Case Note

• Citation: (2016) 28 SAcLJ 649
• Published date: 01 December 2016
• Date: 01 December 2016

EXPLORING A NEW FRONTIER IN SINGAPORE'S PRIVATE INTERNATIONAL LAW

IM Skaugen SE v MAN Diesel & Turbo SE

[2016] SGHCR 6

The establishment of the Singapore International Commercial Court (“SICC”) marks a significant development in Singapore's private international law. This note leverages on the Singapore High Court decision of IM Skaugen SE v MAN Diesel & Turbo SE[2016] SGHCR 6 to discuss two key issues raised by the SICC: the relationship between the Singapore High Court's and the SICC's jurisdictional rules, and the applicable test for the exercise of the SICC's jurisdiction. This note argues that the possibility of a transfer to the SICC should influence the High Court's exercise of its international jurisdiction, and that the SICC should not apply the common law jurisdictional approaches for the exercise of its international jurisdiction, but a unique test that recognises the competing policy objectives it has to balance.

I. Introduction

1 The Singapore International Commercial Court (“SICC”) was officially established as a division of the Singapore High Court1 on 5 January 2015.2 This heralded the accomplishment of an important lynchpin in Singapore's strategy to expand its legal services sector, profile Singapore law as the law of choice for international commercial disputes and cement Singapore as a leading destination for commercial dispute resolution.3 Cases which are “international and commercial in

nature” fall within the jurisdiction of the SICC,4 and cases may be transferred from the High Court to the SICC and vice versa under conditions specified in the Rules of Court.5 To facilitate its objective of drawing international commercial cases to Singapore, several of the SICC's unique features are as follows: (a) the SICC is not bound to apply Singapore rules of evidence;6 (b) it may allow questions of foreign law to be determined on submissions rather than proof;7 (c) registered foreign lawyers can argue before the SICC;8 and (d) the SICC bench comprises distinguished jurists from major jurisdictions around the world.9

2 Aside from representing a major step toward the fulfilment of Singapore's ambitions to be an internationally recognised dispute resolution hub, the advent of the SICC also marks a significant milestone in Singapore's private international law. It introduces a new body of jurisdictional rules into Singapore law and, as with any burgeoning area of law, several teething issues as to how the SICC rules should be interpreted and how these will interact with the existing rules remain to be elaborated. In view of the nascent stage of development of this area of law, the recent Singapore High Court decision of IM Skaugen SE v MAN Diesel & Turbo SE10 (“IM Skaugen”) is afrontrunner in the development of the law in this regard. In this case, the assistant registrar presiding over the case ably faced several of these issues head-on and proposed solutions to guide the law's development.

3 This note aims to use the judgment in IM Skaugen as a launching point to discuss and analyse two key issues in Singapore's private international law raised by the establishment of the SICC: the relationship between the High Court's and the SICC's jurisdictional rules, and the applicable test for the exercise of the SICC's jurisdiction. This note argues that the possibility of a transfer to the SICC should influence the Singapore High Court's application of the Spiliada Maritime Corp v Cansulex Ltd11 (“Spiliada”) calculus, although the High Court should continue to apply its own rules of international jurisdiction and not those of the SICC. This note also seeks to demonstrate that the common law approaches, that is, the English

Spiliada and the Australian Voth v Manildra Flour Mills Pty Ltd12 (“Voth”) tests, should not be adopted as the tests for the exercise of the SICC's jurisdiction pursuant to O 110 r 8 of the Singapore Rules of Court. Instead, the exercise of the SICC's international jurisdiction should be governed by a unique test that leans strongly towards the exercise of jurisdiction but has the flexibility to decline to exercise jurisdiction in exceptional circumstances in order to take into account the competing policy considerations it has to balance. As for the test governing a transfer of proceedings from the High Court to the SICC pursuant to O 110 r 12(4), above the requirement that the case in question be in substance international and commercial in nature, the court should balance the benefits of a transfer against the inconvenience and possible expense it may cause to the litigants. For avoidance of doubt, any reference to the High Court in this note refers to the High Court excluding the SICC. II.

