Astro All, Lippo Face Off in Singapore Court Over $300m Ruling

Shoeb K. Zainuddin

Singapore. The long-running legal saga between the Lippo Group and Malaysia’s Astro All Network, owned by T. Ananda Krishnan, over a failed pay-television joint venture in Indonesia took another turn in Singapore’s High Court on Monday as Queen’s Counsel Toby Landau sought to overturn earlier awards granted by the arbitration tribunal against several Lippo group companies.

The two-day hearing is seen as a critical test case for Singapore’s legal system given its complexity and regional implications. Singapore has in recent years been promoting itself as a regional arbitration center, prompting many companies to use it to settle commercial disputes.

The case involved eight plaintiffs — all members of Astro’s media group — and three defendants, which are Lippo group companies. One of these units, First Media, applied earlier this month for the case to be heard in open court “as it will determine a point of international significance and it will be closely followed by international arbitration reporters and practitioners.” Two of the other companies have since been sold.

Landau argued that the arbitration court had mistakenly granted awards to three Astro firms — Astro All Asia Networks, Measat Broadcast Network Systems and All Asia Multimedia Networks FZ-LLC — because none of the defendants had entered into an arbitration agreement with these companies.

“In our view, what transpired in the arbitration court is extraordinary,” Landau said. “The only substantive relief at the end of the day was for plaintiffs 6, 7 and 8, but the defendants never entered into an arbitration agreement with them,” he said, referring to the three Astro companies.

The identity of the parties connected to a contract is fundamental, he noted. “This has to be established very clearly. You are contracting out your fundamental right to access the courts and you do not take that from people lightly.”

Both parties must consent to arbitration for the tribunal to have jurisdiction over the proceedings. As there was no agreement, Landau continued, logically there was no consent.

“The logic of the arbitration tribunal was difficult to follow. It looked like the cart was put before the horse,” he said. “The proper starting point should have been who had agreed to arbitration.”

The arbitration tribunal granted five awards to Astro between May 2009 and August 2010 involving a total of $300 million in damages, interests and costs.

However, most of the penalties were granted to the three Astro units which were not part of the arbitration agreement. He also questioned the whole process of arbitration as the defendants had started legal proceedings in Indonesian courts before the arbitration began.

The QC, who has argued more than 250 international arbitrations worldwide and has extensive experience in foreign investment, trade, joint ventures, power and other large-scale projects, also took issue with Astro’s assertions that First Media had abandoned or waived its right to appeal and fight the decision by participating in the arbitration process.

Employing examples of past legal cases which had raised similar issues, Landau questioned Astro’s argument by noting that First Media had made known its reservations at every stage of the proceedings against plaintiffs 6, 7, and 8.

“What is being said by Astro is out of line with the law,” he said. “That you cannot argue the merits of the case under reservation is the basic flaw in the Astro argument as general reservation is sufficient to fight the arbitration.”

In his written summation, Landau noted that First Media’s substantive right to challenge the enforcement orders should certainly not be taken away lightly, especially where there is so much doubt and controversy surrounding the service of the originating summonses and the enforcement orders made on Aug. 5, 2010, and Sept. 3, 2010.

“If there is any doubt in the mind of this honorable Court that the enforcement orders were properly served on the second defendant, the benefit of that doubt should certainly be given to the second defendant.”

Astro will argue its case today through its own Queen’s Counsel David Joseph.

Krishnan, a former oil trader who conceived Petronas Towers that transformed Kuala Lumpur’s skyline, has investments in health care, pay-TV and energy. In recent years he has run into legal trouble. In India the Central Bureau of Investigation filed a case against him for alleged graft involving Astro All Asia Networks and telecommunications giant Maxis.

First Media and the Jakarta Globe are both affiliated with the Lippo Group.