Lao Holdings NV v Government of the Lao People’s Democratic Republic and another matter [2022] SGHC(I) 6

Costs

This is our judgment on the issue of costs in SIC/OS 5/2020 and SIC/OS 6/2020 (“OS 5” and “OS 6” respectively, and “the Applications” collectively), following our dismissal of the Applications to set aside an International Centre for Settlement of Investment Disputes (“ICSID”) arbitration award and a Permanent Court of Arbitration (“PCA”) award respectively in Lao Holdings NV v Government of the Lao People’s Democratic Republic and another matter [2021] 5 SLR 228 (“the Judgment”), and in HC/SUM 5593/2019 and HC/SUM 5579/2020 (“the Sealing Applications” collectively).

Costs

The facts relating to the dispute between the parties have been canvassed extensively in the Judgment. In the following, we restate only the material facts, and highlight aspects of this long-standing dispute that are relevant to the issue of costs. Unless otherwise specified, we adopt the same terms as defined in the Judgment.

Costs

Although we were concerned, in the Applications, with what may be considered the tail-end of the parties’ dispute, it is important to see the proceedings before us in the light of the almost decade-long saga that has transpired between the parties. As we will come to below, this has an impact on how we view the reasonableness of the costs incurred in the Applications. We reproduce here a timeline of key events that we had set out in our Judgment at [14]:

Costs

We highlight that the BIT Awards dismissing the plaintiffs’ claim also included orders that (a) LH pay US$1,293,720.27 to GOL for the latter’s lawyer fees and expenses and US$481,662.95 as the latter’s share of arbitration costs (to reimburse GOL for the advance that it had paid); and (b) Sanum pay US$1,313,252.31 to GOL for the latter’s legal costs and US$465,000 as the latter’s share of arbitration costs (similarly, as reimbursement for the advance that GOL had paid). The aggregate sum of legal costs for the BIT Arbitrations due to GOL was therefore just over US$2.6m. For completeness, we note that the arbitration costs amounted to around US$1.735m and US$1.773m for the ICSID and PCA Arbitrations respectively, for a total of around US$3.5m, all of which was ordered to be borne by the plaintiffs.

Costs

It is apparent from the above that the Applications represent a culmination of more than nine years of arbitral and court proceedings, in which the plaintiffs have resolutely sought to vindicate the wrongs allegedly done to them, while GOL has, with no less vigour, sought to defend itself against these allegations. What began as two notices of arbitration in August 2012 spawned proceedings in Singapore (up to the Court of Appeal) on the issue of the PCA Tribunal’s jurisdiction, additional proceedings within the BIT Arbitrations concerning GOL’s material breaches of the Settlement Deed (the first of which, it might be noted, failed), and various procedural disputes, leading up to the issuance of the comprehensive BIT Awards dismissing the plaintiffs’ claims. The appeal against our decision in the Judgment is still pending. The Applications, therefore, can be understood to be among one of the plaintiffs’ last possible avenues of recourse in their attempts to seek relief against GOL, and, conversely, if GOL were to be successful in resisting the Applications, what may be the end of this lengthy and costly saga for GOL. We do not think it is an overstatement at all to say that the stakes were very high in these Applications.

Costs

The Applications were transferred to the SICC on 14 July 2020. At the pre-trial conference (“PTC”) held before the Deputy Registrar, the plaintiffs had argued that the costs regime under O 59 of the Rules of Court (2014 Rev Ed) (“ROC”) and Appendix G of the Supreme Court Practice Directions (“Appendix G”) should continue to apply, whereas GOL argued that there was no reason why O 110 of the ROC should not apply. The issue of the applicable costs regime was reserved to this court. The material orders are as follow:

Costs

As noted above, Prayer 3 in the Sealing Applications remained outstanding. Together with Prayer 3, we broached the issue of redaction of the forthcoming written judgment with the parties. The parties filed written submissions on both Prayer 3 and the issue of redaction, and we heard parties orally on 3 September 2021. Having heard parties, we granted orders in terms of Prayer 3 in the Sealing Applications. We also held that the written judgment in OS 5 and OS 6 would not be redacted, and that costs in the applications would be reserved to after judgment was released on OS 5 and OS 6.

Costs

We make three observations about the Judgment. First, as a general matter, it is apparent that GOL was overwhelmingly successful in the Applications, managing to resist the plaintiffs’ arguments almost entirely. This is relevant when we come to the plaintiffs’ submissions that the costs award to GOL should be reduced to account for the issues on which it was not successful.

Costs

Thirdly, as alluded to above, the parties had submitted extensively on the novel issue of whether arbitral tribunals had a duty to review evidence of corruption. While this was ultimately not necessary for our determination, the parties had made submissions on various arbitrations and academic authorities in the course of these proceedings, and we considered these in coming to our decision (see the Judgment at [152]–[154]). Furthermore, the fact that this was an investor-state dispute brought to the fore some of the key public interest concerns that surround such disputes. Certainly, GOL, as a government, had a keen interest in advocating for its position concerning the role of arbitral tribunals when faced with allegations, not just on the facts of this case but also as a matter of principle. As we will elaborate below, the specific nature of investor-state disputes is something that this court should take cognisance of in determining the appropriate costs order.

Costs

We summarise broadly here the parties’ respective positions on costs, and deal with their detailed arguments in the course of our analysis. The plaintiffs take the following position on the issue of costs:

Costs

It suffices to note at this point that the parties’ positions are very far apart, and are based on dramatically different assumptions and approaches to the issue of costs. A careful analysis of the principles and rationale underlying costs orders in the SICC will therefore be essential in our determination of which position to prefer.

