Pertamina Energy Trading Ltd v Karaha Bodas Co LLC and Others

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 01 March 2007
• Neutral Citation: [2007] SGCA 10
• Docket Number: Civil Appeal Nos 38 and 39 of 2005,Civil Appeal No 41 of 2006
• Date: 01 March 2007
• Published date: 14 March 2007
• Year: 2007
• Plaintiff Counsel: Oommen Mathew and Rajmohan (Haq & Selvam)
• Defendant Counsel: Alvin Yeo SC, Tan Kay Kheng, Tan Hsiang Yue, Aw Wen Ni (Wong Partnership)
• Court: Court of Appeal (Singapore)
• Citation: [2007] SGCA 10
• Subject Matter: Applicable principles,Whether third parties may be liable for aiding and abetting contempt of court,Contempt of Court,Order of court expressing that purpose of injunction not to prevent appellant from disposing of assets in ordinary course of business,Mareva injunction ordered by Singapore court in regard of foreign arbitral award,Whether initiation of garnishee proceedings by first respondent thwarting operation of injunction amounts to contempt of court,Civil contempt,Condition of order of court that certain information to be furnished by appellant to first respondent for specific purpose only,Whether breach of such undertaking amounting to breach of court order and contempt of court,Condition of order of court imposing on respondent implied undertaking not to use information for collateral purpose

1 March 2007 Judgment reserved.

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

Introduction

1 The present proceedings raised the issue of whether or not a contempt of court had been committed in the context of a Mareva injunction. However, they arose in somewhat unusual circumstances. There was no alleged contravention of the Mareva injunction by the injunctee as such. There was, instead, an alleged thwarting or frustration of the injunction concerned as well as an alleged breach of an implied undertaking by the injunctor. In other words, the party in whose favour the injunction had been granted was now being accused by the party against whom the injunction had been granted of having committed acts in contempt of court. This was therefore an unusual fact situation. However, in the oft-cited words of an oft-cited article (see Joseph Moskovitz, “Contempt of Injunctions, Civil and Criminal” (1943) 43 Colum L Rev 780 at 780):

Contempt of court is the Proteus of the legal world, assuming an almost infinite diversity of forms.

Indeed, in the English Court of Appeal decision of Attorney-General v Newspaper Publishing Plc [1988] Ch 333 (“Newspaper Publishing”), Sir John Donaldson MR referred to the “protean nature” of contempt (a point noted by Lord Oliver of Aylmerton in Attorney-General v Times Newspapers Ltd [1992] 1 AC 191 at 216 (“Times Newspapers 2”)) and, in the (also) English decision of Attorney-General v Sport Newspapers Ltd [1991] 1 WLR 1194 (“Sport Newspapers”), Hodgson J referred (at 1230) to contempt as constituting “the Proteus of the common law”.

2 Turning to the factual matrix proper, the appellant, Pertamina Energy Trading Ltd (“Petral”), is a company incorporated and carrying on business in Hong Kong. It is the first defendant of the originating summons that was accompanied by the grant of the Mareva injunction, which forms the centrepiece in the present proceedings (see [9] below). Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, now known as PT Pertamina (“Pertamina”), owns 99.83% of the shareholding in Petral. The second defendant in the aforementioned originating summons is Pertamina Energy Services Pte Ltd (“PES”). PES is incorporated in Singapore and is a wholly-owned subsidiary of Petral. Pertamina and PES were not parties to the contempt proceedings in the court below. Neither was involved in this appeal either.

3 The first respondent, Karaha Bodas Co LLC (“KBC”), is a company incorporated in the Cayman Islands. KBC is a special project vehicle that was formed for the purposes of developing geothermal energy resources in Indonesia with Pertamina. Currently, it is not carrying on any business because the project with Pertamina was cancelled by Presidential Decrees issued by the Indonesian government in 1997/1998. The cancellation of this project led to arbitration proceedings in Switzerland and resulted in an award against Pertamina on 18 December 2001.

4 In March 2002, KBC commenced parallel enforcement proceedings in Hong Kong and Singapore, in relation to the arbitral award which set in motion a string of events that have led to this contempt application.

5 The second respondent is a solicitor and partner at the Hong Kong office of a UK law firm. The second respondent is in charge of the conduct of KBC’s enforcement proceedings in Hong Kong. The third respondent is made up of the entire Hong Kong office of the UK law firm just referred to, and is a partnership of 11 persons including the second respondent.

The facts leading up to the present proceedings

6 The Singapore High Court granted KBC leave to enforce its arbitral award on 14 March 2002, with judgment entered in the terms of the award. On 29 May 2002, KBC obtained garnishee orders nisi against PES and on 6 June 2002 Pertamina applied for an order to set aside the enforcement proceedings on the ground of invalid service.

7 Meanwhile, in concurrent Hong Kong proceedings, KBC’s execution proceedings were stayed pending Pertamina’s application to set aside the service of court documents. Between mid-July 2002 and early August 2002, KBC’s charging order nisi was made absolute and Pertamina’s application to set aside the service of court documents was dismissed.

