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  • WestLB AG v Philippine National Bank and others
    Upon the ship s arrival in Germany a winding up order was made against the plaintiff The defendants who had in the meantime discovered the fraud arrested the ship and commenced proceedings against her in a German court to enforce their lien The German court ordered the ship to be sold and ordered that lien to be satisfied out of the sale proceeds Although the plaintiff had notice of these proceedings it did not appear Subsequently liquidators of the plaintiff sued the defendants in England to recover the fruits of the foreign judgment The defendants argued that the German proceedings were in rem and binding on the plaintiff Collins J agreed with the defendants Minna Craig at 61 I took time to go carefully through the proceedings in the German Court in order to satisfy myself whether they were or were not proceedings in rem I have come to the conclusion that they were practically undistinguishable sic from those which in Castrique v Imrie were held by the House of Lords to be proceedings in rem and not merely a roundabout method of getting execution upon a judgment in personam It is true that the words par privilége sur ce navire are wanting here but I do not think that makes any real difference The proceedings were taken against the ship the liability was limited to the value of the ship and in each of their judgments the German Courts refer to the right of the bill of lading holders as a lien Therefore I must treat the decision as one in rem emphasis in original in italics emphasis added in bold italics 54 It is essential to the recognition of a foreign judgment in rem that the res should have been situated in the foreign country concerned at the time of the proceedings Dicey Morris Collins vol 1 38 supra at para 14 104 and Briggs Rees 46 supra at para 7 57 If the res were so situated jurisdiction would exist even if the owner did not consent to its being there eg where a yacht is stolen and abandoned in a foreign port Dicey Morris Collins vol 1 at para 14 104 On the other hand if the res were situated elsewhere the foreign court would have had no such jurisdiction Dicey Morris Collins vol 1 at para 14 101 55 A case in point is Calyon v Irene Michailaidis and others 2009 UKPC 34 Calyon which concerned an ownership dispute in relation to a collection of Eileen Gray furniture the Collection From about the 1970s until his death Christo who was part of a wealthy Greek shipping family lived with one Robin in a house in Kensington When Christo died in 1999 he was domiciled in Greece and under Greek law his mother Irene and sister Despina were his heirs In 2000 Robin sold the Collection through a Paris dealer for 15m The Collection was flown to Switzerland for delivery to the buyer and the sale proceeds were dissipated by Robin for various purposes The Collection ended up with the Gibraltar branch of a French bank Calyon 56 Christo s family disputed Robin s right to sell the Collection claiming that the Collection belonged to Christo and had therefore passed to his heirs upon his death On 23 February 2001 they started proceedings against Robin and Robin s company RSL which had benefitted from the sale proceeds On the same day Robin and RSL issued proceedings in Athens seeking a declaration that Robin was the owner of the Collection and joined Irene Despina and the administrators as defendants In June 2004 the Greek court delivered judgment in favour of Irene and Despina Armed with the Greek judgment Irene and the administrators proceeded to the courts of Gibraltar asserting that Calyon had dishonestly assisted Robin in a breach of trust 57 Lord Rodger held that if it were treated as a judgment in rem it could not be granted recognition since the Collection was never within the jurisdiction of the Greek court Calyon at 20 the Collection was last seen as it was flown from London to Switzerland in April 2001 to be delivered to its purchaser There is therefore no reason to suppose that the Collection was ever so situated as to be within the lawful control of the State Greece under the authority of which the court which determined its ownership sat So the Greek judgment does not satisfy the first test for a judgment in rem laid down by Blackburn J giving the opinion of most of the consulted judges and approved by Lord Chelmsford in Castrique v Imrie 1870 LR 4 HL 414 429 and 448 The Court of Appeal duly held that the Greek judgment was not a judgment in rem Counsel for the claimants and respondents Mr Steinfeld QC did not challenge that conclusion The Board agrees with it and therefore proceeds on the basis that the Greek judgment was in personam emphasis added 58 As a judgment in personam the Greek judgment could not bind Calyon This was because Calyon had not been made a party to the Greek proceedings Calyon at 21 Equally clearly Calyon was not a party to the counter claim in the Greek proceedings In these circumstances since Calyon was not itself a party to the proceedings the judgment of the Greek court could not give rise to any estoppel per rem judicatam against Calyon in the present proceedings even if it would have given rise to such an estoppel against Robin and RSL The Court of Appeal rightly so held and the respondents did not cross appeal against that decision emphasis added The present facts 59 As earlier stated at 45 above I am of the view that the Forfeiture Judgment is a judgment in rem The Philippines Supreme Court had explicitly stated in the Forfeiture Resolution that a forfeiture proceeding is an action in rem against the thing itself instead of against the person It had also clearly indicated its intention to finally determine the ownership of the Funds stating in the Forfeiture Judgment that Almost two decades have passed since the government initiated its search for and reversion of such ill gotten wealth The definitive resolution of such cases on the merits is thus long overdue If there is proof of illegal acquisition accumulation misappropriation fraud or illicit conduct let it be brought out now Let the ownership of these funds and other assets be finally determined and resolved with dispatch free from all the delaying technicalities and annoying procedural sidetracks We thus take cognizance of this case and settle with finality all the issues therein 60 The in rem nature of the forfeiture proceedings may also be discerned from the wording of RA 1379 pursuant to which the proceedings were instituted In particular ss 2 and 6 of RA 1379 provide Section 2 Filing of petition Whenever any public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property said property shall be presumed prima facie to have been unlawfully acquired Section 6 Judgment If the respondent is unable to show to the satisfaction of the court that he has lawfully acquired the property in question then the court shall declare such property forfeited in favor sic of the State and by virtue of such judgment the property aforesaid shall become the property of the State emphasis added It is clear from the wording of these provisions that the proceedings under RA 1379 were directed against the res in question as long as the presumption of unlawful acquisition is not adequately rebutted the res would become vested in the State That the forfeiture proceedings were directed against the res ie the Funds in the present case is also demonstrated by the fact that the Funds were in the meantime parked in escrow accounts pending final determination of their disposition see 16 above Further the forfeiture proceedings were brought in relation to Executive Order No 2 12 March 1986 which inter alia required full disclosure from all persons and entities who had knowledge of possession of such ill gotten assets and prohibited them from concealing transferring or dissipating them and from otherwise frustrating or obstructing the recovery efforts of the government Whether the Philippines court had jurisdiction to issue an in rem judgment Non participation of the Foundations in the forfeiture proceedings 61 Having found that the Forfeiture Judgment is in rem in nature what effect does it have in the present proceedings Mr Mohan argues that the Philippines Supreme Court did not in any event have jurisdiction to bind the Foundations since contrary to the guarantees provided by the Philippines authorities to the Swiss authorities see 17 18 above the Foundations were not made parties to the forfeiture proceedings I disagree 62 As Mr Elias rightly points out while the Philippines government guaranteed that the Foundations would be entitled to be heard in the forfeiture proceedings it did not undertake a duty to implead the Foundations Significantly after the Forfeiture Judgment was released in July 2003 the Swiss Federal Office of Justice issued a press release announcing inter alia that the guarantees provided by the Republic were satisfactory and that the Philippines government could dispose of the Swiss Deposits see 20 above In the circumstances there is no basis for this court to find that the Philippines authorities had breached the conditions set out by the Swiss Federal Supreme Court As evidenced by Powers of Attorney executed by Imelda Marcos in favour of the Foundations Mr Patrick Foetisch the Foundations were aware of the forfeiture proceedings and their right to participate in the same They chose not to participate in the forfeiture proceedings despite having notice of the same and cannot now rely on their non participation as a basis for arguing that the Forfeiture Judgment did not bind them see for example Minna Craig 53 supra Situs of the Funds at the material time 63 In spite of the foregoing there is an impediment to the recognition of the Forfeiture Judgment in that the Funds were not in the Philippines but in Singapore at the time of the Forfeiture Judgment As discussed see 54 57 above it is essential to the recognition of a foreign judgment in rem that the res should have been situated in the foreign country concerned at the time of the proceedings 64 To circumvent this difficulty Mr Elias argues that the Philippines Supreme Court had jurisdiction to bind the world as the authorities of Switzerland where the Funds were originally situated had delegated jurisdiction to it pursuant to the IMAC proceedings thus giving it constructive custody of the Funds In other words as the Funds were deposited in Singapore pursuant to and in accordance with the Swiss orders the situs of the Funds in Singapore was immaterial to the force of the Forfeiture Judgment which was rendered in compliance with the IMAC process 65 Unfortunately no authority has been cited in support of such an extension of the principle of recognition of judgments in rem While the references to actual or constructive possession of the subject matter and situated within the lawful control of the state in for example Castrique and Calyon 55 supra may suggest that the principle may accommodate situations where the foreign state only has constructive custody of the res in the absence of full and proper argument on this specific point this court would be slow to adopt such a position In any event even if as the Republic suggests the jurisdictional requirements were fulfilled on the basis of constructive custody this court would still be unable to grant recognition to the Forfeiture Judgment due to its penal nature as explained below 3 Whether the Republic s claim depends upon the indirect enforcement in Singapore of a foreign penal law 66 The HRVs and the Foundations argue that enforcement of the Forfeiture Judgment in Singapore would amount to indirect enforcement of RA 1379 which they aver is a penal law Accordingly they argue that the Republic s claim premised on the Forfeiture Judgment must fail The law 67 It is trite that a forum court will not enforce a foreign judgment if to do so would amount to a direct or indirect enforcement of a penal law revenue law or other public law of the foreign state Dicey Morris Collins vol 1 at para 5 020 and Relfo Ltd in liquidation v Bhimji Velji Jadva Varsani 2008 4 SLR R 657 at 53 As Lord Denning MR held in Attorney General of New Zealand v Ortiz 1984 1 AC 1 Ortiz at 20 our courts will not entertain a suit brought by a foreign sovereign directly or indirectly to enforce the penal or revenue laws of that foreign state We do not sit to collect taxes for another country or to inflict punishments for it 68 This rule stems from the foreign state s lack of international jurisdiction to enforce its laws outside its own territory and the forum court s unwillingness to exercise its own jurisdiction in aid of an attempt by the foreign state to act in excess of its own jurisdiction Government of the Islamic Republic of Iran v The Barakat Galleries Ltd 2008 3 WLR 486 Barakat Galleries at 97 The rule was explained by Lord Denning MR in similar terms Ortiz at 21 By international law every sovereign state has no sovereignty beyond its own frontiers The courts of other countries will not allow it to go beyond the bounds They will not enforce any of its laws which purport to exercise sovereignty beyond the limits of its authority 69 In Banco de Vizcaya v Don Alfonso de Borbon y Austria 1935 1 KB 140 Banco de Vizcaya the Spanish Republic declared the ex King of Spain Alfonso to be a traitor decreed that all his property be seized for the benefit of the State and ordered all bankers in Spain having in deposit any such property to deliver the same to the Spanish Treasury Certain securities belonging to Alfonso had been deposited in an English bank WBank to the order of the Spanish bank BV which was Alfonso s agent Both Alfonso and BV claimed the delivery up of these securities WBank took out an interpleader summons Lawrence J held that BV was not in reality asserting its own contractual rights as they originally existed but the rights of the Spanish Republic Consequently BV s claim failed since to countenance it would amount to an enforcement of an admittedly penal law of the Spanish Republic Banco de Vizcaya at 143 145 the substance of the right sought to be enforced by BV is the delivery to them of the securities in question and the enforcement of this right will directly or indirectly involve the execution of what are undoubtedly and admittedly penal laws of the Spanish Republic BV s whole case is that they are bound by virtue of the decrees to hand over the securities to the Spanish Government in defiance of the mandate of Alfonso and that being so it seems to be unarguable that the enforcement of BV s right will not directly or indirectly involve the execution of the decrees But in the present case the penalty imposed is seizure by the State for its own benefit of all Alfonso s properties rights and grounds of action and this penalty is imposed in terms for high treason and the only way in which BV is able to assert their claim that they are entitled as against Alfonso is by virtue of these decrees and they are compelled to admit that they have no personal right or title to the property in the securities I therefore hold that Alfonso and not BV is entitled to the securities in question emphasis added 70 It is important to note that whether a foreign law is penal is to be determined by the forum court Barakat Galleries at 106 Penal law was defined by the Privy Council in Huntington v Attrill 1893 AC 150 Huntington v Attrill at 156 157 as follows The rule has its foundation in the well recognised principle that crimes including in that term all breaches of public law punishable by pecuniary mulct or otherwise at the instance of the State Government or of some one representing the public are local in this sense that they are only cognizable and punishable in the country where they were committed Accordingly no proceeding even in the shape of a civil suit which has for its object the enforcement by the State whether directly or indirectly of punishment imposed for such breaches by the lex fori ought to be admitted in the Courts of any other country in Wisconsin v The Pelican Insurance Company 127 U S 20 Davis 265 Mr Justice Gray after referring to the text books and the dictum by Chief Justice Marshall already cited went on to say The rule that the Courts of no country execute the law of another applies not only to prosecutions and sentences for crimes and misdemeanors but to all suits in favour of the State for the recovery of pecuniary penalties for any violation of statutes for the protection of its revenues or other municipal laws and to all judgments for such penalties Their Lordships do not hesitate to accept that exposition of the law which in their opinion discloses the proper test for ascertaining whether an action is penal within the meaning of the rule emphasis added In light of this nuanced definition care should be taken not to conflate the concepts of criminal with penal the forum court may conclude that the foreign law is penal even if it does not form part of the criminal code of a foreign country Barakat Galleries at 108 As observed in Dicey Morris Collins vol 1 38 supra at para 5 027 for the present purposes a penal law could be one which punishes or prevents an offence The present facts 71 In arguing that the Forfeiture Judgment was not penal in nature Mr Elias emphasised that the Forfeiture Judgment and the Forfeiture Resolution had stated in no uncertain terms that forfeiture proceedings under RA 1379 are civil in nature and do not terminate in the imposition of a penalty see 21 above This however does not foreclose the issue since as mentioned at 70 above whether a foreign law is penal is to be decided by this court That the proceedings under RA 1379 were not criminal in nature also does not determine the issue whether such law is of a penal nature 72 In United States of America v Inkley 1989 1 QB 255 Inkley the US government brought an action against the defendant for the enforcement of a judgment for the amount of