Costs

As such, the following issues arise for determination on the question of costs are as follows:

Costs

We begin with a consideration of the approach that this court should take to the issue of costs, and in doing so, make certain observations on the issue of costs in the SICC more generally. Having done so, we then apply this approach to the facts of this case.

Costs

In our discussion of the applicable approach, we begin with the distinction between pre- and post-transfer costs that often arises in the context of SICC proceedings. This distinction is material to cases that were first filed in the High Court (or the General Division of the High Court, as the case may be), and which are then transferred pursuant to O 110 r 12 and/or r 58 of the ROC (the latter applying to proceedings relating to international commercial arbitration). As the Court of Appeal noted in CBX and another v CBZ and others [2022] 1 SLR 88 (“CBX”) at [17]:

Costs

In the present case, GOL argues that this court should take the pre- and post-transfer costs together, rather than split them up for consideration, because Appendix G should not apply at all to this case. The plaintiffs argue that Appendix G should apply to the pre-transfer costs, and should remain a relevant factor in the assessment of the post-transfer costs.

Costs

In our judgment, it is appropriate to maintain a distinction between pre- and post-transfer costs. This is because the considerations as to whether Appendix G ought to apply, and if so, the extent to which the guidelines should be followed, differs when it comes to pre- and post-transfer costs. This follows from the Court of Appeal’s guidance in CBX at [40]. In relation to pre-transfer costs, we disagree with GOL that Appendix G should have no application at all (which is what GOL’s submissions appear to amount to). As the Court of Appeal observed in CBX at [28], the costs guidelines in Appendix G are always a starting point when it comes to pre-transfer costs; and the issue is whether Appendix G should be departed from. A departure from Appendix G consisting in a higher quantum of costs does not mean that Appendix G should be wholly disregarded. The question is only whether the circumstances of the case “support a lesser degree of dependence on Appendix G for the pre-transfer costs” (CBX at [28]). As the Court of Appeal summarised at [29]:

Costs

We therefore proceed, in this case, to consider both pre- and post-transfer costs distinctly, in the light of the different approach to each segment of the proceedings. Having said that, we turn to consider in greater detail the approach to post-transfer costs. Before doing so, it is worth clarifying the scope of the Court of Appeal’s judgment in CBX. CBX was one of two appeals that had been filed in that matter. The other, CA/CA 136/2020, was the appeal from the SICC’s judgment. CBX was an independent appeal, on the basis that even if the SICC’s judgment on the merits was upheld, the SICC’s order on costs should be varied in any event (see CBX at [7]). As it turned out, the Court of Appeal allowed the appeal in CA/CA 136/2020, and so naturally allowed the appeal in CBX and set aside the SICC’s costs order below.

Costs

In CBX, the question of principle that occupied the Court of Appeal was the approach to be taken to pre-transfer costs (see CBX at [28]–[29]). When it came to the quantum of the costs, the Court of Appeal considered both the pre- and post-transfer costs. In relation to the post-transfer costs, the Court had the following to say (at [39]–[41]):

Costs

We observe that the Court of Appeal’s views were very fact-specific and involved a close consideration of the case in question. Its observations should not (as the plaintiffs appear to argue) be taken as setting out a general principle that Appendix G should be accorded significant weight in assessing post-transfer costs. Even in CBX, the Court of Appeal only ventured to state that Appendix G remained relevant, without specifying the exact weight to be given to Appendix G. As for the Court of Appeal’s observations at the end of [41] that the likely result was that the costs would be significantly lower than $127,000 (excluding disbursements) that the SICC had awarded, this must be seen in the light of the Court of Appeal’s view that the SICC had erred in its approach to the pre-transfer costs, thus warranting a larger reduction in pre-transfer costs. Further, the Court of Appeal did not come to a firm landing on whether or not the post-transfer costs, assessed at around $61,600 by the SICC, should be reduced at all with reference to Appendix G. All that the Court stated was that: “it would always remain open to the court to consider whether there should be any reduction of that sum in the light of the substantially lower figure which would have been recoverable under Appendix G had the case remained in the High Court” (at [41]). In our view, the Court of Appeal in CBX was in fact opening the door, at least in relation to post-transfer costs, to developing further the principles that the SICC should consider in determining how to assess costs under O 110 r 46 of the ROC. It is to this that we now turn.

Costs

The question of how costs should be dealt with in the SICC must be considered against the background of costs in Singapore civil procedure more generally, both because the debates so far have centred on whether and to what extent Appendix G (developed for use more generally in the High Court) should apply in the SICC, and because the SICC is part of the Singapore court structure.

Costs

We begin with the Court of Appeal’s account of the principles underlying the rules concerning costs in civil proceedings in Maryani Sadeli v Arjun Permanand Samtani and another and other appeals [2015] 1 SLR 496 (“Maryani”) at [29]–[34]:

Costs

The central point emphasised by the Court of Appeal in Maryani is that rules on the recovery of costs is ultimately a matter of “social policy”. Since it is certain that parties who go to the courts will incur legal costs, the question of who is to bear those costs and how much that party should bear are ultimately questions that relate to the policy underlying the legal and judicial system. The answer to these questions will depend, in other words, on the attitude that the particular legal and judicial system takes to a number of competing concerns and considerations. In this regard, “social policy” is not an immutable and abstract object, but must be considered in the light of the goals and constraints of each particular system of civil justice. For example, the spectre of bankruptcy when a person loses his case in court due to crippling levels of costs is something that many a legal system will hold in the balance as it is directly related to the principle of access to justice; litigation cannot be the privilege of the well-heeled. Further, within a single system of civil justice in a country or territory, as in the Singapore legal system generally, one would expect there to be different policies governing specific areas and institutions within that legal system. This is not only unexceptional, given the wide variety of areas that the law touches upon and the diversity of the means by which disputes may be resolved, but is also necessary and useful. A clear example of this is the vast difference in approaches that have emerged in the family justice system when compared with the civil justice system more generally: see Sundaresh Menon, Chief Justice, “Through the Eyes of a Child”, Keynote Address at the 8th Family law & Children’s Rights Conference: World Congress 2021 (12 July 2021) at paras 4 and 6. We will return to the question of social policy as it applies in the context of the SICC below.

