Re Harish Salve and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 25 January 2018
• Neutral Citation: [2018] SGCA 6
• Plaintiff Counsel: Kelvin Poon, Alyssa Leong and Matthew Koh (Rajah & Tann Singapore LLP),Alvin Yeo SC, Smitha Rajan Menon and Stephanie Yeo (WongPartnership LLP)
• Date: 25 January 2018
• Docket Number: Civil Appeal Nos 49 and 50 of 2017
• Hearing Date: 23 October 2017,16 October 2017
• Subject Matter: Legal Profession,Ad hoc,Admission
• Published date: 10 February 2018
• Defendant Counsel: Christopher Anand Daniel and Harjean Kaur (Advocatus Law LLP),Jeyendran Jeyapal, Elaine Liew and May Ng (Attorney-General's Chambers),Suresh Divyanathan, Aaron Leong, Victoria Choo and Marvin Chua (Oon & Bazul LLP)
• Court: Court of Appeal (Singapore)
• Citation: [2018] SGCA 6
• Year: 2018

Judith Prakash JA (delivering the grounds of decision of the court): Introduction

The appellant, Mr Harish Salve, who holds the appointment of Senior Advocate in India, applied in Originating Summonses No 1114 and 1115 of 2016 (“OS 1114” and “OS 1115”) for ad hoc admission as an advocate. The purpose of admission was for the applicant to argue issues of Indian law (and only such issues, while local counsel would argue the other issues) in applications to set aside a final award in an ICC arbitration (“the Award”) and to resist the enforcement of the Award in Singapore.

The appellant’s applications for admission were dismissed by the High Court judge (“the Judge”), whose decision can be found at Re Harish Salve [2017] SGHC 28 (“the Judgment”). The appellant appealed. After careful consideration of the arguments made by the parties, the Law Society of Singapore and the Attorney-General, we allowed the appeals. We gave brief reasons for our decision at the time and now set out the full grounds.

Background facts

On 11 June 2008, the respondent, [BPW], entered into a share purchase and share subscription agreement (“the Agreement”) with certain shareholders (“the Sellers”) of [P] Limited (“the Company”) to purchase their controlling stake in the Company. The Agreement is governed by Indian law and contains an ICC arbitration clause designating Singapore as the place of arbitration. On 12 November 2012, the respondent commenced arbitration proceedings against the Sellers pursuant to the arbitration clause in the Agreement (“the Arbitration Agreement”). The crux of the respondent’s claim was that during the negotiations leading to the Agreement, the Sellers had fraudulently misled them and concealed facts concerning certain investigations that the United States Department of Justice and the United States Food and Drug Administration had commenced against the Company. The respondent claimed that such non-disclosure constituted fraud under the Indian Contract Act 1872 (Act No 9 of 1872) (“Indian Contract Act”). It also sought monetary damages pursuant to s 19 of the Indian Contract Act, to put it in the same position as if the representations made had been true. The Sellers contested their liability for fraud. They also objected to the computation, scope, and measure of damages which the respondent claimed pursuant to the Indian Contract Act.

The Award was delivered on 29 April 2016 by the majority of the three-member arbitral tribunal (“the Tribunal”) who found in favour of the respondent. The third arbitrator issued a dissenting award. Thereafter, the respondent started enforcement proceedings in India. The appellant was appointed lead counsel by some of the Sellers to assist them in resisting the Indian enforcement proceedings.

Around the same time, by way of Originating Summons No 490 of 2016 (“OS 490”), the respondent also sought to enforce the Award in Singapore. Leave to enforce the Award against the Sellers in Singapore was granted on 18 May 2016 (“the Leave Order”).

The Sellers responded by taking out applications in OS 490 to set aside the Leave Order, and filing Originating Summonses 784 and 787 of 2016 against the respondent to set aside the Award (collectively, “the Singapore Proceedings”). It will be noted that the Sellers filed two separate applications in the Singapore Proceedings and, correspondingly, two separate applications for the ad hoc admission of the appellant in OS 1114 and OS 1115. This is because the Sellers comprise two groups. The first group comprises 15 adult and corporate sellers (“the Adult Sellers”). The second group comprises five minor sellers (“the Minor Sellers”). The two groups raised different arguments in their applications, and these differences are elaborated on below at [11]. Before delving into the Sellers’ arguments, we note material aspects of the Award.

