Singapore High Court to Mull Whether US Sanctions Bar Enforcement of Arbitral Award
The High Court of Singapore will consider whether an arbitral award can be enforced in Singapore in light of U.S. sanctions on the party slated to receive the award. Earlier this month, Judge Thomas Bathurst declined to first and separately consider whether the enforcement of the award is contrary to Singapore's public policy due to the sanctions, opting instead to consider that question along with the other elements of the arbitral dispute.
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At issue is a Swiss arbitral award, worth over $315 million, that was issued in a dispute between Hamer Investment and Tajik Aluminum Co. The dispute arose out of two barter agreements decided between the parties that ran 2003-04 and concerned the supply of raw materials, equipment and services to Tajik Aluminum Co. in exchange for finished aluminum provided by various parties.
Hamer was awarded $315 million following the arbitration. After Hamer took to the Singapore International Commercial Court to enforce the award, Tajik Aluminum Co. asked the court to set aside the award on the grounds that it would be "contrary to Singapore's public policy," since Hamer is owned by sanctioned Russian oligarch Oleg Deripaska.
In the Singapore High Court, counsel for Hamer suggested that Bathurst first resolve three separate questions, since answering the questions would "finally determine the proceedings and avoid" an expensive and lengthy factual inquiry.
The first question is whether the enforcement of the award would be contrary to Singapore's public policy, assuming Hamer is or may be subject to sanctions "other than those specifically enforced in Singapore." The second and third questions, which also assume Hamer is subject to U.S. sanctions, ask whether the International Arbitration Act allows the enforcement of a foreign arbitral award in Singapore dollars "notwithstanding that the currency of the said award is expressed in United States dollars," and whether the award can be satisfied in U.S. dollars without breaching U.S. sanctions.
Bathurst said that since answering these questions would require assuming a set of facts "without reaching a conclusion as to whether these facts are correct or otherwise," it's best to establish the fact first and then reach these questions of law.