Strandore Invest A/S and others v Soh Kim Wat

• Jurisdiction: Singapore
• Judge: Quentin Loh J
• Judgment Date: 10 June 2010
• Neutral Citation: [2010] SGHC 174
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 19 of 2010
• Published date: 18 June 2010
• Year: 2010
• Hearing Date: 17 May 2010
• Plaintiff Counsel: See Tow Soo Ling (Colin Ng & Partners)
• Defendant Counsel: Leo Cheng Suan (Infinitus Law Corporation)
• Subject Matter: Arbitration
• Citation: [2010] SGHC 174

Quentin Loh J: Introduction

The applicants in this Originating Summons are Danish companies; Strandore Invest A/S (“Strandore), LKE Electric Europe A/S (“LKE Europe”) and MS Invest Odense A/S (“Odense”) (collectively, the “Applicants”). The Applicants filed these proceedings to enforce an arbitration award (“the Final Award”) against the respondent, Soh Kim Wat (“Soh”). The Final Award, in favour of the Applicants, dated 30 April 2008, was made by a 3-member arbitral tribunal and issued out of the Danish Institute of Arbitrators (“DIA”).

On 9 April 2010, Soh applied to: stay this Originating Summons No 19 of 2010 (“OS 19/2010”), pending the resolution of Suit No 968 of 2009 (S 968/2009”), in which Soh challenges the Final Award or alternatively that OS 19/2010 be converted into a Writ action pursuant to O 28 r 9 of the Rules of Court (Cap 322, R5, 2006 Rev Ed)(“Rules”), and consolidated and heard together with S 968/2009; and set aside the Mareva injunction issued on 8 January 2010 against him (the “Mareva injunction”).

I dismissed Soh’s applications and proceeded to hear the Applicants’ application in OS 19/2010 for leave to enforce the Final Award pursuant to ss 19 and 29 of the International Arbitration Act (Cap 143A, 2002 Rev Ed)(“IAA”). After hearing the parties, I granted the Applicants leave to enforce their Final Award. Soh appealed against my decision on 13 April 2010 and I issued my written grounds on 14 May 2010 (the “14 May 2010 Decision”) (see Strandore Invest A/S and others v Soh Kim Wat [2010] SGHC 151).

Soh then applied for a stay of execution pending appeal. I heard the parties on 17 May 2010 and refused Soh’s application for a stay of execution. Soh appealed against my decision on 20 May 2010 and I now set out my grounds for refusing a stay.

In essence, the Applicants, shareholders in LKE Electric (M) Sdn Bhd, (the “Company”), entered into share sale and purchase agreements, (the “Agreements”; the first two Agreements dated 22 March 2003 and the third dated 10 December 2004), to sell their shares to Soh, who is also a shareholder and director of the Company. The Applicants alleged that Soh breached the Agreements and failed to complete the purchase.

The full facts of the case and grounds for my decision have been set out in the 14 May 2010 Decision and it is not necessary to set them out here, except insofar as they are relevant to my decision to refuse a stay pending the appeal.

Principles Applicable for Stay of Execution Pending Appeal

The principles governing a stay of execution pending appeal are well settled and have been authoritatively set out in a number of decisions, including the decision of the Court of Appeal in Lian Soon Construction Pte Ltd v Guan Qian Realty Pte Ltd [1999] 1 SLR(R) 1053. They are as follows: While the court has the power to grant a stay, and this is entirely at the discretion of the court, the discretion must be exercised judicially, ie, in accordance with well-established principles. The first principle is that, as a general proposition, the court does not deprive a successful litigant of the fruits of his litigation, and lock up funds to which he is prima facie entitled, pending an appeal. There is no difference whether the judgment appealed against was made on a summary basis or after a full trial. This is balanced by the second principle. When a party is exercising his undoubted right of appeal, the court ought to see that the appeal, if successful, is not nugatory. Thus a stay will be granted if it can be shown by affidavit that, if the damages and costs are paid, there is no reasonable probability of getting them back if the appeal succeeds. The third principle follows, and is an elaboration of the second principle, that an appellant must show special circumstances before the court will grant a stay. All other rules follow and are derived from the application of these three principles to the individual circumstances and facts of each case. For example, the likelihood of success is not by itself sufficient, and a bald assertion of the likelihood of success in an affidavit is inadequate. Otherwise, a stay would be granted in every case because every appellant must expect that his appeal will succeed. Finally, it is neither possible, nor desirable, to give a catalogue of all the circumstances that would qualify to be considered as special. The court in every case will have to examine the facts to see if special circumstances justifying the grant of a stay of execution exist based upon the application of the three principles.

Application of the Law to the Facts and Circumstances of this case

Having weighed the competing factors and circumstances of this case. I was of the view that the first principle weighed heavily against the grant of a stay. The Applicants alleged that Soh was in breach of the Agreements by not making payment for the shares. On 4 January 2006, their solicitor sent Soh a letter of demand for payment of the shares under the Agreements. Soh’s Malaysian solicitors replied on 23 January 2006 pointing to the governing law and arbitration clause in all the Agreements requiring all disputes to be resolved through Copenhagen arbitration, and stated that Soh was prepared to proceed with Copenhagen arbitration in accordance with the terms of the Agreements. The Applicants subsequently filed Suit No 55 of 2006 (“S 55/2006”), effected service on Soh on 21 February 2006 and Soh succeeded, pursuant to s 6 IAA, in obtaining an order for a stay of S 55/2006 on 10 May 2006. The Applicants then commenced arbitration in Copenhagen by filing their Requests for Arbitration before the DIA on 23 June 2006. Soh however did not nominate or appoint his arbitrator as required under the DIA Rules although he was requested to do so a number of times by the DIA (the detailed facts of the course of the arbitration in Copenhagen are set out in the 14 May 2010 Decision). Soh sent various communications challenging the validity of the Request for Arbitration, the service on him, contending that the documents were not in order, raising a number of technicalities and protesting, inter alia, that the Agreements were never meant to be enforced and were for a collateral purpose of showing them to another third party to assist the Applicants. Soh did not file any defence or otherwise participate in the arbitration hearing. As noted above, the Final Award was issued on 30 April 2008. The Applicants then commenced enforcement proceedings back in Singapore in Originating Summons No 999 of 2008, (“OS 999/2008”) on 29 July 2008, and leave to enforce the Final Award was granted on 31 July...