Orchard Capital I Ltd v Ravindra Kumar Jhunjhunwala

• Jurisdiction: Singapore
• Judgment Date: 24 February 2012
• Date: 24 February 2012
• Docket Number: Civil Appeal No 106 of 2011
• Court: Court of Appeal (Singapore)

Orchard Capital I Ltd

Plaintiff

and

Ravindra Kumar Jhunjhunwala

Defendant

[2012] SGCA 16

Chao Hick Tin JA

and

Andrew Phang Boon Leong JA

Civil Appeal No 106 of 2011

Court of Appeal

Conflict of Laws—Choice of jurisdiction—Non-exclusive—Settlement agreement containing non-exclusive jurisdiction clause in favour of Hong Kong—Party suing in Singapore to enforce agreement—Party in breach seeking stay of proceedings on ground of forum non conveniens—Whether non-exclusive jurisdiction clause had effect of exclusive jurisdiction clause

Conflict of Laws—Natural forum—Settlement agreement containing non-exclusive jurisdiction clause in favour of Hong Kong—Party suing in Singapore to enforce agreement—Party in breach seeking stay of proceedings on ground of forum non conveniens—Whether proceedings in Singapore should be stayed in favour of forum selected in non-exclusive jurisdiction clause on application of Spiliadaprinciples

The appellant (‘the Appellant’) and the Respondent (‘the Respondent’) entered into three contracts in February 2007 (collectively, ‘the Three Contracts’), comprising a note purchase agreement, an investment deed, and a 3.5% redeemable exchangeable promissory note, respectively. According to the Appellant, the Respondent failed to meet his obligations pursuant to the Three Contracts. In an attempt to resolve matters amicably, the Appellant and the Respondent entered into a Settlement Agreement (‘the Agreement’) on 28 May 2010. Pursuant to cl 8 (i) (a) of the Agreement, the Respondent was to pay the sum of US$2,500,000 to the Appellant by 28 November 2010. The Respondent allegedly failed to make such payment and so the Appellant commenced Suit No 8 of 2011 (‘S 8/2011’) on 7 January 2011 to enforce its claim under cl 8 (iv) of the Agreement.

On 7 March 2011, the Respondent applied to stay S 8/2011 on the ground of forum non-conveniens. The Respondent's application was founded on cl 23 of the Agreement (‘the Clause’) which was, on a plain reading, a non-exclusive jurisdiction clause.

The Respondent's application was heard by the assistant registrar (‘the AR’) on 21 April 2011. He refused to grant a stay of proceedings. On appeal, the High Court judge (‘the Judge’) overturned the AR's decision and granted a stay of proceedings on 3 August 2011. Against this decision, the Appellant brought the present appeal.

Held, allowing the appeal:

(1) As pointed out in a leading article (see Yeo Tiong Min, ‘The Contractual Basis of the Enforcement of Exclusive and Non-Exclusive Choice of Court Agreements’ (2005) 17 SAc LJ 306) there are two central strands of analysis in respect of non-exclusive jurisdiction clauses. The first central strand was contractual in nature. Depending on the intention of the parties concerned, a non-exclusive jurisdiction clause could (taken at its highest) be given the effect of an exclusive jurisdiction clause - in which case strong cause would be required to be demonstrated by the party seeking to sue in a jurisdiction other than that stated in the relevant clause itself. The second central strand, on which parties arguments were centred, was general in nature. Put simply, a non-exclusive jurisdiction clause was a factor in ascertaining whether or not the action concerned ought to be stayed (pursuant to the principles first laid down in the seminal House of Lords decision of Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460(‘Spiliada’)): at [23] to [25].

(2) Even if arguments in relation to the first central (ie, contractual) strand had been raised in order to maintain the proposition that the Clause ought to be accorded the effect of an exclusive jurisdiction clause, they would have failed. Having regard to the context in which, inter alia, the Clause was entered into, the parties had not intended that the Clause have a significant effect. Even assuming that this was not the case, it was clear that there was simply no evidence whatsoever that demonstrated that the Clause was intended by the parties to have a significant effect. In this regard, the fact that the Clause included a reference to the parties waiving their right to a jury trial was, at best, neutral. It would only suggest that the parties intended to exclusively select Hong Kong if Hong Kong was the only jurisdiction in the world with a jury system, which was certainly not the case here: at [27] to [29].

