ITC Global Holdings Pte Ltd (In liquidation) v ITC Ltd and others

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 09 June 2011
• Neutral Citation: [2011] SGHC 150
• Court: High Court (Singapore)
• Docket Number: Suit No 1344 of 2002 (Registrar’s Appeal Nos 465 of 2010 and 466 of 2010)
• Published date: 14 June 2011
• Year: 2011
• Hearing Date: 27 January 2011
• Plaintiff Counsel: Andre Maniam SC and Cheryl Fu (Wongpartnership LLP)
• Defendant Counsel: Edwin Tong and Colin Chow Zhiquan (Allen & Gledhill LLP)
• Citation: [2011] SGHC 150

Lee Seiu Kin J: Introduction

The present cross-appeals arise from the assistant registrar’s (“the AR”) decision in respect of the first to third defendants’ (“the three defendants”) application in summons no 271 of 2010 for the following orders: first, the order of court dated 13 May 2009 granting the plaintiff (“Global”) leave to effect service out of jurisdiction to India be set aside; secondly, that Global’s service of its amended writ of summons (“the Writ”) on the three defendants be set aside; and thirdly, all proceedings in this suit be stayed on the ground of forum non conveniens.

The AR dismissed the application to set aside the order of court granting leave to serve the writ out of jurisdiction because Global’s claims raised serious issues to be tried, there was no non-disclosure of material facts, and Singapore was the most appropriate forum to hear the dispute. The AR also dismissed the application to set aside the service of the Writ vis-à-vis the first defendant (“ITC”) since the Writ was validly served on ITC in accordance with Indian law. However, the AR held that the Writ was not validly served on the second and third defendants (“Deveshwar” and “Vaidyanath” respectively) and that the Singapore court had no discretion to cure this irregularity. Finally, a temporary stay of proceedings in Singapore was ordered until such time as Global could show evidence that a claim brought by Global on similar facts and grounds in the United States in November 1995 had been withdrawn. ITC was ordered to pay costs to Global, and Global was ordered to pay the costs of Deveshwar and Vaidyanath.

In registrar’s appeal no 466 of 2010, Global appealed against the setting aside of the service on Deveshwar and Vaidyanath. The three defendants’ appeal in registrar’s appeal no 465 of 2010 is against the AR’s refusal to set aside the service on ITC and the order of court dated 13 May 2009, and also his refusal to order a stay of proceedings. Both sides also appealed against the consequent costs orders of the AR.

Before me, counsel for the parties rightly focused on the issue of whether Singapore was the forum conveniens. That was an essential criterion for leave to effect service out of jurisdiction, and if decided in the three defendants’ favour, would also justify a stay of proceedings. The other issues raised on appeal were not in serious contention, eg whether there was non-disclosure of material facts in Global’s ex parte application for leave. Counsel also addressed the issue of whether the service effected on the three defendants were valid, which is the consequent issue should Singapore be held to be the forum conveniens.

Background

In 1992, ITC incorporated Global as a commodities trading company in Singapore. ITC was incorporated in India and the sole shareholder of Global.¹ In November 1996, Global was placed under judicial management.² It was put into liquidation on 30 November 2007. Deveshwar and Vaidyanath are directors of ITC, and were based in India at the material times. They are also Indian nationals and resident there.

In addition to the three defendants in the present appeals, there are twelve other defendants named in the suit. The fourth to thirteenth defendants are implicated either as employees of ITC, or directors or employees of Global at the material time. The fourteenth and fifteenth defendants (“the Chitalias”) are citizens of the United States of America (“USA”); they controlled a group of companies incorporated in the USA and Liechtenstein (“the Chitalia Group”).

The Chitalia Group was one of Global’s trading partners. In the course of business, Global gave loans or made advances to the Chitalia Group. In the suit, Global alleges that the defendants are liable for its losses which stemmed from two sets of transactions with the Chitalia Group. These will be referred to as “the Trade Advances” and “the Colombo Rice Transactions”.

In relation to the Trade Advances, Global alleged that ITC, acting through one or several of the second to eleventh defendants, had caused Global to grant several advances totalling US$9.1m to the Chitalia Group with no commercial benefit to Global.³ The Trade Advances, it is alleged, were made for the benefit of ITC. ITC had sold certain commodities at inflated prices to the Chitalia Group which then on-sold them to other parties at substantially lower prices. By doing so, ITC was able to generate paper profits, whereas the Chitalia Group would book paper losses.⁴ Global’s case is that it was instructed to make the Trade Advances in order to put the Chitalia Group in funds for them to make payment to ITC. This was necessary because the Indian foreign exchange regulations required ITC to collect payment for the invoiced sales of commodities from the Chitalia Group within 180 days, and the Chitalia Group lacked the means to do so.

