The Pitfalls Of Dispute Resolution In Multi-Party M&A

Disputes arising from M&A and joint venture arrangements can be complex. Multiple parties and multiple contracts create many possible dispute combinations, even in situations where the parties can be allocated to two distinct groups. Dispute resolution provisions need to be drafted carefully to cope with every possible eventuality. Where they are not, there is the risk that contractual remedies are ineffective. The Singapore High Court has recently considered such a situation in Sanum Investments Limited v ST Group Co, Ltd and others [2018] SGHC 141.

The facts

The gambling industry in Laos has grown substantially in the past decade. The casinos are located within Special Economic Zones set up by the Government and attract Thai and Chinese tourists in particular. One foreign investor, the Macau-based Sanum Investments Limited ("Sanum"), has had an especially chequered time since it first entered the industry in 2007 by way of a joint venture with a local company, ST Group Co, Ltd ("ST Group"). The main casino in the joint venture was first hit by a substantial tax bill, then confiscated and sold by the Government. There is an ongoing investment treaty arbitration about this as well as litigation in the USA.

At the same time, there has been an international commercial arbitration between Sanum and its joint venture partner about another property, a slot club at Thanaleng near the Thai border. That arbitration took place in Singapore under the SIAC Rules. Sanum alleged breach of contract because the Thanaleng slot club had not been passed to Sanum as agreed, when certain third party contracts expired in 2010 and 2011. The tribunal agreed with Sanum and in August 2016 it awarded Sanum US$ 200 million in damages, to be paid by the respondents in the arbitration, ST Group and three associated parties.

The respondents had not taken part in the arbitration. When Sanum took steps to enforce the award in Singapore, the respondents applied to the Singapore High Court to avoid enforcement on the basis that the tribunal did not have jurisdiction to render the award and the arbitration had not taken place in accordance with the parties' arbitration agreement. This led the Singapore High Court to review the joint venture arrangements.

Multiple contracts

The first issue was the relationship between the multiple contracts in the joint venture, namely, an overarching Master Agreement dated 30 May 2007, a Participation Agreement that set the term of the joint...