8 In Singapore, on 20 August 2002, a consent order was made in the terms that the service of documents on Pertamina was valid, that Pertamina be given 21 days to apply to set aside the order of 14 March 2002, that the garnishee orders nisi were to remain in force and lastly, that further proceedings be held in abeyance until the lapse of the 21-day period or until the determination of Pertamina’s setting-aside application or until a further order was made. On 10 September 2002, Pertamina applied to set aside the order of 14 March 2002 and the garnishee orders nisi.

9 More than two years later, on 22 December 2004, KBC obtained a domestic Mareva injunction (“the Singapore injunction”) against Petral and PES one day after they had obtained, in Hong Kong, a worldwide Mareva injunction against Petral. After the Singapore injunction was obtained, KBC was given leave to serve court documents on Petral, out of jurisdiction. On 17 and 18 January 2005, PES and Petral, respectively, applied for, inter alia, a discharge of the Singapore injunction. They were in fact successful and the Singapore injunction was discharged on 14 March 2005 (see Karaha Bodas Co LLC v Pertamina Energy Trading Ltd [2005] 2 SLR 568, affirmed in Karaha Bodas Co LLC v Pertamina Energy Trading Ltd [2006] 1 SLR 112).

10 Crucially, though, on 26 January 2005, Petral, through their lawyers sent a letter to KBC’s Singapore lawyers informing KBC of a transfer of funds from Bank Mandiri in Singapore to Dah Sing Bank in Hong Kong. Petral claimed in its letter that the transfer was to effect payments as itemised in the letter. The text of the letter is as follows:

1. The 1st Defendants hereby advise that the [sic] they will be making payments as set out in the attachment to this letter. The payments will be made this week.

2. The source of these funds is the 1st Defendants’ account with Bank Mandiri (Singapore). Moneys have been transferred to the 1st Defendants’ bank account in Hong Kong for the above purpose.

11 Petral asserts that this transfer and intended payments constituted “a dealing with or disposing of any of their assets in the ordinary and proper course of business”, pursuant to Exception 2 of the Singapore injunction (set out at [17] below). Petral’s case is that the letter was furnished pursuant to Exception 2 of the Singapore injunction.

12 KBC’s Singapore lawyers who were in conduct of its Singapore proceedings received Petral’s letter on 27 January 2005. KBC’s Singapore lawyers relayed the said letter to the second respondent in Hong Kong. Having had receipt, KBC proceeded to apply to the High Court in Hong Kong and was granted a garnishee order nisi against Dah Sing Bank, despite making full and frank disclosure of the Singapore proceedings. Through this order, KBC was able to garnish the moneys transferred by Petral to Dah Sing Bank.

13 The present contempt proceedings have come about through events that occurred between 26 and 27 January 2005, starting with the letter sent out by Petral and culminating with the point at which the moneys transferred to Dah Sing Bank were garnished by KBC.

The issues

14 This appeal is brought by the appellant, Petral, against the decision of the trial judge (“the Judge”) dismissing the appellant’s committal application against the respondents for contempt of court (see Karaha Bodas Co LLC v Pertamina Energy Trading Ltd [2006] 3 SLR 721 (hereafter, “GD”)).

15 The issues raised by the appellant in the present proceedings are set out as follows:

(a) Whether the first respondent had thwarted the operation of Exception 2 of the Singapore injunction by directly preventing the appellant from dealing with its assets in the ordinary and proper course of business.

(b) Whether the first respondent had breached the implied undertaking not to use the information furnished in the letter of 26 January 2005 for a collateral purpose.

(c) Assuming that contempt of court by the first respondent is established, whether the second respondent and the third respondent should be liable for contempt of court for aiding and abetting the first respondent in its contempt of court.

16 Whilst we will deal with the substance of these issues, we will not deal with them in the precise manner in which they have been raised in the preceding paragraph. In particular, although issues (a) and (b) are closely related, they are conceptually distinct. More importantly, it would be preferable to consider issue (b) first, which constitutes – in and of itself – a separate ground upon which contempt of court might have been established. Further, in so far as the second and third respondents are concerned, additional legal issues arise as they are third parties inasmuch as they are not parties against whom the court order was issued. And, if a contempt of court is indeed established, the further issue arises as to the sanction to be imposed on the party or parties concerned. To this end, after setting out the relevant parts of the Singapore injunction in the next part of this judgment, we proceed to consider, first, the relevant legal principles before applying these principles to the facts in the present proceedings.

The material portions of the Singapore injunction

17 For ease of reference, the portions of the Singapore injunction that are relevant to the present proceedings are set out below:

Disposal of assets

1. (1) The 1^st Defendant [the appellant] must not remove from Singapore in any way dispose of or deal with or diminish the value of any of his assets which are in Singapore whether in his own name or not and whether solely or jointly owned up to the value US$36,236,581.65. This prohibition includes but is not limited to the following assets in particular:-

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