Arbitration agreements provide an alternative dispute resolution option to court proceedings. Where a party seeks to litigate, despite having entered into an arbitration agreement, Courts in England, the Isle of Man and Singapore appear to be arbitration-friendly by granting anti-suit injunctions (ASIs) to prevent a party from commencing or continuing Court proceedings.
However, issues can arise when ASIs are sought by third parties to arbitration agreements, as seen in the Singapore case of Asiana Airlines Inc v Gate Gourmet Korea Co Ltd [2024] SGCA(I) 8 (Asiana Airlines).
BACKGROUND
Asiana Airlines entered into two agreements in 2016. One agreement was with Gate Gourmet Switzerland (GGS) for their joint venture to create a new entity, Gate Gourmet Korea (GGK). The second agreement was with GGK (the Catering Agreement). Both contracts provided for any disputes to be resolved by arbitration.
Following a dispute related to the Catering Agreement, GGK commenced an ICC Arbitration against Asiana Airlines. Thereafter, GGK obtained an Award. Asiana Airlines challenged the Award by applying to the Singapore Courts for it to be set aside. Asiana Airlines’ application was denied at first instance and on appeal.
Asiana Airlines then issued proceedings against GGK in Korea, seeking a declaration that the Catering Agreement was null and void. Asiana Airlines also issued Korean proceedings against GGS and two of its directors. As a result, GGS and its directors sought ASIs from the Singapore Courts. At first instance, ASIs were obtained and both sets of proceedings were restrained.
SINGAPORE COURT OF APPEAL – FOR THIRD PARTIES IN CERTAIN INSTANCES
However, on appeal, the Singapore Court of Appeal held that, save for a few exceptions, only parties to an arbitration agreement have the standing to apply for an ASI. Despite being aware of it, the two GGS directors were not signatory parties to the arbitration agreement. The Court therefore set aside the ASI restraining the claims against GGS’s directors but upheld the previous ASI in relation to the claim against GGK. The Court stated that an ASI can exceptionally be obtained by third parties where:
- Clauses in an arbitration agreement expressly allow it; or
- On a proper interpretation of the contract, the wording intended to include a third party to benefit from the agreement.
POSITION UNDER ENGLISH LAW
Similar issues were also considered recently in English case of Renaissance Securities (Cyprus) Ltd v ILLC Chlodwig Enterprises [2024] EWHC 2843 (Comm) (Renaissance).
In Renaissance, the English High Court stated that the starting position is that, absent express language to the contrary, only disputes between the parties to the arbitration agreement are covered. Adopting a similar approach to the Singapore Court of Appeal, the English High Court considered that an ASI may be available where, on a proper interpretation of the contract, the parties intended a third party to benefit from their arbitration agreement.
However, on the facts in Renaissance, the English High Court refused to grant an ASI to a non-party as there were certain factors present which evidenced an intention that third parties be excluded from the arbitration agreement, such as: (1) the Contracts (Rights of Third Parties Act) 1999 being excluded; and (2) the terms, rights, and obligations in the arbitration agreement being defined by reference to the parties alone.
POSITION UNDER ISLE OF MAN LAW
The Staff of Government Division (the Island’s Court of Appeal) has considered a similar issue in the 2017 case of Excalibur Almaz Ltd & otrs v Horie 2DS 2017/19 (Excalibur).
In Excalibur, the Claimants sought an ASI to prevent Mr Horie from continuing to prosecute fraud and negligence proceedings in Texas, USA, in breach of a settlement agreement. The Staff of Government Division exercised its discretion and granted an ASI. Notably, there were eight Claimants in Excalibur, but only Excalibur Almaz Limited (EAL) was a party to the settlement agreement. Yet, the Court found that all eight Claimants could be covered as part of the clauses contained within in the settlement agreement.
Noting the absence of any strong reason not to grant the ASI, the Staff of Government Division considered numerous factors, including:
- Isle of Man law governed the settlement agreement;
- The Isle of Man is no less inconvenient than Texas for Mr Horie;
- EAL and another Claimant were Isle of Man companies. Two Claimants were directors of both companies and together owned and/or controlled more than 50% of the voting share capital;
- The remaining Claimants all submitted to the jurisdiction;
- Mr Horie's fraud claim against certain Claimants can be brought by way of counterclaim in these proceedings.
KEY TAKEAWAYS
Therefore, the Isle of Man Court’s approach of granting ASIs to third parties, in such circumstances, follows the obiter comments in Asiana Airlines which outlined the instances where third parties may have standing to apply for an ASI in Singapore. Both cases highlight the importance of clear and precise drafting in arbitration or settlement agreements, particularly in multi-party transactions with jurisdictional differences.
For more information on how Maher Law’s specialist dispute resolution team can assist in relation to anti-suit injunctions, please contact Tom Maher at tom@maher.im.
Related: see our other article on Staying Winding-Up Claims Pending Arbitration.
31 March 2025