an appearance bond obtained in a Florida federal court sitting as a civil court The defendant who had been arrested in the US and charged with criminal offences had been released on bail but had subsequently failed to appear to answer criminal charges In refusing to enforce the Florida judgment the English Court of Appeal held that since the purpose of the action was part of a public law process aimed to ensure attendance of persons accused of crime before the criminal courts the general context was criminal and penal and was unaffected by the fact that it was dressed up in civil form Inkley at 265 266 the fact that in the foreign jurisdiction recourse may be had in a civil forum to enforce the right will not necessarily affect the true nature of the right being enforced in this country we have come firmly to the conclusion that the general context and background against which the appearance bond was executed was criminal or penal The power to require the execution of the bond arose from section 3146 et seq of the United States Code Annotated for Crimes and Criminal Procedure The circumstances in which it came into existence were clearly criminal in nature and breaches of the conditions incorporated in it could give rise to further criminal process Finally the whole purpose of the bond was to ensure so far as it was possible the presence of the executor of the bond to meet justice at the hands of the state in a criminal prosecution The fact that the obligations under the bond were the subject matter of a declaratory judgment in a civil court does not affect in our judgment the basic characteristic of the right which that judgment itself enforced namely the right of the state as the administrator of public law and justice to ensure the due observance of the criminal law or the exaction of pecuniary penalties if that course was frustrated Notwithstanding its civil clothing the purpose of the action initiated by the writ issued in this case was the due execution by the United States of America of a public law process aimed to ensure the attendance of persons accused of crime before the criminal courts emphasis added 73 I find that the HRVs and the Foundations are correct in contending that the success of the Republic s case is dependent upon the indirect enforcement of a foreign penal law RA 1379 which provides for the forfeiture of property in favour of the state whenever any property is found to have been unlawfully acquired by a public officer is clearly of a penal nature since it summarily forfeits property in the hands of public officials in consequence of a wrong committed by the individual Significantly during Mr Tan s cross examination of the Republic and PNB s Philippines law expert Mr Ed Vincent S Albano Mr Albano Mr Albano confirmed that the forfeiture proceedings under RA 1379 did not apply to revest originally state owned property in the State but vested property in the State by virtue of the forfeiture Mr Tan The State doesn t have to show that the jewellery which is being forfeited was actually bought with State funds That s not the purpose of the Act Mr Albano Yes because it is Mr Tan Isn t that correct Mr Albano because it is the Mr Tan Just just answer Mr Albano Yes Mr Tan Even if that jewellery was bought with not with State funds because of the net asset accounting you can t explain how you got this addition of 1 million this property is just declared forfeited You re punished We take this property that s how it works isn t it Mr Albano Yes because here the Mr Tan Yes Mr Albano the person is given the right to explain how he how he got it If he cannot explain it then that is ordered forfeited in favour of the State Mr Tan It s after the forfeiture and divestment that it becomes the property of the State Mr Albano Yes Mr Tan Thank you emphasis added 74 Indeed the intrinsically penal nature of the forfeiture proceedings under RA 1379 was borne out during Mr Tan s cross examination of Mr Albano Mr Tan RA 1379 is a specific enactment in The Philippines and it authorises the forfeiture to the State of property of a public officer or employee in certain circumstances That s correct isn t it Mr Albano Yes Sir Mr Tan Now the forfeiture comes about when it s found that what the public officer or employer has is manifestly out of proportion to his salary as such public officer or an employee when compared with his other lawful income and the income from legitimately acquired property Mr Albano Yes Sir Mr Tan If it s found that there is this unexplained wealth what RA 1379 authorises is the forfeiture of the illegally acquired property Mr Albano Yes Sir Mr Tan By the forfeiture it means that this property is divested from the public officer without compensation Mr Albano Er yes Sir because of illegal act that is committed Mr Tan So this divesting of property this forfeiture is a punishment imposed on RA 1379 on the officer Mr Albano It is in the form of a punishment because he is divested Mr Tan So it is the law of The Philippines that any forfeiture under RA 1379 amounts to a penalty because it punishes the public officer found liable Mr Albano It does not pun it it er it is it is in that sense but it does not punish in the sense in the sense that he s sent to prison Mr Tan Other than the fact that it he s not sent to prison he is punished by the divestment of his property Mr Albano Yes Sir because the property that he stole or amassed is returned to the rightful owner which is the State emphasis added That RA 1379 was penal in character was also conceded by Mr Albano during his cross examination by Mr Mohan Mr Mohan So when the Supreme Court here says forfeiture partakes the nature of a penalty Mr Albano Yes Because er the property that was illegally gotten by the public officers er which is not proportionate to his income goes back to the government to the legally to the er government which is the or to the state who is the legal owner Mr Mohan And and that you agree with me is a penalty Mr Albano Penalty in the sense that it is it is forfeited emphasis added In the premises I find that the Forfeiture Judgment was penal in nature and consequently dismiss the Republic s claim Analysis of the HRVs claim 75 The HRVs primary case is that the Chinn Assignment validly transferred all right title and interest in the Funds from the Foundations to the HRVs Their argument is based on the assumption that the issue is the validity of the Chinn Assignment vis a vis the assignor and assignee and that such issue is to be determined by US law They rely on the evidence of their US law expert Professor David I Levine Prof Levine to support their claimed entitlement to the Funds pursuant to the Chinn Assignment under US law 76 The Republic and PNB disagree arguing that it is Swiss law which governs the question of validity of the Chinn Assignment In any event they argue that the Chinn Assignment is invalid under both Swiss law and US law For this they rely on the evidence of their Swiss law expert Dr Andres Lanzlinger Dr Lanzlinger and the evidence of Ms Bronster The Foundations did not in their closing submissions address the question of the appropriate law governing the issue However like the Republic and PNB their position is that the Chinn Assignment was ineffective in passing title to the HRVs under both Swiss law and US law They rely on the evidence of Prof Buxbaum who testified on the content of US law and the evidence of Dr Lanzlinger on the content of Swiss law 77 Two questions arise First is there a true conflict between US law and Swiss law on the relevant issues to be decided As mentioned although only the Republic and PNB have tendered expert evidence on Swiss law parties have all produced evidence in relation to US law and perhaps unsurprisingly the US law experts have provided varying opinions on the validity and effect of the Chinn Assignment The possibility of a false conflict thus presents itself since the Chinn Assignment could very well be ineffective to pass title under both US law and Swiss law Second if US law and Swiss law differ in their treatment of the Chinn Assignment which system of law applies As will be seen at 109 below these questions will in turn determine the Re registration issue 78 A court seeking to discover the lex causae ie governing law typically embarks on a three stage process involving viz a the characterisation of the relevant issue b the selection of the choice of law rule which lays down a connecting factor for that particular issue and c the identification of the system of law which is tied by that connecting factor to the relevant issue Macmillan Inc v Bishopsgate Investment Trust plc No 3 1966 1 WLR 387 Macmillan No 3 at 391 392 Raiffeisen Zentralbank sterreich AG v Five Star Trading LLC 2001 QB 825 Raiffeisen at 26 79 Although generally the three step search for the lex causae is undertaken after a determination of the presence of a true conflict situation Janeen M Carruthers The Transfer of Property in the Conflict of Laws Oxford University Press 2005 Carruthers at para 4 10 there is in the present case value in first setting out the appropriate characterisation of the issue and the relevant connecting factor because as will be seen from the analysis much of the disagreement on the effect of the Chinn Assignment may be attributed to a mischaracterisation of the relevant issue feeding into the failure to pinpoint the appropriate connecting factor and hence the appropriate governing law In undertaking the three step inquiry the following observations by Mance LJ in Raiffeisen at 26 29 are borne in mind 26 The process falls to be undertaken in a broad internationalist spirit in accordance with the principles of conflict of laws of the forum 27 While it is convenient to identify this three stage process it does not follow that courts at the first stage can or should ignore the effect at the second stage or characterising an issue in a particular way The overall aim is to identify the most appropriate law to govern a particular issue A mechanistic application without regard to the consequences would conflict with the purpose for which they were conceived 28 29 There is in effect an element of interplay or even circularity in the three stage process identified by Staughton LJ But the conflict of laws does not depend like a game or even an election upon the application of rigid rules but upon a search for appropriate principles to meet particular situations emphasis added Stage 1 Issue characterisation 80 Mr Tan frames the issue as one concerning the validity of the assignment as between the assignor and assignee ie the Foundations and the HRVs I find this to be too narrow a construction of the dispute at hand bearing in mind its context as an interpleader action By focusing purely on the assignor assignee relationship Mr Tan has essentially characterised the issue as a contractual one This however is problematic First framing the issue in contractual terms is artificial when one considers the involuntary nature of the Chinn Assignment Second and more importantly a contractualisation of the issue ignores the fact that the Chinn Assignment had expressly directed all persons acting in the capacity or title of custodians officers directors or trustees of entities having authority over the bank accounts to effect the transfer of the Funds as directed This putative third party reach of the Chinn Assignment cannot be ignored 81 As Mr Elias rightly points out the court is ultimately concerned with determining who has proprietary entitlement to the Funds In the face of the competing claims the issue is more appropriately framed in property terms viz whether the Chinn Assignment effectively vests in the HRVs proprietary rights to the Funds which are good against the whole world Stage 2 The choice of law rule 82 Parties have suggested various connecting factors that might apply on the present facts Given the manner in which Mr Tan has framed the issue see 80 above he argues that US law applies as the lex loci actus and that pursuant to US law the Foundations rights title and interests in the Funds were validly assigned to the HRVs under the Chinn Assignment Alternatively he argues that the appropriate governing law should be the law governing the assignor and the assignee ie the proper law of the assignment and that since both were subject to the jurisdiction of the US court at the relevant time the lex causae is US law Mr Elias on the other hand argues that the validity of the Chinn Assignment which was an involuntary assignment akin to an attachment or garnishment of debt should be determined based on the lex situs of the debt that being Swiss law As mentioned Mr Mohan takes the view that it is immaterial which law applies as the HRVs would have no claim in any event 83 However the lex loci actus the lex situs and the proper law of the assignment appear to be inappropriate in cases of involuntary assignments of intangible movable property such as the present After reviewing the authorities I am of the view that the law governing the question whether the HRVs had obtained a proprietary right to the Funds under the Chinn Assignment is the proper law of the debt which is in this case Swiss law This is distinct from the proper law of the assignment I will examine each connecting factor raised by the parties before explaining why the proper law of the debt is the most appropriate law to govern the issue i US law as the lex loci actus 84 The HRVs rely on the leading case of Republica de Guatemala v Nunez 1927 1 KB 669 Nunez in support of their position that US law applies as the lex loci actus Nunez concerned moneys which were deposited with London bankers by a former president of the Republic of Guatemala ROG Cabrera who was domiciled in Guatemala The moneys had allegedly been wrongfully misappropriated by Cabrera from the ROG Cabrera subsequently assigned the moneys by way of gift to his son Nunez who was also domiciled in Guatemala An interpleader action was brought by the London bankers to determine the title issue between the ROG and Nunez To do so the English court had to determine the validity of the purported assignment based on either English law as the lex situs under which the assignment was valid or Guatemalan law under which the assignment was void The English court opted for the latter position Unfortunately due to the lack of unanimity in the judges reasoning it is unclear whether Guatemala law applied as the lex domicilli or the lex loci actus since those two connecting factors coincided on the facts Mark Moshinsky in The Assignment of Debts in the Conflict of Laws 1992 108 LQR 591 Moshinsky at pp 598 599 601 However regardless of whether Guatamala law applied as the lex domicilli or lex loci actus Nunez does not really advance the HRVs case as it dealt with a voluntary assignment as distinct from the Chinn Assignment 85 I also note that the emphasis on the loci actus as a connecting factor appears now to have become outmoded even in the context of voluntary assignments since modern conditions may render the place of the transaction to be purely fortuitous JHC Morris The Conflict of Laws Sweet Maxwell 7th Ed 2009 Morris at para 15 027 Moshinsky at p 601 and Macmillan No 3 at 402 A fortiori in the context of involuntary assignments ii US law as the proper law of the assignment 86 The HRVs also suggest that US law may apply as the proper law of the assignment There are however at least two reasons for rejecting this suggestion First it would not be sensible for the proper law of the assignment to be pivotal in cases of involuntary assignments As I have explained the contract metaphor in cases of involuntary assignments is not well founded and consequently focusing on the

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  • The Republic of the Philippines v Maler Foundation and others and other appeals
