Top court dismisses appeal on arbitration award

Singapore's top court has ruled in favour of Lesotho against a South African diamond mining company seeking to restore an arbitration award on its mine leases expropriated by the kingdom.

The Court of Appeal, in the first application in Singapore involving an investor-state arbitral award dispute from Africa, dismissed the appeal against a Singapore High Court decision to set aside the award.

The appeal, heard by a five-judge court presided over by Chief Justice Sundaresh Menon, underscores Singapore's growing profile as a seat for arbitrations in general, and for investment arbitrations in particular, lawyers told The Straits Times.

Investment arbitrations are a form of arbitration directed against states, and usually brought under a foreign investment treaty or a free trade agreement.

The case is also significant as the parties chose Singapore for their arbitration although it did not concern Singapore or Singapore law. But the appeal enabled the courts here to address important issues of international law.

In the case, Swissbourgh Diamond Mines and other investors claimed their mining leases in Lesotho had been unlawfully expropriated and sought redress. Lesotho is one of 15 member states of the Southern African Development Community (SADC) which set up a regional tribunal to hear investment claims.

An SADC tribunal approached by the investors in 2009 was dissolved by its member states before the claim could be heard.

In 2012, Swissbourgh took the case to the Permanent Court of Arbitration (PCA), which ordered a new tribunal be formed to hear the expropriation claims.

But last year, Lesotho successfully applied to the Singapore High Court to set aside the PCA's award.

Swissbourgh and the South African investors appealed in May this year to the top court, comprising CJ Menon and Judges of Appeal Andrew Phang, Judith Prakash, Tay Yong Kwang and Steven Chong.

Representing them was Queen's Counsel Stephen Jagusch as briefed by a WongPartnership team led by Senior Counsel Alvin Yeo. Lesotho was defended by QC Samuel Words-worth as briefed by a Rajah & Tann team led by Mr Paul Tan Beng Hwee.

The court also appointed Queen's Counsel J. Christopher Thomas and Professor N. Jansen Calamita from the National University of Singapore to help the court as amici curiae, which means friends of the court.

The appeals court, in its 160-page judgment, made clear it had the jurisdiction to set aside the award based on the cited provisions in UNCITRAL Model Law, which is a regime prepared by the United Nations Commission on International Trade Law that countries can use as part of their domestic legislation on arbitration. The court said, among other things, that the PCA tribunal had no jurisdiction to determine the claim of Swissbourgh and the investors.

"We find that there are no relevant disputes that concern any obligation that was owed by the kingdom in relation to the admitted investment. Finally, we also take the view that (Swissbourgh) may not have exhausted their local remedies," wrote CJ Menon in judgment grounds issued on Tuesday.

The court also called Swissbourgh's claim of "a lack of judicial independence in the kingdom's courts spurious", given that the courts had not hesitated to be "critical and dismissive of the actions of (their) own government".

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