DFM v DFL

Outcome: The Court of Appeal dismissed the appeal against the General Division of the High Court (the “General Division”) and held that the appellant (the “Appellant”) had waived his right to challenge the jurisdiction of the arbitral tribunal (the “Tribunal”) to make a provisional award granting, among other orders, interim relief in the form of a freezing order against the Appellant’s assets up to the value of US$90,826,522 (the “Provisional Award”).

•  Where an application for interim relief involves some consideration of issues that may appear to touch on the merits of the claims, it is not necessarily inconsistent for a party to submit to the jurisdiction of the arbitral tribunal in respect of the interim relief application, while retaining his 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 in an interim relief application is typically different to that required for the resolution of the substantive dispute: at [39].

•  A waiver of the right to challenge an arbitral tribunal’s jurisdiction may be found where a challenging party fails to make a timely objection to the arbitral tribunal’s jurisdiction. A party that believes it has a basis to object to some intended act of the tribunal must take the point before the tribunal and afford the tribunal the opportunity to consider and respond to the objection. That party cannot hold the point in reserve and raise it only after the tribunal has made its decision: at [45].

1 The Appellant is an Indian national and the business partner of the respondent in the appeal (the “Respondent”). The Respondent is a Qatari national and chairman of a Qatari company having diversified business interests in luxury and retail, hospitality, trading, manufacturing and industrial services, among other sectors.

2 On 7 August 2018, pursuant to a settlement agreement (the “Settlement Agreement”), the parties decided to dissolve their business relationship with the Respondent selling his 50% shareholding (the “Sale Shares”) in a company (the “Company”) to the Appellant. It was contemplated that the Appellant would use the Respondent’s Sale Shares to transact a merger between a third-party buyer and the Company (the “M&A Transaction”). As part of the Settlement Agreement, the Appellant was to pay the Respondent a total of US$114,097,487 in three tranches.

3 The Settlement Agreement contained an arbitration agreement (the “Arbitration Agreement”) which provided for arbitration under the Dubai International Financial Centre (the “DIFC”) – London Court of International Arbitration Rules, with the seat of the arbitration in London.

4 On or around 17 January 2019, the Appellant made the first payment under the Settlement Agreement to the Respondent. However, the Appellant did not make the second and third payments, with approximately US$90m remaining outstanding under the Settlement Agreement. The Respondent’s position was that the Appellant had received proceeds from the M&A Transaction but had failed to pay the amounts that had fallen due, and that the Respondent had a proprietary interest in those proceeds by reason of a clause in the Settlement Agreement.

5 On 14 September 2021, the Ruler of Dubai issued a decree (the “Decree”) which came into effect on 20 September 2021. Pursuant to the Decree, the Dubai International Arbitration Centre (“DIAC”) was to replace the DIFC in considering and determining all disputes arising out of arbitration agreements, unless otherwise agreed by the parties.

6 On 2 April 2022, the Respondent commenced an arbitration (the “Arbitration”) in the DIAC by filing his request for Arbitration (the “Request for Arbitration”). On 3 August 2022, following a case management conference during which the Tribunal gave directions for the conduct of the Arbitration, the Respondent made an interim relief application seeking a proprietary injunction over sums received by the Appellant and the Company pursuant to the M&A Transaction, a freezing order against the Appellant’s assets for a value of up to US$90,826,522, and other ancillary reliefs (the “Interim Relief Application”). On 16 November 2022, after hearing the parties, the Tribunal issued the Provisional Award allowing the Interim Relief Application. The Interim Relief Application was heard and decided before the Tribunal finally ruled on its jurisdiction in relation to the Arbitration.

7 The Respondent thereafter brought enforcement proceedings in several jurisdictions, including Singapore. On 27 December 2022, the Respondent applied in Singapore by way of HC/OA 882/2022 for an order granting leave to enforce the Provisional Award (the “Leave Order”), which was granted on 28 December 2022, and then served on the Appellant on 18 July 2023. On 29 August 2023, the Appellant applied in HC/SUM 2925/2023 (“SUM 2925”) to set aside the Leave Order under s 31(2)(e) of the International Arbitration Act 1994 (2020 Rev Ed) 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.

8 The judge in the General Division (the “Judge”) dismissed SUM 2925 on the basis that the Appellant had submitted to the jurisdiction of the Tribunal in respect of the Interim Relief Application.

9 The sole issue in the appeal was whether the Appellant, having raised his objections to the Tribunal’s jurisdiction to hear the Arbitration, had nonetheless submitted to its jurisdiction at least for the purpose of determining the Interim Relief Application: at [35].

10 Where an application for interim relief involves some consideration of issues that may appear to touch on the merits of the claims, it is not necessarily inconsistent for a party to submit to the jurisdiction of the arbitral tribunal in respect of the 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 in an interim relief application is typically different to that required for the resolution of the substantive dispute. This was precisely the situation in this case. In the Provisional Award, the Tribunal noted that it was required only to find on a prima facie standard that the claim might succeed on the merits and that the Company was a party to the Settlement Agreement. Findings made on a prima facie basis are typically provisional in nature and subject to revision. As a result, where a party accedes to an arbitral tribunal’s jurisdiction in respect of an interim relief application, even where that application involves some consideration of the merits of the claims, this does not necessarily evidence an unequivocal, clear and consistent intention to submit to the jurisdiction of the arbitral tribunal to finally determine the merits of the matters in dispute. There was therefore nothing inherently inconsistent in the Appellant’s submission to the jurisdiction of the Tribunal for the purposes of the Interim Relief Application while reserving his position in relation to its jurisdiction to deal with the substantive dispute. Accordingly, the jurisdictional question raised in this appeal was limited to the Interim Relief Application: at [39]–[41].

11 The court assumed, purely for the purposes of the appeal, that the Appellant’s contention that the arbitral procedure had not been in accordance with the parties’ agreement was well-founded. However, even if that ground for resisting enforcement were made out, it is trite that a party may by his conduct be found to have waived his right to rely on this. Whether a party has waived his right to object to the jurisdiction of an arbitral tribunal, while being a question of Singapore law, must be considered in the context of the law of the seat and the arbitral rules which the parties have chosen: at [43]–[44].

12 Under Singapore law, a waiver of the right to challenge an arbitral tribunal’s jurisdiction may be found where a challenging party fails to make a timely objection to the arbitral tribunal’s jurisdiction. A party that believes it has a basis to object to some intended act of the tribunal must take the point before the tribunal and afford the tribunal the opportunity to consider and respond to the objection. That party cannot hold the point in reserve and raise it only after the tribunal has made its decision. As the rules under the Arbitration Act 1996 (c 23) (UK) and the arbitral rules did not contemplate the situation in the present case where the Tribunal had to hear and determine the Interim Relief Application before the jurisdictional objection was to be finally determined, the court approached the question of waiver of the basis of that principle: at [45] and [55].

13 The Appellant chose to contest the Interim Relief Application on the merits, did not canvass or ventilate any arguments or submissions on the question of the Tribunal’s jurisdiction to deal with that application, and also did not seek to suspend the proceedings so that the Tribunal could first make a determination on the issue of jurisdiction. Having taken that course, the Appellant was not entitled to challenge the Provisional Award in enforcement proceedings by contesting the Tribunal’s jurisdiction to decide the Interim Relief Application: at [62].