(3) Applying the principles expounded inSpiliada, the Respondent had failed to discharge his burden of proving that Hong Kong was a clearly or distinctly more appropriate forum than Singapore. The only positive factor which the Respondent could invoke - if at all - was embodied in the Clause. This was so, because the remaining arguments advanced by the Respondent only attempted to show that the dispute involved connecting factors which were interspersed across various jurisdictions other than Singapore. There was simply no evidence that the Clause was intended by the parties to be a strong indicator that Hong Kong was a clearly or distinctly more appropriate forum to hear the case: at [34].

[Observation: While the court was by no means wholeheartedly accepting the contractual approach that was the subject of the first central strand of Prof Yeo's article, lawyers would do well to pay close attention to his article should an issue relating to jurisdiction clauses, both exclusive and non-exclusive, arise before the Singapore courts in the future: at [3] and [26].]

CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR (R) 543; [2008] 4 SLR 543 (refd)

Good Earth Agricultural Co Ltd v Novus International Pte Ltd [2008] 2 SLR (R) 711; [2008] 2 SLR 711 (refd)

JIO Minerals FZC v Mineral Enterprises Ltd [2011] 1 SLR 391 (refd)

Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd [2008] 5 HKLRD 631 (refd)

OCBC Capital Investment Asia Ltd v Wong Hua Choon [2010] 4 SLR 904 (refd)

Siemens AG v Holdrich Investment Ltd [2010] 3 SLR 1007 (refd)

Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 (folld)

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR (R) 1029; [2008] 3 SLR 1029 (refd)

Lai Yew Fei and Khelvin Xu Cunhan (Rajah & Tann LLP) for the appellant

Patrick Chin Meng Liong (Chin Patrick & Co) and RSWijaya (RSWijaya & Co) for the respondent.

Judgment reserved.

Andrew Phang Boon Leong JA

(delivering the judgment of the court):

Introduction

1 This is an appeal against the decision of the High Court judge (‘the Judge’) in Orchard Capital I Ltd v Ravindra Kumar Jhunjhunwala [2011]SGHC 185 (‘the GD’). The respondent (‘the Respondent’) had applied to stay the action brought by the appellant (‘the Appellant’) against the Respondent. The application was dismissed by an assistant registrar (‘the AR’) and the Respondent appealed. The Judge allowed the appeal and stayed the action sine die with liberty to restore. The Appellant brought the present appeal against that decision.

2 This is a deceptive case - simple in terms of issue but hugely complex in terms of legal principles. Pared down to its essence, we have on the one hand a non-exclusive jurisdiction clause that points to Hong Kong and, on the other, the fact that the defendant (who has applied for a stay of the Singapore action) is resident in Singapore. In such circumstances, ought - and this is the central issue before this court - the Singapore action to be stayed on the ground of forum non conveniens? To add an ironic twist, perhaps, the applicable legal principles in relation to forum non conveniens have hitherto been considered to be one of the more well-established areas of Singapore law in general and the conflict of laws in particular. Whence, then, does the legal complexity just alluded to originate from?

3 Put simply, the legal complexity lies in ascertaining the legal effect of non-exclusive jurisdiction clauses in general and the specific clause in relation to the present appeal in particular. Much of the learning in the local context (and, dare we say, in the Commonwealth context as well) may be found in the comprehensive article by one of our leading local legal scholars in the field (see Yeo Tiong Min, ‘The Contractual Basis of the Enforcement of Exclusive and Non-Exclusive Choice of Court Agreements’ (2005) 17 SAc LJ 306 (‘Yeo’)). However, despite the excellent breadth as well as depth of analysis in this article, many questions remain unanswered. Sadly, some will continue to remain unanswered as there was no reference by either party either to this article or (and more specifically) to one central strand of issues. As we shall see, however, there has - fortuitously, perhaps - been no detrimental effect in the context of the present appeal based on the facts before us. In particular, the parties' arguments were not affected and that part of the article which could have been (but was not) raised in argument before us did not (in any event, as we shall see below (at [27])) affect the result of the present appeal. But, henceforth, lawyers would do well to pay close attention to this article should an issue relating to jurisdiction clauses, both exclusive and non-exclusive, arise before the Singapore courts in the future.

4 With these preliminary observations in mind, let us turn briefly to the background leading to the present appeal. As already alluded to above, it is in fact very straightforward.

Background

5 The Appellant is an exempt limited liability company registered in the Cayman Islands. The Appellant is a special purpose vehicle set up to effect financial investments, specifically in a company known as Orind Global Holdings Ltd (‘OGHL’). The Respondent is a Singaporean Permanent Resident of Indian nationality. The Respondent carried on the business of manufacturing and trading in refractories. The Appellant and the Respondent entered into three contracts in February 2007 (collectively, ‘the Three Contracts’)...