Conflict of Laws

Publication year2020
Date01 December 2020
Published date01 December 2020
AuthorJoel LEE Tye Beng1 LLB (Hons) (Wellington), LLM (Harvard), DCH (AIH); Barrister and Solicitor (New Zealand); Advocate and Solicitor (Singapore); Professor, Faculty of Law, National University of Singapore. LEOW Wei Xiang Joel Dip (Law and Management) (Temasek Polytechnic); LLB (Hons) (National University of Singapore); Associate, Dentons Rodyk & Davidson LLP. Marcus TEO Wei Ren LLB (Hons) (National University of Singapore); Sheridan Fellow, Faculty of Law, National University of Singapore.
I. Introduction

12.1 For 2020, there are 13 cases that will be examined in this review. As in previous years, it is useful to note that conflict of laws cases sometimes relate to other areas of law. In these situations, this review will only examine those parts of the case that are relevant to the field of conflict of laws.

II. Jurisdiction and stay of proceedings

12.2 It is trite that before a court can hear a matter, it must be seised of jurisdiction. Jurisdiction can be in personam or in rem. In personam jurisdiction can be established via presence, submission and the court's long-arm discretionary jurisdiction under O 11 r 1 of the Rules of Court2 (“ROC”). Implicit in all of these is that service of papers on the defendant is required.

12.3 On discretionary jurisdiction, there are three requirements before leave to serve out of jurisdiction is granted. First, the plaintiff's claim must come within one of the heads of claim in O 11 r 1 of the ROC. Second, the plaintiff's claim must have a sufficient degree of merit. Third,

Singapore must be the forum conveniens for the dispute. Furthermore, as the application for leave for service out of jurisdiction is usually done ex parte, the plaintiff is required to make full and frank disclosure of all the material facts.3 In cases where leave is granted, parties can challenge the existence of the court's jurisdiction and apply to set aside the writ.

12.4 On the third requirement, that of forum conveniens, it is useful to point out that apart from being considered as part of the discretionary jurisdiction analysis (where the existence of jurisdiction is being challenged), a defendant can also apply to the court to stay proceedings on the basis of forum non conveniens, essentially asking the court to not exercise its jurisdiction because there is a more appropriate forum elsewhere.

12.5 When considering the requirements for service out of jurisdiction, there is sometimes the danger of adopting too mechanistic an approach, which can lead to missing the forest for the trees. Recovery Vehicle 1 Pte Ltd v Industries Chimiques Du Senegal4 highlights, inter alia, the importance of keeping a strategic and big picture perspective when looking at the requirements for service out of jurisdiction.

A. Recovery Vehicle 1 Pte Ltd v Industries Chimiques Du Senegal

Discretionary jurisdiction — Order 11 rule 1

Discretionary jurisdiction — Forum non conveniens — Foreign proceedings

Discretionary jurisdiction — Forum non conveniens — Time bar

Discretionary jurisdiction — Full and frank disclosure — Continuing obligation

12.6 The related High Court decision was covered in last year's Annual Review.5 Involving cross-appeals, the appellant in Civil Appeal 31 was Recovery Vehicle 1 Pte Ltd (“RV1”). RV1 was the assignee of debts owed by Industries Chimiques Du Senegal (“ICS”) to the assignor, Affert Resources Pte Ltd (“Affert”). Affert, a Singapore-based company, had entered into six contracts with ICS for the purchase and sale of sulphur

(“sulphur contracts”) and under these sulphur contracts, ICS was to have paid over US$17m to Affert.6

12.7 Without having to go into the details, there was a series of transactions whereby Affert acquired shares in ICS. As part of this arrangement, ICS claimed that this debt had been waived by Affert. Affert was subsequently placed in creditor's voluntary winding up and the liquidators sent letters of demand to ICS for payment, before commencing proceedings in the Singapore courts. The debt was subsequently assigned to RV1 who then applied to amend the writ (to replace itself as claimant) and then applied for leave for service out of jurisdiction. RV1 did not disclose the existence of the defence that the debt had been waived. Leave was granted and service was effected on ICS.

12.8 Following this, ICS applied to and obtained from the Dakar Commercial Court a default judgment to the effect that the ICS debt had been waived. It was undisputed that the assignor, liquidator and plaintiff had not been notified of the Dakar proceedings, and they only came to know of it after ICS obtained and served the default judgment on them. The liquidators also applied in Singapore to set aside the waiver as an undervalued transaction. These proceedings were stayed pending the determination of the Dakar judgment appeal.