IM Skaugen

4 In IM Skaugen, the plaintiffs were a group of companies providing marine transportation services in the oil and gas industry, with constituents incorporated in Norway and Singapore. The defendants were manufacturers of marine diesel engines, with constituents incorporated in Germany and Norway. The plaintiffs contracted with Chinese shipbuilders to build ships and opted to purchase ship engines from the defendants. During the course of negotiations between the plaintiffs and the defendants, the defendants made representations in a project planning manual regarding the rate of fuel consumption of the engines. Representations as to the rate of fuel consumption were also made in a technical agreement between the Chinese shipyard and the defendant. The shipbuilders purchased the engines from the defendants pursuant to this technical agreement. When the completed engines were put through factory acceptance tests, the results of the tests purported to show that the rates of fuel consumption were below the values previously represented to the plaintiffs. The defendants conceded that the factory acceptance tests may have been externally influenced in an improper manner to display incorrect rates of fuel consumption.

5 At the time of the Singapore High Court's judgment, the two sides were engaged in arbitration in Denmark and the International Chamber of Commerce (“ICC”), as well as litigation in Norway. Before the High Court, the plaintiffs pleaded that the representations made to them by the defendants during negotiations and the factory acceptance tests regarding the fuel consumption rates of their engines were false,

and that the plaintiffs were induced to rely upon, and did rely upon, these representations. The plaintiffs also alleged negligence and fraud. The defendants applied to set aside service of the writ out of jurisdiction and, alternatively, for a stay of proceedings on the ground that Singapore is not the natural forum. In the further alternative, the defendants argued that the proceedings should be stayed on case management grounds pending the outcome of other proceedings. In response, the plaintiffs argued, inter alia, that Singapore was the natural forum for the dispute and that the establishment of the SICC should feature in the natural forum calculus.

6 The assistant registrar eventually held for the defendants as Germany was found to be a more appropriate forum than Singapore. Accordingly, the writ for service out of jurisdiction was set aside.

III. Relationship between the High Court's and SICC's jurisdictional rules

7 In coming to his decision, the assistant registrar addressed the issue of whether the existing common law principles on the exercise of jurisdiction, as applied in the High Court, should be influenced by the possibility of transferring the case to the SICC.

8 The common law approach to the exercise of jurisdiction is well established and has been reaffirmed by the Court of Appeal on several occasions.13 Essentially, the position in Singapore is aligned with the seminal English decision in Spiliada, where the House of Lords held that the overarching inquiry in determining whether the court should exercise its jurisdiction or grant a stay of proceedings involves a search for the most appropriate forum where “the case may be tried more suitably for the interests of all parties and the ends of justice”.14 The Court of Appeal, in reaffirming the applicable test in Singapore, emphasised that “it is important to see what the case is about, and connections which have no or little bearing on adjudication of the issues in dispute between the parties will carry little weight”. 15

9 As set out in Halsbury's Laws of Singapore16 and affirmed by the Court of Appeal,17 factors which the court will consider at the first stage of the Spiliada analysis include personal connections, connections to events and transactions, governing law, other proceedings and shape of the litigation. Should the defendant seeking a stay of proceedings succeed in proving that a foreign court is the more appropriate forum at this stage, the court will ordinarily grant a stay of proceedings, unless the plaintiff succeeds in showing that the case should nevertheless be heard in the forum due to the interests of justice. At this second stage of the Spiliada inquiry, factors that the court will consider include whether the foreign court will give effect to parties' choice of law, the presence of a time bar and whether there will be a denial of substantial justice if the case is stayed.18

10 Broadly, the same approach applies for cases of service out of jurisdiction, except that the procedural context is reversed. Where the plaintiff is seeking leave for service out of jurisdiction, the burden is on the plaintiff to prove that the forum is the most appropriate forum. Should the plaintiff fail to do so, he could argue that the interests of justice demand that the forum hear the case nonetheless. The defendant may apply to set aside service of the writ out of jurisdiction or to apply for a stay of proceedings, although in view of the differing allocation of the burden of proof, the more strategic option for the defendant would probably be the former.19

11 The introduction of...