Karaha Bodas Co LLC v Perusahaan Pertambangan Minyak dan Gas Bumi Negara

• Jurisdiction: Singapore
• Judge: Sundaresh Menon JC
• Judgment Date: 18 August 2006
• Neutral Citation: [2006] SGHC 148
• Docket Number: Originating Summons No 342 of 2002
• Date: 18 August 2006
• Year: 2006
• Published date: 21 August 2006
• Plaintiff Counsel: Alvin Yeo SC, Tan Kay Kheng, Tan Hsiang Yue (Wong Partnership)
• Citation: [2006] SGHC 148
• Defendant Counsel: Chelva Retnam Rajah SC, Chew Kei-Jin, Ang Gek Joo (Tan Rajah & Cheah)
• Court: High Court (Singapore)
• Subject Matter: Whether application to set aside ex parte order by party obtaining such order may be granted by court,Originating processes,Whether court considering exercise of discretion in application to set aside ex parte order may have regard to all relevant matters including those occurring after original order made,Civil Procedure,Order 32 r 6 Rules of Court (Cap 322, R 5, 2006 Rev Ed)

18 August 2006 Judgment reserved.

Sundaresh Menon JC:

1 The parties before me are Karaha Bodas Company LLC (“the applicant”) and Perusahaan Pertambangan Minyak dan Gas Bumi Negara otherwise known as “Pertamina” (“the respondent”). These parties were at one time jointly engaged in a project to mine geothermal resources in Indonesia. That project was suspended following a presidential decree issued by the Government of Indonesia sometime in 1997 or 1998, in the aftermath of the economic crisis of that time which adversely affected a number of countries in Asia. The suspension gave rise to arbitration proceedings which culminated in an award made in Geneva in favour of the applicant for an amount of around US$260m. The applicant then commenced enforcement proceedings in various jurisdictions. Before me, reference was made by both counsel to such proceedings being pursued in the US, Canada, Hong Kong and here in Singapore.

2 It was not disputed that the proceedings in the US were the furthest along. According to Mr Alvin Yeo SC who appeared for the applicant, those proceedings were all over “bar the shouting”. He informed me that the respondent had filed a final petition for a writ of certiorari to the Supreme Court of the United States (“the Petition”). The outcome of the Petition was expected to be known by October this year. According to Mr Yeo, if the Petition were denied, as the applicant fully expects it will be, then the applicant will recover in the US the entire amount it claims is due.

3 Against that backdrop, I briefly recount the history of the proceedings in Singapore. On 14 March 2002, the applicant commenced these proceedings and obtained an ex parte order to enforce the award (“the ex parte order”). Following some initial procedural skirmishes which centred primarily on the issue of service of process, certain directions were made by consent and on 10 September 2002 the respondent filed its application to set aside the ex parte order. The respondent filed its affidavit in support of that application a little over a month later. The parties then came to an understanding to hold these proceedings in abeyance pending developments in some other jurisdictions. This agreement or understanding was extended from time to time.

4 In January 2006, following a change of solicitors, the respondent filed a further affidavit introducing an allegation of fraud in support of its application to set aside the ex parte order. It appears that at that point, the respondent no longer considered itself bound by the previous understanding. Directions were then given for the applicant to file a responsive affidavit. Further affidavits were filed by the respondent and the matter was fixed for hearing from 9 to 11 May 2006. These dates were vacated on the applicant’s motion which was grounded upon Mr Yeo’s unavailability and fresh dates were given for the matter to be heard from 26 to 28 July 2006. Mr Yeo candidly accepted that but for his unavailability the matter might well have proceeded in May. However, he maintained that had that been the case, it was likely that the applicant would have made a further application for directions to have the matter tried with oral evidence, discovery and possibly pleadings in view of the fraud allegation that had been introduced by the respondent.

5 That of course did not take place. Instead, on 10 July 2006, a fortnight or so before the hearing was scheduled to commence, the applicant applied for the matter to be stayed pending the outcome of the determination by the US Supreme Court on the Petition.

6 That application was successfully resisted by the respondent before the learned assistant registrar, Ms Dorcas Quek. The applicant appealed against the order of the learned assistant registrar and that came before me.

7 Mr Yeo’s submissions on the appeal before me can be summarised thus:

(a) It is within the discretion of the court to make the order sought.

(b) The Petition was filed in the US after the fraud allegation had been raised in Singapore. However the fraud allegation does not feature in it.

(c) The trial in Singapore is unlikely to be a simple three-day matter, given the nature of the fraud allegation and the application for further directions which he intimated he was likely to make: see [4] above.