12.9 ICS subsequently applied to set aside the amended writ and/or leave order. The assistant registrar opined that RV1 had not complied with its duty to make full and frank disclosure. As such, the leave order was set aside. RV1 appealed against this decision.

12.10 On appeal, the High Court held that:

(a) While RV1 did not know of the waiver documents when it filed its amended writ, it had breached its continuing duty to provide full and frank disclosure. Despite this, the judge exercised her discretion not to set aside the leave order.

(b) The requirements in O 11 r 1(d)(ii) of the ROC were not satisfied because the sulphur contracts were not governed by Singapore law but by Senegalese law.

(c) The requirements in O 11 r 1(e) of the ROC were satisfied because payments were to be made in Singapore, non-payment of which meant that the breach had been committed in Singapore.

(d) Singapore was forum conveniens for the matter.

(e) RV1 could not rely on the time bar in Senegal as it did not show it had acted reasonably in failing to commence timely proceedings in Senegal.

12.11 Both parties cross-appealed and the Court of Appeal was asked to consider the following issues:

(a) what law governed the sulphur contracts;

(b) whether a good arguable case had been established for the purpose of O 11 r 1(e);

(c) whether RV1's claim was time barred in Senegal such that it lacked sufficient merit to satisfy an order for service out of jurisdiction;

(d) whether Singapore was forum conveniens; and

(e) whether RV1 had breach its duty of full and frank disclosure such that the leave order ought not to have been granted.

12.12 Turning to the first issue on the proper law of the sulphur contracts, the court affirmed the High Court's approach in analysing this issue via the three-stage test in Pacific Recreation Pte Ltd v S Y Technology Inc7 (“Pacific Recreation”). On analysis, the High Court had concluded that the law governing the sulphur contracts was Senegalese law.8 RV1 highlighted the nature of the sulphur contracts being cost, insurance and freight (“CFR”) contracts and that the High Court had erred in attaching weight to the goods being discharged in Senegal. RV1 submitted instead that for a CFR contract, weight should be attached to the contemplated place of performance, which it submitted was Singapore.9

12.13 Noting that the authorities cited by RV1 did not support its submissions, the court disagreed and opined that the correct approach towards determining the governing law of CFR contracts was no different from the approach towards any other contract.10 It is useful to note that the Court of Appeal noted (without disapproval) the following factors in the identification of the governing law under stage 2 of Pacific

Recreation: (a) place of contracting; (b) place of performance; (c) place of residence or business of the parties; and (d) nature and subject matter of the contract.11

12.14 In the absence of an express choice (stage 1 in Pacific Recreation) or a divination of parties' intentions (stage 2), the court would embark on a pragmatic exercise to identify which law has the most connection with the contract in question and the circumstances surrounding the inception of that contract (stage 3). Since RV1 did not actually adduce evidence as to the actual or contemplated place of performance, the court agreed with the High Court's analysis and conclusion that the governing law of the sulphur contracts was Senegalese law.12 In doing so, it also made three observations. First, taking into account the common commercial purpose of the sulphur contracts, there were clearly many more connections to Senegal.13 Secondly, the court rightly did not accept RV1's submissions to take into account transactions and documents that occurred after the sulphur contracts.14 These should have no connection in determining the governing law of the sulphur contracts. Finally, the court refused RV1's curious submission to make its determination of Senegalese law as the governing law a provisional one.15 This must be correct. RV1 had raised the matter of governing law to satisfy O 11 r 1(d)(iii) and would likely not have raised this point had the determination been in its favour. Put simply, RV1 cannot have its cake and eat it too.

12.15 On the second issue, O 11 r 1(e) requires a claim to be “brought in respect of a breach committed in Singapore”. The High Court had held that the obligation to pay was in Singapore, and non-payment constituted a breach committed in Singapore, thereby satisfying this head of jurisdiction.16 The Court of Appeal disagreed and made a number of observations.

12.16 First, the High Court had required ICS to show that payment was to be made in Hong Kong. However, the Court of Appeal opined that while ICS may have made this contention, the overall burden remained

RV1's to show that there was the existence of a contractual obligation in Singapore and there had been a breach of this contract.17

12.17 Secondly, the court opined that in order to satisfy O 11 r 1(e), authorities required RV1 to show that Singapore was the only place from which performance of the obligation is required.18

12.18 Thirdly, RV1 had relied on the general rule from The Eider19 that where there is no express or implied term under the contract stating the place from which payment must be made, the debtor must pay the creditor at the creditor's place of business.20 Noting that this rule is an established one in English law, the Court of Appeal opined that the “general rule” would clearly have no place in a situation...

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