Gonzalo Gil White v Oro Negro Drilling Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 22 March 2024
• Neutral Citation: [2024] SGCA 9
• Hearing Date: 17 January 2024
• Docket Number: Civil Appeal No 10 of 2023
• Citation: [2024] SGCA 9
• Court: Court of Appeal (Singapore)
• Year: 2024
• Subject Matter: Civil Procedure,Injunctions,Prohibitory injunction to restrain breach of negative covenant,Companies,Memorandum and articles of association,Conflict of Laws,Restraint of foreign proceedings
• Published date: 22 March 2024

[LawNet Admin Note: The following judgment is displayed as received from source]

Steven Chong JCA (delivering the grounds of decision of the court):

To fully appreciate the key issues in this appeal, it is essential to track the history of the litigation before the courts in Singapore and in Mexico. The connection to Singapore stems from the fact that the respondents are all Singapore-incorporated companies. Each of the Singapore incorporated companies owns a single offshore jack-up drilling rig deployed in Mexican waters, giving rise to the Mexican nexus.

The heart of the dispute can be traced to a decision by the directors of the respondents to grant a power of attorney to several lawyers in a Mexican law firm to commence restructuring proceedings in Mexico in the name of the respondents (“the Oro Concursos”). However, the articles of association of the respondents (which we collectively refer to as “Art 115A” even though they bear a different number – “Art 111A” – in three of the respondents’ constitutions) prohibits each of the respondent and its directors from initiating the Oro Concursos without the affirmative vote of the respondents’ independent director duly appointed by a bond trustee. However, no such vote was obtained. In fact, no notice was ever given to the independent director before the commencement of the Oro Concursos.

Given that the Oro Concursos were commenced in breach of Art 115A, it was hardly surprising that the respondents commenced this action in Singapore to restrain them. On 12 September 2019, this Court reinstated the interim injunctions against various parties including the appellant from “commencing, continuing or maintaining”, inter alia, the Oro Concursos.

Notwithstanding the interim injunctions, it appeared that the Oro Concursos continued in Mexico in breach of this Court’s order. It was under these circumstances that the appellant came before us to persuade this Court to deny the respondents the relief of the permanent injunction granted below on the principal ground that such an injunction would constitute, among other things, an abuse of process and would conflict with the decisions of the Mexican courts, citing judicial comity in aid thereof.

We heard and dismissed this appeal on 17 January 2024 with brief oral grounds. We found that there was no identity of issues between the Singapore proceedings in HC/OS 126/2018 (“OS 126”) and the Oro Concursos to give rise to any abuse of process or res judicata. That in and of itself was dispositive of the appeal. It was also untenable for the appellant to rely on judicial comity to deny the respondents the permanent injunction on account of the various decisions of the Mexican courts. There was no dispute that the breach of Art 115A is continuing. Furthermore, the Mexican decisions were procured in breach of the interim injunctions earlier restored by this Court. To deny the permanent injunction would have been tantamount to not giving effect to the previously ordered interim injunctions; this would in turn have effectively extended recognition to the Mexican decisions which were procured in breach of that interim injunction. In short, judicial comity could not be applied at the expense of the court’s role to protect its own jurisdiction and orders.

Background facts

The facts for the underlying dispute are extensive and have been traversed in the decision below in Oro Negro Drilling Pte Ltd and others v Integradora de Servicios Petroleros Oro Negro SAPI de CV and others [2023] SGHC 297 (the “GD”) and also in our earlier grounds of decision concerning two interlocutory appeals in Oro Negro Drilling Pte Ltd and others v Integradora de Servicios Petroleros Oro Negro SAPI de CV and others and another appeal (Jesus Angel Guerra Mendez, non-party) [2020] 1 SLR 226 (“Oro Negro (CA)”). We reproduce below the facts necessary for the disposal of the present appeal.

As a matter of terminology, we note that restructuring proceedings commenced in Mexico are referred to as a concurso mercantile. As the Judge did at [8] of his GD, we refer to such restructuring proceedings as a “concurso”. A concurso is governed by the Mexican Business Reorganisation Act, which in Spanish is known as the Ley de Concursos Mercantiles (“LCM”). For avoidance of doubt, in referring to the specific restructuring proceedings commenced in Mexico on behalf of the respondents by way of six concurso petitions, we refer to them as the “Oro Concursos” (see above at [2]).

The parties

The six respondents are companies incorporated in Singapore (hereinafter and collectively, the “respondents”). The respondents were the plaintiffs in the underlying suit in OS 126, where they sought declaratory and injunctive relief against, among others, the appellant.

