6DM (S) Pte Ltd v AE Brands Korea Ltd

• Jurisdiction: Singapore
• Judge: Mavis Chionh Sze Chyi J
• Judgment Date: 16 November 2021
• Court: High Court (Singapore)
• Docket Number: Suit No 951 of 2020 (Summons No 665 of 2021) and Originating Summons No 138 of 2021

6DM (S) Pte Ltd

and

AE Brands Korea Ltd and others and another matter

[2021] SGHC 257

Mavis Chionh Sze Chyi J

Suit No 951 of 2020 (Summons No 665 of 2021) and Originating Summons No 138 of 2021

General Division of the High Court

Civil Procedure — Jurisdiction — Submission — Singapore distributor distributing “Peroni” products pursuant to three distribution agreements with three beer companies — Two distribution agreements stating that courts of England and Wales had exclusive jurisdiction while one distribution agreement stating that local courts had exclusive jurisdiction — Beer companies terminating distribution agreements with Singapore distributor — Singapore distributor suing beer companies in Singapore — Beer companies applying to set aside service of writ out of jurisdiction and issuing statutory demand against Singapore distributor — Whether issuance of statutory demand constituted submission to jurisdiction of Singapore courts — Whether application to set aside service of writ out of jurisdiction with alternative prayer for stay or dismissal of proceedings on improper forum grounds constituted submission to jurisdiction of Singapore courts — Whether submission to jurisdiction of Singapore courts should result in refusal of stay or dismissal of proceedings under s 12 Choice of Court Agreements Act (Cap 39A, 2017 Rev Ed) — Section 12 Choice of Court Agreements Act (Cap 39A, 2017 Rev Ed) — Convention on Choice of Court Agreements (30 June 2005)

Civil Procedure — Service — Service out of jurisdiction — Breach of duty of full and frank disclosure — Non-disclosure of material facts

Civil Procedure — Stay of proceedings — Principles for applications under s 12 Choice of Court Agreements Act (Cap 39A, 2017 Rev Ed) — Grounds on which court could choose not to stay or dismiss proceedings under s 12 Choice of Court Agreements Act — Whether court should stay or dismiss proceedings under s 12 Choice of Court Agreements Act — Section 12 Choice of Court Agreements Act (Cap 39A, 2017 Rev Ed) — Convention on Choice of Court Agreements (30 June 2005)

Companies — Winding up — Determining existence of substantial and bona fide dispute — Whether there were exceptional circumstances to justify winding up despite there being substantial and bona fide dispute — Clean hands

Conflict of Laws — Choice of jurisdiction — Exclusive — Principles for applications under s 12 Choice of Court Agreements Act (Cap 39A, 2017 Rev Ed) — Sections 11(1), 11(2), 12, 24(1) and 24(2) Choice of Court Agreements Act (Cap 39A, 2017 Rev Ed)

Held, allowing SUM 665 and OS 138, and dismissing Suit 951 in respect of the Asahi Entities:

(1) Following from the manner in which s 12 of the CCAA was formulated, applications under s 12(1) for a stay or dismissal of proceedings fell to be considered in two stage. First, the court had to consider whether there existed an exclusive choice of court agreement (which the court also referred to as an “EJC”), which did not designate Singapore as a chosen court and which applied to the case or proceeding in which the s 12(1) application was made. If there was such an EJC, the court had to stay or dismiss the case or proceeding, unless it was shown that one of the five exceptions set out in s 12(1) applied: at [25].

(2) In the context of s 12(1) of the CCAA, a relatively robust approach was appropriate at the first stage of the analysis when determining whether an EJC existed and whether it governed the dispute in question. The court adopted the same approach as that set out in Vinmar Overseas (Singapore) Pte Ltd v PTT International Trading Pte Ltd[2018] 2 SLR 1271 (“Vinmar”), ie, the party applying under s 12(1) of the CCAA for a stay or dismissal of the case or proceedings had to show a “good arguable case” that an EJC existed and governed the dispute in question: at [34].

(3) Unlike the common law where a party in breach of an EJC had to show “strong cause amounting to exceptional circumstances” why he should not be held to the EJC once the other party had established a good arguable case that the EJC existed and governed the dispute in question, s 12 of the CCAA made clear that, where an EJC did not designate any Singapore court as a chosen court, a Singapore court had to stay or dismiss the case or proceeding to which the agreement applied unless one of the five exceptions stipulated in s 12(1) of the CCAA applied. For the purpose of an application under s 12(1) of the CCAA, it did not suffice for a party resisting a stay of the Singapore proceedings to show there was “strong cause” to refuse a stay or that the applicant had submitted to the jurisdiction of the Singapore courts if he could not bring himself within one of the five exceptions in s 12(1) of the CCAA: at [35], [36] and [38].