    act of state doctrine 53 With all due respect we also decline to follow the Ninth Circuit Court of Appeal s holding in In Re PNB that the Forfeiture Judgment may itself constitute an act of state The act of state doctrine has consistently been applied in England only to acts of foreign legislatures or governmental acts of officials see Lucasfilm Ltd and others v Ainsworth and another 2012 1 AC 208 at 87 per Lord Collins of Mapesbury this is also assumed in Dicey Morris Collins The Conflict of Laws vol 1 Sweet Maxwell 15th Ed 2012 Dicey Morris Collins vol 1 at para 5 045 and Jonathan Hill and Adeline Chong International Commercial Disputes Hart Publishing 4th Ed 2010 at para 2 2 4 The reasoning in In Re PNB was premised on the fact that the Forfeiture Judgment was issued in response to a forfeiture action initiated by the Philippine government pursuant to its statutory mandate to recover property that was allegedly stolen from the treasury the distinguishing factor was that the judgment gave effect to the public interest of the Philippines It is not evident to us however how the conceptual underpinnings of the act of state doctrine under the common law could justify this extension of the doctrine to cover judicial acts 54 The difference between governmental or legislative acts and judicial acts was recently considered by the English Court of Appeal in Yukos Capital Sarl v OJSC Rosneft Oil Co No 2 2013 3 WLR 1329 Yukos Capital In Yukos Capital which involved the enforcement in England of an arbitral award against the Russian state controlled respondent company that had been set aside by a Russian court it was alleged by the appellant company that the decision of the Russian court had been partial and biased and was part of an overall campaign waged by the Russian state against the appellant The question before the Court of Appeal was whether the act of state doctrine precluded the forum court from adjudicating upon the conduct of the judiciary of a foreign state Rix LJ delivering the judgment of the Court of Appeal distinguished In Re PNB and held that the act of state doctrine did not apply to judicial acts The rationale for the difference between legislative and executive acts on the one hand and judicial acts on the other was explained in the following terms at 87 If then the question is asked Well why should acts of a foreign judiciary be treated differently from other acts of state and what is the basis of that difference the answer in our judgment is that judicial acts are not acts of state for the purposes of the act of state doctrine The doctrine in its classic statements has never referred to judicial acts of state it has referred to legislative or executive or governmental or official acts of a foreign sovereign Two examples will suffice for more Lord Hope speaks of the legislative or other governmental acts of the foreign sovereign in Kuwait Airways v Iraqi Airways at 135 and Lord Collins speaks of foreign legislation or governmental acts of officials such as requisition in Lucasfilm v Ainsworth at 86 It is not hard to understand why there should be a distinction Sovereigns act on their own plane they are responsible to their own peoples but internationally they are responsible only in accordance with international law and internationally recognised norms Courts however are always responsible for their acts both domestically and internationally Domestically they are responsible up to the level of their supreme court and internationally they are responsible in the sense that their judgments are recognisable and enforceable in other nations only to the extent that they have observed what we would call substantive or natural justice what in the United States is called due process and what internationally is more and more being referred to as the rule of law In other words the judicial acts of a foreign state are judged by judicial standards including international standards regarding jurisdiction in accordance with doctrines separate from the act of state doctrine even if the dictates of comity still have an important role to play emphasis added 55 We concur with the above observations Private international law is concerned with both executive legislative sovereignty and adjudicative sovereignty The former is covered by the act of state doctrine that applies to governmental and legislative acts the latter is covered by the rules on recognition enforcement and public policy that apply to foreign judgments As explained in Underhill cited above at 42 courts should not judge governmental acts as sovereigns are equal on the plane of international law and recourse for grievances must be obtained through the means open to be availed of by sovereign powers The exclusion of judicial acts from the ambit of the act of state doctrine may be explained quite simply on the basis that much of the ground that would be covered by the doctrine vis à vis judicial acts is implicitly embodied in the common law conflict of laws rules relating to foreign judgments A fundamental premise of the rules on recognition is that a foreign judgment is generally conclusive of the matter adjudicated upon and cannot be impeached for an error of fact or law save for limited exceptions which refer to the international standards of rule of law alluded to by the Court of Appeal in Yukos Capital These are two distinct concepts that have been designed to deal with acts or decisions emanating from different institutions and have understandably developed in response to separate considerations Judgments of a foreign court should not be additionally considered within the rubric of the act of state doctrine 56 Second and more fundamentally the application of the act of state doctrine is territorially limited The Republic submitted that the locus of the Funds in Singapore should not preclude the act of state doctrine and cited the following passage in In Re PNB which merits citing in extenso at 773 The class plaintiffs next argue that the act of state doctrine is inapplicable because the judgment of the Philippine Supreme Court did not concern matters within its own territory Generally the act of state doctrine applies to official acts of foreign sovereigns performed within their own territory Credit Suisse 130 F 3d at 1346 internal quotations omitted The act of the Philippine Supreme Court was not wholly external however Its judgment which the district court declared invalid was issued in the Philippines and much of its force upon the Philippine Bank arose from the fact that the Bank is a Philippine corporation It is also arguable whether the bank accounts have a specific locus in Singapore although they apparently were carried on the books of bank branches there See Callejo v Bancomer S A 764 F 2d 1101 1121 25 5th Cir 1985 discussing differing theories of situs of intangibles Even if we assume for purposes of decision that the assets were located in Singapore we conclude that this fact does not preclude treatment of the Philippine judgment as an act of state in the extraordinary circumstances of this case T he act of state doctrine is to be applied pragmatically and flexibly with reference to its underlying considerations Tchacosh Co v Rockwell Int l Corp 766 F 2d 1333 1337 9th Cir 1985 Thus even when an act of a foreign state affects property outside of its territory the considerations underlying the act of state doctrine may still be present Callejo 764 F 2d at 1121 n 29 Because the Republic s interest in the enforcement of its laws does not end at its borders id the fact that the escrow funds were deposited in Singapore does not preclude the application of the act of state doctrine The underlying governmental interest of the Republic supports treatment of the judgment as an act of state It is most important to keep in mind that the Republic did not simply intrude into Singapore in exercising its forfeiture jurisdiction The presence of the assets in Singapore was a direct result of events that were the subject of our decision in Credit Suisse There we upheld as an act of state a freeze order by the Swiss government enacted in anticipation of the request of the Philippine government to preserve the Philippine government s claims against the very assets in issue today Credit Suisse 130 F 3d at 1346 47 To permit the district court to frustrate the procedure chosen by the Swiss and Philippine governments to adjudicate the entitlement of the Republic to these assets would largely nullify the effect of our decision in Credit Suisse In these unusual circumstances we do not view the choice of a Singapore locus for the escrow of funds to be fatal to the treatment of the Philippine Supreme Court s judgment as an act of state emphasis added The Republic also relied on the decision of the Appellate Division of the Supreme Court of New York in Osqugama F Swezey v Merrill Lynch Pierce Fenner Smith Inc 87 A D 3d 119 2011 Swezey where an argument was raised that the Sandiganbayan did not have in rem jurisdiction of assets held by one Arelma Foundation in a New York bank account The majority of the court observed We fail to see how this limitation on the reach of the Sandiganbayan s mandate deprives the Republic of its status as a necessary party to this proceeding The fact remains that the Republic claims to be the true owner of the Arelma assets which had been found by a Philippine court to constitute the proceeds of wealth stolen from the Philippine people and spirited out of that country by its faithless former president Beyond question the issue of title to the Arelma assets is within the jurisdiction of the Sandiganbayan even if the fund itself having been secreted abroad by the wrongdoer is no longer present in the Philippines emphasis added 57 The Republic contended that the theory underlying the territorial limitation to the act of state doctrine was that the foreign state was presumed to be less concerned about the effects of its acts on property outside of its territory than within however there may be situations where the considerations underlying the act of state doctrine may still be present when the property is located outside the territorial boundaries of the state It was argued that the Republic had an underlying governmental interest in the enforcement of its laws over the Swiss Deposits and that the Republic had not intruded into Singapore in exercising its forfeiture jurisdiction over the Swiss Deposits as the presence of the Swiss Deposits in Singapore was the direct result of acts of the Swiss and Philippine governments 58 We do not consider that the reasoning of the Ninth Circuit Court of Appeal in In Re PNB or the Appellate Division of the Supreme Court of New York in Swezey may be readily imported into the common law act of state doctrine that presently applies in England and Singapore First the finding in Swezey that the Sandiganbayan had jurisdiction over the assets held by the Arelma Foundation was expressly founded on the premise that the Republic s claim was that the assets belonged to the Republic as a matter of Philippines law at the time of misappropriation In other words it was a patrimonial claim see footnote 7 of the majority s opinion in Swezey but this was not the basis upon which the Republic advanced its claim to the Funds before us 59 Second the argument that the Republic had a governmental interest in recovering the ill gotten gains from corruption that were secreted in bank accounts overseas precisely to place the money beyond the reach of the Republic does have an intuitive appeal However the territorial limitation of the act of state doctrine has historically been regarded as an essential element of the doctrine see Dicey Morris Collins vol 1 at para 5 049 citing Empresa Exportadora De Azucar v Industria Azucarera Nacional SA The Playa Larga and Marble Islands 1983 2 Lloyd s Rep 171 at 194 Yukos Capital at 68 Where title to property is concerned the lex situs rule in Rule 137 of Dicey Morris Collins The Conflict of Laws vol 2 Sweet Maxwell 15th Ed 2012 Dicey Morris Collins vol 2 also states at para 25R 001 RULE 137 A governmental act affecting any private proprietary right in any movable or immovable thing will be recognised as valid and effective in England if the act was valid and effective by the law of the country where the thing was situated lex situs at the moment when the act takes effect and not otherwise 60 There is no principled basis for us to displace either established rule merely because the act purporting to have extraterritorial effect is based on an underlying governmental interest The classic enunciation of the act of state doctrine was premised on sovereign states possessing absolute sovereign powers with respect to acts within their territorial boundaries that should not be questioned by a foreign court and t he near universal rule of international law is that sovereignty both legislative and adjudicative is territorial that is to say it may be exercised only in relation to persons and things within the territory of the state per Lord Millett in Société Eram Shipping Co Ltd v Cie Internationale de Navigation and others 2004 1 AC 260 at 80 We are unable to accept that the invocation of governmental interest in the form of the public policy of mutual judicial assistance in enforcing foreign confiscation orders creates an exception to the territoriality or lex situs rule 61 A similar argument was rejected by the English Court of Appeal in Peer International In Peer International a Cuban decree purported to assign the United Kingdom copyright in a number of Cuban music works to a Cuban entity and the issue before the court was whether the decree was effective to divest the original owner of the copyright by reason of a positive public policy exception to the lex situs rule The Cuban decree was purportedly aimed at reasserting Cuban control over intellectual property rights that had been exploited by foreign companies and it was argued that the decree was consonant with both English and international concepts of public policy After reviewing the old English authority of Lorentzen v Lydden and Company Limited 1942 2 KB 202 which had held that a foreign wartime decree for the requisition of property could be recognised and given effect to even if the property was located beyond the territorial boundaries of the foreign country Aldous LJ concluded that the case had been wrongly decided and observed at 46 the submission that there should be an exception to the lex situs rule based on public policy is misguided This was demonstrated by Mr Lloyd Jones in his submissions He rightly submitted that any exception based upon public policy was wrong in principle because 1 it would subordinate English property law to that of a foreign state 2 the rule would be founded and would operate by reference to public policy which could change from time to time and could be uncertain 3 it would require the English courts to assess the merits of the foreign legislation 4 it would lead to intractable problems when the property was situated in a third state 5 it would require the court to balance one public policy against the public policy that states do not interfere with property situated abroad and 6 it would lead to great uncertainty Mance LJ also considered at 65 that there was little basis for elevating public policy to a positive connecting factor overriding the law of the situs and that to do so would create confusion and uncertainty We respectfully adopt these reasons and would add in this regard that Singapore as the situs of the Funds at the material time regulates the proprietary incidents of the Funds and must itself determine whether the exercise of the forfeiture jurisdiction by the Sandiganbayan constituted an intrusion into Singapore The presence of a governmental interest of a foreign state cannot displace our established domestic property law principles or established rules of private international law based on territorial jurisdiction 62 Further as Prof Yeo astutely observed the focus of the Ninth Circuit Court of Appeal in In Re PNB on the underlying governmental interest of the Republic is unsurprising in the light of the choice of law jurisprudence in the United States which has departed from the traditional common law approach and now focuses on a state interest analysis viz a balancing of factors including the policy of the forum and the policies of interested states and the relative interests of these states in the determination of the issue see 6 2 of the Restatement Second of Conflict of Laws The United States position has been interpreted as elevating the act of state doctrine to a super choice of law rule requiring the lex fori to apply foreign law as the lex causae where it otherwise would not do so under its own private international law rules per Perram J in Habib v Commonwealth of Australia 2010 FCAFC 12 at 38 which may occasionally displace the law of the situs where governmental interests dictate this In contrast there is no such counterpart to the choice of law analysis under the common law in Singapore which proceeds by a rule based identification of connecting factors derived from requirements of justice that are applicable to the resolution of particular categories of legal issues 63 In summary we conclude that the traditional version of the act of state doctrine as applicable in Singapore does not assist the Republic s case The court will not question the validity of the IMAC measures entered into by the Swiss and Philippine governments or the delegation of the determination of entitlement to the Swiss Deposits and hence the Funds to the Philippine courts but it remains for the Singapore courts to determine the effect of the Forfeiture Judgment on title to the Funds and to do so would require this court to apply the common law rules on recognition of foreign judgments Recognition of the Forfeiture Judgment 64 We agree with the Judge that the Forfeiture Judgment is properly characterised as an in rem judgment which was defined in the following terms by Lord Mance in the Privy Council decision of Pattni v Ali and another 2007 2 AC 85 Pattni at 21 a judgment in rem in the sense of the common law rules relating to recognition of foreign judgments is thus a judgment by a court where the relevant property is situate adjudicating on its title or disposition as against the whole world and not merely as between parties or their privies in the litigation before it The above passage was cited with approval by this court in Takako Marakami executrix of the estate of Takashi Murakami Suroso deceased v Wiryadi Louise Maria and others 2007 4 SLR R 565 at 32 and it was also observed at 30 that in characterising the nature of a foreign judgment the Singapore court would consider the substance of the judgment and its intended effect on the parties whether or not the foreign law recognised the concepts of an in rem or in personam judgment 65 It is clear that the Supreme Court of the Philippines had considered that the Forfeiture Proceedings were proceedings against a res and had framed its orders in the Forfeiture Judgment as a forfeiture of title to the Swiss Deposits instead of a judgment directed against Mrs Marcos or the Marcos Estate personally The Swiss deposits which were transferred to and are now deposited in escrow at the PNB in the estimated aggregate amount of US 658 175 373 60 as of January 31 2002 plus interest are hereby forfeited in favor of petitioner Republic of the Philippines note 34 emphasis added This corresponds with the relevant section of RA 1379 which states as follows Sec 6 Judgment If the respondent is unable to show to the satisfaction of the court that he has lawfully acquired the property in question then the court shall declare such property forfeited in favor of the State and by virtue of such judgment the property aforesaid shall become property of the State note 35 emphasis added The Forfeiture Resolution also expressly endorsed an earlier decision of the Philippine Supreme Court in Republic v Sandiganbayan