Author: Michelle Lee*
Published: August 2017
The landmark decision of the Singapore Court of Appeal in PT First Media TBK v. Astro Nusantara International BV (“Astro”) involving the longstanding saga between the Astro Group and the Lippo Group, popularized phrases such as “choice of remedies,” “active remedy,” “passive remedy” and “one-shot remedy” in arbitral linguistics. It was held in Astro that Article 16(3) of the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration (the “Model Law”) is not a “one-shot remedy.” That is, a failure by a party to utilize its “active remedy” of seeking judicial review provided for in that article to challenge the arbitral tribunal’s ruling as a preliminary question that it has jurisdiction (“Article 16(3) ruling”), would not preclude that party from relying on its “passive remedy” to resist the recognition and enforcement of the final award under Article 36 of the Model Law on the same jurisdictional ground. The court confirmed that this “choice of remedies” is “the heart of [the Model Law’s] entire design.” The “choice of remedies” that the court dealt with was that between the active remedy found in Article 16(3) of the Model Law and the passive remedy of resisting recognition and enforcement of an award under Article 36 of the Model Law. Such a choice may therefore be more precisely referred to as a “choice between an active remedy and a passive remedy.”
A natural extension of the inquiry is to consider whether there is a “choice of active remedies”—that is, whether a failure by a party to utilize its active remedy in Article 16(3) of the Model Law to challenge the Article 16(3) ruling would preclude that party from pursuing its active remedy of setting aside the award under Article 34 of the Model Law on the same jurisdictional ground. This issue is significant because a party may unwittingly lose its right to object to jurisdiction if it fails to utilize its active remedy in Article 16(3) and, indeed, the Model Law regime does not recognize a choice of active remedies.
The courts in the Model Law jurisdictions and academics are both divided on this issue, with one camp taking the view that the active remedy under Article 16(3) is mandatory and therefore has preclusive effect, with another camp taking the view that Article 16(3) is optional and therefore has no preclusive effect, and a third remaining ambivalent on the issue. While the Singapore Court of Appeal hinted in obiter dicta that such a choice is unlikely to be available, this article suggests, through a textual analysis of Article 16(3) of the Model Law, a review of the travaux préparatoires of the Model Law, and a consideration of the policy implications, that such a choice of active remedies is indeed available to a party seeking recourse against the award on the basis of its objection to the jurisdiction of the arbitral tribunal.
This article comprises six parts. It begins with an explanation of what is meant by an “active remedy” and a “passive remedy.” The second part analyzes the textual features of Article 16(3) of the Model Law, followed by a review of the relevant travaux préparatoiresof the Model Law in the third part. The fourth part considers the effect, if any, of the likely legal doctrines that may be invoked by parties seeking to resist such a choice, including waiver, estoppel, and res judicata. A consideration of the policy implications ensues in the fifth part, before concluding in the final analysis that the choice of active remedies is indeed available, and that a denial of such a choice is contrary to the arbitral regime envisaged by the drafters of the Model Law.
*Michelle Lee, LL.M. (James Kent Scholar) (Columbia Law School), LL.B. (Hons) (National University of Singapore), Advocate & Solicitor (Supreme Court of Singapore), Associate, Baker & McKenzie. Wong & Leow.