Key takeaways

• A party to an arbitration agreement is prima facie entitled to an anti-suit injunction to restrain foreign tort proceedings against the party if such proceedings are in breach of the arbitration agreement.
• Further, if the foreign tort proceedings are also brought against non-parties to the arbitration agreement, the party to the arbitration agreement is prima facie entitled to an anti-suit injunction to restrain the proceedings against the non-parties if it has a sufficient interest (such as liability for damages).
• A "matter" which must be referred to arbitration is a substantial issue that is legally relevant and essential to a claim or defence and is susceptible to be determined by an arbitrator as a discrete dispute.

Background

The 1^st Applicant, Gate Gourmet Korea (GGK) was a joint venture between the 2^nd Applicant, Gate Gourmet Switzerland (GGS) and the Defendant Asiana Airlines ("Asiana"), whereby GGS would own 60% of the share capital of GGK and Asiana would own the remaining 40% pursuant to a Joint Venture Agreement between GGS and Asiana (JVA). The 3^rd Applicant Mr Christoph Schmitz ("Mr Schmitz") and the 4^th Applicant Mr Xavier Rossinyol Espel ("Mr Rossinyol") (collectively, the "Directors") are respectively the current and former Chief Executive Officers of the Gate Gourmet group of companies which GGK and GGS belong to ("Gate Group").

Pursuant to a Catering Agreement between GGK and Asiana (CA), GGK was to provide airline catering and handling services to Asiana for 30 years on an exclusive basis commencing 1 July 2018. In return for the exclusivity, GGK agreed to pay Asiana KRW 53.33 billion (which was the same sum that Asiana was due to pay for its 40% share in GGK under the JVA). The CA and the JVA were governed by Korean law and contained arbitration agreements in substantially the same form, requiring parties to submit any dispute to ICC arbitration seated in Singapore.

The Initial Dispute

The parties were unable to agree on the correct interpretation of the pricing mechanism for the catering services that GGK was to provide under the CA. The dispute was referred to arbitration in June 2019 by GGK seeking an order that Asiana pay all outstanding invoices and for a declaration that the pricing mechanism was binding. Asiana counterclaimed for a declaration that GGK was bound to negotiate and agree with Asiana on an adjusted price mechanism and for an order that GGK repay excess payments based on that adjusted price mechanism.

By its award in February 2021, the Tribunal upheld GGK's claims and dismissed Asiana's counterclaim ("Final Award"). Asiana's application to the Singapore courts to set aside the Final Award was unsuccessful at first instance and on appeal.

Indictment of Chairman Park

In May 2021, Park Sam-Koo, the Chairman of the Kumho Asiana Group which Asiana was part of ("Chairman Park") was indicted for embezzlement and breach of trust. Specifically, Chairman Park was accused of entering into a "Package Deal" whereby Asiana would grant the exclusive catering business license to GGK at a significant undervalue in exchange for the Gate Group funding another subsidiary of the Kumho Asiana Group ("Kumho & Co") by purchasing zero interest bonds with warrants in the amount of KRW 160 billion with a maturity date of up to 20 years (governed by a Bonds with Warrants Subscription Agreement, i.e., the BWA).

Chairman Park was tried and convicted. In August 2022, Chairman Park was sentenced to 10 years of imprisonment. Chairman Park's appeal against conviction is currently pending.

The Korean proceedings

As a result of the investigations against Chairman Park, Asiana commenced civil suits in the Courts of South Korea (i) against GGK seeking a declaration that the CA is invalid due to GGK's participation in the "Package Deal" which amounted to a breach of trust against Asiana ("Korean CA Proceedings"); and (ii) against GGS, Mr Schmitz, and Mr Rossinyol for damages for participating in the "Package Deal" which amounted to a breach of trust against Asiana ("Korean Compensation Proceedings").

The Applicants applied to the Singapore Court for declaratory and anti-suit relief in relation to the Korean CA Proceedings and Korean Compensation Proceedings.

Decision of the Singapore International Commercial Court

The Court granted anti-suit injunctions restraining Asiana from proceeding further with the Korean CA Proceedings and the Korean Compensation Proceedings.

Legal principles for anti-suit injunction to restrain foreign tort proceedings

After canvassing the relevant authorities, the Court held that there was an interest in preventing "forum fragmentation" by bringing separate claims in contract and tort on essentially the same issue in different jurisdictions. Accordingly, where an anti-suit injunction is sought by a party to an arbitration agreement to restrain foreign tort proceedings against itself and other non-parties to the arbitration agreement, the position is as follows:

1. The court should first interpret the arbitration clause to determine whether it extends to tort disputes and tort claims against non-parties.
2. If so, the court must decide whether bringing the tort claim against the party breaches the arbitration clause.
3. If so, the party is prima facie entitled to an anti-suit injunction in its favour.
4. If the party has a sufficient interest in the tort claim (such as liability for damages), it is also prima facie entitled to an anti-suit injunction in its favour to restrain the continuation of the claim as against the non-parties.
5. If it does not, the non-party can seek a non-contractual anti-suit injunction on the basis that the foreign proceedings are vexatious or oppressive.

Conclusion

The Court's decision in Gate Gourmet Korea Co. Ltd. and others v Asiana Airlines, Inc. [2023] SGHC (I) 23 is the latest chapter in the quest to develop just and efficient international dispute resolution mechanisms in an increasingly connected and globalised world. This decision highlights the strong judicial policy in preventing "forum fragmentation" and reaffirms the Singapore courts' commitment to a robust and commercially-sensible interpretation as to the scope of an arbitral tribunal's jurisdiction. 

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