Singapore court finds state immunity not applicable and grants anti-suit injunction

Singapore courts are well known for upholding arbitration agreements and granting anti-suit injunctions ("ASIs") to enforce compliance. But what if the party breaching an arbitration agreement is an entity linked to the government of a foreign state? Does that entity enjoy immunity from ASIs? The SICC considered this issue in Cooperativa Muratori and Cementisti – CMC di Ravenna, Italy v Department of Water Supply & Sewerage Management, Kathmandu [2025] SGHC(I) 16.

In summary, a state will not be subject to an ASI to enforce an arbitration agreement unless it has specifically waived its enforcement immunity. An entity which is separate from the executive organs of the state may nonetheless be covered by state immunity if the proceedings relate to actions performed in the exercise of sovereign authority, and if the state itself would have been immune. In its decision, the SICC also noted various practical points for applicants for ASIs against states, including the duty of full and frank disclosure.

CASE BACKGROUND

The claimant, Cooperativa Muratori and Cementisti – CMC di Ravenna, Italy ("CMC") entered into a contract with Melamchi Water Supply Development Board ("MB"), an entity formed by the Government of Nepal to alleviate water shortage in Nepal. The contract between CMC and MB provided for disputes to be resolved by SIAC arbitration with the "place of arbitration" in Singapore.

CMC terminated the contract and commenced arbitration. Various disputes ensued, including whether there was a valid arbitration agreement, whether MB should be joined to the arbitration, and whether the seat of the arbitration was Nepal or Singapore.

The Tribunal decided against MB that the seat of the arbitration was Singapore: 'It is well-established that, because the physical venue or place at which the arbitration occurs is of far less significance than the seat of the arbitration, if the word “seat” is not used in the arbitration agreement, a reference by the parties to a chosen “place” or “venue” for arbitration will usually be construed as a choice of the seat' (judgment at [30]). It followed that any challenge to the Award should be brought in Singapore: 'A choice of seat by the parties is generally construed as a choice of the exclusive jurisdiction in which the parties can challenge decisions made by an arbitral tribunal' (judgment at [34]).

Nevertheless, MB applied to the courts in Nepal to set aside the Tribunal's decisions. CMC therefore applied to the Singapore courts for an ASI to restrain MB from pursuing the foreign proceedings. Among other issues, the SICC considered whether the SIA prevented it from granting the ASI against MB as an entity of the Nepalese state. The court decided that there was no such immunity in this case and the ASI was granted.

KEY ISSUES

Requirements for an ASI

The SICC took the opportunity to discuss and clarify the requirements that must be established for the grant of a contractual anti-suit injunction. i.e. an ASI that seeks to restrain the breach of a jurisdiction clause or arbitration agreement, as opposed to a non-contractual ASI that restrains foreign proceedings which are vexatious or oppressive or interfere with the processes, jurisdiction or judgments of the Singapore court.  The requirements for a contractual ASI were stated to be:

(1)   The defendant is amenable to the jurisdiction of the court.

(2) The foreign proceedings are in breach of an exclusive jurisdiction clause or arbitration agreement between the parties.

(3) There are no strong reasons to decline enforcement of the parties’ agreement.

ASIs and the State Immunity Act

As regards immunity, the SIA provides that a state is immune from the adjudicative and enforcement jurisdiction of the courts of Singapore (s 3(1)), with various exceptions.  

An arbitration agreement falls under the exceptions to immunity to adjudicative jurisdiction. Section 11(1) of the SIA states that "where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts in Singapore which relate to the arbitration". The SICC approved of the English Court of Appeal's comment in Svenska Petroleum Exploration AB v Government of the Republic of Lithuania and another (No 2) [2007] QB 886, that "if a state has agreed to submit to arbitration, it has rendered itself amenable to such process as may be necessary to render the arbitration effective” (at [117]).

On immunity to enforcement jurisdiction, s 15(2)(a) of the SIA institutes a specific bar against granting injunctive relief against a state. This is waivable only by written consent. The SICC clarified that this consent requires a "relatively specific reference" to waiving state immunity. The SICC also noted that in the absence of a specific reference to sovereign immunity, a clear and unambiguous reference to the State's consent to an award being "wholly enforceable" may suffice. What is clear, however, is that merely stating that parties submit disputes to arbitration seated in Singapore would not be sufficient to constitute the state's consent to waiving immunity (s 15(3) of the SIA).

States and state entities

Immunity under the SIA applies to "States" and – in certain circumstances – to separate entities connected to the state.

A "State" includes: (a) the sovereign or head of State in their public capacity; (b) the government of that State; and (c) any department of that government (s 16(1) of the SIA).

S 16(2) clarifies that state immunity does not ordinarily extend to entities separate from the executive organs of the government's State and capable of suing or being sued in their own right. Nevertheless, such entities will enjoy immunity if certain exceptions apply, i.e. if (a) proceedings relate to actions performed by that entity in the exercise of sovereign authority; and (b) the circumstances are such that a State would have been immune. 

Whether an entity is separate from the state is fact sensitive. In this case, the SICC found that MB was not a State based on the following features:

1. MB was a body corporate with perpetual succession;
2. MB was entitled to transact and hold movable and immovable property;
3. MB had the ability to sue and be sued; and
4. MB had the capacity to contract with the plaintiff on its own behalf.

To determine whether MB (as a separate entity) nevertheless enjoyed state immunity, it was necessary to assess whether MB undertook the activity in the exercise of sovereign authority or if the transaction was a commercial transaction. 'An act can only amount to either an exercise of sovereign authority or a commercial transaction, but not both' (at [56]). On the facts of this case, the SICC found that the exceptions were not applicable, as the relevant contract involved the supply of services and was therefore a commercial transaction.

Duty of full and frank disclosure

The SICC cautioned that a party seeking an ex parte injunction against entities that may be entitled to state immunity must raise the issue of state immunity as part of its duty of full and frank disclosure.

Further, even if the duty of full and frank disclosure does not strictly apply (e.g. in an inter partes application), the SICC noted that it would still be incumbent upon the parties to raise the issue of state immunity to the attention of the court 'given not only its potentially dispositive significance but its implications on matters of importance such as comity and state sovereignty' (at [48]).

PRACTICAL TAKEAWAYS

Parties transacting with an entity which could potentially fall within the definition of "State" under the SIA should consider including in writing a clear and specific statement that they waive any right they may have to any form of state immunity.

If that is not possible, parties should consider stating that the parties consent to an arbitral award being "wholly enforceable".

A party seeking injunctive relief from the Singapore courts is under a duty to raise any potential issue of state immunity to the attention of the courts, whether or not a duty of full and frank disclosure applies.