Singapore court decision extends res judicata doctrine

In recent years Singaporean courts have laid down various principles to ensure that parties bring the whole case forward in a single set of proceedings, on the basis that finality in litigation, as well as arbitration, is in the public interest.

One such principle, the ‘extended doctrine’ of 'res judicata' in Singapore, otherwise known as the Henderson v Henderson rule, bars new claims and issues that could have been raised in prior court proceedings or in arbitration proceedings.

A recent decision by the Singapore Court of Appeal (SGCA) has made clear that the extended doctrine can be invoked even if a party was not a participant in earlier arbitration proceedings or the arbitration agreement itself.

As a result, a failure to raise claims and issues that fall within the scope of the arbitration agreement may result in any such claims and issues being barred in future proceedings, even if such future proceedings involve non-parties to the preceding arbitration. 

The case also highlights the importance of parties being aware of the available measures in arbitration proceedings, such as the possibility of applying for a subpoena even if the opposing party objects to a certain individual being called as a witness.

Finally, this case is reflective of the Singapore courts’ general pro-arbitration stance, as it affirms that the courts will not permit unjustified collateral attacks against prior decisions, including those by arbitral tribunals.

In this case, a dispute about how shares should be valued was referred to arbitration, wherein the buyer relied on the market benchmarks identified in a consultant’s report, while the seller relied on a different benchmark. The consultant was not a party to the arbitration nor the arbitration agreement.

The seller had agreed to the appointment of the consultant, who was proposed by the buyer, on the condition that the consultant provided a declaration of no conflict of interest.

The seller later raised allegations of bias and lack of independence against the consultant, but did not call the consultant as a witness, meaning the tribunal couldn’t determine whether the allegations were credible. Ultimately, the tribunal found that the appropriate benchmarks should be determined from the consultant’s report.

The seller attempted to have the award set aside and failed, before taking the consultant to court over claims that the consultant had not acted independently as it and the buyer were involved in another project together, which the consultant had failed to address in its conflict-of-interest declaration.

The SGCA said that it was clear that any claim concerning the validity of the consultant’s report came within the scope of the arbitration agreement between the buyer and the seller, meaning that any issue which related to its use, such as issues of independence and conflict of interest, “could and ought to have been raised fully and exhaustively” in the arbitration.

The court found that there was no good reason for the seller not to raise any issue of independence or conflict of interest in the arbitration, as even though the buyer objected to the consultant being called as a witness, the seller could have subpoenaed the consultant and compelled it to give evidence.

The seller’s claims were therefore blocked because of the extended doctrine of 'res judicata'.

In the context of prior arbitration proceedings, the doctrine can only be invoked if a party demonstrates that the new claims come within the scope of the arbitration agreement. 

If successfully demonstrated, the burden of proof would shift to the other party to explain why the claims could not have been brought during the original arbitration, for example because they were outside the scope of the arbitration agreement or there was a good reason for the claims not to be pursued.  

Co-written by Melissa Heng of Pinsent Masons MPillay.