Costs

In the context of costs generally, the general principle is the “indemnity principle” (see Maryani at [30]). As the High Court explained in Then Khek Koon and another v Arjun Permanand Samtani [2014] 1 SLR 245 (“Then Khek Koon”) at [153], this consists of two component rules: (a) a costs-shifting rule; and (b) a quantification rule. The court described these rules as follows (at [154]):

Costs

The underlying policy of the indemnity principle is to compensate the winner, ie, to make “the vindicated winner whole for the costs of what he has shown, by the court’s judgment, to be unmeritorious litigation” (Then Khek Koon at [155]). In other words, the successful litigant has shown that he should not have been put to the cost of either bringing the proceedings to vindicate a legal right (as in the case of a successful plaintiff) or defending himself in proceedings against a claim by another (as in the case of a successful defendant). However, compensation alone is not the ultimate objective – compensation is justified by the policy of enhancing access to justice: “[t]he indemnity principle facilitates a meritorious litigant’s pursuit of justice by ensuring retrospectively that he attains justice at his opponent’s expense rather than his own” (Then Khek Koon at [156]).

Costs

At the same time, the policy of enhancing access to justice cannot be achieved if the indemnity principle does not “hold a balance between the interests of the victor against those of the vanquished” (Then Khek Koon at [158]). For this reason, “the indemnity principle must not only set a floor on the winner’s entitlement to recover costs, it must also set a ceiling on the loser’s liability to pay costs” [emphasis in original] (Then Khek Koon at [158]). In addition, apart from the parties to the actual dispute, the indemnity principle must also address the interests of potential litigants, as the indemnity principle may also have a deterrent effect. This effect arises because at the very outset, when considering whether to commence or continue litigation, a party faces not just the risk of failing in the substantive claim (or its defence of a claim) but also the risk of paying the legal costs for each set of independently represented parties (ie, in the usual two-party case, his own costs and his adversary’s costs). This risk may deter potential litigants who may have a meritorious claim but are “unwilling or unable to take on that worst-case risk”, and such a “risk-averse litigant is almost always the individual and the impecunious litigant” (Then Khek Koon at [160]) or a litigant without a deep enough pocket. Put bluntly, “[a]n indemnity principle which has no regard for its deterrent effect therefore risks denying access to justice” [emphasis in original] (Then Khek Koon at [160]). In order to address these risks, the indemnity principle is modified, both in terms of the cost-shifting rule and the quantification rule. In the present context, we do not need to address the cost-shifting rule further, as that is not in issue before us. We turn instead to consider with some detail, the parameters and limits on the quantification rule.

Costs

The first limit that the High Court identified in Then Khek Koon is that “the winner is entitled on taxation not to an actual indemnity for his costs but to what the procedural law defines to be an indemnity” (Then Khek Koon at [163]). The procedural law applies a “double test of reasonableness” (Then Khek Koon at [164]):

Costs

Even costs taxed on an indemnity basis, however, do not reach the full amount of costs that a solicitor is entitled to be paid by his own client, what the High Court in Then Khek Koon referred to as the “latent limit” on the quantification component (at [166]). The costs that a solicitor is entitled to (referred to often as “solicitor-and-client costs” or “S&C costs”) are, in the first instance, a matter of a solicitor’s entitlement under contract, but are ultimately subject to the court’s control through its jurisdiction to tax a solicitor’s bill, assisted by three presumptions as explained in Then Khek Koon at [170]:

Costs

In general, there is a “small but appreciable margin between the quantum of costs which a loser has to pay a winner assessed on the indemnity basis and the costs which the winning party has to pay his own solicitor” (Then Khek Koon at [171]).

Costs

However what amounts to a “small but appreciable margin” is somewhat elastic. In the decades past, a rule of thumb was that solicitor and client costs were one third or one half more than party and party costs, (depending on the reputation and skill of the lawyer retained). Reality also requires us to note that there are cases where a litigant decides that a case carries, for example, such grave reputational risk or other considerations that the litigant decides it must engage the best possible advocate to prosecute its case or its defence. In such cases, where success must be achieved, what a litigant has to pay his lawyer can come up to multiples of what is eventually awarded by a court.

