Citibank NA v Robert

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 24 January 2011
• Neutral Citation: [2011] SGHC 21
• Plaintiff Counsel: Gerald Kuppusamy, Yap Cui Xian and Michelle Lee (Wong & Leow LLC)
• Docket Number: Suit No 175 of 2010 (Registrar’s Appeal No 243 of 2010)
• Date: 24 January 2011
• Hearing Date: 13 January 2011,18 October 2010,03 August 2010,28 June 2010
• Subject Matter: Conflict of laws
• Published date: 31 January 2011
• Citation: [2011] SGHC 21
• Defendant Counsel: Gurbani Prem Kumar (Gurbani & Co)
• Court: High Court (Singapore)
• Year: 2011

Chan Seng Onn J: Introduction

The plaintiff brought Suit No 175 of 2010 (“the Suit”) against the defendant pursuant to an “Irrevocable Guaranty and Indemnity” dated 10 August 2004 (“the Guaranty”). Summons No 1543 of 2010 (“the Summons”) was the defendant’s application to stay the Suit on the basis that Singapore was not the appropriate forum. The present appeal was brought before me following the learned Assistant Registrar’s dismissal of that application.

Facts Background

The plaintiff is a US bank licensed to carry on business in Indonesia and elsewhere. The defendant, an Indonesian citizen, is the President Director of PT Permata Hijau Sawit (“PHS”), an Indonesian company.

The plaintiff has a long course of dealing with PHS dating back to 2001. However, for the purposes of the present proceedings, only a handful of agreements are material. The Guaranty, as mentioned above, was signed on 10 August 2004. It was governed by New York law. Pursuant to cl 2 of the Guaranty, the defendant guaranteed certain obligations owed by PHS to the plaintiff. This included obligations arising from agreements including and in connection with an ISDA Master Agreement and a Schedule (“ISDA Agreement”) entered into on 18 May 2001 in respect of multi-currency cross-border transactions between PHS and the plaintiff. New York law also governed the ISDA Agreement.

On 2 January 2008, the plaintiff sent a letter of offer (“the LO”) to PHS and other companies that were part of the same group offering foreign exchange facilities of up to US$5 million. The defendant accepted the offer on behalf of PHS. However, while the LO originally required a personal guaranty from the defendant and his wife for up to US$ 20 million each as well as a corporate guaranty from PHS for the same amount to cover the indebtedness of related companies, the defendant struck out these requirements before signing the document and returning the same to the plaintiff. The only other security asked for in the LO was a standby letter of credit for US$500,000. PHS duly provided this.

The plaintiff and PHS subsequently entered into a Confirmation Agreement dated 5 September 2008 in respect of certain Callable Forward transactions. The Confirmation Agreement was entered into pursuant to the foreign exchange facility granted under the plaintiff’s LO. By its terms, the Confirmation Agreement was to supplement and form part of the ISDA Agreement that the plaintiff and PHS entered into on 18 May 2001.

PHS incurred a debt to the plaintiff of the sum of US$ 23,146,749.41 in respect of the Callable Forward transactions. It defaulted on this debt. Consequently, in letters dated 22 December 2008 and 9 January 2009 respectively, the plaintiff demanded that the defendant pay the sum of US$5,250,000. It alleged that the defendant was required to pay this sum pursuant to the terms of the Guaranty.

Procedural history

On 16 January 2009, PHS commenced an action in the District Court of South Jakarta, Indonesia, against the plaintiff for, inter alia, a declaration that the Callable Forward transactions were “annulled by law”. On 26 November 2009, the District Court handed down the judgment that the Confirmation Agreement and the Callable Forward transactions were null and void on the ground of illegality. PHS and the plaintiff were each ordered to refund money belonging to the other under the respective transactions. The plaintiff appealed this decision. I am given to understand that the District Court’s decision has no executory effect pending the appeal.

