Burgundy, THE BIFURCATION OF JURISDICTION AND ITS FUTURE IMPLICATIONS

• Citation: (2015) 27 SAcLJ 207
• Published date: 01 December 2015
• Author: ZHUANG WenXiong LLB (National University of Singapore), LLM (New York University); Justices' Law Clerk, Supreme Court of Singapore; Teaching Fellow, National University of Singapore.
• Date: 01 December 2015

In the seminal Court of Appeal decision of Burgundy Global Exploration Corp v Transocean Offshore International Ventures Ltd[2014] 3 SLR 381, Sundaresh Menon CJ departed from the traditional conception of jurisdiction as being monolithically rooted in presence, and recognised the notion of subject-matter jurisdiction. This essentially entails an examination into whether a non-resident is so closely connected to Singapore that a Singapore court is justified in regulating her extraterritorial conduct. This is a laudable development that coheres with the increasing outmodedness of Westphalian notions of sovereignty. This article suggests that, moving forward, subject-matter jurisdiction is relevant in two other contexts: as a true alternative to a plea of forum non conveniens, and as a check on the over-inclusive language of O 11 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed), upon which ex juris service should only be allowed if the claim is closely enough connected to Singapore.

I. Introduction

1 The Court of Appeal recently handed down the seminal decision of Burgundy Global Exploration Corp v Transocean Offshore International Ventures Ltd (“Burgundy”),1 and in doing so adjudicated on the question of whether leave is required to serve an examination of judgment debtor (“EJD”) order out of jurisdiction on a non-party. On the surface, this called for the application of settled principles of statutory interpretation. However, things are not always as they seem; the court resolved the question in large part on the basis of subject-matter jurisdiction, which was hitherto a concept extant in English law that has never been referenced in local jurisprudence. The decision comprehensively settled the position for EJD orders, but leaves unanswered deeper jurisprudential issues which may determine how analogous issues are argued and decided in the future. This paper will not focus on the immediate issues raised by Burgundy which, in the

author's view, were laudably and correctly decided, but on the larger implications for the direction of case law in Singapore.

2 The facts are deceptively simple. Burgundy Global Exploration Corporation (“Burgundy”) entered into two separate but related contracts with Transocean Offshore International Ventures Limited (“Transocean”). Under the first contract, which was governed by an arbitration clause and included some exclusion clauses, Transocean agreed to supply a drilling rig and provide offshore drilling services to Burgundy. Under the second contract, which was governed by a non-exclusive jurisdiction clause in favour of the Singapore courts, Burgundy agreed to secure its payment obligations under the first contract by depositing moneys into an escrow account according to a stipulated timeline, failing which Transocean was entitled to terminate the first contract. Burgundy failed to make the first requisite payment, and Transocean exercised its right to terminate the first contract. Transocean commenced O 112 proceedings against Burgundy in the High Court for a breach of the second contract. Burgundy attempted to rely on the arbitration clause in the first contract to stay proceedings, but was unsuccessful in doing so. Transocean obtained summary judgment against Burgundy, and damages were assessed at US$105,536,922.

3 Transocean subsequently applied for and obtained EJD orders against the directors of Burgundy. Although the directors were resident in the Philippines, Transocean did not apply for leave to serve the EJD orders out of jurisdiction. Instead, Transocean obtained leave to effect substituted service by serving them on Burgundy's lawyers in Singapore. The directors applied to set aside the order for substituted service, but this was rejected by an assistant registrar. Burgundy appealed against the damages awarded while the directors cross-appealed against the assistant registrar's refusal to set aside the EJD orders. Both appeals were dismissed by the High Court; the parties then appealed to the Court of Appeal.

4 Burgundy's appeal to the Court of Appeal was successful. In brief, the second contract was meant to secure Burgundy's payment obligations, and was not to be conflated with Transocean's performance interest under the first contract. The latter could only be vindicated by an arbitral tribunal.

