Mineral Enterprises Ltd v JIO Minerals FZC and others

• Jurisdiction: Singapore
• Judge: Philip Pillai JC
• Judgment Date: 13 April 2010
• Neutral Citation: [2010] SGHC 109
• Court: High Court (Singapore)
• Docket Number: Suit No 167 of 2009 (Registrar’s Appeal No 98 of 2010)
• Published date: 15 April 2010
• Year: 2010
• Hearing Date: 19 March 2010,06 April 2010,18 March 2010
• Plaintiff Counsel: Gan Kam Yuin (Bih Li & Lee)
• Defendant Counsel: Cavinder Bull SC and Adam Yusoff Maniam (Drew & Napier LLC)
• Subject Matter: Conflict of laws,Natural forum
• Citation: [2010] SGHC 109

Philip Pillai JC:

This was an appeal against the decision of the Assistant Registrar dated 18 February 2010 in Summons No 6033 of 2009 filed in Suit No 167 of 2009 ordering that: (a) the plaintiff’s action be stayed pursuant to O 12 r 7(2) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) and para 9 of the First Schedule of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed); and (b) costs of and occasioned by the defendants’ application fixed at S$4,500.00 plus reasonable disbursements be paid forthwith by the plaintiff to the defendants.

The only issue before me was that of forum non conveniens, viz, whether the Singapore court should adjudicate this dispute or decline to exercise jurisdiction in favour of another more appropriate forum.

Background The parties

The plaintiff was a company incorporated in India, with expertise in mining and marketing of iron ore. The first defendant was a company incorporated in United Arab Emirates (“UAE”) with a representation office in Jakarta, Indonesia. The second defendant was an Indonesian citizen and a director and shareholder of the first defendant. The third defendant was an Indian national who had been residing in Indonesia since 1995. Both the second and the third defendants were representatives of the first defendant, and hence were included in this action.

The factual matrix

The second defendant was the President and Director of an Indonesian incorporated company, PT JIO Energi Resources (“PT JIO Indonesia”), which held Indonesian iron ore concessions. It was apparent in this appeal that the second defendant, was the common directing mind behind each of the Indonesian, Singapore and UAE JIO companies. His purpose in establishing the offshore companies in Singapore and then UAE, was to procure offshore mining and marketing expertise, as well as funding, for PT JIO Indonesia.

The joint venture agreement of 7 April 2006 between the plaintiff and JIO Singapore

On 7 April 2006, the plaintiff entered into a joint venture agreement (“JVA”) with a Singapore incorporated company, JIO Corporation Pte Ltd (“JIO Singapore”), to assist PT JIO Indonesia in mining its Indonesian iron ore concessions. At all material times, the second defendant was a director and controlling shareholder of JIO Singapore.

Under the JVA the plaintiff was to provide the equipment and other technical support for mining, whilst JIO Singapore was to procure an exclusive agreement for the marketing of such iron ore to be purchased from its Indonesian counterparty, PT JIO Indonesia, for sale in international markets for the benefit of the joint venture.

Paras (D) and (E) of the preamble to the JVA state that: (D) The parties are desirous of entering into a joint venture to jointly assist PT JIO [Indonesia] in mining iron ore in the locations licensed to PT JIO [Indonesia] and subsequently to purchase the said iron ore at a price to be determined with PT JIO [Indonesia] and to market the iron ore for sale in international markets for the benefit of the joint venture. (E) The parties propose to incorporate a joint venture company in the Republic of Singapore as their joint venture vehicle for the abovementioned purposes. The joint venture company shall be named MEL-JIO PTE LTD (the “Company”).

The principal terms of the JVA required the plaintiff to pay US$300,000 to JIO Singapore and to deposit an escrow sum of US$1.7m in a bank in Singapore to be paid to JIO Singapore on or before “completion”, which was defined in the JVA as the completion of the establishment of the joint venture company named MEL-JIO Pte Ltd (the “JVA Company”). One of the conditions to completion was for JIO Singapore to procure the marketing rights over at least 1 million tonnes of iron ore from Indonesia for the JVA Company and for the plaintiff’s verification of such deposit with the JVA Company. On completion the plaintiff and JIO Singapore would each subscribe for 50% of the shares in the JVA Company.

Article 9 of the JVA provided that JIO Singapore’s obligation was to ensure that all necessary permits, licences and regulatory approvals for the exploitation and mining of iron ore by the JVA Company at any mining area within Indonesia were obtained and to ensure that JIO Singapore granted the right to market iron ore mined in Indonesia to the JVA Company. The plaintiff’s obligation was to provide technical know-how, equipment and expertise to the JVA Company and PT JIO Indonesia in relation to the mining and marketing of minerals and metals, to ensure full assistance was rendered to the JVA Company for the sale of the iron ore at the best prevailing market price for the JVA Company, and to bear all costs associated with the operation of the JVA Company until such time when the JVA Company was able to bear such operation costs with its internal or external financing.