Costs

The overall effect of these rules is that there is a “four-point scale”. At the lowest end is costs on a standard basis, in the middle is costs on an indemnity basis, and the third is what a solicitor is entitled to be paid by his own client (ie, S&C costs). The fourth was also called “indemnity costs” but it was on the basis of a contractual provision between the parties for one party to indemnify the other party, (usually a bank or a beneficiary under a guarantee), for the full costs and disbursements incurred by the legal action. It follows that “a successful litigant is almost always out of pocket for an appreciable part of his costs” on the first of the three scales (Then Khek Koon at [173]). The margin between S&C costs, indemnity basis costs, and standard basis costs reflects the reality that (Then Khek Koon at [175]):

Costs

A perception grew in the High Court that there was a large range of costs being awarded for what seemed to be comparable cases. We use the word “perception” because not all taxations or awards of costs came with published reasons. What appeared to be similar or comparable cases would, in many cases, exhibit differences when one was able to drill down into the facts and issues put forward by the parties, the judgement and reasons for the taxed items. Costs are notoriously fact sensitive not only to the issues raised in a case but also how they were run at trial. It was in this context of a need for some uniformity in costs awards in the High Court that the guidelines in Appendix G were formulated to provide some consistency in the awards of costs. As Appendix G provides at para 2:

Costs

It would therefore appear that the ranges of costs provided in Appendix G reflect the underlying considerations of policy that inform the rules of costs more generally in O 59 of the ROC. The appropriateness or otherwise of referring to Appendix G would therefore depend on whether, and to what extent, the approach to the issue of costs in the SICC ought to resemble the approach taken in the High Court under O 59 and in the civil justice system generally in Singapore.

Costs

It should be emphasized that in appropriate cases in the High Court, Appendix G is departed from and a much higher level of costs can be awarded. Even applying the double attenuation described at [39] above, costs in these cases are significant, but not exorbitant. One example is Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others [2013] 1 SLR 636, (a case involving challenges to arbitral awards under the Model Law), where the costs at the High Court level, on a standard basis, were taxed at S$250,000 (and Section 2 costs at S$1,500) with disbursements at S$35,723.58 making a total of S$287,223.58. The costs at appellate level, on a standard basis, but with a certificate for 3 solicitors, were taxed at S$200,000 (and Section 2 costs at S$3,000) with disbursements at S$99,325.12 making a total of S$302,325.12. The opposing parties were represented by Queen’s Counsel.

Costs

In a second example, involving a complex building contract dispute over an allegedly defective façade of a building, where two large granite panels weighing over 100 kg each, fell off the façade, the owners of the building sued the main contractor, the domestic façade subcontractor, the architect and two sets of consultant engineers. When it came to costs, Appendix G, was clearly inapplicable and put aside by all parties (see Millenia Pte Ltd (formerly known as Pontiac Marina Pte Ltd) v Dragages Singapore Pte Ltd (formerly known as Dragages et Travaux Publics (Singapore) Pte Ltd) and others (Arup Singapore Pte Ltd, third party) [2019] 4 SLR 1075 and the oral judgment on costs dated 8 March 2021). The trial was held over multiple tranches and spanned some 59 days and involved 16 expert witnesses from various disciplines. On appeal, the Court of Appeal dismissed the appeals and awarded costs of S$100,000 to one party and S$180,000 to another party. On taxation, where certificates for three solicitors were, save for one party, granted – we need only mention some of the costs awards to illustrate the point – the main contractor and its façade subcontractor were liable to the owners for costs of S$2,772,500; experts fees came to well over S$1,000,000. One set of consultant engineers was awarded costs of S$1,600,000 and the other consultant engineer was awarded S$2,000,000.

Costs

Another, more recent example, is the case of China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another [2018] SGHC 101 and the appeal therefrom in China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another [2020] 1 SLR 695. We refer to these as China Machine generally. China Machine concerned an application to set aside an arbitral award. We do not, for our purposes, need to set out the details of this matter, except to note that it was a complex matter – one indication of this is that the High Court’s judgment extended to 232 paragraphs in length, while the Court of Appeal’s judgment was 175 paragraphs long. In both the High Court and Court of Appeal, certificates were given for three counsel. The award itself was for around US$200m, with arbitration costs of around US$20m, while the entire dispute concerned close to US$1bn. The parties proceeded to taxation of the costs on a standard basis in the High Court and Court of Appeal (in HC/BC 54/2021 and HC/BC 56/2021 respectively). For the High Court proceedings, the claimed amount of S$920,000 was allowed (in taxation parlance, as Section 1 costs), whereas for the Court of Appeal proceedings, the Section 1 costs were taxed at S$395,000. It goes without saying that every case is determined on its own terms – we refer to China Machine presently to note that even under O 59, the costs orders can be very substantial, if justified.

Costs

In coming to costs in the context of the SICC, we begin by considering the nature of cases that would be heard by this international commercial court. The jurisdiction of the SICC is governed by s 18D of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”), which reads as follows:

Costs

We turn now to the rules on costs in the SICC which currently apply, and which apply to this case. These rules are set out in O 110 r 46 of the ROC. The fundamental principle, in relation to proceedings in the SICC is as follows (in O 110 r 46(1) of the ROC):

Costs

This is dramatically different from the rules as to costs under O 59 of the ROC. As noted above, O 59 costs are subject to a double attenuation, whether on the standard or indemnity basis (the difference between these two bases being the burden of proof). By contrast, under O 110 r 46(1) of the ROC, there is only one reference to reasonableness. As the SICC recently observed in Kiri Industries Ltd v Senda International Capital Ltd and another [2022] 3 SLR 174 (“Kiri”) at [73]–[77], in light of the specific considerations applying to proceedings in the SICC which we will elaborate on below, this should be understood to mean that there is only a single attenuation – as long as the costs are reasonably incurred, a successful party should be compensated for those costs. Indeed, the express disapplication of O 59 by O 110 r 46(6) of the ROC indicates very clearly that a different costs regime applies in the SICC (see CPIT Investments Ltd v Qilin World Capital Ltd and another [2018] 4 SLR 38 (“CPIT”) at [15]).

