)(a) of the SIA and did not concern the exercise of sovereign authority. Therefore, MB was not entitled to sovereign immunity from the jurisdiction of the Singapore courts and the anti-suit injunction sought by CMC may be granted against MB.

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