Elan Impex (Singapore) Pte Ltd and Another v Daewoo Corporation and Others

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 08 February 2003
• Neutral Citation: [2003] SGHC 20
• Docket Number: Suit No 282 of 2002
• Date: 08 February 2003
• Published date: 07 October 2003
• Year: 2003
• Plaintiff Counsel: N Sreenivasan and Bal Ratanesh Kaur (Straits Law Practice LLC)
• Citation: [2003] SGHC 20
• Defendant Counsel: Philip Jeyaretnam, SC and Goh Peng Fong (Rodyk & Davidson),Anil M Changaroth (Lim & Lim)
• Court: High Court (Singapore)
• Subject Matter: Stay of proceedings,Civil Procedure,Actions commenced in Singapore and South Africa,Order granting service of writ out of jurisdiction,Whether order should be set aside,Whether Singapore more appropriate forum,Whether action against defendants should be struck out,Service,Striking out

The parties

1 The first plaintiff is a company incorporated in Singapore. The second plaintiff is a South African company and is the first plaintiff’s distribution agent.

2 The first and second defendants are South Korean companies. The second defendant was established in a restructuring of the first defendant.

3 The third defendant is a former employee of the first plaintiff, and the husband of the fourth defendant. They are residents of South Africa.

The three agreements

4 There are three agreements involved in these proceedings:

(i) an agreement dated 18 January 2000 ("the first agreement");

(ii) an agreement dated 23 August 2000 ("the second agreement"); and

(iii) an agreement dated 19 June 2001 ("the third agreement").

The first plaintiff had entered into the first and second agreements with the first defendant. The first agreement was subsequently superseded by the third agreement which was entered into by the first plaintiff and the second defendant.

5 The agreements were licensing agreements which permitted the first plaintiff to use the defendants’ "Daytek" and "Daewoo" names and logos on electrical appliances that the first plaintiff was to purchase on its own and sell. The first plaintiff would pay the defendants royalties based on the value of the appliances purchased.

6 The agreements covered different territories. The second agreement extended over three Asian countries and Australia while the third agreement extended over 12 African countries.

The termination of the agreements

7 The second agreement was terminated by the second defendant by a letter dated 21 December 2001 on the ground of lack of performance.

8 The third agreement was terminated by the second defendant by a letter of 8 February 2002 on the ground that the first plaintiff had failed to pay the full royalties due.

The basis of the claims

9 The plaintiffs instituted the action because they regarded the terminations of the two agreements as wrongful.

10 They claimed that the third defendant had procured and induced the "first and/or second defendant" to breach the agreements with the result that the second defendant breached the agreements.

11 They also claimed that the third and fourth defendants had threatened and intended to continue to procure breaches of the agreements.

Order of Court of 15 March 2002

12 The plaintiffs made ex parte applications for the service of the writ out of jurisdiction and for interim restraining orders against the defendants.

13 On 15 March 2002 the plaintiffs obtained an order to restrain the first and second defendants from granting branding and distribution rights to third parties or to distribute products bearing the Daytek and Daewoo names and logos in the areas covered by the agreements, or to supply such products to those territories, and to restrain them from interfering with the activities of the first plaintiff.

14 The plaintiffs also obtained leave to serve the writ on the first and second defendants in South Korea and on the third and fourth defendants in South Africa.

15 In addition to that Mareva injunctions were obtained against the third and fourth defendants restraining them from disposing of their properties in Singapore.

The defendants’ applications

16 The applications before me were the first and second defendants’ application that (i) the action against the first defendant be struck out, (ii) the order for service on them out of jurisdiction be set aside and (iii) the injunctions against them be discharged. Alternatively they wanted the proceedings against them stayed.

17 The third and fourth defendants applied that (i) the order giving leave to serve the writ on the third defendant be set aside, (ii) the actions against them be struck out, (iii) the Mareva injunctions against them be set aside, and (iv) the proceedings against them be stayed.

Jurisdiction of the Singapore courts

18 The plaintiffs asserted that the action came within the jurisdiction of the courts of Singapore because (i) the first defendant executed the first and second agreements with the first plaintiff, and the first defendant has property in Singapore, (ii) the second defendant executed the third agreement with the first plaintiff, and is a necessary and proper party to the action and (iii) the third and fourth defendants are necessary and proper parties to the action.

19 Ground (i) related to Order 11 rule 1(a) of the Rules of Court which allows for service out of Singapore with the leave of court if relief is sought against a person who is domiciled, ordinarily resident, carrying on business or who has property in Singapore.

20 The question arises whether there is any relief that the plaintiffs can seek from the first defendant. Although the first defendant had executed the first agreement, the plaintiffs accept that this agreement was superseded by the third agreement between the first plaintiff and the second defendant. Effectively the first defendant was replaced by the second defendant as a contracting party. Two facts, (i) that the letter of termination was issued by the second defendant and (ii) that the plaintiffs complained that the termination for short payment of royalties was unjustified rather than that the second defendant was not the proper party to terminate the agreement, confirmed that the second defendant had replaced the first defendant.

21 Similarly, the plaintiffs had not complained that the second defendant did not have the capacity to terminate the second agreement. Their complaint was that they had not failed to perform the agreement and that the letter of termination the second defendant issued was lacking in particulars.

22 The plaintiffs also alleged in para 15 of their statement of claim that "Prior to their purported termination of the second Agreement…the first and/or second defendants were already in breach of the second Agreement" in that they authorised a third party to distribute products bearing the Daewoo brand and logo in the United Arab Emirates.

23 This claim was based on some documents exhibited in the affidavit of Gautam Kunzru, Managing Director of the first defendant. These documents referred to "setting up of an agency for Daewoo International...