STAYING AN ACTION COMMENCED IN BREACH OF A JURISDICTION CLAUSE: A NOTE ON “THE ASIAN PLUTUS”1

• Published date: 01 December 1991
• Author: TOH KIAN SING
• Date: 01 December 1991

A. INTRODUCTION

An exclusive jurisdiction clause present in a contract is an agreement to refer any dispute arising from the contract2 to the exclusive jurisdiction of the courts of a particular country. A party who subsequently brings an action in a forum other than the agreed one would therefore be in breach of this agreement. Assuming that the court before which the dispute is brought3 has jurisdictional competence to hear the action,4 nevertheless it would very likely decline to exercise its jurisdiction on account of such a breach5. In other words, the court would stay the action in deference to the chosen foreign forum.

The rationable for such a rule is, quite simply, that the parties should abide by what they have agreed upon. In ‘The Eleftheria’, the leading case on this area, Brandon J. (as he then was) observed that:

“…it is essential that the court should give full weight to the prima facie desirability of holding the parties to their agreement. In this connection I think that the court must be careful not just to pay lip service to the principle involved, and then fail to give effect to it because of a mere balance of convenience.”6

Although any action commenced in breach of the forum agreement would prima facie be stayed, the plaintiff may, however, rebut the presumption of stay by proving that a strong cause exists for bringing the action before the actual forum instead of the agreed forum. However, the task confronting the plaintiff is a difficult one for the demonstration of strong cause entails more than proving that the actual forum is a forum conveniens.7 The actual forum would consider all the circumstances of the case in deciding whether

the action should continue. However, the following guidelines laid down by Brandon J. in “The Eleftheria” are particularly pertinent:8

1. (a) In what country the evidence on the issues of fact is situated or more readily available, and the effect of that on the relative convenience and expense of trial as between the forum or abroad.

2. (b) Whether the law of the foreign court applies and, if so, whether it differs from the lex fori in any material respect.

3. (c) With what country either party is connected and, if so, how closely.

4. (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages.

5. (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would:

   1. (i) be deprived of security for their claim;

   2. (ii) be unable to enforce any judgment obtained;

   3. (iii) be faced with a time-bar not applicable here; or

   4. (iv) for political, racial, religious or other reasons be unlikely to get a fair trial.

B. THE POSITION IN SINGAPORE

The Eleftheria approach and the guidelines laid down by Brandon J. were accepted locally in the case of Amerco Timbers Pte Ltd, v Chatsworth Timber Corporation9 (although the Singapore Court of Appeal did not refer specifically to “The Eleftheria”), but with one refinement. It was held that the plaintiff must show the presence of ‘exceptional circumstances’ before he could make out his strong cause. Amerco’s case was followed, and hence the modified Eleftheria guidelines reiterated, in three other local decisions, “The Maldive Importer”10, and more recently, “The Asian Plutus”11 and “The Vishva Apurva”12.

The local position is incontrovertible after the repeated acceptance of the Eleftheria approach.13 The purpose of this note seeks to go beyond stating the local position in two respects: by examining firstly, certain principles pertaining to the Eleftheria approach which were enunciated in ‘The Asian Plutus’ and secondly, the manner in which the court applied the approach.

C. “THE ASIAN PLUTUS”

1. Background to the decision.

In this recent decision, a stay was granted by the Registrar in respect of an action commenced in Singapore in breach of an exclusive jurisdiction clause which stipulated the Tokyo District Court as the exclusive forum. The dispute arose out of a contract of carriage of some lathe machines which arrived in Singapore damaged. The plaintiffs were owners of those machines and they sued the defendants, who were owners of the ship, the “Asian Plutus”, for breach of contract or alternatively, in negligence. The exclusive jurisdiction clause in question was found in the bill of lading which also contained a clause stipulating Japanese law as the proper law of the contract.

The Registrar granted a stay of proceedings on terms that the defendants provide acceptable security for the plaintiffs’ action to be brought in the Tokyo District Court, appoint solicitors to accept service of process for the Tokyo action and refrain from raising any time bar there. Against this decision, the plaintiffs appealed to the High Court.

2. The decision of Yong J. (as he then was)

(a) The Importation of the Approach

The court was seised of its jurisdiction to hear the claim under s. 3 (1) (g) of the High Court (Admiralty Jurisdiction) Act14 since this was a claim for damage to goods’ carried in the ship.

“[I]n the absence of a relevant local law”15, Yong J. imported the

Eleftheria approach by virtue of s. 5 of the Civil Law Act.16 With due respect, the recourse to s. 5 as a channel to import the Eleftheria approach is questionable. Whilst the learned judge did not elaborate as to what is meant by “a relevant local law”, there are at least two relevant local authorities which accepted the Eleftheria approach, Amerco’s case and “The Maldive Importer”, neither of which made any reference to s. 5 presumably because this is an area of common law and one interpretation of s. 5 limits its application to the importation of mercantile statutes only.17 Since Amerco’s case is a Court of Appeal decision and so was binding on the court in the instant case, the judge could have used the approach simply by citing a binding precedent which did so.

Furthermore, it is not clear how the learned judge came to the conclusion that s. 5 could be applied.18 After all, the precise question before the court was procedural for it was dealing with a stay of proceedings.19 No doubt, since the dispute arose under a contract of affreightment, a very broad characterization of the issue could conceivably bring it within the ambit of “mercantile law” or “the law … of carriers… by sea.” But an explanation for the use of s. 5 that relies on increasing the breadth of the issue defined merely illustrates the unreliability of the technique of issue characterization.20

Similar passing reference to s. 5 was repeated in “The Vishva Apurva”21, also a decision on stay of an action commenced in breach of a foreign exclusive jurisdiction clause. These unexplained and unnecessary forays into s. 5 raise a query of some importance. Does this mean that in future, conflict of laws principles in common law could only be imported via s. 5 and following from that, only in a mercantile context? Such a result will leave a yawning gap in local conflict of laws principles which relate to non-

mercantile issues. Besides, it is inconsistent with local cases that have applied common law conflictual principles in non-mercantile contexts.22 One way to reconcile this apparent inconsistency might be to say that our courts can apply these conflictual principles in a non-mercantile context if they are found to be persuasive, subject of course, to the usual modifications to suit local conditions. But if that is so, is it not logically compelling to extend the argument to conflictual principles that arise in a mercantile context? In other words, can our courts not apply these principles whenever they are persuaded to do so, whether the context be mercantile or not,23 instead of having to wade through the rigmarole of s. 5?

Apart from circumventing the...