(4) The Asahi Entities had made out a good arguable case that the EJC in the AEBK Agreement was an EJC in favour of the courts of England and Wales. Applying the principles of contractual interpretation established in English law to the EJC in the AEBK Agreement, the AEBK Agreement was a renewal of the 2013 Distribution Agreement, which was based on SABMiller's standard form template, and which also contained an EJC in favour of “the courts of England and Wales”. It did not make commercial sense for the parties to have consciously decided to switch to a court other than the courts of England and Wales, particularly since the AEBK Agreement continued to adopt English law as the governing law: at [42], [45] and [46].

(5) There was a good arguable case that the EJCs in the three distribution agreements applied to Suit 951 – it was not disputed that the relationship between 6DM and the Asahi Entities was a contractual one, and 6DM's claims against the Asahi Entities plainly required determination of questions relating to the circumstances in which the distribution agreements were concluded, the respective parties' rights and obligations under the distribution agreements, and whether the express terms of the distribution agreements were exhaustive of their rights and obligations. While Bogna was not a party to the distribution agreements and was not bound by the EJCs in these agreements, the EJCs were still binding as between 6DM and the Asahi Entities, and any case or proceeding which 6DM brought against the Asahi Entities to which the EJCs applied had to be stayed or dismissed vis-à-vis the Asahi Entities. Thus, the court had to dismiss or stay the proceedings in Suit 951, unless it determined that one of the five exceptions in s 12(1) of the CCAA applied: at [54] to [57].

(6) Giving effect to the EJC would not result in manifest injustice nor would it be manifestly contrary to the public policy of Singapore under s 12(1)(c) of the CCAA. A party who sought to invoke one of the five stated exceptions had to exceed a high threshold and demonstrate exceptional circumstances before the exception was engaged. In the present case, 6DM claimed that granting a stay or dismissal of Suit 951 vis-à-vis the Asahi Entities would lead to multiple sets of proceedings in more than one jurisdiction and thus the fragmentation of the dispute, but 6DM had not articulated any coherent formation of the public policy that would be manifestly contravened in that scenario. In any event, the argument about fragmentation of the dispute was “purely speculative” and failed to exceed the high threshold required. The mere fact that 6DM had commenced proceedings against Bogna in Singapore did not alter that conclusion – the proceedings against Bogna were still at a preliminary stage, and even if Bogna could not be joined as a party to proceedings against the Asahi Entities in the English courts, it was in principle possible for the risk of parallel proceedings and inconsistent findings to be mitigated via a limited stay of the Singapore proceedings against Bogna pending the resolution of the English proceedings: at [58] and [66] to [68].

(7) The issuance of the Statutory Demand was not a submission to the jurisdiction of the Singapore courts by the Asahi Entities. The Statutory Demand was not an application made in Suit 951 and was not a “step” within Suit 951, nor was it premised on the Singapore courts having jurisdiction over the dispute in Suit 951. The Statutory Demand also contained a reservation stating that nothing in the Statutory Demand “shall constitute a submission to the Singapore courts of any dispute arising under or in connection with [the three distribution agreements]”, which, in the circumstances, supported the court's finding that the Asahi Entities did not intend to submit to the jurisdiction of the Singapore court: at [79] to [81].

(8) The filing of SUM 665 by the Asahi Entities also did not amount to a submission to the jurisdiction of the Singapore courts, as the prayer for a stay or dismissal of proceedings on improper forum grounds was really a “fall-back”. As such, the Asahi Entities had not engaged in conduct that constituted a waiver of their objection to the existence of the Singapore court's jurisdiction: at [86].

(9) Even if the Asahi Entities had submitted to the jurisdiction of the Singapore courts, 6DM had not explained why or how this purported submission to jurisdiction should result in the refusal of a stay or dismissal of Suit 951 under s 12 of the CCAA, which required that the Singapore court stay or dismiss any case so long as there was an EJC that did not designate Singapore as the chosen court: at [88].

(10) Section 12 of the CCAA did not provide any specific guidelines for when a stay was to be preferred over a dismissal or vice versa. A stay would make sense in cases where part of the dispute between the parties fell outside the scope of their EJC; in such cases, it would make sense to stay that part of the dispute which fell within the scope of the EJC while allowing the remainder of the dispute to proceed in the Singapore proceedings. However, in cases where the entirety of the dispute fell within...