Interim jurisdiction upheld: provisional award enforced in Singapore despite pending jurisdictional objection

Background

This appeal arose out of an application by the appellant to set aside the Singapore High Court’s order granting the respondent leave to enforce a provisional award granting interim relief issued in a Dubai International Arbitration Centre (DIAC) arbitration. The appellant had applied to set aside the leave order under Section 31(2)(e) of the Singapore International Arbitration Act 1994, on the basis that the composition of the arbitral authority or the arbitral procedure had not been in accordance with the agreement of the parties.

The arbitration agreement between the parties provided for arbitration under the Dubai International Financial Centre – London Court of International Arbitration (DIFC-LCIA) Rules. However, the DIFC-LCIA was abolished in September 2021 pursuant to a decree issued by the Ruler of Dubai (the Decree). In March 2022, the DIAC and LCIA announced that all DIFC-LCIA cases commenced and formally registered on or before 20 March 2022 would be administered by the LCIA, with all cases commenced after that date to be administered by the DIAC under its Rules. However, the Decree was silent as to how future disputes arising under a DIFC-LCIA arbitration clause would be dealt with. 

The respondent commenced arbitration in the DIAC on 2 April 2022 and subsequently sought interim relief from the arbitral tribunal, which was granted by way of the provisional award. The respondent thereafter brought enforcement proceedings in Singapore and obtained the leave order, which the appellant then applied to set aside. The appellant submitted that the provisional award should not be enforced because, amongst other things, the parties had only agreed to the DIFC-LCIA Rules under the arbitration agreement and the Decree did not substitute and/or amend the arbitration agreement in this regard, and the appellant had objected to the jurisdiction of the tribunal in the arbitration.

The Singapore High Court dismissed the appellant’s application and found that:

The arbitration procedure under the DIAC Rules was not in accordance with the parties’ agreement for arbitration under the DIFC-LCIA Rules;

However, the provisional award should be enforced, because the appellant had nonetheless demonstrated an unequivocal, clear and consistent intention to submit to the tribunal’s jurisdiction in respect of the interim relief application;

The conclusion that the appellant had submitted to the tribunal’s jurisdiction in respect of the interim relief application was separate and distinct from the question of whether the tribunal had jurisdiction over the substantive claim in the arbitration. If the appellant subsequently succeeded on his jurisdictional objections to the arbitration generally, the interim relief orders would be discharged, and the appellant could obtain compensation for any loss caused by the provisional award.

The Court’s findings

The sole issue on appeal was whether the appellant, having raised its objections to the tribunal’s jurisdiction to hear the arbitration generally, had nonetheless submitted to the tribunal’s jurisdiction for the purpose of determining the interim relief application.

The Court of Appeal first observed that it is not necessarily inconsistent, conceptually, for a party to submit to the jurisdiction of a tribunal in respect of an interim relief application, while retaining its jurisdictional objection in respect of the rest of the arbitral proceedings. This is because the standard to which an applicant must establish the relevant facts for an interim relief application is often a prima facie standard, which is different from a final determination on the merits that would dispose of the substantive dispute between the parties. As a result, where a party accedes to an arbitral tribunal’s jurisdiction in respect of an interim relief application, this does not necessarily evidence an unequivocal, clear and consistent intention to submit to the jurisdiction of the tribunal to finally determine the merits of the matters in dispute.

On the issue on appeal, the Court found that notwithstanding the appellant’s general jurisdictional objection, it chose to contest the interim relief application on the merits, did not canvass any arguments on the tribunal’s jurisdiction to deal with that specific application, and did not seek to suspend the proceedings so that the tribunal could first make a determination on jurisdiction. The court concluded that the appellant had been content to proceed with the hearing of the interim relief application without raising any objection to the tribunal’s jurisdiction in that application, and it was accordingly not permissible for it, subsequently, to mount an attack against the provisional award at the enforcement stage.

Key Takeaways

This is the first time that a Singapore court has expressly confirmed that a party may choose to submit to the jurisdiction of an arbitral tribunal to determine an interim relief application while at the same time maintaining its reservation to the jurisdiction of the same tribunal to determine the arbitration generally, in a pending challenge. It is also a good reminder that a challenge to a tribunal’s jurisdiction must be taken before the tribunal such that the tribunal is afforded the opportunity to consider and respond to the objection. A party cannot hold the point in reserve and raise it only after the tribunal has made its decision. If a party intends to object to a tribunal’s jurisdiction with regard to an interim relief application, it is incumbent on that party to raise and pursue such objections expressly in respect of the interim relief application itself, not just in respect of the arbitration proceedings generally (whilst at the same time engaging with the merits of the interim application).

This dispute is one of the number of reported challenges to the validity of DIFC-LCIA arbitration agreements following the Decree. Different jurisdictions appear to have taken different positions as to whether such clauses remain valid, with a number of jurisdictions (Singapore and Louisiana included) taking the view that arbitration under the DIAC Rules would be a departure from an agreement to arbitrate under the DIFC-LCIA Rules, while the Abu Dhabi Commercial Court of Appeal on the other hand has confirmed that such arbitration agreements are valid and enforceable (see Hogan Lovells alert Abu Dhabi Court of Appeal confirms enforceability of DIFC-LCIA Arbitration Agreements).

However, the Singapore Court of Appeal has not yet had an opportunity to consider this point: in this case it expressly declined to do so as it was not required to by the appeal – it therefore remains to be seen how this issue will develop in Singapore. If not already done, parties with DIFC-LCIA arbitration clauses in their contracts should consider amending these agreements, to mitigate any risks that they may later be found to be invalid if a dispute arises.

Authored by Randall Walker, Shi Jin Chia, Jessica Quinlan, and Hugo Petit.