(d) The primary jurisdiction in which the enforcement proceedings are being contested is the US. The applicant believes that by October 2006, the Petition will be dismissed and this will clear the way for the applicant to recover all the amounts it claims are due. Any further effort expended in litigating the issue in Singapore in the meantime, will therefore likely result in a waste of time and resources.

Mr Yeo therefore submitted that good sense dictated that the matter should be stayed in the meantime.

8 Mr Chew Kei-Jin presented the case for the respondent though he was led by Mr Chelva Rajah SC. He submitted in reliance upon some dicta of Lai Kew Chai J in his landmark judgment in Sumitomo Bank Ltd v Kartika Ratna Thahir [1993] 1 SLR 735, that there is no requirement whether as a rule of law or otherwise that every component of an allegation of fraud has to be proved by oral evidence. He indicated that the respondent’s case on fraud was founded largely upon documents. He therefore did not accept Mr Yeo’s suggestion that the matter could not be disposed of within the three days that had been allocated. In any event, he submitted that whatever the outcome of the Petition in the US, it was the intention of the respondent to proceed with this application to set aside the ex parte order on the basis of fraud.

9 I invited Mr Chew to clarify this since it seemed to me that if the applicant successfully recovered all that it considered was due to it as a result of the enforcement proceedings in the US, it would likely bring an end to these proceedings. Mr Chew’s explanation went to the heart of the respondent’s position. He explained that the respondent wanted the opportunity to make good the allegation of fraud before a first instance court and Singapore would most likely be the first jurisdiction that would be able to return a finding on this issue at first instance. He submitted it would be unjust to the respondent to deprive it of the opportunity to make good its allegation of fraud. He further submitted that an outcome here could have a bearing on an appeal pending in Canada which is due to be heard in October 2006.

10 In the course of the arguments, I invited Mr Yeo to clarify why the applicant did not simply make an application to set aside the ex parte order on its own motion if it was so sure of its position in the US. Mr Yeo having taken instructions then indicated that if I was not with him in the appeal he would make an oral application to set aside the ex parte order.

11 Having considered the arguments, I dismissed the appeal. My reasons, briefly stated, centred on the fact that I did not consider it fair or just that the applicant, having commenced the proceedings, could then control its pace to suit its own convenience. As long as both parties consensually took a certain course, as had been done until the end of 2005, the court was likely to be sympathetic to their joint request to keep the matter in abeyance. However, when one party withdrew from this understanding, the position was likely to be viewed differently.

12 This seemed to me to be even more so when an allegation of fraud had been raised. If the applicant had sought an expeditious hearing to refute the fraud allegation, it would likely have met with a sympathetic response and in my view, it was fair that the same approach be taken in assessing the respondent’s desire to bring its allegation of fraud to a speedy judgment. A party against whom an action is brought is equally entitled to have the matter brought to a conclusion expeditiously since vindication is a legitimate interest.

13 I was also mindful of the fact that after the respondent had withdrawn from the previous understanding, it had acted diligently and exerted all reasonable efforts to bring the matter to a hearing. Indeed, but for Mr Yeo’s unavailability in May, the hearing might have commenced already even if, perhaps, it might not yet have been completed.

14 Moreover, in my view, there was substance in Mr Chew’s point that the respondent stood to be prejudiced if the matter were delayed since they had their pending applications in other jurisdictions which conceivably might be influenced by what happened in these proceedings.

15 Finally, it was clear to me that if the basis of the application was that it was practically all over because of what the applicant believed would transpire in the US, then it was a matter for the applicant to take a view on and to apply to set aside the ex parte order.

16 This brings me to the oral application that was then made by Mr Yeo on behalf of the applicant to set aside the ex parte order. It may be noted that the subject matter of the pending hearing which the applicant had initially attempted to stay was the respondent’s application to have that same order set aside. Nonetheless, the respondent opposed Mr Yeo’s oral application.

17 It was not disputed that the court has the jurisdiction to set aside an ex parte order. This is expressly provided for in O 32 r 6 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed). In essence Mr Chew’s arguments may be summarised as follows:

(a) The court’s jurisdiction to set aside an ex parte order may only be exercised upon the application of a party affected by the order. It may not be exercised upon the application of the party who obtained the order. All the reported cases dealing with this jurisdiction concern the former situation.

(b) Further and in any event, an ex parte order may only be set aside on the basis of facts and matters in existence at the time the order was made. Facts and matters subsequent to the making of the order may not be relied...