Challenging the jurisdiction of arbitral tribunals: a Singapore perspective

Those consequences came to bear in the recent decision of the Singapore Court of Appeal in the case of DFM v DFL. In that case, a respondent in an English seated arbitration governed by the Dubai International Arbitration Centre (DIAC) Rules failed to resist the enforcement of a provisional arbitral award ordering the freezing of its assets in Singapore, as both the Singapore High Court and the Court of Appeal found that it had submitted to the jurisdiction of the tribunal under the DIAC rules.

More about the case

For context, the parties’ arbitration agreement was governed by English law and the DIFC-LCIA rules, administered by the DIFC-LCIA Arbitration Centre, an institution which was later abolished by decree by the Dubai government in 2021 (decree). The LCIA and the DIAC thereafter agreed that any affected arbitration commenced on or after 21 March 2022 would be administered by the DIAC. In this case, the claimant commenced arbitration on 2 April 2022 – under the DIAC rules – seeking payment under a settlement agreement.

After the tribunal was constituted, the claimant made an application for interim relief seeking a proprietary injunction over sums received by the respondent and a freezing order over the respondent’s assets. The tribunal granted the application in a provisional award issued on 16 November 2022. Subsequently, upon the claimant’s application, the Singapore High Court made an order allowing the claimant to enforce the provisional award in Singapore against the respondent’s assets.

The respondent sought to set aside that order under Section 31(2)(e) of the International Arbitration Act 1994, which states that a court may refuse enforcement of a foreign award if the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties.

In this regard, the respondent argued that the arbitral procedure was not in accordance with the arbitration agreement since it provided for arbitration under the DIFC-LCIA rules, not the DIAC rules. The claimant accepted that the agreement for arbitration under the DIFC-LCIA rules was “frustrated” by the decree and the High Court took the same view, stating that the Decree “could not force an arbitration under the DIAC Rules on the respondent without his agreement”. In doing so, the High Court took a different view from the UAE courts.

Although the High Court found that the arbitration procedure under the DIAC rules was not in accordance with the parties’ agreement, the judge nevertheless held that the respondent’s challenge under Section 31(2)(e) failed. This was because it considered that the respondent had submitted to the jurisdiction of the tribunal with respect to the interim relief application, despite having raised jurisdictional objections in respect of the arbitration. The Court of Appeal made a similar finding. It dismissed the appeal on the basis that the respondent had waived its right to object to the tribunal’s jurisdiction with respect to the interim relief application, despite its objections in respect of the arbitration.

Both decisions highlight important legal and practical considerations for parties wishing to effectively pursue objections to the jurisdiction of a tribunal in the context of an interim application.

Lessons from the rulings

As to timing, Article 16(2) of the UNCITRAL Model Law on International Commercial Arbitration provides that jurisdictional objections should be raised no later than the submission of the statement of defence. As for conduct, as stated by the High Court, a party will be considered to have submitted to jurisdiction if “it demonstrates an unequivocal clear and consistent intention to submit to the jurisdiction of the court”. In practice this means looking at whether there has been “a step in the proceedings”, i.e. an act which affirms the correctness of the proceedings or demonstrates a willingness or intention to defend the substance of the claim.

The High Court looked to several earlier Singapore court decisions, including the ruling in the case of Carona Holdings, in considering what constitutes a “step in the proceedings”. The court in the case of Carona Holdings reviewed decisions made in several common law jurisdictions, including Hong Kong and the UK, and concluded that there was a uniform approach to this issue.

It said: “First, where a party performs or carries out a significant act signifying that it is submitting to the court’s jurisdiction rather than to arbitration to resolve the outstanding issues between the parties, that party will be deemed to have taken a step in the proceedings. Second, the act will be regarded as a step in proceedings if it is a step in furtherance of the action by advancing the hearing of the matter in court in contrast to one that serves to smother the action and stop the proceedings dead in its tracks. Third, where a party does an act with the consent of the other party, this will not amount to taking a step in the proceedings.”

“Finally, the courts usually take the position that parties should not blow hot and cold or equivocate. Instead, they should be decisive about whether they are insisting on arbitration in preference to litigation. Disingenuous reservations will be disregarded. Should a party wish to proceed to arbitration, that party must be ready and willing to do all things necessary for the proper conduct of the arbitration. … It is conceptually possible for an earlier reservation to be subsequently waived by clearly inconsistent conduct,” it added.

In the case of DFM v DFL, the respondent had addressed its objection to the jurisdiction of the tribunal in three respects:

• in its response to the request for arbitration, reserving its rights in relation to the impact of the decree;
• in its statement of defence, objecting to the conduct of the arbitration under the DIAC Rules; and
• in its answer and skeleton argument with respect to the interim relief application, mentioning that these were without prejudice to its objections to the tribunal’s jurisdiction.

This was, however, not enough. The respondent had objected to the jurisdiction of the tribunal in a timely manner with respect to the arbitration, but what was critical to the High Court was the fact that the respondent did not raise any jurisdictional objections with respect to the interim relief application and instead merely noted that its answer and skeleton argument in relation to that application were “without prejudice” to its objections to the tribunal’s jurisdiction. The High Court concluded that, in doing so, “the respondent had demonstrated an unequivocal clear and consistent intention to submit to the tribunal’s jurisdiction with respect to the application” and noted that “it was incumbent on the respondent to specifically raise such objections if he intended to rely on them with respect to the [interim relief application]”.

The central issue on appeal was whether the respondent had waived its right to challenge the tribunal’s provisional award on the basis that the tribunal lacked jurisdiction to make that provisional award, i.e. jurisdiction with respect to the interim relief application.

Before turning to the facts the case, the Court of Appeal considered, for the first time, whether there was any conceptual contradiction between submitting to the jurisdiction of a tribunal to determine an interim relief application while maintaining an objection to the jurisdiction of that tribunal to determine the arbitration.

The Court of Appeal contrasted the provisional nature of findings in an interim relief application, which are made on the basis of a high-level reading of the evidence only, with a final determination on the merits to dispose of the substantive dispute between parties, and found that submitting to the tribunal’s jurisdiction in respect of the former does not necessarily evidence submission to jurisdiction in respect of the latter, and so there was no such contradiction.

The law applicable to jurisdictional objections was also addressed in the Court of Appeal’s decision. The Court of Appeal observed that, while the issue of whether the respondent had waived its right to object to jurisdiction was a question of Singapore law, the issue had to be considered in the context of the law of the seat – in this case, London – and the arbitral rules – in this case, the DIAC Rules.

On this point, the Court of Appeal referred to the Singapore High Court’s decision in the case of Giant Light Metal Technology Kunshan Co v Aksa Far East Pte, relying on the decision of the High Court of England and Wales in Akai Pty Ltd v People’s Insurance Co Ltd which stated that, to determine whether there has been a submission to jurisdiction for purposes of enforcement of a foreign judgement in England, the court had to look at English law but also at the domestic law of the court where the steps were taken.

Turning to the central issue in the case of DFM v DFL, the Court of Appeal considered whether the respondent had waived its right to object to the jurisdiction of the tribunal, rather than whether it had submitted to its jurisdiction, although it noted these were two sides of the same coin. The Court of Appeal found that neither the substantive law, Singapore and English law, nor the applicable procedural rules, the DIAC Rules, addressed this issue in the context of an interim relief application.

The Court of Appeal therefore looked to the procedural history and the sequence of events, echoing the High Court’s finding that “it was significant that no jurisdictional objections were raised for the purposes of the interim relief application”. In addition, the Court of Appeal considered three “material” points regarding the respondent’s conduct:

• the respondent did not make any arguments on the issue of jurisdiction in its submissions on the interim relief application;
• it was inferred from the conduct of the parties that the tribunal and the parties had understood that the respondent had not pursued its jurisdictional objections in the interim relief application; and
• the respondent raised various objections following the circulation of the provisional award, but none of these concerned the issue of jurisdiction.

Actions for businesses

The decisions of the Singapore High Court and the Court of Appeal in the case of DFM v DFL establish a high standard for parties wishing to assert jurisdictional objections to a tribunal’s jurisdiction when interim applications are concerned, consistent with the pro-arbitration stance of the Singapore courts. Parties that raise only a general objection to jurisdiction or a general reservation of their rights as to jurisdiction in those circumstances are therefore likely to run into difficulty.

Instead, an objection to jurisdiction must be raised in respect of the tribunal’s jurisdiction to hear the interim application itself, and it is prudent to raise and maintain that objection clearly throughout the proceedings at stake, as well as following any unfavourable decision on the application.

Parties should also bear in mind that their conduct in the proceedings will be carefully scrutinised and that any action which is inconsistent with an objection to jurisdiction may be considered as a step in the proceedings or a waiver of their jurisdictional objection.

Co-written by Shyrie Chopra of Pinsent Masons.