and Macario Asistio Jr 200 SCRA 667 1991 that forfeiture proceedings were actions in rem and therefore civil in nature note 36 The nature of the Forfeiture Proceedings was therefore such that the Forfeiture Judgment was intended to have an in rem effect by deciding on the ownership of the Swiss Deposits 66 We now turn to consider the question of whether the Philippine Supreme Court had jurisdiction in an international sense to issue an in rem judgment which question is governed by the common law rules on the recognition of foreign judgments The rule relating to the recognition of the legal effect of a foreign in rem judgment in the forum court is set out in Rule 47 of Dicey Morris Collins vol 1 at para 14R 108 RULE 47 1 A court of a foreign country has jurisdiction to give a judgment in rem capable of enforcement or recognition in England if the subject matter of the proceedings wherein that judgment was given was immovable or movable property which was at the time of the proceedings situate in that country It is therefore essential to the recognition of a foreign judgment in rem that the res was situated in that foreign country at the time of the judgment The Judge considered the authorities of Louis Castrique v William Imrie and another 1869 1870 LR 4 HL 414 and Minna Craig Steamship Company and James Laing v Chartered Mercantile Bank of India London and China 1897 1 QB 55 in some detail at 48 53 of the Judgment and it suffices for us to note that that the key principle that may be distilled from these authorities is embodied in Dicey Morris Collins Rule 47 also see Pattni at 24 67 It is not disputed that the situs of the Funds was Singapore as the Funds were held by the Singapore branch of WestLB at the time the Forfeiture Judgment was rendered Territoriality is a historically entrenched principle that underpins the common law concepts on recognition and departing from the rules on recognition of in rem judgments would engender considerable difficulties in delineating the scope of an exception for sui generis circumstances Although the Judge tentatively alluded at 65 of the Judgment to a possibility that recognition of judgments in rem may be extended to circumstances where the foreign court has constructive custody of the subject matter of the judgment the Republic did not make full arguments on this point before us and we do not express any concluded opinion on this We therefore find that the legal effect of the Forfeiture Judgment in so far as it purported to vest title to the Funds in the Republic at the time the Funds were located outside of the Philippines cannot be recognised for the purposes of determining entitlement to the Funds in the Interpleader Proceedings 68 We are also of the view that the legal effect of the Forfeiture Judgment cannot in any event be recognised as it would be tantamount to the indirect enforcement of a penal law of a foreign country The relevant principles of law in this regard are well established and we summarise them as follows a The courts will not enforce either directly or indirectly a penal revenue or public law of a foreign state see Rule 3 1 in Dicey Morris Collins vol 1 at para 5R 019 b The question of whether a law is penal is to be determined by the lex fori and while the word penal does not lend itself to an accurate or specific definition the broad test is whether the proceeding leading to the judgment is in the nature of a suit in favour of the State for the recovery of penalties Huntington v Attrill 1893 AC 150 Huntington at 155 157 c Whether or not the penal law is part of the criminal code of the foreign country is not conclusive the forum court must give due consideration to the particular impugned provision of the foreign law Huntington at 155 156 Attorney General of New Zealand v Ortiz and others 1984 AC 1 Ortiz at 33 d Whether the recognition of a foreign law would involve a direct or indirect enforcement of a penal law depends on whether such recognition involves the execution of the penal law Huntington at 155 Ortiz at 32 69 Applying the above principles we find that RA 1379 was clearly a penal law although the Forfeiture Proceedings were regarded as civil proceedings under Philippines law see the Forfeiture Resolution at 10 The Republic s expert witness Dean Ed Vincent S Albano Dean Albano strenuously denied that RA 1379 imposed a penalty but said that it instead partook in the nature of a penalty and we consider that it is clear that RA 1379 would under Singapore conflict of laws principles be classified as a penal law as it is directed towards the forfeiture of the property of public officials that is presumed to have been derived from illegal sources The property is forfeited in favour of the State and the proceedings are instituted by the State see ss 2 and 6 of RA 1379 note 37 Dean Albano also acknowledged that forfeiture proceedings under RA 1379 are a means of punishing and deterring public officials to advance a State interest note 38 70 We are thus unable to recognise the legal effect of the Forfeiture Judgment made pursuant to RA 1379 as affecting title to the Funds as this would in substance be an execution and indirect enforcement of a foreign penal law The Green Line Argument 71 The Green Line Argument was initially run as the secondary string to the Republic s bow but following Prof Yeo s opinion that this court is not precluded from recognising a beneficial entitlement arising under an express trust the Republic sought to reframe the Green Line Argument as a claim to the Funds under an express trust created by the Escrow Agreements The Republic argued that the beneficial interest in the Swiss Deposits which were held on trust by PNB vested by operation of law in the Republic following the satisfaction of the condition in cl 2 vii of the Escrow Agreements Clause 2 vii of the Escrow Agreements provides as follows 2 The ESCROW AGENT will vii not do sic dispose of the Escrow Funds other than in accordance with a final and enforceable judgment of the Sandiganbayan or any final and enforceable judgment of any competent court in the Philippines or in accordance with written and identical instructions received from both Aguamina Foundation and the Government of the Philippines as represented by the PCGG or in accordance with instructions received from the PCGG as approved in principle by the properly represented ESTATE OF FERDINAND E MARCOS and or IMELDA ROMUALDEZ MARCOS MARIA IMELDA MARCOS MANOTOC FERDINAND R MARCOS JR and IRENE MARCOS ARANETA whereby in case of any such disposal the above undertakings and the guarantee as per clause 3 below lapse emphasis added 72 We will first address the threshold procedural objection of the Human Rights Victims and the Foundations that the Republic should not be permitted to claim a beneficial interest under an express trust as this was not pleaded before the Judge or argued at the first hearing before us on 7 February 2013 The Republic underscored the fact that the parties were not required to file formal pleadings in the Interpleader Proceedings and that this claim was implicit in its Green Line Argument and had been recognised by this court in Republic of the Philippines Sovereign Immunity 73 As mentioned above at 22 the interpleader proceedings were commenced by way of originating summons and parties were directed by Kan Ting Chiu J on 4 March 2009 to file and exchange Statements of Case and replies to the same presumably pursuant to O 17 r 5 1 b of the Rules of Court Cap 322 R 5 2006 Rev Ed which states as follows 1 Where on the hearing of an originating summons or a summons under this Order all the persons by whom adverse claims to the subject matter in dispute referred to in this Order as the claimants appear the Court may order b that an issue between the claimants be stated and tried and may direct which of the claimants is to be plaintiff and which defendant emphasis added The parties subsequently obtained directions for discovery and the filing of affidavits of witnesses and experts and this was followed by an 11 day hearing with cross examination of witnesses While strict formal pleadings in the nature of statements of claim or defences in a writ action were not filed for the Interpleader Proceedings we recognise that the objection raised by the Human Rights Victims and the Foundations is not merely technical or pedantic It appears to us from a perusal of the record that the nature of the evidence adduced during the hearing before the Judge was shaped by the legal characterisation and controverted aspects of the claims as framed by the parties in their Statements of Case The Judge and parties must therefore have proceeded on the assumption that the Statements of Case clearly defined the issues for determination by the court in relation to each competing claim and we are of the view that the rationale underlying the rules for pleadings on the raising of new arguments on appeal should be given due weight where one party may be taken by surprise by the canvassing of new arguments by the other 74 No mention was made in the Republic s Statement of Case filed below of any claim to a beneficial interest under an express trust the Statement of Case did not identify the asserted entitlement to the Funds within the parameters of a trust claim nor did it aver to the facts relating to the Escrow Agreements that gave rise to an express trust ie the terms of the Escrow Agreements that evinced an intention of the parties to the Escrow Agreements that the Funds would be held by PNB as trustee Turning to the Republic s argument that it must have in any event been obvious from this court s observations in Republic of the Philippines Sovereign Immunity that the Republic was in the alternative relying on a proprietary claim as a beneficiary under a trust we do not read the relevant remarks as categorically stating a legal conclusion of the basis of the Republic s claim The court noted at 21 that Before us the Republic nuanced its argument to state that the effect of the Forfeiture Order was that it had possession and control of the Funds through PNB In other words the argument was that PNB held the Funds for the Republic s account or on trust for the Republic as the escrow had terminated due to the fulfilment of the Escrow Condition as a result of the Forfeiture Order emphasis added The general references to PNB holding the Funds for the Republic s account or on trust emphasis added should be construed in the specific context of whether the Republic had a sufficient interest in the Funds to assert state immunity The court s remarks were merely a possible interpretation of the Republic s vague assertion that it had possession and control of the Funds and did not define the actual legal basis upon which the Republic had in fact framed its substantive claim of entitlement to the Funds 75 For the above reasons we consider that the Republic had to satisfy the usual requirements for raising a new argument on appeal to advance a claim to a beneficial interest under a trust at this belated stage viz this court should be in as advantageous a position as the court below to consider the issue and no new evidence is required to be adduced see Ang Sin Hock v Khoo Eng Lim 2010 3 SLR 179 at 61 62 76 In our judgment it would be prejudicial to the Human Rights Victims and the Foundations to allow the Republic to assert an additional claim premised on a beneficial interest under an express trust created by the Escrow Agreements If there were no foreign law elements and the sole legal question was whether the terms of the Escrow Agreements should be construed as creating an express trust this would possibly have been a pure question of law that this Court could determine However the express trust analysis is complicated by the interpolation of multiple layers of choice of laws issues Prof Yeo s opinion identified at least two different aspects the law governing the creation of the express trust and the law governing the operation of the express trust which raise questions relating to the application and interpretation of foreign law as well as the principles of construction of documents ie the Escrow Agreements that may be governed by foreign law Satisfactory evidence of these matters was not placed before us 77 It is trite that foreign law has to be proven as a matter of fact and that the law of the forum will be applied in default of proof Dicey Morris Collins vol 1 at para 9 002 However we do not think that it lies in the mouth of the Republic to assert that Singapore law may apply as the default position or that the court may take judicial notice of the relevant aspects of the foreign law ie Philippines law when the very reason why evidence on these matters was not available was because the Republic had failed to argue this point below Indeed the Republic took the position that it was apparent that the Republic had asserted an interest on the grounds of inter alia a trust note 39 when the Republic first made a claim to the Funds yet the Republic only expressly articulated the legal nature of its claim as a beneficial interest under an express trust for the first time after Prof Yeo submitted his opinion Both the Human Rights Victims and the Foundations also disagreed with the Republic s submissions on the applicable foreign law and the interpretation of that law but did not have the opportunity to canvass comprehensive arguments or adduce expert evidence We therefore consider that it would not be in the interests of justice to grant leave to the Republic to raise this additional point on appeal As stated earlier in this paragraph foreign law must be proven as a fact It is too late now for the Republic to raise a new point which has a foreign law dimension ie requiring evidence relating to foreign law governing the point 78 For completeness we note that the original Green Line Argument was premised on the satisfaction of the escrow condition in cl 2 vii of the Escrow Agreements but there was no further legal analysis as to why the satisfaction of cl 2 vii would vest the beneficial interest in the Funds in the Republic In the absence of a trust the satisfaction of cl 2 vii would at most give the Republic a contractual claim against PNB under the Escrow Agreements This was not the Republic s case Conclusion 79 In the premises we affirm the Judge s finding that the Forfeiture Judgment cannot

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  • Maldives Airports Co Ltd and another v GMR Malé International Airport Pte Ltd
    act of State depends on the nature of the act done Nissan at 238 More specifically a given act may amount to an act of State if it was done in the exercise of the State s supreme sovereign power see Salaman v Secretary of State in Council of India 1906 1 KB 613 Thus Lord Cottenham LC stated in Brunswick at 21 22 If it were a private transaction then the law upon which the rights of individuals may depend might have been a matter of fact to be inquired into But if it be a matter of sovereign authority we cannot try the fact whether it be right or wrong emphasis added 29 In the present case Mr Daniel sensibly agreed in the course of the hearing that the dispute between the parties was essentially one of a private nature even though one of the disputing parties happened to be a sovereign State The contrary became unarguable once Mr Daniel confirmed that the Appellants accepted the jurisdiction of the arbitral tribunal in the 2nd Arbitration to resolve the dispute over the validity of the Concession Agreement Indeed this was the only position which the Appellants could take given that it was they who had commenced the 2nd Arbitration seeking a declaration that the Concession Agreement was void ab initio and or had been frustrated As noted in Underhill see 24 above the essence of the act of State doctrine is that redress for grievances are left to be secured through means that may be availed of by sovereigns as between themselves Here the Appellants are seeking private law remedies Moreover they fully accept that the subject matter of the dispute may be resolved by and through a private law arbitral tribunal Indeed in their written submissions for this appeal they stated note 10 T he substantive dispute between the Appellants and the Respondent is whether the Concession Agreement is void and of no effect and or whether the Concession Agreement had been frustrated and had come to an end and whether the Appellants are entitled to restitutionary remedy sic from the Respondent for appropriate accounts and inquiries emphasis added 30 That being the substance of the Appellants grievance there is no scope for the argument that the Restrained Acts would have amounted to acts of State in which this court may not intervene The background leading to OS 1128 from the issuance of the November Notices until the commencement of the 2nd Arbitration two days later and the nature of the reliefs that were sought there by the Appellants all contribute to paint a picture of what in essence is a private law dispute between the parties It is also relevant that the Appellants asserted basis for taking over the Airport stems from their claim that the Concession Agreement was void ab initio and or had been frustrated This is asserted as a matter of contract law It is evident therefore that there is no act of the Maldives Government pursuant to an exercise of sovereign power which is impinged by the Injunction 31 It was not pressed before us that where a possible future act of State might be the subject of an injunction the wider principle of judicial abstention or restraint should apply and the court should refrain from adjudicating on the matter see Buttes Gas and Oil Co and Another v Hammer and Another 1982 AC 888 at 931 It is unnecessary for us to express a view on this save to say that it would inevitably be a factor which a court will take into consideration when assessing whether an injunction should be