Costs

In coming to an assessment of “reasonable costs” under O 110 r 46(1) of the ROC, the SICC Practice Directions provide in para 152(3) a list of circumstances that the court may consider:

Costs

The broad discretion of the SICC in ordering “reasonable costs”, however, must clearly be exercised judiciously. Attempts have been made in the jurisprudence to formulate an approach to assist parties and courts in this exercise. The most recent attempt can be found in Kiri, where the SICC held that post-transfer costs in that case “should be higher than indemnity costs in the High Court, yet should still not amount to solicitor-and-client costs” (Kiri at [68]). As this approach represents a culmination of the authorities that have arisen on the interpretation of O 110 r 46 of the ROC, we focus our attention on the court’s analysis in Kiri here:

Costs

At the same time, although the lessened emphasis on access to justice in the SICC justifies costs awards that would exceed the indemnity costs awarded in the High Court, this does not necessarily justify S&C costs being ordered. The SICC in Kiri noted that this was because (a) O 110 r 46 of the ROC did not provide for this; and (b) “the touchstone of reasonableness is present … to act as a safeguard to prevent parties from indiscriminately incurring costs and thereby oppressing the other side” (Kiri at [79]). This safeguard preserves the efficiency of dispute resolution in the SICC (Kiri at [80]):

Costs

We respectfully agree with the reasoning of the court in Kiri. As we began by observing at [35] above, the question of what costs a successful party will be able recover from the unsuccessful party is ultimately a question of policy. Different areas of legal practice, and, certainly, different courts which adjudicate different matters may have to reflect a different emphasis or different policy considerations, including questions of social policy for domestic courts in order to be effective and fair to the parties involved. This is due to a combination of various factors, including the nature of disputes that come before the courts, the nature of persons and entities that are parties to those disputes, the expectations of those parties, and the role of the formal, judicial dispute resolution mechanism in the context of the parties’ relationships and, more generally, in the landscape of options for dispute resolution.

Costs

The policy concerning costs has to be assessed in light of the unique characteristics of the SICC which require broader considerations than those which apply to the Singapore High Court. In the context of international commercial disputes, issues of the welfare of the community or society in Singapore, including access to justice in the domestic courts and that justice should not be a privilege of those with deep pockets, have less relevance to corporations or individuals engaged in international commerce. For those parties, access to the SICC to have their disputes resolved by a court with the reputation which Singapore has built up as a dispute resolution hub, is more important as a policy than social policy which applies to the domestic courts in Singapore. Therefore different considerations apply in determining the level of costs that international commercial parties can recover in the SICC.

Costs

Whilst the policy element of imposing costs on the losing party is common to the High Court and SICC, the quantification of costs in the SICC has deliberately departed from that which applies in the High Court. Whilst O 59 rr 1 to 37 sets out a detailed code which includes taxation of costs, standard and indemnity bases for taxation and S&C costs, the SICC Rules exclude O 59 and include the general principles in O 110 r 46 where the quantification is expressed as “reasonable costs” with a wide discretion given to the court in assessing what are reasonable costs in any particular case. In the commercial context of the SICC, legal costs are part of the expenses that may be incurred in the pursuit of commercial objectives. When it comes to dispute resolution, these costs have to be weighed against the value or benefit that the pursuit or defence of the case would yield. Where it is a successful plaintiff, there is no reason why the plaintiff should be made to effectively reduce the value of its legal right (which is vindicated in the legal proceedings) by the costs of pursuing the vindication of that right. Put another way, the plaintiff should not, in general, be required to forego part of its entitlement by having to bear the costs of pursuing that relief.

Costs

In relation to international commercial disputes, many of which are more complex in law and fact, parties would generally spend more on legal representation than in other contexts. This is also generally justified by the generally larger amounts at stake in these disputes. While this varies from case to case, we find that this is an important part of the background in which the issue of costs in the SICC rests. If parties would naturally spend more to vindicate themselves in court proceedings, especially where parties are international entities or sophisticated individuals with exposure to other legal systems and alternative dispute resolution like arbitration or mediation, it would be a justified expectation that the SICC’s rules on costs should also be responsive to that reality, without being shackled to the parochial concepts of costs limits in any particular jurisdiction: see also B2C2 Ltd v Quoine Pte Ltd [2019] 5 SLR 28 (“Quoine”) at [14].

Costs

In addition, we observe that the costs regime in the SICC must also account for a relatively unique feature of commercial litigation: the existence of third-party funding (“TPF”). This establishes a different approach to commercial parties and cases has been adopted. The common law prohibitions against maintenance or champerty as being illegal and/or contrary to public policy (subject to certain exceptions developed in the authorities) have been removed in relation to TPF by s 5B(2) of the Civil Law Act (Cap 43, 1999 Rev Ed) which provides that:

Costs

In this light, the limited exceptions to the prohibition against contracts of maintenance or champerty was intended in 2017 to allow the TPF framework to be “tested within a limited sphere by parties of commercial sophistication” (Singapore Parliamentary Debates, Official Report (10 January 2017), vol 94 (Indranee Rajah, Senior Minister of State for Law)). The extensions of the TPF framework in 2021 can be seen as a gradual extension of the framework to other proceedings which are commercial in nature and also involve parties of relative sophistication – this is certainly the case for the extension of the TPF framework to SICC proceedings and appeals therefrom. In our judgment, the existence of the TPF framework for SICC proceedings is yet another indication that the nature of the cases and parties that come before the SICC justifies a different approach to costs in the light of O 110 r 46 of the ROC.