5 The Court of Appeal also allowed the directors' cross-appeal apropos the EJD orders. This is, of course, the subject matter of this article, and the reasoning of Sundaresh Menon CJ shall be summarised more fully:

(a) Jurisdiction is not a monolithic concept. There is a distinction between personal and subject-matter jurisdiction (citing Mackinnon v Donaldson, Lufkin and Jenrette Securities Corp (“Mackinnon”)3 and Masri v Consolidated Contractors International (UK) Ltd (No 4) (“Masri”)4);5

(b) Personal jurisdiction refers to the question of whether a person is amenable to the jurisdiction of the court in the sense of him being brought before the court. Subject matter jurisdiction refers to what a court is permitted to do in terms of regulating the extraterritorial conduct of someone over whom it has personal jurisdiction;6

(c) Where an EJD order is sought against a foreign officer of a company, the court's personal jurisdiction over the officer is in issue, and it is inevitable that the court has regard to whether this is the prelude to the impermissible exercise of exorbitant substantive jurisdiction;7

(d) Lord Mance's concerns in Masri must be understood in the context of England's Civil Procedure Rules (“CPR”).8 The CPR did not allow EJD orders to be served out of jurisdiction.9 The Singapore Rules of Court,10 in contrast, did allow EJD orders to be served out;11

(e) The caveat in O 11 r 8(1) of the Rules of Court, which stipulates that leave is not required where service of the originating process has already been granted, was not intended to extend to non-parties resident outside of Singapore. Concerns about extraterritoriality vis-à-vis the non-party would not have been considered at the originating process stage;12

(f) Thus, leave is required for EJD orders to be served out of jurisdiction on non-parties.13 The fundamental question is whether the foreign officer is so closely connected to the substantive claim that the Singapore court is justified in taking jurisdiction over him. The mere fact of the officer possessing relevant information is insufficient.14

II. Genealogy of subject-matter jurisdiction

6 The jurisdiction of the English common law courts was originally regarded as an emanation of royal power. This is hardly surprising: the first common law court was the curia regis or aula regis established during the reign of King William I, which gradually and literally imposed the King's law across his territory and superseded the plethora of local jurisdictions.15 The Peace of Westphalia, according to accepted canon, was the decisive geo-political event that laid the ground for the development of a system of authority based on the sovereignty of nation states.16 Local elites, who were oftentimes Kings, started to exercise exclusive secular authority over their territories. The writ, which enabled a plaintiff to avail himself of the King's courts, was originally a command issued in the name of the King.17

7 Jurisdiction in the common law was thus synonymous with, and was perhaps better denoted as, amenability. A defendant was amenable to the common law courts because he was a subject of the realm.18 This extends beyond residence or domicile: foreign visitors in a King's territory were also subject to the commands of the King. The high watermark for this conception of jurisdiction was Carrick v Hancock.19 The plaintiff sought to enforce a Swedish judgment against the

defendant. The Swedish action was started by a writ served on the defendant during a short visit to Sweden. Lord Russell of Killowen CJ observed that jurisdiction was based upon the principle of territorial dominion, and that all persons within any territorial dominion owe their allegiance to its sovereign power, obedience to all its laws and to the lawful jurisdiction of its courts.20 The service of the writ was foundational to the invocation of the court's jurisdiction precisely because it was a royal edict. Even in more recent times, Justice Holmes has said that “the foundation of jurisdiction is physical power”.21

8 It is, of course, self-evident that states (with a few exceptions) are not discrete and closed units unto themselves with no contact with other states. Subjects trade and generally intermingle with subjects of other states, and this means that common law plaintiffs may find themselves unable to avail themselves of the courts if they are unable to physically serve a writ on a putative defendant while he is physically present in the forum.22 In a more extreme case, a defendant ordinarily resident in the forum who flees to another state would be outside of the jurisdiction of the common law courts.23 This was legislatively remedied by the Common Law Procedure Act 1852,24 which allowed writs to be served on defendants not physically present in the jurisdiction if the cause of action arose within England, or if a contract made within England was breached.25 These provisions are of course the precursors to modern legislation which permit ex juris service of originating processes. The significance of these provisions shall be examined in the ensuing section.

9 The Westphalian concept of sovereignty is today incomplete, both normatively and descriptively. In regard to the former, Nazi Germany regarded itself qua sovereign as being completely unbound by the rules of war, and committed unspeakable atrocities.26 The Nuremberg Tribunal rejected the full implications of Westphalian sovereignty, and stressed that a court of law could penetrate the veil of the sovereign and convict persons who mere merely following the orders

of the sovereign.27 In regard to the...