granted in such circumstances As far as the present circumstances are concerned we are satisfied that the Injunction does not offend the act of State doctrine Whether the Singapore court has the power to grant the Injunction 32 There is one further gateway issue Assuming the foregoing jurisdictional objections were disposed of as they have been the parties seemed to assume that the Singapore court would have the power to grant the Injunction We invited submissions on this issue as it was not initially clear to us that that was indeed the position Section 12A of the IAA 33 Section 12A of the IAA was enacted to set out the powers of the High Court to grant interim measures in connection with arbitration proceedings It achieves this by extending to the High Court the powers that are conferred on an arbitral tribunal to make orders or give directions as to the range of matters set out in ss 12 1 c to 12 1 i As the opening words of s 12A 2 make clear the court is conferred such powers s ubject to the constraints that are laid down in ss 12A 3 to 12A 6 At the hearing Mr Daniel and Mr Pillay both agreed that s 12A 4 of the IAA was the material provision governing the court s power to grant the Injunction as this was a case of urgency and the arbitral tribunal in the 2nd Arbitration was not yet in a position to determine this issue Section 12A 4 must be read with ss 12A 2 and 12 1 i The respective provisions read 12 1 Without prejudice to the powers set out in any other provision of this Act and in the Model Law viz the UNCITRAL Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on 21 June 1985 an arbitral tribunal shall have powers to make orders or give directions to any party for i an interim injunction or any other interim measure 12A 1 This section shall apply in relation to an arbitration a to which this Part applies and b irrespective of whether the place of arbitration is in the territory of Singapore 2 Subject to subsections 3 to 6 for the purpose of and in relation to an arbitration referred to in subsection 1 the High Court or a Judge thereof shall have the same power of making an order in respect of any of the matters set out in section 12 1 c to i as it has for the purpose of and in relation to an action or a matter in the court 4 If the case is one of urgency the High Court or a Judge thereof may on the application of a party or proposed party to the arbitral proceedings make such orders under subsection 2 as the High Court or Judge thinks necessary for the purpose of preserving evidence or assets emphasis added in italics and bold italics 34 On their face these provisions provide that the High Court may grant an interim injunction if it is necessary for the purpose of preserving evidence or assets In conventional parlance where evidence or assets are sought to be preserved the court typically grants an Anton Piller order or a Mareva injunction In the present case the Injunction is neither It is an open ended injunction to restrain the Appellants from interfering with the Respondent s performance of its obligations under the Concession Agreement That however is not the end of the matter because the express wording of s 12A 4 does not strictly confine the court to only ordering an Anton Piller order or a Mareva injunction The court may make such orders emphasis added under ss 12 1 c to 12 1 i as are necessary for the preservation of the evidence or assets in question Therefore although the usual order might likely take the form of an Anton Piller order or a Mareva injunction it is in fact the case that any other interim order may be granted by the court as long as this is considered necessary for the preservation of evidence or assets 35 Initially the Respondent claimed that it was seeking to preserve two specific assets by the Injunction namely two contractual rights note 11 a the right to be served the appropriate notice under the Concession Agreement before termination was effected and b the right to have any dispute over the entitlements of the parties under the Concession Agreement resolved by an arbitral tribunal before those entitlements were destroyed During the oral arguments Mr Pillay also included the Respondent s asserted interest in the land on which the Airport is situated the Site as an asset which the Respondent was seeking to preserve 36 Mr Pillay argued that the aforesaid contractual rights fell within the term assets in s 12A 4 as that section must be construed widely He referred to the English Court of Appeal decision in Cetelem SA v Roust Holdings Ltd 2005 1 WLR 3555 Cetelem in support of his contention In Cetelem the plaintiff and the defendant entered into a contract under which the defendant would sell the plaintiff a 50 interest in a Cypriot company The contract provided that any dispute would be referred to arbitration in London The approval of the Russian Central Bank the RCB was a condition precedent to the contract If approval was not obtained by 31 January 2005 the contract would be null and void The latest possible date for submitting documents to the RCB for approval was 10 December 2004 but that deadline lapsed without any documents having been submitted by the defendant On 23 December 2004 the plaintiff applied under s 44 3 of the Arbitration Act 1996 c 23 UK the Arbitration Act 1996 for among other things an interim mandatory injunction requiring the defendant to submit an application to the RCB for the approval of the share purchase agreement The injunction was granted on 29 December 2004 The defendant appealed Its case was that the court had no power to grant an interim mandatory injunction under s 44 3 because the order requiring the defendant to procure that certain documents be delivered was not one that was necessary for the preservation of the plaintiff s assets The court disagreed holding instead first at 57 that assets in s 44 3 included choses in action and contractual rights and second at 67 that the court had the power under s 44 3 to grant the interim mandatory injunction as long as it was persuaded that the injunction was necessary to preserve the plaintiff s right to purchase the shares under the contract 1 Scope of the term assets 37 On the scope of the term assets Clarke LJ as he then was who delivered the leading judgment held that once it was accepted that assets included choses in action which counsel for the defendant did there was no reason to distinguish between different types of choses in action Moreover Clarke LJ could not see any reason why a contractual right should not be an asset within the meaning of s 44 3 of the Arbitration Act 1996 At least two other English High Court decisions have followed Cetelem and interpreted s 44 3 as encompassing contractual rights Telenor East Holding II AS v Altimo Holdings Investments Ltd and other companies 2011 EWHC 458 Comm at 30 Starlight Shipping Co and another v Tai Ping Insurance Co Ltd Hubei Branch and another 2008 1 Lloyd s Rep 230 Starlight Shipping at 21 38 We have discussed Cetelem at some length because it was evidently relied on by the Ministry of Law the Ministry in formulating the International Arbitration Amendment Bill 2009 Bill 20 of 2009 the Bill by which s 12A was introduced into the IAA In a press release containing the Ministry s response to feedback following a public consultation on the Bill the Press Release available at accessed 8 February 2013 the Ministry stated that while it found useful the suggestion to remove the phrase for the purpose of preserving evidence or assets as the word assets was potentially confusing in the light of Cetelem nonetheless it had decided to retain the phrase The Ministry at p 5 of the Press Release reaffirmed its intention and understanding that a wide meaning of the term assets be adopted to include choses in action and rights under a contract as decided by the English Court of Appeal in Cetelem underlining in original emphasis added in italics 39 This is echoed in the Explanatory Statement to the Bill which explained at p 8 with respect to the proposed s 12A 4 that it was intended that a wide meaning of the term assets be adopted to include choses in action and rights under a contract Moreover at the second reading of the Bill in Parliament the Minister for Law Mr K Shanmugam the Minister repeated that assets should be read in line with current case law to include intangible assets or choses in action such as bank accounts shares and financial instruments emphasis added Singapore Parliamentary Debates Official Report 19 October 2009 vol 86 at col 1628 The choses in action articulated by the Minister are arguably different from typical rights under a contract Bank accounts shares and financial instruments are more closely aligned to the concept of assets than contractual rights Be that as it may the Bill was passed without any amendment Neither Cetelem nor the expression rights under a contract was explicitly referred to at the second reading of the Bill In our judgment the extrinsic evidence indicative of Parliament s intention vis à vis the scope of the term assets strongly suggests that the holding in Cetelem is intended to govern the proper interpretation of s 12A 4 of the IAA The court s function is to give effect to Parliament s intention and to that end we read the reference to assets in s 12A 4 as encompassing rights under a contract But in the context of the provision itself this must be confined to such contractual rights as lend themselves to being preserved In the normal course of events a party faced with a threatened breach of a contract is not entitled to preserve his right to have the contract performed rather the primary obligation to perform the contract gives way to a secondary obligation to pay damages see Photo Production Ltd v Securicor Transport Ltd 1980 1 AC 827 at 848 849 per Lord Diplock That said there plainly are rights under a contract that can and ordinarily are preserved by way of an order for specific performance or an injunction 40 Thus we do not interpret Cetelem or Parliament by extension as having established a rule that all types of contractual rights may be the subject matter of a preservation order under s 12A 4 of the IAA If an interim injunction should lie under s 12A 4 to preserve any contractual right from being eroded it would ineluctably open the floodgates to applications for interim mandatory injunctions to compel parties to perform any and all types of contractual obligations pending the resolution of the dispute A seller s breach of an obligation to deliver ordinarily substitutable goods such as produce for example would on such a hypothesis trigger the court s power to grant an interim mandatory injunction to preserve the right to receive those goods by compelling the seller to deliver the goods This plainly cannot be the position because as we have already noted the recourse of the buyer in such circumstances would ordinarily be an order for damages see also The Law of Contract in Singapore Andrew Phang Boon Leong gen ed Academy Publishing 2012 at para 23 082 It is beside the point that the court would not necessarily grant the interim order sought in such cases indeed we note that the courts for good reasons are slow to grant interim mandatory injunctions NCC International AB v Alliance Concrete Singapore Pte Ltd 2008 2 SLR R 565 NCC International at 75 The mere fact under the above hypothesis that it would be open to the court to order an interim injunction to prevent such potential albeit mundane breaches of contract is contrary to the basic conventional principle in contract law that a final mandatory injunction which is akin to specific performance Dowty Boulton Paul Ltd v Wolverhampton Corporation 1971 1 WLR 204 does not practically lie when damages are an adequate remedy for the breach 41 An overly broad understanding of choses in action for the purposes of defining assets in s 12A 4 would lead to the perverse result that s 12A 4 in principle contemplates and sanctions the protection of contractual rights by way of an interim injunction even though a final finding of a breach of those same rights would for all intents and purposes only give rise to a secondary right to claim damages and not a right to specific performance We do not think that s 12A 4 should be interpreted as having this far reaching and plainly unintended effect The more restrained interpretation that we have applied to assets in s 12A 4 would not have led to a different result in Cetelem The contractual right preserved in Cetelem was the right to purchase shares of what appears to have been an unlisted company and a contractual right to purchase such shares which are not available in the open market is one that is likely to be specifically enforceable at the suit of either the purchaser or the vendor Lee Chee Wei v Tan Hor Peow Victor and others and another appeal 2007 3 SLR R 537 at 54 42 In the same vein the right to have disputes resolved before a contractually chosen court or pursuant to an arbitration agreement could also rightfully be protected by way of an anti suit injunction whether on a final or an interim basis National Westminster Bank plc v Utrecht America Finance Company 2001 3 All ER 733 at 29 35 The justification for the grant of an anti suit injunction in these cases was clearly articulated by Millett LJ as he then was in Aggeliki Charis Compania Maritima SA v Pagnan SpA The Angelic Grace 1995 1 Lloyd s Rep 87 at 96 as follows In my judgment where an injunction is sought to restrain a party from proceeding in a foreign Court in breach of an arbitration agreement governed by English law the English Court need feel no diffidence in granting the injunction provided that it is sought promptly and before the foreign proceedings are too far advanced I see no difference in principle between an injunction to restrain proceedings in breach of an arbitration clause and one to restrain proceedings in breach of an exclusive jurisdiction clause as in Continental Bank N A v Aeakos Compania Naviera S A 1994 1 W L R 588 The justification for the grant of the injunction in either case is that without it the plaintiff will be deprived of its contractual rights in a situation in which damages are manifestly an inadequate remedy The jurisdiction is of course discretionary and is not exercised as a matter of course but good reason needs to be shown why it should not be exercised in any given case emphasis added in italics and bold italics 43 Millett LJ s explanation has been widely accepted even as part of Singapore law Halsbury Laws of Singapore vol 6 2 LexisNexis 2009 at para 75 133 In our judgment the same rationale that avails when granting anti suit injunctions to restrain breaches of jurisdiction clauses or to uphold arbitration agreements also applies in the context of s 12A 4 of the IAA Accordingly we consider that the type of contractual rights which would come within the meaning of assets under s 12A 4 are those which lend themselves to being preserved or put another way those which if lost would not adequately be remediable by an award of damages 2 Preservation of the Respondent s assets 44 Even though the reference to assets in s 12A 4 of the IAA includes contractual rights the court may only order an interim injunction in an urgent case if it is satisfied that the injunction is necessary to preserve evidence or assets This qualification was emphasised in Cetelem at 45 47 overruling the earlier decision of Hiscox Underwriting Ltd v Dickson Manchester Co Ltd 2004 2 Lloyd s Rep 438 where it was held that the power under s 44 3 of the Arbitration Act 1996 was not limited to the stated purposes In our view necessary ordinarily imports the notion that without the order in question the evidence or asset which is sought to be preserved would be lost If there are other reasonably available alternatives for securing the evidence or asset then it cannot be said that the order is necessary for the preservation of that evidence or asset This narrow interpretation is in line with the object and purpose of the IAA to limit curial involvement in arbitration proceedings NCC International at 40 41 and it also lends further support to the view we have taken as to the restrained interpretation of assets in s 12A 4 Naturally if the order sought does not in effect preserve the evidence or asset in question the order cannot be considered necessary for the preservation of that evidence or asset A The contractual rights relied on by the Respondent 45 In our judgment the Injunction does not preserve the first of the two contractual rights see 35 above relied upon by the Respondent We are unable to see how an injunction that restrains the Appellants from interfering with the Respondent s performance of its obligations under the Concession Agreement can preserve the Respondent s right to be served the appropriate notice under the Concession Agreement If this was all that the Respondent wanted it should have sought an interim mandatory injunction compelling the Appellants to serve the appropriate notice prior to effecting termination of the Concession Agreement 46 In relation to the second of the two contractual rights which the Respondent relied on the core of Mr Pillay s argument had to be that the Appellants intimated actions in the present circumstances would have the effect of irretrievably and irreversibly displacing the Respondent s right to carry out and perform the Concession Agreement before the arbitral tribunal in the 2nd Arbitration had the opportunity to pronounce on the parties rights Accordingly or so the argument went the Injunction was necessary to preserve this asset namely the contractual right to carry out and perform the Concession Agreement before the dispute over the subsistence of that right was conclusively decided by an arbitral tribunal The flaw in this argument is that there was nothing to suggest that the Concession Agreement as a whole was one that was specifically enforceable or that its breach even