Kiyue Company Limited v Aquagen International Pte Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeChoo Han Teck J
Judgment Date18 July 2003
Neutral Citation[2003] SGHC 156
Citation[2003] SGHC 156
Defendant CounselGregory Vijayendran with Melvin See (Wong Partnership)
Subject MatterParties,s 216A(2) Companies Act (Cap 50, 1994 Rev Ed),'Action',Words and Phrases,Arbitration,Whether a complainant may bring an action in the name and on behalf of a company that is involved in arbitration proceedings,ss 216A(2), 366(2)(a) Companies Act (Cap 50, 1994 Rev Ed),Conduct of arbitration
Date18 July 2003
Plaintiff CounselKenneth Tan SC with Wang Wei Chi (Kenneth Tan Partnership)
Published date03 October 2003
Docket NumberOriginating Summons No 561 of 2003

1 An arbitration has commenced in which PG Seraya Investment Pte Ltd (‘PGSI’) is the claimant. One of the respondents is Aquagen International Pte Ltd (‘AIPL’). Kiyue Company Ltd (‘Kiyue’) is another respondent. AIPL resolved not to contest the claim in the arbitration. Kiyue, which is a minority shareholder in AIPL applied to this court under s 216A of the Companies Act, Ch 50 for leave to intervene in the arbitration ‘for the purposes of defending and counter-claiming in the name and on behalf of AIPL’, and that it (Kiyue) be authorised to have control of the conduct of the arbitration including the appointment of counsel for AIPL. Mr Kenneth Tan SC and Miss Wang Wei Chi appeared for Kiyue while Mr Gregory Vijayendran and Mr Melvin See appeared for AIPL.

2 There is very little dispute of the facts. Various parties, namely PGSI, ST Engineering Services Pte Ltd (‘STE’), 15 other minor parties, including Kiyue, joined in a project to create a showcase power plant harnessing thermal power to create de-salinated potable water. The intention was to use this showcase plant to sell the thermal de-salination technology (known as the ‘VTE-SME technology’) to overseas clients. AIPL was the company through which the project was to be undertaken. PGSI held 42% of the shares in AIPL, and nominated three of the seven members of the Board of Directors. STE had 25% of the shareholding and nominated two directors to AIPL. Kiyue held 7% of the shareholding and together with the other smaller shareholders, nominated two directors to AIPL. The rights and obligations are set out in the Shareholders Agreement dated 28 May 1999. It was decided by the parties that a separate company be incorporated to carry out the building of the plant. That company was incorporated as Anchorville Pte Ltd (‘Anchorville’). There are only three shareholders in Anchorville and they are PGSI, AIPL and STE. Kiyue and the other minority shareholders in AIPL are not shareholders in Anchorville. The rights and obligations of the shareholders are set out in this second shareholders’ agreement. The two agreements will be referred to as the AIPL Shareholders Agreement and the Anchorville Shareholders Agreement respectively.

3 At the time when these agreements were made, PGSI was a subsidiary of Power Seraya Ltd which was, in turn, a subsidiary of Singapore Power Ltd. Sometime after, Singapore Power Ltd’s group of companies was restructured with the result that PGSI became a direct subsidiary of Singapore Power Ltd. Power Seraya Ltd, which held a power generation licence from the government, left the Singapore Power Ltd’s group. Attempts were made to obtain a fresh licence in the name of PGSI failed. This point is relevant in the submission of Mr Tan, SC because he says that it was due to the failure to obtain the fresh power generation licence that Power Singapore Ltd lost interest in its investment in AIPL and Anchorville. He argued that that was the real reason, not the alleged frustration of contract that its subsidiary PGSI put up in its claim in the arbitration, that prompted PGSI to commence arbitration proceedings.

4 PGSI asserts that the AIPL and Anchorville shareholders agreements have been frustrated and PGSI is, accordingly, released from all its obligations under those agreements; and that included its obligation to contribute towards the building of the showcase power plant. AIPL sought legal advice when it was served with the notice of arbitration. Mr Foo Maw Shen of Ang & Partners rendered his advice in writing on 14 June 2002 and 10 February 2003. He advised that, in view of AIPL’s substantial interest in the project, it was imperative that AIPL refutes PGSI’s claim and counterclaims against PGSI in the arbitration. However, the majority of the Board of Directors of AIPL were not persuaded. Ang & Partners were subsequently discharged. The majority in the AIPL Board decided not to contest PGSI’s claims in the arbitration.

5 Kiyue was named as a respondent in the arbitration, but because it was not a signatory to the Anchorville Shareholders Agreement, it has no legal standing to challenge PGSI’s claims in respect of the Anchorville Shareholders’ Agreement except through AIPL. It will be recalled that only PGSI, STE and AIPL are parties and signatories to that agreement. That is why Kiyue needed to appear in the name of AIPL to challenge PGSI’s claims, in particular, the dispute concerning the Anchorville Shareholders’ Agreement. The majority of the directors in AIPL who voted against active participation in the arbitration...

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2 cases
  • Jiang Haiying v Tan Lim Hui and Another Suit
    • Singapore
    • High Court (Singapore)
    • 19 February 2009
    ...to an arbitration agreement may participate in it. … [The author examines the case of Kiyue Co Ltd v Aquagen International Pte Ltd [2003] 3 SLR 130 3.23 … Third parties, who are strangers and uninvolved in the transaction, are certainly not parties to the arbitration. 20 In the case of Kiyu......
  • Jiang Haiying v Tan Lim Hui and Another Suit
    • Singapore
    • High Court (Singapore)
    • 19 February 2009
    ...to an arbitration agreement may participate in it. … [The author examines the case of Kiyue Co Ltd v Aquagen International Pte Ltd [2003] 3 SLR 130 3.23 … Third parties, who are strangers and uninvolved in the transaction, are certainly not parties to the arbitration. 20 In the case of Kiyu......

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