Costs

For completeness, we recognise that the TPF framework applies also to proceedings in the High Court related to international and domestic arbitration. However, in those instances, O 59 of the ROC continues to apply. Even so, we note that in Appendix G, the costs ranges for matters related to arbitration tend to be higher than for other matters. This, we find, is a recognition (within the confines of O 59 of the ROC and the policies articulated in Maryani and Then Khek Koon) that a differentiated approach to commercial matters can apply but as that issue is not before us, we need say no more about it.

Costs

For these reasons, in considering the balance of policies analysed in Maryani and Then Khek Koon, we find that the overriding and primary policy in the SICC is to compensate the successful party, as far as it is reasonable, for costs incurred in the pursuit of a claim or maintenance of a defence that is meritorious. This, of course, is subject to the court’s control of the quantum of costs – we agree with the court in Kiri that the court’s supervision is engaged because of the word “reasonable”. An unsuccessful party should only have to bear the reasonable costs incurred by the successful party, for the reasons elaborated on in Kiri at [79]–[80].

Costs

Having discussed the applicable rules and principles, we turn to our views on the applicable costs regime in the SICC. At the outset, we should state that we need to carefully distinguish between:

Costs

Our views on the costs awarded in the SICC that follow are for those cases under [76(b)], cases that were commenced in the SICC, and under [77(c)], the assessment of that part of the costs after transfer to the SICC.

Costs

The discretion to award costs in the SICC arises under O 110 of the ROC, as O 110 r 46(6) states expressly that “Order 59 (costs) does not apply to … proceedings in the Court”.

Costs

The fundamental purpose of an award of costs in the SICC under O 110 of the ROC is to compensate the successful party for reasonable costs incurred in the legal proceedings. The phrase “reasonable costs” is applicable to all costs, provided that they are reasonable. The qualification that the costs must be reasonable is only intended to provide a means for the court to ensure discipline in the pursuit of the case, as well as to prevent an unsuccessful party from being oppressed by the successful one. It is not intended to incorporate any further attenuation on the basis of considerations of social policy which may be appropriate in domestic courts. The starting point, therefore, in assessing costs in the SICC must be the costs actually incurred by the successful party, ie, the costs payable by the successful party to its solicitors, and its experts or consultants where relevant, which is then subject to the single attenuation for reasonableness.

Costs

In this regard, “reasonableness” is assessed in line with the considerations laid out in the SICC Practice Directions. We would highlight that a consistent thread throughout these considerations is essentially the principle of proportionality. In a narrow sense, proportionality here refers to the proportionality of the costs incurred to the benefit to be obtained (largely based on the quantum in dispute): see Kiri at [82]; Quoine at [14]. In a broader sense, proportionality is a guiding principle in this assessment – the question is simply what steps a litigant can properly be allowed to take in the pursuit of a particular claim or defence of a particular nature. This will involve consideration of the various factors listed in para 152(3) of the SICC Practice Directions, for example, the complexity of the claim and the novelty of the issues. It will also be a part of the analysis as to whether one party had unreasonably raised certain issues in the proceedings or where there were an excessive number of lawyers or experts.

Costs

It is clear from the above that O 59 of the ROC and Appendix G do not apply to cases commenced in the SICC where the assessment of costs is dealt with under O 110 r 46 of the ROC. It certainly remains relevant, as part of the broader context and to demonstrate the practice of the High Court when it comes to post-transfer costs in cases which are transferred to the SICC from the High Court, but beyond that, it would generally be inappropriate to use Appendix G in quantifying those costs in the SICC so as either to award successful parties costs based on Appendix G or to take account of the levels of costs in Appendix G, when awarding those costs. In the absence of specific application of Appendix G by agreement or in a transfer order, it would be a very rare case indeed where it would be appropriate to use Appendix G to adjust a costs award downwards either as part of or after the assessment of reasonableness under O 110 r 46 of the ROC. We provide some room for flexibility in the very exceptional and therefore rare SICC case where Appendix G assumes relevance because assessment of costs is notoriously fact sensitive. In the majority of SICC cases, it would not be appropriate to use Appendix G as a starting point in assessing post-transfer costs in the SICC, as that is contrary to the principles on which O 110 r 46 of the ROC is grounded.

Costs

In our judgment, O 22 r 3(1) of the SICC Rules merely makes explicit what is already implicit in O 110 r 46(1) of the ROC, which currently applies. It was felt desirable to lay out some of the factors which the SICC would take into account in assessing the costs because the litigants in the SICC may not come from common law jurisdictions or from jurisdictions where only minimal costs are awarded to the prevailing party. The principles and considerations underlying costs have not really changed. We note that it was only natural that parties have sought to rely on an existing reference point in addressing the court on costs in the SICC in the early years of this institution, but it was thought necessary to make clear (both by judicial pronouncement and by clear drafting in the SICC Rules) that the costs regime in the SICC stands on its own and is sui generis when compared to the High Court costs regime under O 59 of the ROC.

Costs

In applying this approach to costs in the SICC to a case such as the present international investor-state arbitration case, we note that these cases have many of the same characteristics as international commercial arbitration cases. In such cases, there will already have been prior arbitration proceedings. The bulk of such cases will be setting-aside applications, or contested enforcement proceedings – the gist of the more complex of these matters, however, will always be an attack on the award as such. We focus our attention here on such applications, of which CBX and another v CBZ and others [2021] 3 SLR 10 (the decision at first instance) is an example. In these circumstances, we think that the history of the arbitration is a material factor in assessing the appropriate costs. This is because the parties will already have invested significant amounts of money in the arbitration proceedings. Furthermore, there may already be a quantified sum for the relief sought in the arbitration. This must then be assessed in the light of the work done for the SICC proceedings. In this regard, the court will have to consider whether the SICC counsel also represented parties in the arbitration proceedings, although this factor is less important where it is a transfer case and the getting up was done pre-transfer (see CBX at [34]).