The first respondent is a holding company whose only assets are all the shares in the second to sixth respondents. The second to sixth respondents are special purpose vehicles incorporated to each own a single offshore jack-up drilling rig operating in Mexico (“SPV”).

The first respondent was a wholly owned subsidiary of the first defendant in OS 126, Integradora de Servicios Petroleros Oro Negro, SAPI de CV (“Integradora”), until September 2017. The first respondent has since become a wholly owned subsidiary of the bondholders’ nominee upon an event of default declared in September 2017.

Integradora’s ultimate holding company is a Mexican state-owned gas and oil company known as Petróleos Mexicanos (“Pemex”).

The appellant, Mr Gonzalo Gil White was the third defendant in OS 126. He was a director of each of the respondents until September 2017, and also a former director of Integradora.

A company that features in the background but who is not a party to the present dispute is a Mexico-incorporated company, Perforadora Oro Negro S de RL de CV (“Perforadora”). Perforadora is 99.25% owned by Integradora, with another subsidiary of Pemex owning the remaining 0.75% shares. Perforadora was responsible for chartering each rig from each SPV under a bareboat charter, and subsequently sub-chartering each rig to a subsidiary of Pemex for deployment in offshore oil drilling operations in Mexico.

The underlying dispute The bond agreement

To raise the funds that each SPV needed to purchase each rig, the first respondent issued over US$900m in bonds in January 2014. The terms of this issuance are contained in a bond agreement, which is governed by Norwegian law. A reputable financial institution in Norway was appointed as trustee for the bondholders (the “Bond Trustee”). The bonds were supported by a guarantee from Integradora and a charterer’s undertaking from Perforadora.

The bond agreement stipulated the following: Clause 13.5(a) of the bond agreement required the first respondent to procure that its constitution and the constitutions of the SPVs were all amended to provide expressly for the right of the Bond Trustee to appoint a director in each respondent (the “Independent Director”) and that the Independent Director’s vote was required “under all circumstances and in all cases” for any respondent to commence any insolvency or restructuring proceeding anywhere in the world, including without limitation a concurso (an “Insolvency Matter”). Clause 15.1(a) of the bond agreement gave the Bond Trustee the power to declare an event of default if the first respondent failed to fulfil any payment obligation under the bond agreement. Clause 15.1(g) of the bond agreement gave the Bond Trustee the power to declare an event of default if any of the six respondents, Integradora or Perforadora, in any jurisdiction, took any step concerning an Insolvency Matter.

As security for its obligations under the bond agreement, the first respondent charged all of its shares in the SPVs to the Bond Trustee for the benefit of bondholders. As security for its obligations under its guarantee, Integradora charged all of its shares in the first respondent to the Bond Trustee for the benefit of bondholders. Furthermore, as part of their security for their obligations under the bond agreement and guarantee respectively, the first respondent and Integrodora were obliged to procure each of the respondents to do the following: To amend their constitutions to incorporate and entrench a new article in compliance with cl 13.5(a) of the bond agreement. This was subsequently done via the insertion of Art 115A into the constitutions of the respondents. Art 115A prohibited each respondent and its directors from carrying into effect an Insolvency Matter unless two conditions are met. The respondent’s shareholder had to vote in favour of doing so by passing an ordinary resolution to that effect and that respondent’s Independent Director had to vote in favour of doing so, presumably at a duly convened meeting of the directors of that respondent. To appoint the Bond Trustee’s nominee as an Independent Director. Mr Noel Cochrane Jr (“Mr Cochrane”) was appointed on 29 September 2016 as the Independent Director of each respondent. His approval vote was therefore needed to carry into effect any Insolvency Matter.

Between 2015 and 2017, Pemex took certain actions which threatened the solvency of both Perforadora and the respondents and thereby risked triggering an event of default under cl 15.1(a) of the bond agreement (see Oro Negro (CA) at [20]).

The granting of powers of attorney to the Guerra Lawyers

On 31 August 2017, without the Independent Director’s knowledge and approval, Mr Alonso Del Val Echeverria (“Mr Alonso”) and the appellant granted a power of attorney on behalf of each respondent to lawyers in a Mexican firm called Guerra González y Asociados (the “Guerra Lawyers”). Each power of attorney was, by its express terms, a “General Power of Attorney for litigations … with all general authorities and even with the special authorities” empowering the Guerra Lawyers, among other things, to “file...