Front Carriers Ltd v Atlantic and Orient Shipping Corporation (Double Happiness)

• Jurisdiction: Singapore
• Judgment Date: 19 July 2006
• Date: 19 July 2006
• Docket Number: Originating Summons No 1104 of (Summons in Chambers No 5286 of 2005)
• Court: High Court (Singapore)

Front Carriers Ltd

Plaintiff

and

Atlantic & Orient Shipping Corp

Defendant

[2006] SGHC 127

Belinda Ang Saw Ean J

Originating Summons No 1104 of 2005 (Summons in Chambers No 5286 of 2005)

High Court

Civil Procedure–Mareva injunctions–High Court establishing personal jurisdiction through service over party to arbitration in foreign jurisdiction–Whether High Court having power under International Arbitration Act to order Mareva injunction against such party in support of such foreign arbitration–Whether High Court having general power under Civil Law Act to grant Mareva relief in support of such foreign arbitration–Whether preconditions for grant of Mareva relief existing–Section 4 (10) Civil Law Act (Cap 43, 1999 Rev Ed), s 12 (7) International Arbitration Act (Cap 143A, 2002 Rev Ed), Art 9 UNCITRAL Model Law on International Commercial Arbitration

The plaintiff commenced arbitration proceedings against the defendant, in London, for breach of a time charter that had allegedly been concluded between the parties. The plaintiff also successfully applied, ex parte,for Mareva relief against the defendant in Singapore, under the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”), to restrain it from removing from Singapore any of its assets up to a specified value or in any way disposing of, dealing with or diminishing the value of any assets within Singapore. Leave to serve the application and order out of jurisdiction was also granted and effected with the defendant accepting service.

The defendant applied to set aside the Mareva injunction on two main grounds: (a) that the High Court had no jurisdiction to order the Mareva injunction in support of the arbitration proceedings in London; and (b) that the plaintiff had not met the requirements for the grant of a Mareva injunction as there was insufficient or no evidence of a risk of dissipation of the defendant's assets in Singapore.

Held, granting the application:

(1) The High Court had power under s 12 (7) of the IAA, to assist, by way of interim orders, international arbitrations both in Singapore and abroad. The language of s 12 (7) endorsed and gave effect to the High Court's interim measures jurisdiction in Art 9 of the UNCITRAL Model Law on International Commercial Arbitration (“the Model Law”), in the same way that O 69A rr 3 (1) (c) and (4) (1) of the Rules of Court (Cap 322, R 5, 2004 Rev Ed) gave effect, procedurally, to Art 9. While the scope of curial support under the Model Law was principally in respect of arbitrations in Singapore by virtue of its Art 1 (2), the court's power prescribed in Art 9 was an express exception. Article 9 hence provided the lawful basis on which the High Court, applying its own domestic law, could grant interim measures in support of arbitration proceedings whether commenced or anticipated, and irrespective of the seat of arbitration. As such, any interim order made under s 12 (7) was a free standing item of ancillary relief: at [14] to [19].

(2) Apart from s 12 (7) of the IAA, s 4 (10) of the Civil Law Act (Cap 43, 1999 Rev Ed), applied with Art 9 of the Model Law, also conferred general power on the court to grant Mareva relief in support of foreign arbitration. The exercise of this power did not require the Mareva order to be ancillary to a final order to be granted by a Singapore court. An ancillary relief of such nature could be granted as long as there was a justiciable right between the parties that was recognised by the Singapore courts: at [32], [43] and [52].

(3) The High Court was required to have in personam jurisdiction over a party against whom interim protection was sought. Personal jurisdiction over a defendant resident outside of Singapore depended on service. Order 11 r 1 of the Rules of Court did not apply to an application for interim relief under s 12 (7) of the IAA. Instead, O 69A r 4 (2) applied. Leave could be granted under O 69A r 4 (2) only if it appeared to the court that the case was a “proper one for service out of the jurisdiction”. The court had to be satisfied that there was (a) prima facie evidence of those facts which formed the basis of the application for interlocutory relief; and (b) a reasonable arguable basis for any question of law involved. An overall aspect of a “proper case” related to the requisite nexus between the arbitral forum and the subject matter of the ancillary matter in dispute, and the extent of the territorial reach of the relief to be ordered in terms of enforcement of the potential award. Of relevance to the issue of forum conveniens was the additional factor that the forum and place of arbitration were member countries of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958: at [17], [34], [38] and [39].

(4) The defendant accepted service of the originating summons and Mareva order. There was no contested issue of the defendant not having been properly served or of this case not being a proper one for service out of jurisdiction. The High Court had therefore established personal jurisdiction over the defendant. Consequently, the court had jurisdiction to grant an injunction against the defendant in precisely the same way as against a person within its jurisdiction since the defendant had made itself amenable to the jurisdiction of the Singapore courts: at [40].

