Merck KGaA and another v Merck Sharp & Dohme Corp and others

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 30 September 2019
• Neutral Citation: [2019] SGHC 231
• Citation: [2019] SGHC 231
• Court: High Court (Singapore)
• Published date: 31 October 2019
• Docket Number: Suit No 415 of 2018 (Summons 4434 of 2018)
• Plaintiff Counsel: Alban Kang, Tan Lijun and Mok Ho Fai (Bird & Bird ATMD LLP)
• Defendant Counsel: Melanie Ho and Jenny Chang (Wong Partnership LLP)
• Subject Matter: Civil Procedure,Judgments and orders,Issue Estoppel,Summary Judgment
• Hearing Date: 03 May 2019,24 January 2019,04 July 2019

Lee Seiu Kin J:

This concerns an application by the first plaintiff, Merck KGaA (“Merck”), against Merck Sharp & Dohme Corp (“MSD”), MSD Pharma (Singapore) Pte Ltd, MSD International GmBh (Singapore Branch), and Merck & Co., Inc (collectively, “the defendants”) for summary judgment in respect of breach of contract, as well as a determination on a question of law under O 14 r 12 of the Rules of Court (Cap 322, R5, 2014 Rev Ed) (“ROC”). The plaintiffs’ contractual claims centre on an agreement signed between a predecessor to Merck, known as E.Merck, and MSD in 1970 (“the 1970 Agreement”) and a letter between the same parties in 1975 (“the 1975 Letter”).

The plaintiffs and defendants are presently embroiled in legal disputes in various jurisdictions across the world. Legal action has been commenced, inter alia, in Germany, France, and England. The English decisions are of particular importance in the present judgment, as Merck claims that they give rise to two issue estoppels. The English decisions are: Merck KGaA v Merck Sharp & Dohme Corp & Others [2014] EWHC 3867 (Ch) (“the UK Preliminary Decision”), Merck KGaA v Merck Sharp and Dohme Corp [2016] EWHC 49 (Pat) (“the 2016 UK Decision”), and Merck KGaA v Merck Sharp & Dohme Corp & Ors [2017] EWCA Civ 1834 (“the UKCA decision”). Collectively, I refer to them as the English decisions.

Procedural history

Merck filed for summary judgment against MSD in summons no 4434 of 2018 in respect of its claim that MSD was in breach of the 1970 Agreement. MSD attempted to challenge the assertion by Merck that it was the successor company to E.Merck. However, I do not agree for reasons given below at [21]. Merck is to be taken as the counterparty to the contract contained in the 1970 Agreement and 1975 Letter.

Merck relied on the English decisions as giving rise to issue estoppels in relation to the governing law of the 1970 Agreement and 1975 Letter as well as the interpretation of cl 7 of the 1970 Agreement.

At the first hearing on 24 January 2019, counsel for the plaintiffs made an oral application under O 14 r 12 of the ROC for the court to determine, as a question of law, whether the English decisions give rise to issue estoppels which are binding on the defendants. Although this application was not made within 28 days of the close of pleadings, which was on 26 September 2018, I granted leave for the plaintiffs to do so. Given that MSD took the position that there was an inadequate opportunity to address the O 14 r 12 issue in the course of the hearing, I granted leave for it to make further arguments. The hearing on 24 January 2019 was then adjourned.¹

Both parties tendered further submissions. At the hearing on 3 May 2019, the defendants sought and obtained leave to adduce further evidence in the form of two decisions of the Hamburg court (“the Hamburg decisions”) on the ground that they were relevant to the determination of the legal issue arising under O 14 r 12 of the ROC. The final hearing took place on 4 July 2019.

Facts

The Merck business originated as a family business in Germany in 1668 under the name “E.Merck”.² In 1889, Merck established its business in the United States, incorporating the company Merck & Co. Inc.³ This was the predecessor company to MSD. Over the years, Merck and MSD began to operate separate and independent businesses, Merck in Europe and MSD primarily in North America. Both entities are extremely successful pharmaceutical companies.⁴ A more detailed history of the genesis of the Merck business has been described elsewhere (see the UKCA decision at [1] – [12]).