As for the Colombo Rice Transactions, Global alleged that in 1994, ITC directed it to purchase from the Chitalia Group about 34,000 metric tons of rice held in Colombo, Sri Lanka. This rice was originally sold by ITC to the Chitalia Group in March 1993.⁵ Global further alleged that it derived no commercial benefit from purchasing this rice, and ITC had agreed to indemnify Global regarding any losses it suffered in relation to this purchase.⁶ Global claimed it suffered losses of US$9m as a direct consequence of this purchase – from the resale of the rice to third parties and from being unable to trade in other profitable commodities because of having committed its resources to the Colombo Rice Transactions.⁷

Global commenced this suit in November 2002 through its liquidators. The causes of action pleaded against the three defendants arising from the Trade Advances include tort,⁸ contract,⁹ restitution,¹⁰ breach of fiduciary duties¹¹ and breach of statutory duties under the Companies Act (Cap 50, 1994 Rev Ed) (“Companies Act”).¹² Global’s claim arising from the Colombo Rice Transactions is for an indemnity given by ITC for its losses.¹³

The law on service out of jurisdiction

The requirements to be satisfied before the court will grant leave for service out of jurisdiction are well-settled. First, the claim must come within the scope of one or more of the paragraphs of O 11 r 1 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“ROC”). Second, the claim must have a sufficient degree of merit. Third, Singapore must be the forum conveniens.

As indicated earlier, there was no serious challenge that the first and second requirements were satisfied. Reading the Writ together with Mr Neo Ban Chuan’s (“Mr Neo”) affidavits filed on behalf of Global as Global’s liquidator, it was clear that there is a good, arguable case that at least rules 1(f)(i), 1(f)(ii), 1(o), 1(q) and 1(s) of O 11 of the ROC have been made out. The defendants’ objections lay mainly in what they claimed was a lack of particulars regarding the offending acts, the link between those acts and the defendants, and the causal link between the acts and Global’s losses. These objections, however, were refuted by the obvious and consistent evidence in the form of various documents provided by Nr Neo which suggested that ITC had instructed Global to make the Trade Advances to the Chitalia Group¹⁴ and that ITC would indemnify Global for losses it may sustain in respect of the Colombo Rice Transactions.¹⁵

There was also no non-disclosure of material facts, contrary to what counsel for the three defendants (“Mr Tong”) argued. The material fact concerned was a decision made by Belinda Ang J on 30 January 2009. She had refused to grant leave for service out of jurisdiction on Global’s previous application for such leave because the Writ had lacked sufficient particulars for the court to make out whether there was a good, arguable case. Counsel for Global (“Mr Maniam”) pointed out that Belinda Ang J’s grounds of decision were neither available at the time the fresh application for leave was made nor at the time of the hearing of the ex parte application. In any event, I am satisfied that Mr Neo’s affidavit¹⁶ filed on 9 April 2009 and the documents it exhibited have since cured the defects highlighted by Belinda Ang J. It is the third requirement which requires greater evaluation, to which I now turn.

Whether Singapore is the forum conveniens

The purpose of the forum conveniens analysis is to identify the most appropriate forum to hear the substantive dispute. “It is not an exercise in comparing the sheer number of connecting factors which point to this or that jurisdiction. What matters is the weight to be given to each connecting factor in the light of all the circumstances of the case”: per Chao Hick Tin JA in Siemens AG v Holdrich Investment Ltd [2010] 3 SLR 1007 at [19]. In that decision, the Court of Appeal stated (at [8]) that the doctrine seeks to identify the most appropriate forum to try the dispute, and it does not matter whether it is most appropriate “by a hair or by a mile”. The main connecting factors to be considered here are the parties’ and witnesses’ personal connections, the connections to the relevant events and transactions, and the governing law of the claims.

The personal connections of the parties are these. While Global is a company incorporated in Singapore and is placed under liquidation in Singapore, ITC is an Indian company and most of the other defendants are Indian nationals and ordinarily resident there. Mr Tong submitted that on the whole, India would be a more convenient forum given that the majority of the key witnesses are located there. I, however, do not think the circumstances of this case point unequivocally towards a most appropriate forum in respect of the parties’ personal connections. The fact that Global is a Singapore company under liquidation, and the liquidator is in Singapore, is also a factor which must be given due weight: see Kaki Bukit Industrial Park Pte Ltd v Ng Man Heng...