Vorobiev Nikolay v Lush John Frederick Peters and others

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 11 March 2011
• Neutral Citation: [2011] SGHC 55
• Court: High Court (Singapore)
• Docket Number: Suit No 720 of 2009 (Registrar’s Appeal No. 19 of 2010/B)
• Year: 2011
• Published date: 18 March 2011
• Hearing Date: 18 February 2010
• Plaintiff Counsel: Manoj Sandrasegara, Tan Mei Yen, Sheryl Wei, Noraisah Ruslan (Drew & Napier LLC)
• Defendant Counsel: Koh Swee Yen, Sim Hui Shan (Wong Partnership)
• Subject Matter: Conflict of Laws,Natural Forum,Forum nonconveniens
• Citation: [2011] SGHC 55

Kan Ting Chiu J:

In this action, the plaintiff, Nikolay Vorobiev, had sued the defendants, John Frederick Peters Lush (“Lush”), Francois Ostinelli (“Ostinelli”) and Alexander Novoselov (“Novoselov”) for fraudulent/negligent misrepresentation and conspiracy. The immediate issue at hand is whether this action should be stayed on the ground that Singapore is not the appropriate forum because Switzerland is the more appropriate forum. An assistant registrar had made a stay order, and the plaintiff had appealed against the order.

Background of the action

Petroval SA (“PSA”), a company incorporated under the laws of Switzerland, was part of the Yukos Group, and had been described as being solely owned by Yukos International UK B.V. PSA had a representative office in Singapore which managed and marketed PSA’s oil products in the Far East. In 2004, the representative office was upgraded into Petroval Pte Ltd (“Petroval Singapore”), a company incorporated in Singapore. The plaintiff, a permanent resident of Singapore was appointed to be its first director with more directors appointed subsequently.

The first defendant, Lush, was formerly the General Manager of PSA and is a director of Petroval Singapore since 19 September 2005. The second defendant, Ostinelli, was formerly the Chief Financial Officer of PSA and is a director of Petroval Singapore since 19 September 2005. The third defendant, Novoselov, was formerly an employee of PSA and later a director of Petroval Singapore from 19 September 2005 to 17 October 2008. One Artem Zakharov (“Zakharov”) was a former employee of PSA. Zakharov had died in July 2008.

The plaintiff’s case was that, in February 2006, Zakharov informed him that the majority shareholder of Petroval Singapore might be selling its stake in Petroval Singapore, and that the plaintiff might be offered a stake in Petroval Singapore. In March 2008, an offer was made to the plaintiff in Geneva by the defendants to buy a stake in Petroval Singapore¹. The plaintiff accepted the offer and acquired a 20% shareholding in Petroval Singapore by acquiring a 20% stake in Stainby Overseas Ltd (“Stainby”) which held all the shares of Petroval Singapore. For the 20% shareholding of Stainby (and through that a 20% shareholding of Petroval Singapore), the plaintiff paid US$3,810,000 and received through his nominees 20% of the shares of Stainby.

Subsequent to the purchase of the 20% interest in Petroval Singapore through Stainby, the plaintiff made two loans to Petroval Singapore. In May/June 2006, the defendants, the plaintiff and Zakharov agreed to make a loan of US$10m to Petroval Singapore, and the plaintiff paid his 20% share of the US$10m loan, amounting to US$2m (“the first loan”).

In September 2006, the defendants, the plaintiff and Zakharov agreed to make a further loan of US$5m to Petroval Singapore, and the plaintiff paid his 20% share of the further loan amounting to US$1m (“the second loan”). These two loans extended by the plaintiff have not been repaid.

The plaintiff sued the defendants in connection with the US$3,810,000 payment for the Petroval Singapore shares and the US$3m he lent to Petroval Singapore. The plaintiff’s action is founded on fraudulent/negligent misrepresentation and conspiracy. The claim in misrepresentation was that the defendants had misrepresented that they had the authority of the beneficial owners of the Petroval Singapore shares to deal with the shares, and that they were authorised by the beneficial owners of the Petroval Singapore shares to offer 20% of the shares to the plaintiff for US$3,810,000. The plaintiff’s case was that the defendants had made these representations with the intention that he would act on them, and that he did rely on and act on them².

The conspiracy claim was based on the same facts as the claim on misrepresentation, ie, that they had, wrongly and dishonestly and with the intent to injure the plaintiff, conspired and agreed to make the representations to induce the plaintiff to make payments of the US$3,810,000 and US$3m.

The plaintiff claimed that he had subsequently found out that the representations were false. In June 2006, the defendants informed him that PSA had claimed that the defendants were holding the PSA shares on trust for PSA, and that PSA had accused the defendants of having acted in breach of trust by dealing with them.

In December 2007, PSA commenced proceedings in the British Virgin Islands (“the BVI proceedings”) against the defendants, Stainby and others over the Petroval Singapore shares. These proceedings have been stayed on the ground of forum non conveniens. In February 2008, PSA commenced proceedings in Singapore in Suit No 103 of 2008 (“the Singapore Proceedings”) against the defendants and others in respect of the same shares. In the Singapore Proceedings, PSA asserted that Lush and Ostinelli had executed Letters of Confirmation acknowledging that they held the first two subscriber shares in Petroval Singapore on trust for PSA³. However, PSA and the defendants came to a settlement and the action against the defendants was discontinued, but the terms of the settlement were not disclosed. The plaintiff was not a party in the Singapore Proceedings.

The law on forum non conveniens

The law on forum non conveniens is set out in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (“Spiliada”). The law, commonly referred to as the Spiliada principles, has been discussed in a host of local decisions, and it is sufficient to refer to the Court of Appeal’s decision in CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR(R) 543 where it explained at [26]:

The gist of these principles is that, under the doctrine of forum non conveniens, a stay will only be granted where the court is satisfied that there is some other available and more appropriate forum for the trial of the action. The burden of establishing this rests on the defendant and it is not enough just to show that Singapore is not the natural or appropriate forum. The defendant must also establish that there is another available forum which is clearly or distinctly more appropriate than Singapore. The natural forum is one with which the action has the most real and substantial connection. In this regard, the factors which the court will take into consideration include not only factors affecting convenience or expense (such as the availability of witnesses) but also other factors such as the law governing the transaction and the places where the parties respectively reside or carry on business. If the court concludes, at this stage of the inquiry (“stage one of the Spiliada test”), that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay. If, at this stage, it concludes that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay, unless there are circumstances by reason of which justice requires that a stay should nevertheless be refused. In this connection, the court will consider all the circumstances of the case. For this second stage inquiry (“stage two of the Spiliada test”), the legal burden is on the plaintiff to establish the existence of those special circumstances.

The first defendant’s application and the connecting factors

The first defendant applied for the plaintiff’s action to be stayed on the ground of forum non conveniens in that Switzerland is a more appropriate forum than Singapore. The first defendant submitted that there was a multitude of factors that connected the dispute to Switzerland.

Connecting factors to Switzerland identified by the first defendant

Domicile All the defendants are domiciled in Switzerland. Place of business Petroval Singapore carried on a larger part of its day-to-day business in Switzerland. Location of witnesses The potential witnesses are either located in Switzerland, Europe, or the United States of America. Compellability of witnesses Foreign witnesses cannot be compelled to give evidence in Singapore. Documents The documents in the defendants’ possession are primarily in Switzerland. Costs and expenses As most of the witnesses and documents are located in Switzerland, proceedings in Switzerland would be more cost effective than proceedings in Singapore. Enforceability of judgment The defendants being domiciled in Switzerland have assets in Switzerland to meet any judgment which the plaintiff may...