Costs

In our view, the costs of the SICC proceedings in international arbitration cases will almost certainly not reach the extent of the arbitration costs awarded (given the more limited scope of court applications), but the parties’ commercial expectations, given their participation in arbitration, will justify costs that seek to compensate the successful party almost entirely for the reasonable costs incurred in bringing or meeting such challenges. An additional factor in challenges to arbitral awards is the policy of the finality of arbitration and the need to discourage challenges to arbitration awards for the purpose of delaying the enforcement of arbitral awards. Thus, those who unsuccessfully challenge arbitral awards should not be encouraged by any award for costs which does not appropriately compensate the party responding to such challenges.

Costs

Cases involving investor-state disputes may generally be at the more substantial end of international arbitration cases. Such cases will involve a state and, typically, a party with deep pockets, and the nature of the claims involved tend to involve higher amounts than many commercial cases. Such disputes are also often long-drawn and, by the time parties come before the court for enforcement or setting aside, parties will have incurred very substantial costs in the arbitrations. While the facts of each case differ, a court faced with assessing costs in an investor-state dispute will have regard to both the factors generally applicable to international arbitration cases as well as the particular factors which apply to investor-state disputes.

Costs

Those factors, of course, are part and parcel of the court’s discretion as to costs, which must be exercised in the light of all the circumstances of the case, and especially those matters described in para 152(3) of the SICC Practice Directions.

Costs

We now turn to apply these principles to the present case. We begin with a discussion of a general point raised by the plaintiffs, before turning to assess the pre-transfer costs, post-transfer costs, and disbursements.

Costs

With respect, these arguments are misplaced. All of these points raised by the plaintiff are relatively minor. In particular, the first two pertain to two specific arguments raised under the rubric of assessing whether the BIT Tribunals’ failure to act in accordance with the parties’ agreement on procedure occasioned the plaintiffs any prejudice. Our decision was, primarily, that there was no breach of the parties’ agreement in the first place – the question of prejudice was not necessary to the decision. Furthermore, even though we agreed with the plaintiffs on those two specific instances, that was not sufficient to convince us to find that there was prejudice in the round, as the plaintiffs could not show that the BIT Tribunals could have arrived at a different conclusion on the broader question of the plaintiffs’ illegal, corrupt and/or fraudulent conduct (Judgment at [279]) and, in any event, we did not consider that the findings on the merits would have been affected (at [280]–[281]). As for the final point, the fact remains that the majority held the point against the plaintiffs, and, in any event, the issue is again only relevant as a further, further alternative – the primary reason for dismissing the complaint was that we could not consider Section 34 de novo (see [17(c)] above), in the alternative, if we could, we would agree with the BIT Tribunals, and in the further alternative, the BIT Tribunals were under a duty to investigate the allegations of corruption. In our view, the points referred to by the plaintiff are all relatively minor points, with no significant effect on costs and in our view no adjustment should be made.

Costs

We turn to the pre-transfer costs. The plaintiffs submit that GOL’s pre-transfer costs should be fixed at S$15,000. GOL has not provided a break-down of its costs submissions based on pre- and post-transfer, but seeks a global sum of S$400,000 in costs. We note here that the manner in which GOL has put forward its submissions in this regard is not satisfactory. While we understand that its position was that the court should take pre- and post-transfer costs together, its failure to provide a breakdown of costs in the alternative has make it harder to discern exactly how much work was done in each segment of the case. Because of this, we have to rely on approximations in our analysis.

Costs

Whilst, in assessing pre-transfer costs, we take account of Appendix G, bearing in mind that the Appendix G guidelines do not limit the costs that can be awarded in cases, in particular complex investor-state arbitration cases. Appendix G provides for a range of between S$12,000 and S$30,000 per day for contesting originating summonses. Specifically, for arbitration cases, the range provided for the daily tariff is between S$13,000 and S$40,000. OS 5 and OS 6 were heard over one and a half days (although two days were initially fixed). We take two days as the reference point here, since time was saved only by the court’s enforcement of strict timelines during the hearing and the prior preparation of counsel and the court: see, eg, CBX at [41]. Indeed, the length of time taken in oral submissions was not commensurate to the complexity of the present case – it was due only to the preparation done in the written submissions, logistical preparations, and counsels’ diligence that the hearing managed to complete earlier than scheduled.

Costs

In this case, in the absence of a detailed breakdown of costs from GOL, there is some ground for assuming that around half the work was done prior to the transfer. In a joint case management plan submitted on 20 August 2020 (ie, around a month after the transfer PTC) on 14 July 2020, the parties had indicated the following estimated costs:

Costs

While not entirely fool-proof, this is a helpful indication of how much work was already done by 20 August 2020 relative to the overall work in the case. As such, around half the costs would be a range of S$13,000 and S$40,000. OS 5 and OS 6 would likely be found at the upper end of that range, if Appendix G were to be followed strictly. We turn now to consider the factors raised by GOL to see if there is any reason to depart from Appendix G significantly in this case.