a repudiatory one could not be adequately remedied by an award of damages 47 Nor was Mr Pillay s argument strengthened by reference to the arbitration agreement contained in cl 21 4 of the Concession Agreement In Starlight Shipping one party breached its obligation to arbitrate a dispute in London by first commencing proceedings before a court in China The other party then applied to the English court for and obtained an interim anti suit injunction under s 44 3 of the Arbitration Act 1996 to halt the Chinese court proceedings and preserve its right to have the matter resolved by arbitration In the present case it might be argued that the Injunction is not necessary in order to preserve the Respondent s right to have the dispute arbitrated Indeed that right was observed and given effect to by the Appellants prior to the Respondent s application in OS 1128 when the Appellants themselves commenced the 2nd Arbitration 48 Nor did cl 21 5 of the Concession Agreement change the position That clause which we consider in some detail below at 72 78 provides that during the pendency of any Dispute and the resolution thereof both Parties shall continue to perform all their respective obligations under this Agreement note 12 In the context of a long term agreement such as the Concession Agreement was contemplated to be it made perfect sense for the parties to agree that they would keep performing their respective obligations notwithstanding the existence of some dispute over an aspect of the Concession Agreement But we do not see how the clause can be called in aid in circumstances such as the present where a party s actions attack the very foundation and continuance of the contract Indeed this is borne out by the fact that cl 21 5 goes on to exclude from the scope of the commitment to continue performance of each party s obligations an obligation which constitutes the subject matter of the Dispute note 13 We recognise that it may be unsatisfactory from a commercial standpoint for a party to be permitted to stop performing all its obligations under a contract notwithstanding the presence of a clause such as cl 21 5 by simply alleging that the contract is void either ab initio or by reason of some subsequent vitiating factor which is disputed but on the other hand it would require very clear language to sustain a construction that despite the existence of a dispute that goes to the very root and foundation of the contract and despite the exclusion of obligations constituting the subject matter of the Dispute note 14 the parties are nonetheless obliged to continue performing their respective obligations under the contract including the disputed ones until they are freed of this by an order of an arbitral tribunal Moreover we return to the main point which we have made above at 46 viz that to invoke the court s power under s 12A 4 of the IAA to grant an interim injunction to protect a contractual right the right in question must be one that would ordinarily be capable of being protected by an injunction or an order for specific performance To put it simply even an obligation to continue performing a contract despite the existence of a dispute ie a cl 21 5 type obligation would not give rise to a contractual right amounting to an asset that may be preserved by way of an interim injunction under s 12A 4 unless it can be shown that its breach is not adequately compensable by damages In the present case we were not convinced that a breach of cl 21 5 could not be adequately compensable by damages and Mr Pillay did not proffer any reasons to the contrary 49 For all these reasons we were unable to see how Mr Pillay could bring the Respondent s case within s 12A 4 at least in so far as he was relying on the two contractual rights mentioned at 35 above as constituting the relevant assets to be preserved B The Respondent s Interest in the Site 50 As we noted earlier in the course of the oral arguments Mr Pillay also raised the point that a further asset that the Respondent sought to preserve was its interest in the Site Mr Pillay submitted that the Respondent s interest in the Site arose from its status as the lessee of the Site under a lease agreement with MACL In particular cl 2 3 1 of the Concession Agreement provided that MACL granted the Respondent a sub lease with the exclusive right to occupy use and peacefully enjoy the Site note 15 for a term which was defined in cl 3 as a period of 25 years 51 In our judgment a lessee s interest in land even if it be a right to occupy use and enjoy that land for a term is precisely the sort of contractual right that is capable of coming within the meaning of asset for the purposes of s 12A 4 The Appellants intimation in the November Notices that they would be taking over the Airport undermined and threatened to destroy the Respondent s interest in the Site Mr Daniel s only reply to this was to point to cl 2 3 2 of the Concession Agreement which states that MACL has and shall retain good and valid title to all Immovable Property note 16 But this is not an answer First under the Concession Agreement Immovable Property is defined as a subset of the Site The Respondent s asset therefore encompasses more than the immovable property which belongs to MACL Second and in any event the Respondent is not asserting title over immovable property situated within the Site instead the Respondent is seeking to protect its interest and rights in respect of the Site whether as a lessee or a licensee of the Site 52 The Injunction was framed in extremely wide terms see 8 9 above If upheld it would prohibit the Airport from being taken over by the Appellants If the Injunction were set aside and if the Appellants then take over the Airport the Respondent s rights to have exclusive use occupation and peaceful enjoyment of the Site would be destroyed Therefore on this ground we are satisfied that in principle the Injunction meets the requirement of being necessary for the preservation of an asset ie the Singapore court does have the power to grant the Injunction That said whether the court should exercise its discretion to grant the Injunction is a separate matter that must be assessed against the balance of convenience and it is to this that we now turn Before leaving this point we should mention that given our view that s 12A 4 of the IAA can in principle be invoked in this case it was not necessary for us to consider whether the Singapore court s jurisdiction to act might have been invoked under any other provision whether contained in the Civil Law Act Cap 43 1999 Rev Ed or the SCJA or otherwise especially as no arguments on this were advanced before us Whether the balance of convenience lies in favour of granting or upholding the Injunction 53 The test that we applied to determine whether the Injunction should be granted or upheld was the well known one laid down by Lord Diplock in American Cyanamid Co Ltd v Ethicon Ltd 1975 AC 396 The assessment is one which involves a balance of convenience The essential principle is that because the court is asked to conduct this balancing exercise at an early stage and based only on affidavit evidence it should take whichever course appears to carry the lower risk of injustice if that course should ultimately turn out to have been the wrong course in the sense of an injunction having been granted when it should have been refused or an injunction having been refused when it should have been granted Regina v Secretary of State for Transport Ex parte Factortame Ltd and Others No 2 1991 1 AC 603 at 683 Would the unsuccessful applicant for an injunction who later establishes that he was right or in the converse situation the party who is later shown to have been wrongly subjected to an injunction be adequately compensated by an award of damages 54 On the facts the balance of convenience here plainly lies in favour of not granting or upholding the Injunction for the reasons that follow i Damages as an adequate remedy 1 Calculating the Respondent s potential loss 55 The Respondent contended that without the Injunction the Appellants would take over the Airport According to the Respondent this would cause it extensive direct loss as well as loss of reputation and goodwill which would be difficult to assess if it should ultimately turn out that the Appellants were not entitled to take that course of action Mr Pillay submitted that the direct loss suffered by the Respondent would involve the calculation of revenue and concession fees which were dependent on commercial airport activities as well as passenger and airline traffic over a 25 year period which was the duration of the Concession Agreement Such damages Mr Pillay submitted would be difficult if not impossible to assess 56 We do not accept this Whatever the relevant period for assessing damages may be while it is true that passenger numbers and airline traffic may fluctuate historical data for the Airport and other airports that are similarly situated should provide some basis for prescribing and calculating the loss of profits that may be sustained by the Respondent In fact it is reasonable to expect that such data would be recorded by the operators of the Airport whether this be the Respondent or MACL Moreover there are experts who would be able to assist in this task Thus any direct loss of profit is calculable even though the difficulties involved should not be underestimated At the same time the difficulties inherent in assessing the damages accruing to the Appellants if the Injunction should ultimately turn out to be unjustified also should not be underestimated These damages would likely be of a different order of complexity for the reasons outlined below at 68 71 57 The Respondent s next argument on the loss of reputation and goodwill is also untenable The Respondent was specially incorporated for the purpose of the Concession Agreement There is no suggestion or evidence that the Respondent had any plans to manage other airports either within the Maldives or abroad in the interim period or at any future time 58 It is also significant to note that the Concession Agreement itself contemplates both the possibility of significant changes to the political and economic climate in the Maldives and the possibility of such changes affecting the Concession Agreement note 17 For instance cl 19 2 1 a states that MACL shall have the right to terminate the Concession Agreement upon the occurrence of any Political Event which is comprehensively defined in cl 18 1 Expropriation is also expressly stated as a basis for termination by MACL in cl 19 2 1 h Expropriation is defined in cl 1 1 as note 18 the nationalization seizure requisition or expropriation of all or any part of the Airport any Works or all or any part of the Respondent s Rights by the Maldives Government or any Relevant Authority 59 Crucially the Concession Agreement then goes on to provide for the payments that would have to be made to the Respondent in the event that the Concession Agreement is terminated on the grounds of Expropriation or Political Event These payments are set out in cll 19 2 1 a and 19 4 3 b read with cll 19 2 2 and 19 2 1 Clause 19 4 3 b in particular deals with payments upon the occurrence of an event of Expropriation note 19 In the event of a termination of this Agreement by the Respondent in accordance with Clause 19 3 2 or by MACL pursuant to Clause 19 2 1 h MACL or the Maldives Government as applicable shall notwithstanding the provisions of Clause illegible pay to the Respondent i an amount equal to 60 Thus the Concession Agreement stipulates the manner of computing or assessing the damages which shall be payable to the Respondent in the event that the Concession Agreement is terminated as a result of certain political events or expropriation The Respondent was at pains to emphasise that the Appellants had not in fact purported to exercise their right to expropriate the Airport It emphasised that what had happened here at least in its view was a gross breach of the Concession Agreement for which the Appellants should be liable in damages We accept that as at the date of the oral arguments the Appellants had not purported to exercise their power of expropriation Mr Daniel too confirmed this But in our view the aforesaid provisions are relevant to show that the parties had contemplated the possibility of having to assess the compensation payable to the Respondent in the event of a

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  • Ch.06 The Conflict of Laws
    trial in the forum are so serious that it would amount to denial of substantial justice 6 2 18 The court has repeatedly emphasized that it will not compare legal systems Procedural differences will not be taken into account or at least will be given little weight Thus the fact that trial takes longer in the more appropriate foreign forum than in Singapore or that the plaintiff can get higher damages in Singapore than in the foreign but more appropriate forum only go to show structural differences in the legal systems and will not in themselves amount to denial of substantial justice d Judges exercise discretion when determining the natural forum 6 2 19 This is a discretionary exercise though of course the discretion is guided by principles laid down in The Spiliada and subsequent cases in England and Singapore An appeal from a decision on this basis is an appeal against discretion and can succeed only if wrong principles had been applied or right principles had been applied wrongly eg if the court had taken account of irrelevant factors or failed to take account of relevant factors or had reached a patently unreasonable conclusion Otherwise the exercise of discretion by a judge on the question of the appropriate forum will generally not be disturbed on appeal 3 Determining the natural forum in a case of territorial jurisdiction 6 2 20 A defendant who has been served within the jurisdiction see Section 6 2 4 6 2 7 above and who does not want the Singapore court to try the case may apply to stay the proceedings by showing that there is another available and competent forum which need not strictly be a court of law The Rainbow Joy 2005 3 SLR R 719 which is clearly the more appropriate forum to try the case The natural forum analysis is a relative one if the defendant has shown a foreign court to be clearly more appropriate the Singapore court does not become the natural forum simply because there is a third forum which has equal or greater claim to be the natural forum Jio Minerals FZC v Mineral Enterprises Ltd 2011 1 SLR 391 If the defendant cannot show that there is a clearly more appropriate forum available elsewhere then a stay will ordinarily be denied Even if the defendant can show that there is a more appropriate forum elsewhere the court may nevertheless decline to stay the proceedings if it is satisfied that the plaintiff will be denied substantial justice if the case is tried in foreign forum 4 Determining the natural forum in a case of extra territorial jurisdiction 6 2 21 The plaintiff who is seeking leave of the court to serve process on the defendant outside Singapore see Section 6 2 8 6 2 9 above must show that Singapore is the most appropriate forum to try the case This does not involve showing that the Singapre is clearly ahead of any foreign court as the most appropriate forum it is enough to show that it is the most appropriate forum on balance and in the final analysis Siemens AG v Holdrich Investments Ltd 2010 3 SLR 1007 Even if the plaintiff cannot show that the court may still grant leave if the plaintiff can show that he will be denied substantial justice if he is not able to sue in Singapore but has to sue in the prima facie more appropriate forum instead 6 2 22 Since the leave is necessarily applied for by the plaintiff in the defendant s absence once served the defendant can apply to set aside the service on the basis that Singapore is not the appropriate forum The arguments are heard afresh at this stage with the onus remaining on the plaintiff to convince the court that the leave was properly granted in the first place F Choice of court agreements 1 Under common law a choice of court agreement is treated as a contractual agreement 6 2 23 In the common law a choice of court agreement is like any other contractual agreement It must be valid according to its applicable law see below Section 6 3 15 6 3 16 The law governing the choice of court clause is usually the law that governs the substantive agreemenet although it is possible for the choice of court agreement to be governed separately by its own law 6 2 24 Whether a particular dispute falls within the choice of court clause is a substantive question of construction governed by the applicable law of the choice of court agreement The Jian He 1999 3 SLR R 432 On the other hand the effect of the contract on the court s jurisdiction is a question of procedure governed exclusively by the law of the forum Abdul Rashid bin Abdul Manaf v Hii Yii Ann 2014 SGHC 194 On the distinction between substance and procedure see below Section 6 3 8 6 3 10 2 Functions of a choice of court agreement 6 2 25 A choice of court agreement can serve two distinct functions a Prorogation function provides a basis for the local courts to assume jurisdiction 6 2 26 First it can have the function of providing a basis for the Singapore court to assume jurisdiction prorogation function In a choice of court agreement the defendant submits or agrees to submit to the jurisdiction of the Singapore court This provides the basis for service within jurisdiction if such a mode of service is specified in the agreement or if not then the contractual submission provides a legal connection for service out of jurisdiction In its basic form the choice of court agreement does not prevent action from being commenced in a jurisdiction other than the chosen jurisdiction This is commonly referred to as a non exclusive jurisdiction agreement