In Singapore, on 12 March 2010, the plaintiff commenced the Suit against the defendant in respect of the Guaranty. On 7 April 2010, the defendant took out the Summons to stay the Suit on the ground that Singapore was not the convenient or appropriate forum for the determination of the dispute that was the subject matter of the Suit. As mentioned above, the defendant’s application was dismissed, upon which, the present appeal was brought.

After the Suit was commenced, the defendant filed a second action in the District Court of South Jakarta, Indonesia, seeking an order that the Guaranty was null and void. At the time parties first appeared before me, that second application was still in a nascent state. Later, however, on 9 December 2010, the South Jakarta District Court issued a decision declaring the guaranty null and void. This decision is now under appeal. It is a point to which I will return below.

My decision The law on forum non conveniens

The general principles governing forum non conveniens have been summarised in CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR(R) 543 at [25] – [26] (“CIMB”):

25 The locus classicus on the question of when a stay would be granted on the basis of forum non conveniens is Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 ("Spiliada"), a decision of the House of Lords where Lord Goff of Chieveley, in delivering the leading judgment, laid down certain guiding principles (at 476-478) for determining the question of forum non conveniens ("the Spiliada test"). Those principles have been adopted by this court in several cases such as Brinkerhoff Maritime Drilling Corp v PT Airfast Services Indonesia [1992] 2 SLR(R) 345 , Eng Liat Kiang v Eng Bak Hern [1995] 2 SLR(R) 851 , PT Hutan Domas Raya v Yue Xiu Enterprises (Holdings) Ltd [2001] 1 SLR(R) 104 and Rickshaw Investments Ltd v Nicolai Baron von Uexkull [2007] 1 SLR(R) 377 ("Rickshaw Investments").

26 The gist of these principles is that, under the doctrine of forum non conveniens, a stay will only be granted where the court is satisfied that there is some other available and more appropriate forum for the trial of the action. The burden of establishing this rests on the defendant and it is not enough just to show that Singapore is not the natural or appropriate forum. The defendant must also establish that there is another available forum which is clearly or distinctly more appropriate than Singapore. The natural forum is one with which the action has the most real and substantial connection. In this regard, the factors which the court will take into consideration include not only factors affecting convenience or expense (such as the availability of witnesses) but also other factors such as the law governing the transaction and the places where the parties respectively reside or carry on business. If the court concludes, at this stage of the inquiry ("stage one of the Spiliada test"), that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay. If, at this stage, it concludes that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay, unless there are circumstances by reason of which justice requires that a stay should nevertheless be refused. In this connection, the court will consider all the circumstances of the case. For this second stage inquiry ("stage two of the Spiliada test"), the legal burden is on the plaintiff to establish the existence of those special circumstances.

Where no jurisdiction clause is relevant to the dispute, the above principles are applied in a straightforward manner in deciding whether or not a stay ought to be granted.

The plaintiff submitted, however, that where a jurisdiction clause exists, a different test ought to be applied. It pointed out that cl 13 of the Guaranty gave it (but not the defendant) the specific option to submit any dispute to any court having jurisdiction over the defendant’s assets, which included the courts of Singapore. The plaintiff described cl 13 as a semi-exclusive jurisdiction clause and submitted that in such instances as the present, the appropriate test to apply ought to be the “strong cause” test set out in Baiduri Bank Bhd v Dong Sui Hung and Another [2000] 2 SLR(R) 271 (“Baiduri”). It is this issue of the appropriate test to apply that my attention now turns.

The court has discretion whether or not to grant a stay on the grounds of forum non conveniens. This discretion exists even when parties have agreed to an exclusive jurisdiction clause (Bambang Sutrisno v Bali International Finance Ltd and others [1999] 2 SLR(R) 632 at [7] – [9] (“Bambang”)). However, while each case has to be decided within its particular factual matrix, where parties have agreed to litigate exclusively in a forum other than Singapore, a stay would ordinarily be granted unless exceptional circumstances warrant otherwise (see The “Eastern Trust” [1994] 2 SLR(R) 511 at [8]). Similarly, where a defendant, in breach of an agreement applies for a stay of proceedings on the ground...