Both the Merck and MSD entities have entered into various co-existence agreements which seek to govern their use of the word “Merck” in various jurisdictions across the world. One such agreement was contained in the 1970 Agreement and the 1975 Letter. The plaintiffs claimed, inter alia¸ that MSD was in breach of cll 4 to 9 of the 1970 Agreement.⁵ The plaintiffs relied on the interpretation given to cl 7 of the 1970 Agreement by the court in the UKCA decision, namely that the use of the word “Merck” per se was prohibited by the said clause. Clause 7 reads “In all other countries [MSD] has undertaken to cancel all existing registrations, withdraw all applications and discontinue all use of the trademarks ‘Merck’ ‘Merck Cross’ and ‘MerckMerckMerck’”.⁶

As the English decisions are alleged to give rise to issue estoppels, it is important to spell out briefly what was decided. Merck first commenced legal proceedings against MSD in 2013. In the UK Preliminary decision, it was held at [97] by the High Court that the governing law of the 1970 Agreement and the 1975 Letter is German law.⁷ In the subsequent 2016 UK Decision, the court held that MSD was in breach of cl 7 of the 1970 Agreement. This finding was upheld in the UKCA decision.

Issues to be determined

The first issue which arises is whether the English decisions give rise to issue estoppels in relation to (a) the interpretation of cl 7 of the 1970 Agreement and (b) the governing law of the contract in the 1970 Agreement and 1975 Letter. The second issue is whether Merck’s application for summary judgment should be allowed. The third issue is whether the court should, in any event, decide the questions of issue estoppel under O 14, r 12 of the ROC.

My decision General principles of issue estoppel

The doctrine of issue estoppel was explained by Lord Diplock in Thoday v Thoday [1964] P 181 (see also Goh Nellie v Goh Lian Teck and others [2007] 1 SLR(R) 453 at [18]):

‘[I]ssue estoppel’ is an extension of the same rule of public policy [as in cause of action estoppel] … If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon evidence or upon admission by a party to the litigation, neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was.

The conditions to raise an estoppel per rem judicatam have been set out by the House of Lords in The Sennar (No 2) [1985] 1 Lloyd’s Rep 521; (see also Lee Tat Development Pte Ltd v MCST Plan No 301 [2005] 3 SLR(R) 157 at [14]–[15]): The earlier judgment was made by a court of competent jurisdiction. The judgment is final and conclusive and made on the merits. The parties in the earlier action must be identical as those in the later action in which estoppel is raised as a bar. The issue in the later action must be the same as that decided by the judgment in the earlier action.

There is no dispute as to the applicable legal principles in The Sennar (No 2).

In this case, the subject of the two issue estoppels which are alleged to have arisen are as follows (“the two estoppels”): The governing law of the 1970 Agreement and 1975 Letter; and The interpretation of cl 7 of the 1970 Agreement.

Application

To succeed in showing that the two estoppels have arisen, all four conditions as spelled out in The Sennar (No 2) must be satisfied.

I now examine whether each condition is satisfied.

The first issue is whether the English decisions have been made by a court of competent jurisdiction. Relying on Humpuss Sea Transport Pte Ltd (in compulsory liquidation) v PT Humpuss Intermoda Transportasi TBK and another [2016] 5 SLR 1322 (“Humpuss”), the defendants argued that the plaintiffs did not apply for leave of court to procedurally “recognise” the English decision.⁸ During the hearing on 24 January 2019, the defendants adopted the rather puzzling position that in the absence of such a formal application, an issue estoppel cannot arise in relation to that decision. The defendants cited no authority for this proposition. Absent authority, I also could not see any reason, supported by logic or common sense, why the defendants’ submission should be accepted. The defendants did not contend that they were otherwise not amenable to the jurisdiction of the English courts, or that they had not voluntarily submitted to their jurisdiction. I therefore accept that the English decisions were handed down by a court of competent jurisdiction.

The defendants also submitted that there are “defences” to the recognition of the English decisions,⁹ and cited Humpuss at [73] that a foreign judgment would not be given effect to “if its recognition or enforcement (as the case may be) would be contrary to the fundamental public policy …” or “if the foreign judgment had been obtained by fraud or in breach of principles of natural justice”. I cannot see anything in the defendants’ submissions which suggests that any of these defences should apply, save for the reference that recognising the English decisions in Singapore “may give rise to inconsistent future decisions in Singapore”.¹⁰ The defendants cite Associate Professor Adeline Chong in Recognition and Enforcement of Foreign Judgments in Asia (Adeline Chong, ed, 2017, Asian Business Law Institute at p 173:

According to the common law, a foreign...