b Derogation function helps to exclude jurisdiction 6 2 27 A choice of court agreement can serve the additional function of excluding jurisdiction derogation function The exclusive choice of court agreement exemplifies this This is an agreement that imports an obligation on one or both parties to the contract not to commence proceedings in any court other than in the chosen court In such a case it would be a breach of a contractual obligation to commence or continue proceedings in a court other than the court of the chosen country Whether a choice of court agreement is exclusive or non exclusive is a matter of construction of the agreement in accordance with its governing law The common law does not apply any presumption as to whether the choice is exclusive or non exclusive In contrast Singapore statute law deems an agreement to submit to the Singapore International Commercial Court to be an exclusive choice of court agreement unless the parties have expressly provided otherwise 6 2 28 Where a plaintiff commences proceedings in Singapore in breach of a choice of court agreement the Singapore court will not apply the natural forum test Although the factors considered are similar in such a case the question is whether there are exceptional circumstances amounting to strong cause why the plaintiff should be allowed to carry on his action in Singapore in breach of contract Amerco Timbers Pte Ltd v Chatsworth Timber Corp Pte Ltd 1977 1978 SLR R 112 Conversely where the plaintiff has commenced action in Singapore pursuant to an exclusive choice of Singapore court clause the defendant has to show strong cause why he should be allowed to breach his contract and force the plaintiff to take his proceedings to a country other than Singapore 3 The choice of court agreement may be unilateral or mutual 6 2 29 An obligation binding a party to a choice of court agreement may be unilateral or mutual The agreement is mutual if both are equally bound by their choice of a forum whether exclusive or not The agreement is unilateral if only one party is bound For example in a contract between A and B B may agree that A can sue B in X Y or Z country and that B agrees to whichever forum A chooses as the exclusive forum for that dispute In this case the agreement is an exclusive choice of court clause as far as B is concerned but not an exclusive one where A is concerned Only B is bound by the forum selected by A 4 Whether the court accepts the agreement as binding on jurisdiction depends on the facts of the case 6 2 30 What amounts to strong cause depends on the facts of the case The Eastern Trust 1994 2 SLR R 511 6 2 31 If the agreement is the product of actual close negotiations between the parties the court will be very slow to release the parties from their bargain If the agreement is a standard clause especially in complex transactions involving multiple parties where it may be difficult for the defendant to ascertain which country the choice of court clause may point to or where the defendant may not even be aware that there is a choice of court clause the court may require less to be shown by way of strong cause 6 2 32 In any event all factors will be taken into consideration by the court including factors which were foreseeable by the parties at the time they had agreed to the exclusive choice of court clause However such factors are likely to bear less weight than factors which had not been foreseeable 6 2 33 Moreover if the Singapore court is of the view that there is no defence to the plaintiff s claim it is likely to find that the defendant is not genuinely desiring to seek trial in the contractually chosen jurisdiction and this is an exceptional circumstance that is likely to amount to strong cause justifying the plaintiff suing in Singapore in breach of an exclusive choice of foreign court agreement The Hyundai Fortune 2004 4 SLR R 548 5 Applicability of the Spiliada test in cases of non exclusive choice of court agreements 6 2 34 This does not mean that the Spiliada test would apply in all cases of non exclusive choice of court agreements Sometimes the court may find that the defendant had impliedly agreed not to raise any natural forum objections to the plaintiff s right to sue the defendant in the chosen Singapore court Thus if the defendant argues that the plaintiff should not sue him in Singapore because another forum is more appropriate that is a breach of contract that needs to be justified 6 2 35 At other times the court may find by an express term or by inference that the defendant has agreed not to object to the chosen Singapore court exercising its jurisdiction it would be a breach of contract to argue that the Singapore court should not exercise its jurisdiction and at least something like strong cause would need to be shown to justify the breach of contract In every case it is a question of interpretation what the parties have agreed to Citibank NA v Robert 2011 3 SLR 465 Quite apart from the question of breach of contract the very existence of a non exclusive jurisdiction bears weight in the Spiliada test and the weight it bears depends on all the circumstances of the case Orchard Capital I Ltd v Ravindra Kumar Jhunjhunwala 2012 2 SLR 519 For example the choice would obviously bear more weight as a conscious choice by the parties of a neutral court than it would had it been just one of several jurisdictions listed as possible places where legal action could be taken G Anti suit injunctions 1 An order to prevent a party from commencing or continuing legal proceedings in a foreign country 6 2 36 An anti suit injunction is an order by the Singapore court to prevent a party from commencing or continuing legal proceedings in a foreign country It is an order that is made personally against the person subject to the injunction The court has no power and does not purport to give the foreign court any direct orders 2 Local courts takes into account comity in exercising its discretion to grant these injunctions 6 2 37 Nevertheless the anti suit injunction is recognised as a rather extreme measure amounting to an indirect interference with foreign legal proceedings and the court will apply great caution in exercising its discretion to grant such an injunction Djoni Widjaya v Bank of America 1994 2 SLR R 898 John Reginald Stott Kirkham v Trane US Inc 2009 4 SLR 428 6 2 38 As a matter of comity generally the court would only consider granting an anti suit injunction if it is the natural forum to try the case Airbus Industrie GIE v Patel 1999 1 AC 119 The Ever Glory 2004 2 SLR R 457 this justifies the exercise of power which could indirectly interfere with foreign proceedings On the other hand the court will not grant an anti suit injunction simply because it is the natural forum to try the case It must also be shown that the party to be enjoined the respondent has in pursuing the foreign legal proceedings behaved in a vexatious oppressive or unconscionable manner against the applicant H Breach of contract 1 Comity bears little weight when the court chooses to enforce the agreement 6 2 39 However comity bears comparatively less weight when the court is enforcing an agreement between the parties WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka 2002 1 SL R R 1088 John Reginald Stott Kirkham v Trane US Inc 2009 4 SLR 428 Donohue v Armco Inc 2002 1 Lloyd s Rep 425 Thus the breach of an exclusive choice of forum court agreement in the pursuit of foreign proceedings is a sufficient reason for an anti suit injunction without further inquiry as to the vexatiousness or oppressiveness of the foreign conduct unless exceptional circumstances amounting to strong cause are shown to justify the breach of contract 6 2 40 The test here is the mirror of that above in the enforcement of exclusive choice of court agreements within the forum This is not surprising since in both cases the court is enforcing an agreement Nevertheless considerations of comity are necessarily weightier when considering whether to grant an anti suit injunction than when the court is considering the exercise of its own jurisdiction The Singapore court has refused to enforce an exclusive choice of court agreement where it was not the contractually chosen court People s Insurance Co Ltd v Akai Pty Ltd 1997 2 SLR R 291 I Jurisdiction of the Singapore International Commercial Court 6 2 41 The Singapore International Commercial Court SICC is a division of the Singapore High Court It has jurisdiction over any action which the High Court may try if the action is international and commercial in nature and satisfies such other conditions that may be prescribed in the Rules of Court 6 2 42 The SICC will have jurisdiction if the parties have agreed to its jurisdiction either before after the dispute has arisen The SICC will not apply principles of natural forum or strong cause to stay proceedings in respect of defendants who have agreed to its jurisdiction Instead the SICC has discretion to transfer a case to the High Court if the subject matter is more appropriately tried there In addition the High Court may transfer suitable cases within its jurisdiction to the SICC whether or not the parties have agreed to the jurisdiction of the SICC 6 2 43 In addition an agreement to submit to the jurisdiction of the SICC has the following consequences under Singapore law unless the contracting parties have expressly provided otherwise a the parties are taken to have agreed to submit to the exclusive jurisdiction of the SICC b the parties are taken to have agreed to carry out the judgment or order of the SICC and c the parties are taken to have agreed to waive any recourse to any court or tribunal outside Singapore against any judgment or order of the SICC or its enforcement insofar as such recourse can be validly waived Return to the top SECTION 3 CHOICE OF LAW A Introduction and methodology 6 3 1 Choice of law problems can arise when a dispute involves parties from or facts occurring over different countries The underlying basis of choice of law is the recognition of the pluralism of legal values and its corollary that the application of the forum law may not do justice to the parties in all cases involving foreign elements 6 3 2 Another important objective of choice of law analysis is as far as possible to promote the uniformity of outcome whichever country happens to try the case Singapore follows the common law choice of law methodology Generally the court analyses the situation in these steps B International mandatory rules must be applied irrespective of any choice of law rule 6 3 3 If there is a rule of the forum that is mandatory in the international sense ie it peremptorily directs itself to apply to the facts irrespective of the foreign elements in the case then such a rule must be applied irrespective of any choice of law rule 6 3 4 Generally it is a question of construction whether a statutory provision bears this character Some provisions are express Otherwise the forum engages in an exercise of construction often by asking whether the rule is intended to protect some fundamental value or interest of the forum or if the statutory objective was not intended to be circumvented by the existence of foreign elements in the dispute C An issue concerned with choice of law must be characterised before the court 1 The objective of characterisation is to identify the nature of the problem in the private international law sense 6 3 5 If the issue is one to which choice of law analysis is relevant the first step is to characterise the issue before the court The objective is to identify the nature of the problem in the private international law sense At this stage while domestic classifications are helpful they are not determinative 2 An example involving the doctrine of consideration 6 3 6 In domestic Singapore law the doctrine of consideration is an essential ingredient of a contract not made under deed Nevertheless an agreement not supported by consideration can be characterised as a contract for choice of law purposes in recognition that other legal systems do not use consideration to resolve the problems that the common law uses that doctrine to resolve Re Bonacina 1912 2 Ch 394 6 3 7 Issues will be characterised into categories which are delineated for choice of law purposes Every category has its own connecting factor which will indicate the applicable law see below Section 6 3 11 6 3 12 3 The basic level of characterisation is between substance and procedure 6 3 8 The most basic level of characterisation is that between substance and procedure Matters of procedure are always governed by the law of the forum Issues of substance are amenable to further characterisation for choice of law purposes The distinction is not necessarily drawn in the same manner as in domestic law a Local courts are concerned with the existence or enforceability of the content of the right 6 3 9 The traditional common law approach Huber v Steiner 2 Bing NC 202 132 ER 80 which appears to be the applicable approach in Singapore is that the distinction depends on whether the matter goes to the existence and content of the right or to its enforceability the former is substantive the latter is procedural Star City Pty Ltd v Tan Hong Woon 2002 1 SLR R 306 Dynasty Line Ltd in liquidation v Sukamto Sia 2014 3 SLR 277 b Other common law countries adopt a functional approach 6 3 10 However the trend in other major common law countries which has yet to be tested in Singapore take a functional approach that is the inquiry is whether the application of foreign law in the case would cause undue inconvenience to the administration and machinery of justice in the court of the forum Tolofson v Jensen 1994 3 SCR 1022 John Pfeiffer Pty Ltd v Rogerson 2000 203 CLR 503 Harding v Wealands 2005 1 WLR 1539 First Laser Ltd v Fujian Enterprises Holdings Co Ltd 2012 HKCFA 52 The Singapore Court of Appeal regarded this modern approach as persuasive though it did not have to decide the point in Goh Suan Hee v Teo Cher Teck 2010 1 SLR 367 4 If the issue is substantive the substantive category of choice of law it belongs to must be determined 6 3 11 If the issue is substantive the next step is to determine which substantive category of choice of law it belongs to The common law has developed a large number of categories and sub categories and they are being continuously redefined and reshaped Examples are contracts with sub categories of formal validity essential validity formation etc torts restitution property inter vivos succession family etc 6 3 12 Associated with each category or sub category are connecting factors pointing to the applicable law Once an issue is identified as belonging to a particular category the question of what law to apply is usually quite straightforward but complications can arise if a reference is made to the foreign legal system s choice of law rules This can create difficulties when the reference is returned renvoi but this problem generally does not affect most commercial transactions in contract and nothing more will be said about it D Foreign law is excluded 6 3 13 The application of foreign law is always subject to the fundamental public policy of the forum Contravention of domestic public policy is not enough there must be contravention of some essential moral social or economic value of the forum Moreover the forum will not enforce directly or indirectly any foreign penal revenue or other public laws The Republic of the Philippines v Maler Foundation 2014 1 SLR 1389 E Choice of law for contracts 1 Most issues arising in contract are governed by the proper law of the contract 6 3 14 The common law choice of law rules apply in Singapore but the rules are very similar to those in many civil law jurisdictions as well as the rules embodied in the Rome Convention applicable in the European Union especially in the respect for party autonomy The choice of law rules were considered by the Law Reform Committee of the Singapore Academy of Law Reform of the Law Concerning Choice of Law in Contract which recommended the retention of the common law Most issues arising in contract in the private international law sense are governed by the proper law of the contract 2 The proper law of contract is determined in the following stages 6 3 15 The proper law of the contract is determined in three stages 1 If the parties to the contract have expressly selected a law to govern the contract that will be the proper law the subjective proper law unless the choice was not made in good faith Pacific Recreation Pte Ltd v S Y Technology Inc 2008 2 SLR 491 Peh Teck Quee v Bayerische Landesbank Girozentrale 1999 3 SLR R 842 The exception is narrowly construed The choice of an unconnected law is not in itself objectionable 2 If the parties have not made any express selection the court may infer a choice from the contract and the surrounding circumstances at the time of the making of the contract 3 If the court cannot find any choice by the parties then the proper law is the law of the country or system of law with the closest and most real connection with the transaction and the parties the objective proper law 6 3 16 Although the second and third stages are conceptually different as the second is still a search for the subjective proper law while third is purely an examination of objective connections the same factors are scrutinised Practically the Singapore court may skip stage 2 in the absence of an express choice and go straight to stage 3 in cases where the factual circumstances are such that any inference of the parties intentions as to choice of law to be drawn from the fact is likely to be speculative Overseas Union Insurance Ltd v Turegum Insurance Co 2001 2 SLR R 285 6 3 17 The subjective proper law is found by the usual ascertainment of objective facts in the common law approach to the determination of the objective intention of the contracting parties It is not a reference to the subjective