W Power Group EOOD v Ming Yang Wind Power (International) Co Ltd

• Jurisdiction: Singapore
• Judge: Thomas Bathurst IJ
• Judgment Date: 29 September 2023
• Neutral Citation: [2023] SGHC(I) 15
• Court: International Commercial Court (Singapore)
• Docket Number: Originating Application No 2 of 2023 (Summons No 13 of 2023)
• Hearing Date: 04 September 2023
• Citation: [2023] SGHC(I) 15
• Year: 2023
• Plaintiff Counsel: Han Wah Teng (CTLC Law Corporation)
• Defendant Counsel: William Ong Boon Hwee, Ivan Lim Jun Rui and Wong Pei Ting (Allen & Gledhill LLP)
• Subject Matter: Civil Procedure,Costs,Security
• Published date: 29 September 2023

Thomas Bathurst IJ:

By a summons filed on 30 May 2023 Ming Yang Wind Power (International) Co. Ltd (“the defendant”) the defendant in proceedings SIC/OA 2/2023 sought an order that the claimant, W. Power Group EOOD (“the claimant”) provide security for its costs of the proceedings. The defendant sought security of S$80,000 to cover its costs up to the commencement of the trial.

The nature of the proceedings

The claimant is a company registered in Bulgaria. It described itself in the Statement of Claim as an international developer engaged in investing and developing wind farms in Bulgaria, Romania and other countries.

The defendant is a Chinese company incorporated in Hong Kong and is a wind turbine manufacturer engaged in the design, manufacture, construction, sales and services of wind turbines in the global market.

The claimant alleges that the claimant and defendant entered into a joint venture agreement on 3 July 2011 to establish a joint venture company for the purpose of developing two wind farm projects. It claimed that pursuant to the joint venture agreement, a joint venture company, MW Wind Power OOD (“MW Wind Power”) was established, the claimant holding one third of the shares in the company and the defendant holding the remaining two thirds.

The claimant claims the defendant breached its obligation under the joint venture agreement essentially by failing to secure financing for the one of the two wind farm projects (“Project 2”) and by withdrawing a performance guarantee for the same project. It claims as a result it was unable to exercise its rights under the joint venture agreement to sell its shares in the joint venture company after the second year of its operation at a price sufficient to pay all principal and accumulated interest of the joint venture company's borrowings. It claims as a result of the defendant's breach of the joint venture agreement, it suffered a loss of profits in the amount of €37.5 million.

The defendant has filed a somewhat detailed defence to the claim. Broadly speaking it states that following changes to the legal and regulatory regime introduced by the Bulgarian government which negatively affected renewable energy projects such as Project 2, Project 2 was no longer viable and the parties agreed not to proceed with it sometime in 2012. It denies any breach of the joint venture agreement and asserts the claimant is estopped from enforcing the agreement and has waived its right to do so. It also claims that the alleged causes of action are barred by s 6(1) of the Limitation Act 1959 and the claimant does not have standing to sue in respect of any alleged breaches of the joint venture agreement in relation to Project 2.

The above is an extremely broad summary of the claims which have been made and the defences to it but it is sufficient for the purpose of the present application.

The relevant rules and legislation

This being a case transferred to the Singapore International Commercial Court (the “SICC”), the parties agreed that the domestic Rules of the Supreme Court (ie, the Rules of Court 2021) apply. The relevant rule is Order 9 r 12 which for relevant purposes is in the following terms:

Security for costs

12.—(1) The defendant may apply for security for the defendant's costs of the action, if the claimant — (a) is ordinarily resident out of the jurisdiction;

…

(2) If the claimant is a company, section 388 of the Companies Act also applies. Section 388 of the Companies Act 1967 (2020 Rev Ed) (the “Companies Act 1967”) provides as follows:

Security for costs

388.—(1) Where a corporation is claimant in any action or other legal proceeding the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in the defendant's defence, require sufficient security to be given for those costs and stay all proceedings until the security is given. The parties’ submissions

The defendant made five points in support of its application. The first was that the claimant was ordinarily resident outside the jurisdiction so what it described as the threshold in Order 9 r 12(1)(a) was met.

There was no dispute between the parties that the claimant was resident outside the jurisdiction. However, there was a dispute as to the effect. The defendant accepted the Court retains a discretion to refuse to grant security, even if that threshold was met but submitted that if the factors weighing for and against the grant of security were otherwise evenly balanced, then in those circumstances security should be granted. It referred to the decision of the Court of Appeal in Jurong Town Corporation v Wishing Star Ltd [2004] 2 SLR(R) 427 at [14] (“Jurong Town Corporation”) in support of that proposition.

By contrast the claimant submitted that Jurong Town Corporation was a domestic case and similar principles do not apply in cases where neither of the parties have a presence in Singapore. In that context the claimant referred to the decision of the High Court in Zhong Da Chemical Development Co Ltd v Lanco Industries Ltd [2009] 3 SLR(R) 1017 (“Zhong Da”). That case involved a challenge under s 24 of the International Arbitration Act 2002 (Cap 143A, 2002 Rev Ed) (“IAA”) to set aside a final award in an arbitration at the Singapore International Arbitration Centre, the defendant in the arbitration proceedings being an Indian company and the claimant being incorporated in China. The Court observed that in the particular circumstances in agreeing to the foreign arbitral forum, the defendant should have been mindful and must have been taken to have agreed that any future order to set aside the arbitral award would take place outside the jurisdiction in which the parties were resident. The Court stated the situation was different to that considered in Jurong Town Corporation and held in those circumstances (ie, in a case where parties seek relief under the IAA) where the factors for and against the granting of security were evenly balanced, it would ordinarily be just to dismiss the application for security: Zhong Da at [13].

As I am of the view that the factors are not evenly balanced it is unnecessary to resolve this...