By the Award, the majority held that the Sellers were liable for fraudulently misrepresenting or concealing from the respondent the genesis, nature, and severity of the Company’s regulatory problems. It is the majority’s computation of damages, however, that forms the focus of the Singapore Proceedings. The Award recorded that it was “not disputed” that the measure of damages recoverable under s 19 of the Indian Contract Act would be similar to that recoverable for fraudulent misrepresentation under general tort principles. In this regard, the Award cited the Gujarat High Court decision in R C Thakkar v Gujarat Housing Board AIR 1973 Guj 34 (“R C Thakkar High Court Decision”) and the English House of Lords decision in Smith New Court Securities Ltd v Citibank N A [1997] AC 254 (“Smith New Court”). Therefore, by the Award, damages were granted in order to put the respondent back in the monetary position it would have been in had the wrong not been committed (ie, pre-acquisition of the Company’s shares). Because the Arbitration Agreement provides that the arbitrators “shall not award punitive, exemplary, multiple or consequential damages”, the Award benchmarked the sum awarded against alternative quantum calculations.

The dissenting arbitrator was of the view that if a contract was obtained by fraudulent misrepresentation, the innocent party had to elect to either rescind the contract under s 19 of the Indian Contract Act or insist that it be specifically performed so as to put that party in the position in which it would have been if the representation made had been true. Because the respondent did not exercise its option to rescind the contract on the ground of fraud, it could not claim damages under s 19 of the Indian Contract Act (ie, it had waived its right to damages for misrepresentation).

As noted, the appellant’s admission was sought solely so that he might address difficult and novel Indian law issues inherent in the Singapore Proceedings. Therefore, not all the grounds which the Sellers have raised in their attempts to set aside the Award were relevant for our consideration of the appeals. In our view, the relevant grounds fell into two broad categories: First, that the Tribunal exceeded its jurisdiction because the Award contained decisions on matters beyond the scope of submission (“the Jurisdictional Challenge”). Second, that the Award is contrary to the public policy of Singapore (“the Public Policy Challenge”).

The main thrust of the Jurisdictional Challenge was that the majority exceeded the Tribunal’s jurisdiction by assessing and awarding damages in a manner contrary to the Arbitration Agreement (see above at [7]).

The Adult Sellers and the Minor Sellers raised different arguments in their Public Policy Challenge. The former argued that the majority’s reliance on the R C Thakkar High Court Decision, which has been overruled by the Indian Supreme Court in R C Thakkar v Gujarat Housing Board Civil Appeal No 2652 of 1972 (“R C Thakkar Supreme Court Decision”), violated Indian public policy. This in turn would violate Singapore’s public policy. The Minor Sellers argued that the Award violated the public policy of Singapore because, by finding the Sellers jointly and severally liable for the full sum of damages, the majority of the Tribunal had imposed grossly disproportionate liability for damages on the Minor Sellers, and had failed to protect their welfare and best interests.

The statutory regime

The provision governing ad hoc admissions in Singapore is s 15 of the Legal Profession Act (Cap 161, 2009 Rev Ed) (“the Act”). In order for foreign counsel to be admitted, the following requirements stipulated under s 15(1) must be satisfied:

Ad hoc admissions

15.—(1) Notwithstanding anything to the contrary in this Act, the court may, for the purpose of any one case, admit to practise as an advocate and solicitor any person who — (a) holds — (i) Her Majesty’s Patent as Queen’s Counsel; or (ii) any appointment of equivalent distinction of any jurisdiction; (b) does not ordinarily reside in Singapore or Malaysia, but has come or intends to come to Singapore for the purpose of appearing in the case; and (c) has special qualifications or experience for the purpose of the case.

If the mandatory requirements in s 15(1) are satisfied, the court goes on to decide whether to exercise its discretion to admit the applicant, having regard to the matters specified in para 3 of the Legal Profession (Ad Hoc Admissions) Notification 2012 (S 132/2012) (“Notification Matters”):

Matters specified under section 15(6A) of Act

3. For the purposes of section 15(6A) of the Act, the court may consider the following matters, in addition to the matters specified in section 15(1) and (2) of the Act, when deciding whether to admit a person under section 15 of the Act for the purpose of any one case: (a) the nature of the factual and legal issues involved in the case; (b) the necessity for the services of a foreign senior counsel; (c) the availability of any Senior Counsel or other advocate and solicitor with appropriate experience; and (d) whether, having regard to the circumstances of the case, it is reasonable to admit a foreign senior counsel for the purpose of the case. The decision below

The Judge dismissed the appellant’s applications for admission. He began his analysis by identifying the specific Indian law issues that arose in the Singapore Proceedings. He classified the disputed issues in the Adult Sellers’ applications as “the Damages Issues” and framed them in the following manner (at [20] of the Judgment): What is the measure of damages permissible under s 19 of the Indian Contract Act? In particular, can a party who has elected to affirm the contract be awarded damages that put it back in the position it would have been in if the misrepresentation had not been made? What is the status of the authorities of Smith New Court and the R C Thakkar High Court Decision in Indian contract law; and ...