Costs

GOL first refers to the previous applications which involved the same parties – HC/OS 24/2014 (“OS 24”) which was GOL’s application concerning the PCA Tribunals’ ruling on jurisdiction, and HC/OS 1439/2017 (“OS 1439”) which was GOL’s application to enforce an SIAC award involving the same parties and in which the plaintiffs applied in HC/SUM 737/2018 (“SUM 737”) to object to enforcement. In OS 24, the parties agreed to fixed costs at S$200,000 (excluding disbursements), and in OS 1439 and SUM 737, the court awarded costs of S$120,000 (excluding disbursements). In GOL’s submission, OS 24 and SUM 737 were both less complex than OS 5 and OS 6.

Costs

In our view, the quantum of S$200,000 agreed by parties in OS 24 has little relevance to the present case, since that was agreed by parties, and it is not apparent what the basis of agreement was. As for SUM 737, we accept that there is force in the argument that the High Court in that case had departed from Appendix G, and awarded higher costs, and provides some guidance as to when the court may be minded to depart from the range in Appendix G.

Costs

As noted above, the upper end of the range based on Appendix G would be S$80,000 for the two full days of hearings. Given that the work done pre-transfer appears to be around half of the work done, and in the light of the complexity of the case, we conclude that an appropriate costs order would be to fix pre-transfer costs at S$42,000.

Costs

In coming to post-transfer costs, we begin with the parties’ estimates of costs (see [97] above). GOL had estimated that it would incur about S$190,000 more in costs and disbursements after 20 August 2020, which was just around a month after the case was transferred to the SICC. Hence, the estimate of around S$190,000 is a useful starting point for assessing post-transfer costs. This is close to GOL’s eventual submission for S$400,000 in costs and around S$30,000 in disbursements, assuming a 50-50 split between pre- and post-transfer costs.

Costs

The plaintiffs referred us to various precedents to argue that the post-transfer costs should be fixed at S$35,000. We do not find these precedents to be helpful in the present case.

Costs

Having regard to GOL’s estimates for its costs (at S$190,000 (all-in)) and its submissions, and in the light of the factors identified above, we find that a costs order approximating the costs actually incurred (which we assume to be around S$200,000 given a 50-50 split between pre- and post-transfer costs) would be justified. In this case, GOL has also sought S$31,212.07 in disbursements. Although there is some disagreement over the correctness of that sum given an affidavit filed under solicitor’s cover, we do not think that the objection is ultimately warranted or needs further attention. In the round, we fix the post-transfer costs at S$180,000 (all-in).

Costs

The plaintiffs seek, in addition, a condition to be imposed in the costs order that the costs should be paid to GOL’s solicitors on their undertaking to repay the sums to the plaintiffs in the event that the plaintiffs appeal against the Judgment in CA/CA 55/2021 is successful. While it is true that a court can impose such a condition, this is not the correct avenue for the plaintiffs to seek such a condition to be imposed. Instead, the plaintiffs should file a separate application if they desire, supported with the necessary affidavit setting out the bases for the condition sought, and giving GOL the chance to file a reply affidavit as well. Indeed, GOL has not had a chance to respond to this request, since the costs submissions were exchanged rather than filed sequentially. The court is not presently in a position to determine this request. Therefore, we make no order as to this request, without prejudice to the plaintiffs filing a formal application if they desire after the costs order is made.

Costs

We turn then to the costs of the Sealing Applications. The plaintiffs seek costs in their favour of S$12,000 plus disbursements of S$836.59. GOL argues that no order as to costs should be made, as the plaintiffs succeeded in the sealing application while GOL succeeded on the issue of redaction.

Costs

We agree with the plaintiffs that an order for costs should be made in their favour. First, the Sealing Applications were the only formal applications involved, and did not cover the issue of redaction, but only sealing. The issue of redaction, although related, was raised by the court of its own accord, given the need to consider the appropriate position under the relevant legislation and in the light of the parties’ submissions on sealing. In that sense, it should be treated as ancillary to and separate from the Sealing Applications. Secondly, in that light, to the extent that costs were incurred for the redaction issue, on which GOL’s position was accepted, we find that the appropriate adjustment would be a reduction of the costs order for the Sealing Applications rather than a denial of costs for the Sealing Applications as a whole.

Costs

Having regard to the submissions made and the fact that GOL’s position on redaction was ultimately accepted, we fix costs of the Sealing Applications at S$8,000 (all-in).

Costs

We must pause at this point to state that parties do themselves no favours when submitting on costs without assisting the court with the relevant details. Giving ballpark figures is wrong in principle. Whilst parties may wish to do so in those international arbitration challenges which seldom exceed one day, they may take the risk of rough justice.

Costs

However, where trials have taken place, a fortiori in more complex trials and with tranches, and even for originating summonses that are heard over a few days, we expect counsel to put in more details into their submissions on the level of costs to be awarded. They should be able to break down costs in different broad stages – costs leading up to the filing of Affidavits of Evidence-in-Chief, or at least costs up to trial, costs during the trial and costs after trial (usually submissions). Parties should be able to provide the number of lawyers claimed, their post-qualification experience, their hours and their respective charge-out rates. Where applicable or beneficial, it should also be broken down into stages. Similarly for experts – their time and hourly charge should be shown, the time should be broken up into stages, like preparation of their reports, the time for the joint experts’ conclave and joint expert report and time taken up at the trial. All of them disbursements should be similarly detailed and where possible either agreed between the parties or agreed as to quantum but not as to the principle as to whether they can be claimed or not, ie, agreement on “figures as figures”. Any information or detail that counsel feel will be relevant and helpful should also be provided. All this is good practice to enable any court or tribunal to come to a proper assessment of costs to be awarded.

Costs

For the foregoing reasons, we fixed the costs of this case as follows: