30 April 2021
In Bloomberry Resorts and Hotels Inc and another v Global Gaming Philippines LLC and another [2021] SGCA 9, the Singapore Court of Appeal refused to set aside an arbitral award on the ground of fraud and upheld the strict time limit of 3 months to set aside an award set out in Art 34(3) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”).
Key Takeaways
This case highlights:
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The 3-month time limit in Art 34(3) of the Model Law is absolute and cannot be extended even in cases of fraud.
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The 3-month time limit in Art 34(3) of the Model Law applies to an application under s 24 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”), which does not create a separate regime for the setting aside of an arbitral award.
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For fraud to set aside an arbitral award, there must be a causative link between any concealment aimed at deceiving the arbitral tribunal and the decision in favour of the concealing party.
Relevant Background Facts
On 9 September 2011, the Appellants (“Bloomberry Resorts”) and the Respondents (“Global Gaming”) entered into a Management Services Agreement (the “MSA”) for Global Gaming to manage the development and operation of the Solaire Resort and Casino in Manila, Philippines.
In response to Bloomberry Resorts’ allegations of material breaches and termination of the MSA, Global Gaming commenced arbitration in Singapore against Bloomberry Resorts for wrongful termination of the MSA.
On 20 September 2016, the arbitral tribunal issued the award on liability (the “Award”) in favour of Global Gaming.
On 21 December 2017 (more than a year after the Award was issued), Bloomberry Resorts applied to the Singapore High Court ("HC") and sought extensions of time to set aside the Award under s 24 of the IAA and Art 34 of the Model Law. It also sought, in the alternative, to resist enforcement of the Award in Singapore under Art 36(1)(b)(ii) and Art 36 (1)(a)(ii) of the Model Law.
For its allegations of fraud, Bloomberry Resorts relied on two key documents (the “FCPA Findings”) evincing investigations by US authorities against Las Vegas Sands Corp (“LVS”) involving Global Gaming’s principals, which were not discoverable until after the Award had been issued.
Bloomberry Resorts alleged procedural fraud (i.e. suppression/concealment of documentary evidence or perjury with dishonest intention to deliberately mislead the tribunal and counterparty) in support of its applications to set aside and resist enforcement of the Award.
The Court of Appeal’s Decision
The Singapore Court of Appeal (“CA”) affirmed the HC’s decision to dismiss Bloomberry Resorts’ applications. Further, the CA confirmed that the 3-month time-bar in Art 34(3) of the Model Law applies to an application under s 24 of the IAA and cannot be extended even in cases of fraud.
The Award was not “induced or affected” by fraud and could not be set aside or refused enforcement on this basis
The CA rejected Bloomberry Resorts’ contentions that the FCPA Findings constituted evidence of fraud that would have materially affected the arbitration proceedings and outcome.
On the facts, the CA did not find that there was a “causative link between any concealment aimed at deceiving the arbitral tribunal and the decision in favour of the concealing party”.
Bloomberry Resorts could not prove that the US investigations against LVS were relevant to the issues in the arbitration proceedings. The CA found that the US investigations involved “entirely different companies” and no allegations had been made that Global Gaming or its principals had, in relation to the Solaire Casino, been involved in the type of conduct being investigated by the US authorities.
Regarding the false statements made by one of Global Gaming’s principals in 2012, the CA held that for the dishonesty to be material, it “must have been intended to cause any person in that proceeding to form an erroneous opinion that touched on any point material to the result of such proceeding, and the newly discovered evidence must be decisive in prompting the arbitrator to rule in favour of the applicant instead of the other party”.
In the CA’s view, a key factor was the fact that the false statements were made outside and before legal proceedings. Further, the accuracy of the false statements was not at issue in the arbitration and in any event, related to misconduct involving a different company (i.e. LVS) which occurred four years before the opening of the Solaire Casino.
Parenthetically, on the disclosure obligations of parties to arbitration proceedings, the CA noted that the “touchstone of disclosure is relevance as understood in the context of the rules governing the proceedings”. Therefore, Global Gaming’s failure to disclose matters beyond the issues in the arbitration (i.e. documents and information related to the US investigations) did not amount to concealment and a finding of procedural fraud.
Overall, the instances of fraud pleaded by Bloomberry Resorts were found to be irrelevant to the issues in the arbitration and did not evince concealment aimed at deceiving the arbitral tribunal.
The 3-month time bar set out in Art 34(3) of the Model Law applies equally to setting aside applications pursuant to s 24 of the IAA
Even though the conclusions on fraud disposed of the appeal, the CA nonetheless went on to affirm that the 3-month time limit (in Art 34(3) of the Model Law) applies to applications to set aside an award even in cases of fraud. It was noted that Singapore, unlike other Model Law jurisdictions, did not enact specific legislation to provide that the 3-month time limit under Art 34(3) should not apply to cases of fraud.
Comments
This approach taken by the CA for procedural fraud in requiring a “causative link” is consistent with the approach taken in relation to setting aside or refusing enforcement of an award for breach of natural justice, where the party must prove a “causal nexus” between the breach and the award (see: AKN v ALC [2015] 3 SLR 488 at [48]; Fisher, Stephen J v Sunho Construction Pte Ltd [2018] SGHC 76 at [56]). In Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 at [91], it was explained that the breach of natural justice rules must “at the very least, have actually altered the final outcome of the arbitral proceedings in some meaningful way”.
This approach is also consistent with Singapore’s judicial policy of preserving the finality of arbitral awards and minimising interference to the extent possible.
Parties should take note that even in cases of fraud, they will be bound by the strict time limit of 3 months for a setting aside application to be made, typically commencing on the date the arbitral award was made. However, if there is any new discovery after the expiry of the 3-month time limit that is a cause to challenge the validity of the arbitral award, the aggrieved party may still seek recourse by resisting enforcement of the arbitral award, which is not bound by the time limits set down in Art 34(3) of the Model Law.
For further information, please contact:
Lijun Chui, Partner, Bird & Bird
