Orchard Capital I Ltd v Ravindra Kumar Jhunjhunwala

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 24 February 2012
• Neutral Citation: [2012] SGCA 16
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 106 of 2011
• Published date: 27 February 2012
• Year: 2012
• Hearing Date: 30 November 2011
• Plaintiff Counsel: Lai Yew Fei and Khelvin Xu Cunhan (Rajah & Tann LLP)
• Defendant Counsel: Patrick Chin Meng Liong (Chin Patrick & Co) and R S Wijaya (R S Wijaya & Co)
• Subject Matter: Conflict of Laws,Choice of Jurisdiction,Natural Forum
• Citation: [2012] SGCA 16

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

This is an appeal against the decision of the High Court Judge (“the Judge”) in Orchard Capital I Limited v Ravindra Kumar Jhunjhunwala [2011] SGHC 185 (“the GD”). The Respondent had applied to stay the action brought by 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.

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?

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 SAcLJ 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.

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

The Appellant is an exempt limited liability company registered in the Cayman Islands.¹ The Appellant is a special purpose vehicle set up to effect financial investments, specifically in a company known as Orind Global Holdings Ltd (“OGHL”).² The Respondent is a Singaporean Permanent Resident of Indian nationality.³ The Respondent carried on the business of manufacturing and trading in refractories.⁴ The Appellant and 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 convertible promissory note, respectively.⁵

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. The relevant provisions of the Agreement are as follows:⁶ Payment and Custody Arrangement (i) [The Respondent] and OGHL shall as promptly as practicable after the date of this Agreement and in any event no later than the dates set forth below deposit USD6,500,000 in freely and immediately available funds to [the Appellant] to the account detailed at Section 8(v): (a) no less than USD2,500,000, 6 months following the date of this Agreement; (b) no less than USD3,500,000, in the aggregate, 8 months following the date of this Agreement; (c) no less than USD5,000,000, in the aggregate, 10 months following the date of this Agreement; and (d) no less than USD6,500,000, in the aggregate, the one year anniversary of the date of this Agreement;

…

(iii) Upon any failure of [the Respondent] or OGHL to timely pay any amount in this Section 8, then in each and every such case, unless such failure to pay shall have been waived in writing by [the Appellant], in its sole discretion, (which waiver shall not be deemed to be a waiver of any subsequent breach): (i) any and all payment obligations outstanding by [the Respondent] and OGHL under this Agreement shall be immediately become due and payable; (ii) [the Respondent] and OGHL shall immediately pay any and all amounts outstanding under this Agreement with all accrued interest thereon in accordance with Section 8(iv) and any other sums owed hereunder in freely and immediately available funds to [the Appellant] to the account detailed at Section 8(v) and (iii) [the Appellant] may enforce any and all of its rights and remedies provided under this Agreement. (iv) If any portion of the USD6,500,000 is not paid on October 1, 2010, then any such unpaid amount shall accrue interest from day to day at a rate of 15% per annum (or the maximum rate enforceable under applicable law).

…

[underlining in original]

As is evident from clause 8(i)(a) of the Agreement above, 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 clause 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 crucial clause (viz, the non-exclusive jurisdiction clause), in respect of the Respondent’s application as well as the present appeal, is to be found in clause 23 of the Agreement (“the Clause”) and reads as follows:⁷

Governing Law This Agreement is governed by and construed in accordance with the laws of Hong Kong, SAR. The Parties submit to the non-exclusive jurisdiction of the courts of Hong Kong, SAR. The parties hereby knowingly, voluntarily and intentionally waive to the fullest extent permitted by law any rights they may have to trial by jury in respect of any litigation based hereon, or arising out of, under or in connection with this Agreement.

[emphasis added in italics and bold italics]

The Respondent’s application was heard by the AR on 21 April 2011. He refused to grant a stay of proceedings.⁸ Against this decision, the Respondent appealed to the High Court.

The decision in the court below

The Respondent’s appeal was allowed by the Judge on 3 August 2011. The Judge’s decision, in granting a stay of proceedings, is encapsulated within the following paragraphs of the GD (at [3]–[5]): 3 Both parties cited Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (“Spiliada”) in support. It seems clear that the Spiliada requires a court, in an application for a stay of proceedings application on the ground of forum non conveniens, to determine on the balance of all competing factors, which forum would be the more clearly appropriate one. Given that the action to be stayed was commenced here, the allegation that this was not the appropriate forum meant that the burden lies with the applicant to show which was the more appropriate forum. 4 In this case, the only material factors facing off were the fact that the parties had chosen Hong Kong as the appropriate forum, and the fact that the appellant and his family are resident here, and he appears to have business in Singapore although the respondent had acknowledged that the original contracts were made to further the appellant’s business in “India, China and USA”. The respondent’s counsel conceded that witness testimony in this case was not material as the claim would be essentially a construction of the contract. The original contracts specified Hong Kong to be the exclusive jurisdiction whereas the settlement agreement specified Hong Kong as the non-exclusive jurisdiction. Performance under the settlement agreement was to be made by payment into a Citibank account in America. 5 Generally, when the court is of the view that the factors are evenly balanced, it would conclude that the defendant had failed to discharge its burden of proving that there was another more appropriate forum. However, in the simple and straightforward contest between the two factors here, I am of the view that the selection of Hong Kong as the jurisdiction of choice was sufficient discharge of the appellant’s burden, there being no evidence of any unforeseen circumstances outside the parties’ contemplation at the time the settlement agreement was concluded, that renders that choice inappropriate or unjust. It was clear to the parties that the appellant’s business could have taken him to China, India, USA or here. Further, there is no reason to believe that the respondent would have any difficulty enforcing a Hong Kong judgment against the appellant in Singapore. Thus, for the reasons above, the appeal is allowed and the action herein be stayed sine die with liberty to restore.

Issue

The resultant issue is, as set out at the outset of this judgment, a simple one: ought the action begun by the Appellant to be stayed on the ground of ...