United Securities Sdn Bhd (in receivership and liquidation) and another v United Overseas Bank Ltd

JudgeJudith Prakash JCA
Judgment Date10 August 2021
Neutral Citation[2021] SGCA 78
Citation[2021] SGCA 78
Defendant CounselLee Eng Beng SC and Cheong Tian Ci Torsten (Rajah & Tann Singapore LLP)
Hearing Date07 May 2021
Plaintiff CounselAbraham Vergis SC (Providence Law Asia LLC) (instructed), Suresh s/o Damodara, Ong Ziying Clement, Lim Qiu'en and Ning Jie (Damodara Ong LLC)
Docket NumberCivil Appeal No 10 of 2021
Published date13 August 2021
CourtCourt of Appeal (Singapore)
Subject MatterInsolvency Law,Cross-border insolvency,Stay of proceedings,Recognition of foreign insolvency proceedings
Judith Prakash JCA (delivering the grounds of decision of the court): Introduction

This appeal arose from a set of parallel proceedings in Singapore and Malaysia which concerned the issue of the respondent’s and the first appellant’s respective rights and obligations under a loan agreement and deed of debenture. Whereas the respondent is seeking to have the issue determined in Singapore, the appellants seek to have it determined in Malaysia.

As part of the appellants’ efforts to halt the Singapore proceedings, they applied to the Singapore High Court for recognition of certain Malaysian proceedings under the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency (30 May 1997) (“the Model Law”), given the force of law in Singapore via s 252 of the Insolvency, Restructuring and Dissolution Act (Act 40 of 2018) (“IRDA”). For convenience, we shall refer to the Model Law as enacted in Singapore as “the SG Model Law”. The appellants contended that upon recognition of the Malaysian Proceedings as either a “foreign main proceeding” or a “foreign non-main proceeding” pursuant to the SG Model Law there should be a stay of the Singapore proceeding. In his oral grounds of decision rendered on 12 January 2021, the High Court Judge (“the Judge”) recognised one of the Malaysian proceedings as being a “foreign main proceeding” covered by the SG Model Law, but nevertheless declined to grant a stay of the Singapore proceeding. Dissatisfied, the appellants appealed against the Judge’s decision.

We heard and dismissed the appeal on 7 May 2021. As the principles applicable to recognition of foreign proceedings under the SG Model Law and the effects of such recognition have not been fully explored in local jurisprudence, this appeal afforded us an opportunity to consider such principles, having regard to the UNCITRAL authorities, textbooks, as well as foreign case law.

The Model Law

Before we go on to discuss the facts and issues in this appeal, it may be helpful to make some brief comments on the Model Law. The account that follows is a paraphrase of the account in UNCITRAL Model Law on Cross-Border Insolvency: The Judicial Perspective, UN Doc A/CN.9/732 and Add 1–3 (2014) as updated in 2013 (see UNCITRAL Model Law on Cross-Border Insolvency: The Judicial Perspective: Note by the Secretariat, UN Doc A/CN.9/778 (2013)) (“The Judicial Perspective”).

The Model Law was developed by UNCITRAL and endorsed by the General Assembly of the United Nations in 1997. The Model Law does not lay down any substantive principles of insolvency law; those are governed by the domestic laws of the individual jurisdictions. Instead, it provides procedural mechanisms to facilitate more efficient disposition of cases in which the insolvent debtor has assets or debts in more than one jurisdiction. The SG Model Law therefore gives effect to four principles: the “access principle” which sets out the circumstances in which a “foreign representative” of an insolvent debtor has rights of access to the Singapore courts in order to seek recognition and relief; the “recognition” principle which deals with the Singapore courts’ recognition of foreign insolvency proceedings as either a foreign “main” or “non-main” proceeding; the “relief” principle which deals with both interim and permanent relief that the Singapore court may provide after it recognises foreign proceedings as “main” or “non-main”; and the cooperation and coordination principle which obliges courts and insolvency representatives in different jurisdictions to communicate with each other and cooperate to ensure the fair administration of the debtor’s estate.

Most relevant for present purposes are the recognition principle and the relief principle. These prescribe the circumstances in which insolvency proceedings in a foreign jurisdiction should be recognised by Singapore courts and be given effect to by the imposition of a stay of local proceedings against the debtor in question. Such recognition is only given to those proceedings which qualify as a “foreign main proceeding” or a “foreign non-main proceeding”. The definitions of these terms as set out in Art 2 of the SG Model Law are set out below: Definitions

For the purposes of this Law — ‘foreign main proceeding’ means a foreign proceeding taking place in the State where the debtor has its centre of main interests; ‘foreign non-main proceeding’ means a foreign proceeding, other than a foreign main proceeding, taking place in a State where the debtor has an establishment; ‘foreign proceeding’ means a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, under a law relating to insolvency or adjustment or debt in which proceeding the property and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation;

