SICC: Award Enforcement and Settlement Disputes

The Singapore International Commercial Court (SICC) has delivered two significant judgments addressing the enforcement of arbitral awards where post-award settlement agreements are in dispute. In DKB v DKC [2025] SGHC(I) 11, the SICC granted a conditional stay of enforcement proceedings, ruling that disputes over whether a post-award settlement agreement precluded enforcement fell within the scope of the settlement's arbitration clause and required resolution through arbitration before enforcement could proceed. The subsequent judgment in DKB v DKC [2025] SGHC(I) 14 addressed the respondent's failure to meet the stay conditions and granted additional time to commence arbitration.

Factual Background
The dispute arose from the assignment of an award from a Swiss-seated arbitration. The successful party assigned the award to DKB under a stay and settlement deed (Settlement Deed), whereby DKC, as the losing party, agreed to satisfy the award through installment payments to DKB. In exchange, DKB agreed to stay enforcement of the award. The Settlement Deed included an arbitration clause requiring disputes to be resolved under the Expedited Arbitration Rules of the SCC Arbitration Institute. When DKC allegedly breached its payment obligations under the Settlement Deed, DKB sought to enforce the award in the SICC pursuant to Sec. 29 of Singapore's International Arbitration Act 1994 (IAA 1994). DKC opposed enforcement, contending that US sanctions prevented lawful payments and that the payment dispute required arbitration in Stockholm under the Settlement Deed's arbitration clause.

First Decision: Conditional Stay Granted
The SICC's analysis in the first judgment established several key principles. The court determined that Singapore procedural law governed the stay application under Sec. 6 of the IAA 1994, which expressly permits parties to seek stays where court proceedings concern matters subject to arbitration agreements. The court applied a low threshold test, finding it sufficient that a dispute existed which prima facie fell within the arbitration agreement's scope, without examining the dispute's merits. Significantly, the SICC held that Sec. 31 of the IAA 1994, despite setting out exhaustive grounds for refusing enforcement of foreign awards, did not prevent the court from staying proceedings to uphold the parties' post-award contractual obligations. Accordingly, the court granted a conditional stay requiring DKC to commence expedited arbitration within ten days and prosecute it diligently. No security was required given the expected expedited resolution.

Second Decision: Extension of Time
In the second judgment, the SICC noted DKC's failure to meet the ten-day deadline for commencing Stockholm arbitration without adequate justification. However, considering the claim's quantum, the parties' agreement to arbitrate, and the limited prejudice to DKB, the court granted DKC additional time to commence arbitration proceedings.

Key Implications
These decisions underscore the importance of carefully drafting settlement clauses to ensure clarity regarding how breaches may affect award enforcement rights. Parties should consider explicitly addressing potential sanctions risks or force majeure events in their settlement agreements:

Low Threshold for Stay Applications: Singapore law mandates a stay upon mere assertion of a dispute prima facie covered by an arbitration agreement. Courts will not assess the dispute's merits during stay applications.

Expanded Grounds for Enforcement Challenges: While Sec. 31 purports to contain exhaustive grounds for refusing enforcement, these decisions effectively recognize an additional ground where parties have agreed to post-award conditions affecting enforcement and disputes arise regarding compliance with those conditions.

Balancing Enforcement Rights with Contractual Obligations: The SICC demonstrated willingness to balance enforcement rights against the parties post-award contractual commitments, particularly where arbitration agreements govern settlement disputes. These precedents provide valuable guidance for practitioners handling complex award enforcement scenarios involving post-award settlement agreements and highlight the SICC's approach to balancing competing legal principles in international commercial disputes.