Swift-Fortune Ltd v Magnifica Marine SA (The "Capaz Duckling")

• Jurisdiction: Singapore
• Judgment Date: 01 December 2006
• Date: 01 December 2006
• Docket Number: Civil Appeal No 24 of 2006
• Court: Court of Appeal (Singapore)

Swift-Fortune Ltd

Plaintiff

and

Magnifica Marine SA

Defendant

[2006] SGCA 42

Chan Sek Keong CJ

,

Andrew Phang Boon Leong JA

and

Tay Yong Kwang J

Civil Appeal No 24 of 2006

Court of Appeal

Arbitration–Interlocutory order or direction–Court's power–Whether Singapore court having power to grant interim relief by way of Mareva injunction in aid of foreign arbitral proceedings with no other connection with Singapore–Section 4 (10) Civil Law Act (Cap 43, 1999 Rev Ed)–Section 12 (7) International Arbitration Act (Cap 143A, 2002 Rev Ed)

The dispute in the present case arose in connection with the sale of a vessel by the defendant-respondent (“Magnifica”), a Panamanian company, to the plaintiff-appellant (“Swift-Fortune”), a Liberian company, at a price of US$9.5m for delivery in China but with legal completion in Singapore. The sale agreement, which was subject to English law, provided for arbitration in London of any dispute arising from it. As a result of a delay in the delivery of the vessel, Swift-Fortune claimed that it suffered substantial losses estimated to be between US$2m and US$2.5m. On the day before the date fixed for delayed completion, Swift-Fortune filed an ex parte action seeking a Mareva injunction to restrain Magnifica from disposing or dealing with its assets in Singapore up to the value of US$2.5m pending arbitration proceedings between the parties in London in accordance with the underlying contract. The court granted the injunction, and also gave leave to serve the application and the Mareva injunction on Magnifica outside the jurisdiction. Upon being served the court papers, Magnifica applied to set aside the proceedings and the Mareva injunction on the ground that the court did not have jurisdiction or power to grant the Mareva injunction.

In the High Court, Judith Prakash J (“Prakash J”) set aside the Mareva injunction, deciding, inter alia, that s 12 (7) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) was intended to only apply to arbitrations where Singapore was stipulated as the seat of arbitration (“Singapore international arbitrations”) and did not apply to arbitrations which had arisen out of an international arbitration agreement but which did not stipulate Singapore as the seat of arbitration (“foreign arbitrations”). Swift-Fortune appealed against the decision of the High Court.

Before the appeal was heard, the case of Front Carriers Ltd v Atlantic & Orient Shipping Corp [2006] 3 SLR (R) 854 (“Front Carriers”) was decided. In Front Carriers, Belinda Ang Saw Ean J (“Ang J”) disagreed with Prakash J on the effect of s 12 (7), holding that the section conferred power on the court to grant interim orders, including a Mareva injunction, in aid of foreign arbitrations. However, Ang J noted that under s 4 (10) of the Civil Law Act (Cap 43, 1999 Rev Ed) (“CLA”), the court would have such power only where it had personal jurisdiction over the defendant and where “there is a recognisable justiciable right between the parties” under Singapore law.

Accordingly, urging the court to accept the decision in Front Carriers in preference to that of the High Court in the present case, Swift-Fortune argued that the appeal should be allowed on the grounds that a Singapore court had the power under s 12 (7) to grant a Mareva injunction under s 12 (1) (i) of the IAA.

Held, dismissing the appeal:

(1) Whatever the policy implications of upholding the decision of the court below, the court would not traverse beyond the duty to ascertain the scope of s 12 (7) by applying established principles of statutory interpretation to give effect to the intention of Parliament. In doing so, it was entitled to look at the objective of the IAA,ie to promote international arbitration in Singapore, to see whether a literal, purposive or some other kind of interpretation would promote the objective of the statute rather than hinder its fulfilment. If the literal interpretation of s 12 (7) promoted the legislative object better than a purposive interpretation, then the court was justified in preferring the former to the latter interpretation. Conversely, if the literal interpretation did not promote the legislative object or did not promote it better than the purposive interpretation, then it was permissible for the court to ignore the literal meaning and give effect to the purposive interpretation: at [14], [16] and [17].

