SGCA exercises inherent power to set aside judgment enforcing arbitral award and order return of sums paid out

Singapore

Does the court have inherent powers to set aside an earlier judgment enforcing an erroneous arbitral award? What about consequential orders flowing from such a judgment? The Singapore Court of Appeal had occasion to decide this in ST Group Co Ltd and others v Sanum Investments Limited [2022] SGCA 2. We review the case and summarise its key takeaways.

Background

Sanum Investments Limited (“Sanum”) is a company incorporated in Macau, and was the claimant in arbitration proceedings brought under the rules of the Singapore International Arbitration Centre (“SIAC”). The respondents to the SIAC Arbitration were ST Group Co Ltd, Mr Sithat Xaysoulivong and ST Vegas Co Ltd (collectively, the “Applicants”) and ST Vegas Enterprise Ltd. The substantive dispute between the parties concerns arrangements relating to a slot machine club in Laos. In a bid to obtain relief against the Applicants for what it claimed were breaches of contract, Sanum commenced the SIAC Arbitration and obtained the SIAC Award against the respondents.

Sanum subsequently obtained leave from the Singapore courts to enforce an arbitral award in the same manner as a judgment of the High Court. Leave was granted and Sanum subsequently obtained judgment for the relief provided in the arbitral award. Based on the judgment, Sanum then obtained three final garnishee orders and garnished certain sums against the Applicants.

The Applicants appealed against the leave granted to Sanum to enforce the arbitral award and were successful in setting aside the leave order on the basis that the wrong seat had been chosen in the arbitration (the arbitration was seated in Singapore instead of Macau), even though the Applicants had not shown prejudice arising from these procedural irregularities. The Court was of the view that the wrong choice of seat was a sufficient basis on which to set aside the enforcement order without there being need for proof of prejudice.

Issue

The issue before the Court of Appeal (where the Applicants sought consequential orders) was whether to set aside the judgment and the garnishee orders, and whether the Court had the power to and should order the return of the garnished sums to the Applicants.

Conclusion

The Court of Appeal held that it should exercise its powers to set aside the judgment and the garnishee orders as there was a clear need in the interests of justice to do so as the entire substratum of the judgment and garnishee orders had ceased to exist. Not setting aside these orders would lead to injustice in that entirely invalid court orders would remain formally operative. This would be unjust and would bring the legal system into disrepute.

The Court of Appeal also held that an appellate court has the inherent power to order a return of sums paid under a judgment or order that has been reversed on appeal. Accordingly, the Court of Appeal ordered that the garnished sums should be returned as a matter of justice. This was the starting point in such a situation and Sanum had not shown that this should be departed from.