Econ Corporation International Limited v Ballast-Nedam International BV

• Jurisdiction: Singapore
• Judge: Lai Kew Chai J
• Judgment Date: 10 December 2002
• Neutral Citation: [2002] SGHC 293
• Docket Number: Originating Summons No 1190 of (Registrar's Appeal No 258 of 2002)
• Date: 10 December 2002
• Year: 2002
• Published date: 19 September 2003
• Plaintiff Counsel: Christopher Lau SC and Cheah Kok Lim (Ang and Partners)
• Citation: [2002] SGHC 293
• Defendant Counsel: Felicia Chua and Lam Wei Yaw (Wong and Leow LLC)
• Court: High Court (Singapore)
• Subject Matter: Whether plaintiffs had a good arguable case,Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 11 rr 1(b), (d), (r),Whether substantial relief sought by way of injunction,Appropriate forum,Conflict of Laws,Service,Choice of jurisdiction,Whether serious issues to be tried,Whether proper case to grant leave for service out of jurisdiction,Civil Procedure,Whether Singapore courts most appropriate forum for deciding rights under Performance Bond and Advance Payment Guarantees

Judgment

GROUNDS OF DECISION

1 The plaintiffs commenced these proceedings against the defendants on 28 August 2002. Under these proceedings, the High Court is asked to decide whether the defendants were entitled to call on a Bond and an Advance Payment Guarantee both dated 20 March 2001 and an Advance Payment Guarantee both 3 April 2002 (and the three instruments are referred to hereafter as the Bond and Advance Payment Guarantees) on the terms and language thereof and in the circumstances to which I will briefly refer presently and whether they were entitled to receive the money under the Bond and Advance Payment Guarantees. Two days later, the plaintiffs obtained an Order of Court for leave to serve the Originating Summons out of jurisdiction on the defendants in the Netherlands.

2 By Summons in Chambers entered No. 3621 of 2002 the defendants applied for the following orders, namely: (a) to set aside the Order of Court of 30 August 2002 which granted leave to serve the Originating Summons out of jurisdiction; (b) alternatively, to stay the proceedings pursuant to Section 6(1) of the International Arbitration Act (Cap. 143A); (c) alternatively, to stay the proceedings herein under the inherent powers of the Court to prevent injustice and/or abuse of process under Order 92 Rule 4 of the Rules of Court (1997 Ed); and/or alternatively, to declare that this Court has no jurisdiction over the defendants under Order 12 Rule 7(g) of the Rules of Court.

3 On 2 October 2002, an Assistant Registrar ordered that the Order of Court dated 30 August 2002 which granted leave to serve the Originating Summons out of jurisdiction be set aside. Being dissatisfied with the decision, the plaintiffs appealed to the Judge in Chambers. At the conclusion of the hearing, I allowed the appeal. I ruled that leave to serve the Originating Summons out of jurisdiction ought to have been granted, as was ordered initially. I set aside the orders of the Assistant Registrar of 2 October 2002 and ordered the defendants to pay the plaintiffs costs here and below fixed at $7,500. I now set out the background and the reasons.

The background

4 In the amended Originating Summons the claim is for the following reliefs:-

(i) a declaration that the defendants shall not be entitled to call or demand payment or otherwise receive payment in respect of the Bond and Advance Payment Guarantees until the final outcome of the arbitration proceedings; and

(ii) the defendants be restrained from taking any steps to demand or receive payment under the said Bond and Advance Payment Guarantees or otherwise receiving, encumbering or otherwise dealing with the monies or any part thereof under the Bond and Advance Payment Guarantees.

5 The Bond was issued by American Home Assurance Company ("AHA"), a corporation of the State of New York, out of their branch office in Singapore to secure its performance of a sub-contract which I will describe later. The Bond expressly stated that it was "made in accordance with the laws of Singapore and subject to the decision of the courts of Singapore". (emphasis added). The Advance Payment Guarantee of 20 March 2001, which was also furnished by AHA, also expressly provided thus: "This Guarantee is made in accordance with the laws of Singapore and subject to the decision of the Courts of Singapore". As security for AHA, the plaintiffs, a Singapore company, had in turn signed counter-indemnities in favour of AHA.

6 The purpose of the Bond and Advance Payment Guarantees arose in the following circumstances in relation to a turnkey project awarded by Petronet LNG Ltd for the engineering, procurement, construction and commissioning of a liquefied natural gas receiving, storage and re-gasification terminal at Dahej, State of Gujarat, India ("the project)". Petronet LNG Ltd is a limited company incorporated under the laws of India and the defendants is a Dutch company. Together with four other internationally well-known construction companies the defendants were awarded the Main Contract for the Project. The Main Contract provided for inter laia the completion of a detached breakwater to protect the LNG terminal. The deadline for completion was 27 December 2003.

7 On 26 January 2001, the defendants sub-contracted to the plaintiffs the construction of the detached breakwater. The sub-contract, as usual, provided that the defendants may give notice to the plaintiffs to proceed with the Subcontract works with due diligence, failing which the Subcontract may be terminated. By sub-clause 21.1 it was provided that any dispute arising between the plaintiffs and the defendants arising out of the execution of the Subcontract works shall be finally settled by arbitration in accordance with the rules of arbitration as laid down in the Main Contract. The place of arbitration, the procedural law applicable to the arbitration, the law applicable to the substance of the dispute, the language of the arbitral proceedings and the number of arbitrators shall be as specified in the Main Contract. Under the Main Contract, any dispute arising out of or relating to the contract or with respect to the breach, termination or invalidity thereof shall be settled exclusively and finally by arbitration. Arbitration shall be conducted in accordance with the Indian Arbitration and Conciliation Act. It was provided that the place of arbitration shall be in New Delhi, India and that the governing law of the Main Contract shall be the laws of the Republic of India.

8 The plaintiffs’ application for leave to serve the Amended Originating Summons out of jurisdiction was based on Order 11 r 1(b), (c), (d)(iii) and (iv) and (r) of the Rules of Court. Rule 11 r 1(c) was not relied on a the hearing before me.

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