Once the court holds that the relevant foreign proceeding meets either of these definitions, then the provisions of Arts 20 and 21 of the SG Model Law come into play. Articles 20 and 21 read: Effects of recognition of a foreign main proceeding Upon recognition of a foreign proceeding that is a foreign main proceeding, subject to paragraph 2 of this Article — commencement or continuation of individual actions or individual proceedings concerning the debtor’s property, rights, obligations or liabilities is stayed; execution against the debtor’s property is stayed; and the right to transfer, encumber or otherwise dispose of any property of the debtor is suspended. The stay and suspension mentioned in paragraph 1 of this Article are — the same in scope and effect as if the debtor had been made the subject of a winding up order under this Act; and subject to the same powers of the Court and the same prohibitions, limitations, exceptions and conditions as would apply under the law of Singapore in such a case,

and the provisions of paragraph 1 of this Article are to be interpreted accordingly.

Without prejudice to paragraph 2 of this Article, the stay and suspension mentioned in paragraph 1 of this Article do not affect any right — to take any steps to enforce security over the debtor’s property; to take any steps to repossess goods in the debtor’s possession under a hire-purchase agreement (as defined in section 88(1) of this Act); exercisable under or by virtue of or in connection with any written law mentioned in Article 1(3)(a) to (i); or of a creditor to set off its claim against a claim of the debtor,

being a right which would have been exercisable if the debtor had been made the subject of a winding up order under this Act.

Paragraph 1(a) of this Article does not affect the right to — commence individual actions or proceedings to the extent necessary to preserve a claim against the debtor; or commence or continue any criminal proceedings or any action or proceedings by a person or body having regulatory, supervisory or investigative functions of a public nature, being an action or proceedings brought in the exercise of those functions. Paragraph 1 of this Article does not affect the right to request or otherwise initiate the commencement of a proceeding under Singapore insolvency law or the right to file claims in such a proceeding. In addition to and without prejudice to any powers of the Court under or by virtue of paragraph 2 of this Article, the Court may, on the application of the foreign representative or a person affected by the stay and suspension mentioned in paragraph 1 of this Article, or of its own motion, modify or terminate such stay and suspension or any part of it, either altogether or for a limited time, on such terms and conditions as the Court thinks fit. Relief that may be granted upon recognition of a foreign proceeding Upon recognition of a foreign proceeding, whether a foreign main proceeding or a foreign non-main proceeding, where necessary to protect the property of the debtor or the interests of the creditors, the Court may, at the request of the foreign representative, grant any appropriate relief, including — staying the commencement or continuation of individual actions or individual proceedings concerning the debtor’s property, rights, obligations or liabilities, to the extent they have not been stayed under Article 20(1)(a); staying execution against the debtor’s property to the extent it has not been stayed under Article 20(1)(b); suspending the right to transfer, encumber or otherwise dispose of any property of the debtor to the extent this right has not been suspended under Article 20(1)(c); providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s property, affairs, rights, obligations or liabilities; entrusting the administration or realisation of all or part of the debtor’s property located in Singapore to the foreign representative or another person designated by the Court; extending relief granted under Article 19(1); and granting any additional relief that may be available to a Singapore insolvency officeholder, including any relief provided under section 96(4) of this Act. Upon recognition of a foreign proceeding, whether a foreign main proceeding or a foreign non-main proceeding, the Court may, at the request of the foreign representative, entrust the distribution of all or part of the debtor’s property located in Singapore to the foreign representative or another person designated by the Court, provided that the Court is satisfied that the interests of creditors in Singapore are adequately...

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2 cases
  • Re PT Garuda Indonesia (Persero) Tbk and another matter
    • Singapore
    • International Commercial Court (Singapore)
    • 18 Enero 2024
    ...of reorganisation or liquidation. In United Securities Sdn Bhd (in receivership and liquidation) and another v United Overseas Bank Ltd [2021] 2 SLR 950 (“United Securities”), the Court of Appeal recognised (at [53]) that the following cumulative requirements must be satisfied for a proceed......
  • Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd
    • Singapore
    • Court of Appeal (Singapore)
    • 18 Octubre 2023
    ...as follows: The Court of Appeal in United Securities Sdn Bhd (in receivership and liquidation) and another v United Overseas Bank Ltd [2021] 2 SLR 950 (“United Securities”) had implicitly affirmed in obiter that the relevant foreign law under Art 2(h) of the SG Model Law must be one which d......
1 books & journal articles
  • Insolvency Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2021, December 2021
    • 1 Diciembre 2021
    ...adopted at the United Nations General Assembly, 52nd Session (30 January 1998). See United Securities Sdn Bhd v United Overseas Bank Ltd [2021] 2 SLR 950. 4 Re DSG Asia Holdings Pte Ltd [2021] SGHC 209. 5 Lim Siew Soo v Sembawang Engineers and Constructors Pte Ltd [2021] 4 SLR 556. 6 The Oc......

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