HYATT TERMINAL AND INDUSTRIAL CORPORATION v FILIPINAS THIRD MILLENIUM REALTY CORPORATION

Facts

Hyatt Terminal and Industrial Corporation (HTIC) owns land in Bataan, Philippines, on which an oil terminal stands. On 29 December 2000 it leased 8.8726 hectares to the operating company, later known as Total (Philippines) Corporation (TPC). The lease, governed by Philippine law, provided for ICC arbitration seated in Singapore. It defined the lessee to include its affiliated companies, successors and assigns; Art 20.2 barred assignment of rights and obligations to any third party without the other side's written consent, subject to Art 7, which let the lessee assign its rights to its assignees without consent.

In 2016 TPC sought HTIC's consent to assign the lease to a related company, but HTIC did not consent and the request lapsed. On 5 July 2021 TPC executed a deed assigning all its rights and obligations under the lease to Filipinas Third Millenium Realty Corporation (FTMRC), stating that HTIC's consent was not needed. HTIC refused to recognise FTMRC and sought to terminate the lease. FTMRC began ICC arbitration, and a 2:1 majority of the tribunal held the assignment valid because FTMRC was an affiliate and not a third party. HTIC applied to the Singapore International Commercial Court (SIC/OA 15/2025) to set aside the award on the ground that FTMRC was not a party to the arbitration agreement.

Issues

1. Whether HTIC's consent was required for TPC to assign the lease to an affiliated company.
2. Whether an affidavit from separate Philippine proceedings, refused by the tribunal, should be admitted on the setting-aside application.
3. Whether the deed could transfer TPC's obligations without HTIC's consent, and whether that invalidated the whole deed.

Holding

The court allowed HTIC's application and set aside the award, solely on the ground that the assignment needed HTIC's consent, which was never given, so FTMRC was not a party to the arbitration agreement. A further argument on formal requirements of Philippine law was not permitted because it had not been raised properly. Costs were left for written submissions.

Reasoning

As a preliminary matter, the court noted that HTIC's witness statement did not properly summarise its reasons as the SICC Procedural Guide requires. It allowed the second argument, which had been signposted and later addressed by Philippine counsel with leave, but not the third. It accepted that a jurisdictional challenge is heard afresh and that evidence refused by the tribunal may be admitted, but declined the affidavit because its weight could not be assessed without a full inquiry.

On consent, the starting point was Art 1649 of the Philippine Civil Code, under which a lessee cannot assign the lease without the lessor's consent unless the contract stipulates otherwise. That general prohibition covers affiliates and non-affiliates alike. A clause barring assignment to third parties without consent does not create a positive exception for affiliates, much as a second sign at a military base banning cameras does not let unauthorised people without cameras enter. In any case, third party in Art 20.2 plainly means anyone not a party to the lease; reading it as non-affiliates was strained and uncertain. Art 7 dealt with subleases and liens and allowed assignment of rights only to existing assignees. TPC's 2016 request for consent to assign to an affiliate supported this reading. Whether FTMRC was in fact an affiliate did not need to be decided.

On obligations, the court accepted that under Philippine law obligations pass only by novation, which needs the creditor's consent. But a failed transfer of obligations would not by itself sink a valid assignment of rights, since that part could be severed and TPC would simply stay bound. So this argument added nothing independent.

From the judgment