(2) Article 9 of the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration was not intended to confer jurisdiction but to declare the compatibility between resolving a dispute through arbitration and at the same time seeking assistance from the court for interim protection orders. For this reason, Art 9 could have no bearing on the meaning and effect of a domestic law providing for interim measures, such as s 12 (7) of the IAA, and could neither subtract nor add to its meaning and effect, which had to be determined by reference to the language and structure of s 12 (7) as well as any other relevant extrinsic matters: at [31] and [33].

(3) Section 12 (7) was not merely declaratory of the powers of the court. Instead, it was an enabling provision which gave powers to the High Court to assist international arbitrations, powers which, hitherto, it never had: at [36] and [37].

(4) Given the collective weight of the reasons that served as indications of Parliament's intention for it not to apply to foreign arbitrations, s 12 (7) was intended to apply only to Singapore international arbitrations and did not give power to the court to grant interim measures, including Mareva interlocutory relief, to assist foreign arbitrations: at [59].

(5) The circumstances that led to the enactment of s 12 (7) suggested that the intention was not to give more powers to the court to grant interim orders to assist foreign arbitrations, but to assist international arbitrations conducted by arbitral tribunals pursuant to Pt II of the IAA. Similarly, the placement of s 12 (7) as a subsection in a provision that dealt exclusively with the powers of arbitral tribunals conducting international arbitrations in Singapore made it unlikely that Parliament intended, in the absence of clear words, for the courts to assist foreign arbitrations: at [41], [43] and [44].

(6) If s 12 (7) was given a plain meaning, ss 12 (1) (a) to 12 (1) (i) of the IAA would become statutorily implied terms in all foreign arbitration agreements notwithstanding its interference with the powers of the foreign arbitral tribunal. Accordingly, the fact that a literal interpretation of s 12 (7) would allow the court to exercise powers that would be contrary to the spirit of international arbitrations represented a compelling reason for concluding that the said section should be read to apply to Singapore international arbitrations only. Furthermore, it would be difficult to accept the argument that a literal interpretation should be given to s 12 (7) for it implied that Parliament had enacted the provision with the intention of permitting the courts to become universal providers of procedural orders and relief to assist all anticipated or ongoing international arbitrations in any country in the world: at [51], [52] and [55].

(7) As s 12 (7) did not deal with the situations dealt with by ss 6 and 7 of the IAA, the existence of the latter sections did not support the argument that the former had to be read to apply to all international arbitrations for Pt II of the IAA to remain internally consistent. Furthermore, as ss 6 and 7, by themselves, provided all the interim relief that was necessary to protect the claims of the claimants until the disposal of the substantive claim without resorting to s 12 (7) for any additional relief, their existence could not affect the interpretation of s 12 (7): at [56] to [58].

(8) As s 12 (7) of the IAA did not independently confer any power on the court in the same way that ss 12 (1) to 12 (6) independently conferred such powers on arbitral tribunals, it followed that the court's power under s 12 (7) had to be found in another statutory source. In the context of this case, that source could only be s 4 (10) of the CLA, read with s 18 (1) of the Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed). It was thus necessary to examine the scope of s 4 (10) of the CLA: at [61] and [62].

(9) While s 4 (10) of the CLA had been invoked as the statutory source of power to grant Mareva injunctions in courtproceedings, the court would have no power to grant Mareva interlocutory relief unless the defendant was “amenable to the jurisdiction of the court” in respect of a substantive cause of action: at [64] and [66].

(10) The finding in Front Carriersthat there was a cause of action justiciable in a Singapore court differentiated it from the present case where Swift-Fortune did not have such a justiciable right against Magnifica when it obtained the ex parte Mareva injunction, and would never have it at any time. Accordingly, the court's decision in the present case and in Front Carriers and Prakash J's judgment below were not in conflict with each other in their interpretations of s 4 (10) of the CLA: at [87].

(11) A Mareva injunction was, by nature, an interlocutory injunction. Its nature did not change because an applicant did not seek a final order. It did not need to become a final order because it was intended to protect a prospective right of enforcement. As the legal objection was not the nature of the injunction but the absence of a cause of action within the jurisdiction of the court which was a precondition for the exercise of the power under s 4 (10) of the CLA, Swift-Fortune's argument that the court had no power to grant the Mareva injunction in this instance because it was, in substance, a final injunction, in that it would be the only relief that it would be seeking from the court, could not...