Article 24 of the JVA provided for dispute settlement under the rules of the Singapore International Arbitration Centre and Art 25 of the JVA provided for Singapore law to be governing law. Curiously, Art 25 also provided that each of the parties to the JVA irrevocably submitted any legal actions or proceedings to enforce the JVA or arising out of or in connection with the JVA to the jurisdiction of the Singapore courts and waived any objection to the proceedings in the Singapore courts on the grounds of venue or on the grounds that the proceedings had been brought in an inconvenient forum.

The JVA was amended on 9 May 2006 to provide that the plaintiff would pay JIO Singapore US$300,000 in Singapore and pay US$1.7m into an escrow account in a bank in Singapore under the name of JIO Singapore.

Subsequently, the plaintiff and the second defendant appeared not to have proceeded further with the JVA and the incorporation of the JVA Company. Instead, for reasons of procurement and other efficiencies as described in the letter of offer in [17] below, the first defendant was formed in the UAE.

UAE Exclusive Irrevocable Exploration, Exploitation, Mining and Marketing Agreement of 7 August 2006 between first defendant and PT JIO Indonesia

On 7 August 2006, the first defendant and PT JIO Indonesia entered into an Exclusive Irrevocable Exploration, Exploitation, Mining and Marketing Agreement (“Exclusive Mining Agreement”). Under this Exclusive Mining Agreement, PT JIO Indonesia appointed the first defendant as the sole agent with exclusive and irrevocable rights of exploration, exploitation, mining and marketing of iron ore concession in South Kalimantan, Indonesia. Pursuant to Art 3.1, the sole agency included: (a) Survey and mapping of mines; (b) Mining Plans; (c) Drilling for the purpose of exploration; (d) Exploitation rights; (e) Blasting or any equivalent thereon; (f) Mining operations ie, excavation, crushing, screening etc, in order to process the ore, to make it internationally marketable; and (g) Sell – Export or locally.

PT JIO Indonesia represented that they possessed iron ore concessions with an estimated reserve of 1 million tonnes of “+65 Fe” iron ore.

Article 13 of the Exclusive Mining Agreement provided for the governing law to be that of Ajman, UAE and Art 14 provided for settlement of disputes to be referred to and settled under the UAE International Arbitration Rules or by dispute resolution laws relating to International Trade and Commerce.

Letter of Offer of 12 September 2006 between plaintiff and first defendant

The final document which was the subject matter of this legal action was a letter of offer (“Letter of Offer”) dated 12 September 2006 between the plaintiff and the first defendant. This Letter of Offer by the first defendant was signed by the second defendant as “President Director” of the first defendant.

The Letter of Offer stated:

We have formed a Company based in AJMAN – FZ (Dubai) which will basically source raw material for steel globally particularly from Latin America, Australia, and Eastern Europe, to supplement our production in Indonesia.

We chose Dubai for this activity is [sic] because of its strategic location to various destinations. Our business model is initially exporting the mined material from Indonesia to China directly. However, the equipment and machinery required for mining will be purchased / invested by the proposed FZCO in Ajman. All billing, banking and other administrative activities will be from the FZCO.

…

PT. JIO [Indonesia] through its “Exclusive Marketing Rights to JIO Minerals FZC established in Dubai-Ajman” - Offers a Joint Venture with your esteem [sic] company Mineral Enterprises Limited, for a 50% direct equity participation.

While we have the Mines and other resources, we need your technical expertise and market reach for creating a proper mine plan and carry out activities in a professional manner in which your esteem [sic] company has been doing for many years.

In this backdrop with our collaboration and strategic alliance we can achieve a cutting edge quality and price advantage in the International Market as well as become a major player in the Iron Ore industry.

We therefore offer 50% shareholding of our company JIO Minerals FZC – Dubai as discussed with you earlier.

The offering was for 50% shareholding in the first defendant for a “premium of US$1.7 million for 50% shares worth US$0.5 million”. The Letter of Offer contained no clause providing a choice of law or a choice of forum.

The offer was accepted and implemented by the transfer of 50 shares in the first defendant (20 shares from the third defendant and 30 shares from the second defendant) to the plaintiff for a total consideration of US$1,725,695 as confirmed by a certified true copy of the general meeting of the first defendant of 25 September 2006. The consideration was remitted to the second and third defendants’ bank accounts in Singapore.

The Letter of Offer and acceptance constitute the foundation of the...