(5) The exercise of the court's jurisdiction to grant Mareva relief still had to be based on the circumstances of the case and on principles which the court would ordinarily follow in considering whether to grant or refuse such an order. The grant of a Mareva injunction involved enquiring whether the preconditions for the grant of a Mareva injunction were met and whether as a matter of discretion, the instant case was an appropriate one in which to actually grant Mareva relief, and if so, in what terms: at [53] and [54].

(6) It was a precondition for the grant of Mareva relief that the applicant satisfy the court with “solid evidence” that there would be a “real risk” of dissipation of assets. The defendant had not been accused of participation in nefarious activities nor were its financial affairs so structured that the court could readily see that a Mareva injunction would be of assistance to the plaintiff. The plaintiff must have been comfortable enough with the defendant's financial status to have wanted to charter its expensive new vessel to the defendant. On the overall evidence, there were insufficient grounds for believing that there was a real risk that a potential award would not be satisfied: at [55] and [60].

(7) As to the overarching enquiry of whether the grant of a Mareva injunction was appropriate in a particular case, the court should be prepared to act only when there was a serious need such that “the balance of advantage plainly favours the grant of relief”. As the plaintiff had gone on to obtain a Mareva injunction against the defendant in respect of the same matter in Canada, there was no compelling need for the continuance of the Mareva order granted in Singapore: at [53] and [62].

Art Trend Ltd v Blue Dolphin (Pte) Ltd [1981-1982] SLR (R) 633; [1982-1983] SLR 362 (refd)

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1992] QB 656, CA (refd)

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, HL (folld)

Choy Chee Keen Collin v Public Utilities Board [1996] 3 SLR (R) 812; [1997] 1 SLR 604 (folld)

Coop International Pte Ltd v Ebel SA [1998] 1 SLR (R) 615; [1998] 3 SLR 670 (folld)

Econ Corp International Ltd v Ballast-Nedam International BV [2003] 2 SLR (R) 15; [2003] 2 SLR 15 (folld)

Interbulk (Hong Kong) Ltd v Safe Rich Industries Ltd [1992] 2 HKLR 185 (refd)

Karaha Bodas Co LLC v Pertamina Energy Trading Ltd [2006] 1 SLR (R) 112; [2006] 1 SLR 112 (distd)

Katran Shipping Co Ltd v Kenven Transportation Ltd [1992] 1 HKC 538 (refd)

Lady Muriel, The [1995] 2 HKC 320 (folld)

Mercedes Benz AG v Leiduck [1996] AC 284 (refd)

PT Garuda Indonesia v Birgen Air [2001] SGHC 262, HC (refd)

PT Garuda Indonesia v Birgen Air [2002] 1 SLR (R) 401; [2002] 1 SLR 393 (folld)

Rena K, The [1979] QB 377 (refd)

Siskina v Distos Compania Naviera SA [1979] AC 210 (refd)

Swift-Fortune Ltd v Magnifica Marine SA [2006] 2 SLR (R) 323; [2006] 2 SLR 323 (not folld)

Civil Law Act (Cap 43, 1999 Rev Ed) s 4 (10) (consd)

High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed)

International Arbitration Act (Cap 143A, 1995 Rev Ed) ss 12 (1) (g), 12 (6)

International Arbitration Act (Cap 143A, 2002 Rev Ed) s 12 (7) (consd);ss 2 (2), 3 (1), 3 (2), 5 (2), 6 (3), 7 (1), 12 (1) (g), 12 (1) (h), 12 (1) (i), 12 (6), 18, 19, 29

Rules of Court (Cap 322, R 5, 2004 Rev Ed) O 11 r 1, O 69 r 3 (1), O 69 r 4 (1);O 69A r 4 (consd);O 11 r 2, O 29 r 1 (1), O 29 r 1 (3), O 69A r 6

Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed) ss 16 (1), 16 (2)

Arbitration Act 1950 (c 27) (UK) s 27 (1)

Rules of Supreme Court (UK) O 11 r 1 (1) (i)

Rules of the Supreme Court (HK) O 11 r 1 (1) (b)

Supreme Court Act 1981 (c 54) (UK) s 37 (1)

Anna Quah and Chong Shiao Hann (Ang & Partners) for the plaintiff

Yap Yin Soon (Allen & Gledhill) for the defendant.

Judgment reserved.

Belinda Ang Saw Ean J

1 This is an application by the defendant, Atlantic & Orient Shipping Corporation (“A&O”), to set aside a Mareva injunction obtained ex parte on 26 August 2005 by the plaintiff, Front Carriers Limited (“FCL”). The Mareva relief was applied for as a pre-award injunction in support of arbitration commenced in London. FCL is a company incorporated in Monrovia, Liberia, and has a registered office in Norway. A&O is a company incorporated in the island of Nevis, West Indies. An important question of jurisdiction which arises in this application concerns the power of the court to grant an interim injunction in aid of foreign arbitration proceedings under the International...