thinking of the parties 3 The doctrine of depeçage 6 3 18 Different parts of a contract may be governed by different laws although generally the court would be slow to arrive at such a conclusion 6 3 19 The proper law of the contract governs issues of essential validity interpretation whether consideration or causa in some civil law contracts is required content of the obligation mode of performance and the discharge of the obligation or of the contract 4 Formal validity of a contract 6 3 20 A contract is formally valid if it is valid either by the proper law of the contract or the law of the place of execution of the contract PT Jaya Putra Kundur Indah v Guthrie Overseas Investments Pte Ltd 1996 SGHC 285 5 Formation of contract 6 3 21 Formation of contract raises one of the most complex problems in private international law because it is an issue that precedes the existence of the contract Authorities from other common law jurisdictions suggest that the debate is likely to be between the proper law of the putative contract ie what the proper law would be assuming the contract to exist and the law of the forum Generally it may make practical sense to apply the former CIMB Bank Bhd v Dresdner Kleinwort Ltd 2008 4 SLR 543 6 The rule for choice of law for capacity of natural persons in contract is unclear 6 3 22 The common law has no clear rule on the choice of law for capacity of natural persons for contracting Various authorities in the past have suggested either the law of the domicile residence place of contract or the proper law of the contract 6 3 23 Many writers argue against using the law selected by the parties as it would amount to the parties pulling themselves up by the bootstrap Domicile and residence are seen by some writers as inconvenient connecting factors in commercial transactions Some writers have suggested that capacity should be validated by the objective proper law of the contract or alternatively the law of the residence A corporation has capacity to enter into a contract if it has capacity both by the law of its incorporation and the proper law of the contract 7 Illegal contracts are generally not enforceable 6 3 24 A contract that is illegal by its proper law will take its consequences from that law it will generally not be enforceable in Singapore A contract that is illegal by the law of the place where it is made will nevertheless be enforceable in Singapore A contract whatever its governing law will not be enforceable in Singapore if its enforcement will contravene the fundamental public policy of Singapore A contract that is illegal by the law of the contractual place of performance may not be enforceable in Singapore Whether this is the consequence of the application of the proper law of the contract or the public policy of the law of the forum has not been resolved A contract may not be enforced by the Singapore court if it involves the commission of acts which although not illegal by the law of the country of performance nevertheless contravene the domestic public policy of that country which is based on general principles of morality and which is shared by the proper law of the contract and or the law of the forum A contractual claim may not be enforced if it is tainted by a collateral illegality F Choice of law for torts 1 Local courts usually apply the double actionability rule for wrongs committed abroad 6 3 25 Singapore applies the double actionability rule for wrongs whether committed abroad or in Singapore Rickshaw Investments Ltd v Nicolai Baron von Uexkull 2007 1 SLR 377 Thus the plaintiff can sue in Singapore for a wrong wherever committed if 1 the wrong is actionable as a tort by the law of the forum if the tort had been committed in the forum and 2 the wrong gives rise to civil liability by the law of the place where the tort is committed 6 3 26 However in an exceptional case the court may apply the law of the forum to the exclusion of the law of the place of the wrong or the law of the place of the wrong to the exclusion of the law of the forum or the law of a third country which has the closest connection with the parties and the occurrence to the exclusion of both the law of the forum and the law of the place of the wrong in respect of specific issues or the entire cause of action Rickshaw Investments Ltd v Nicolai Baron von Uexkull 2007 1 SLR 377 Where the tort is committed is not always easy to determine but the court would look back at the series of events constituting the tort and ask itself where in substance the tort had occurred Jio Minerals FZC v Mineral Enterprises Ltd 2011 1 SLR 391 2 Other countries have dropped the requirement of the law of the forum and local courts may be receptive to such reform 6 3 27 In several major common law countries eg England Private International Law Miscellaneous Provisions Act 1995 Canada Tolofsen v Jensen 1994 3 SCR 1022 and Australia Regie National des Usines Renault SA v Zhang 2002 210 CLR 491 the requirement of the law of the forum has been dropped as being a relic of the past which is inconsistent with modern choice of law approaches towards civil obligations generally and which also encourages forum shopping The protection of the interest of the forum is today generally seen as something which can be dealt with by its fundamental public policy and international mandatory rules 6 3 28 The Court of Appeal in Rickshaw Investments Ltd v Nicolai Baron von Uexkull 2007 1 SLR 377 has observed that with the judicious application of the flexible exception to the general rule of double actionability results in Singapore will not be vastly different from the results in these other countries Choice of Law for Restitutionary Obligations 6 3 29 Restitutionary claims on a restitutionary obligation are claims seeking the reversal of the unjust enrichment of the defendant at the expense of the plaintiff Such claims are governed by the proper law of the restitutionary obligation The proper law of the restitutionary obligation is determined by the following guidelines a if the obligation arises from a contractual relationship between the parties the proper law is the law governing the contractual relationship b if the obligation arises out of an immovable property the proper law is the law of the country where the immovable property is situated c in other cases the proper law is the law of the place of where the enrichment occurred unless the obligation is more closely connected with some other legal system CIMB Bank Bhd v Dresdner Kleinwort Ltd 2008 4 SLR 543 Where there is an express choice of law in a contract the chosen law may be the proper law of a restitutionary obligation arising from the contractual relationship even if the contract is void or rescinded so long the reason for the non existence or avoidance of the contract does not directly affect the agreement between the parties with respect to that choice of law CIMB Bank Bhd v Dresdner Kleinwort Ltd 2008 4 SLR 543 Choice of Law for Equitable Obligations 6 3 30 Equitable obligations have their origins in the chancery jurisdiction in common law systems Today the important equitable obligations that may arise in the commercial context include the fiduciary obligation the obligation of confidentiality and obligations not to intermeddle with trust or fiduciary institutions In the Commonwealth there is considerable uncertainty relating to the choice of law for such obligations The question is settled in Singapore law to the extent that where such an equitable obligation arises from a factual matrix governed by a relationship recognized by the law eg in contract or tort the law which governs that underlying relationship will apply to the equitable obligation Rickshaw Investments Ltd v Nicolai Baron von Uexkull 2007 1 SLR 377 G Foreign currency obligations 6 3 31 The Singapore courts can and do regularly enter judgments in foreign currency where that is the currency in which the relevant loss or gain is felt and such a judgment is converted to local currency at the date of execution of the judgment Indo Commercial Society Pte Ltd v Ebrahim 1992 2 SLR R 667 Proof of Foreign Law 6 3 32 The correct application of foreign law in accordance with choice of law rules depends on the proof of foreign law before the Singapore courts As a rule of convenience in the absence of proof of foreign law Singapore law will be applied by default D Oz International Pte Ltd v PSB Corp Ltd 2010 3 SLR 262 Foreign law is regarded as a fact which needs to be proven under the common law In Singapore foreign law may be proven by the use of secondary sources like law reports and textbooks but generally these should be introduced and explained to the court by an expert familiar with that legal system Pacific Recreation Pte Ltd v S Y Technology Inc 2008 2 SLR 491 The Singapore court may direct the parties to refer a question of foreign law to be determined by a foreign court Westacre Investment Inc v The State Owned Company Yugoimport SDPR 2009 2 SLR 166 The Singapore Supreme Court signed a Memorandum of Understanding with the Supreme Court of New South Wales in 2010 for such mutual references but the power of the Singapore court extends to directing parties to proceed in any other foreign court Return to the top SECTION 4 FOREIGN JUDGMENTS A Introduction 1 Foreign judgments may be recognised or enforced by action in Singapore 6 4 1 A foreign in personam judgment may be recognised in Singapore or enforced by action at common law in Singapore A foreign judgment that is recognised may be used to raise an estoppel on a specific issue or on a cause of action 2 Conditions to be met for foreign judgments to be recognised or enforced 6 4 2 The common law allows foreign judgments to be recognised or enforced if the following conditions are met A judgment from a court of law of a foreign country on a matter of substance which is final and conclusive by the law of that country where the court had international jurisdiction as defined by Singapore law over the party sought to be bound in the local proceedings binds that party to obey that judgment In addition a foreign judgment must be for a fixed or ascertainable sum of money to be enforceable Poh Soon Kiat v Desert Palace Inc 2010 1 SLR 1129 6 4 3 In enforcement proceedings the judgment

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  • Ch.06 The Conflict of Laws
    not be taken into account or at least will be given little weight Thus the fact that trial takes longer in the more appropriate foreign forum than in Singapore or that the plaintiff can get higher damages in Singapore than in the foreign but more appropriate forum only go to show structural differences in the legal systems and will not in themselves amount to denial of substantial justice d Judges exercise discretion when determining the natural forum 6 2 19 This is a discretionary exercise though of course the discretion is guided by principles laid down in The Spiliada and subsequent cases in England and Singapore An appeal from a decision on this basis is an appeal against discretion and can succeed only if wrong principles had been applied or right principles had been applied wrongly eg if the court had taken account of irrelevant factors or failed to take account of relevant factors or had reached a patently unreasonable conclusion Otherwise the exercise of discretion by a judge on the question of the appropriate forum will generally not be disturbed on appeal 3 Determining the natural forum in a case of territorial jurisdiction 6 2 20 A defendant who has been served within the jurisdiction see Section 6 2 4 6 2 7 above and who does not want the Singapore court to try the case may apply to stay the proceedings by showing that there is another available and competent forum which need not strictly be a court of law The Rainbow Joy 2005 3 SLR R 719 which is clearly the more appropriate forum to try the case The natural forum analysis is a relative one if the defendant has shown a foreign court to be clearly more appropriate the Singapore court does not become the natural forum simply because there is a third forum which has equal or greater claim to be the natural forum Jio Minerals FZC v Mineral Enterprises Ltd 2011 1 SLR 391 If the defendant cannot show that there is a clearly more appropriate forum available elsewhere then a stay will ordinarily be denied Even if the defendant can show that there is a more appropriate forum elsewhere the court may nevertheless decline to stay the proceedings if it is satisfied that the plaintiff will be denied substantial justice if the case is tried in foreign forum 4 Determining the natural forum in a case of extra territorial jurisdiction 6 2 21 The plaintiff who is seeking leave of the court to serve process on the defendant outside Singapore see Section 6 2 8 6 2 9 above must show that Singapore is the most appropriate forum to try the case This does not involve showing that the Singapre is clearly ahead of any foreign court as the most appropriate forum it is enough to show that it is the most appropriate forum on balance and in the final analysis Siemens AG v Holdrich Investments Ltd 2010 3 SLR 1007 Even if the plaintiff cannot show that the court may still grant leave if the plaintiff can show that he will be denied substantial justice if he is not able to sue in Singapore but has to sue in the prima facie more appropriate forum instead 6 2 22 Since the leave is necessarily applied for by the plaintiff in the defendant s absence once served the defendant can apply to set aside the service on the basis that Singapore is not the appropriate forum The arguments are heard afresh at this stage with the onus remaining on the plaintiff to convince the court that the leave was properly granted in the first place F Choice of court agreements 1 Under common law a choice of court agreement is treated as a contractual agreement 6 2 23 In the common law a choice of court agreement is like any other contractual agreement It must be valid according to its applicable law see below Section 6 3 15 6 3 16 The law governing the choice of court clause is usually the law that governs the substantive agreemenet although it is possible for the choice of court agreement to be governed separately by its own law 6 2 24 Whether a particular dispute falls within the choice of court clause is a substantive question of construction governed by the applicable law of the choice of court agreement The Jian He 1999 3 SLR R 432 On the other hand the effect of the contract on the court s jurisdiction is a question of procedure governed exclusively by the law of the forum Abdul Rashid bin Abdul Manaf v Hii Yii Ann 2014 SGHC 194 On the distinction between substance and procedure see below Section 6 3 8 6 3 10 2 Functions of a choice of court agreement 6 2 25 A choice of court agreement can serve two distinct functions a Prorogation function provides a basis for the local courts to assume jurisdiction 6 2 26 First it can have the function of providing a basis for the Singapore court to assume jurisdiction prorogation function In a choice of court agreement the defendant submits or agrees to submit to the jurisdiction of the Singapore court This provides the basis for service within jurisdiction if such a mode of service is specified in the agreement or if not then the contractual submission provides a legal connection for service out of jurisdiction In its basic form the choice of court agreement does not prevent action from being commenced in a jurisdiction other than the chosen jurisdiction This is commonly referred to as a non exclusive jurisdiction agreement b Derogation function helps to exclude jurisdiction 6 2 27 A choice of court agreement can serve the additional function of excluding jurisdiction derogation function The exclusive choice of court agreement exemplifies this This is an agreement that imports an obligation on one or both parties to the contract not to commence proceedings in any court other than in the chosen court In such a case it would be a breach of a contractual obligation to commence or continue proceedings in a court other than the court of the chosen country Whether a choice of court agreement is exclusive or non exclusive is a matter of construction of the agreement in accordance with its governing law The common law does not apply any presumption as to whether the choice is exclusive or non exclusive In contrast Singapore statute law deems an agreement to submit to the Singapore International Commercial Court to be an exclusive choice of court agreement unless the parties have expressly provided otherwise 6 2 28 Where a plaintiff commences proceedings in Singapore in breach of a choice of court agreement the Singapore court will not apply the natural forum test Although the factors considered are similar in such a case the question is whether there are exceptional circumstances amounting to strong cause why the plaintiff should be allowed to carry on his action in Singapore in breach of contract Amerco Timbers Pte Ltd v Chatsworth Timber Corp Pte Ltd 1977 1978 SLR R 112 Conversely where the plaintiff has commenced action in Singapore pursuant to an exclusive choice of Singapore court clause the defendant has to show strong cause why he should be allowed to breach his contract and force the plaintiff to take his proceedings to a country other than Singapore 3 The choice of court agreement may be unilateral or mutual 6 2 29 An obligation binding a party to a choice of court agreement may be unilateral or mutual The agreement is mutual if both are equally bound by their choice of a forum whether exclusive or not The agreement is unilateral if only one party is bound For example in a contract between A and B B may agree that A can sue B in X Y or Z country and that B agrees to whichever forum A chooses as the exclusive forum for that dispute In this case the agreement is an exclusive choice of court clause as far as B is concerned but not an exclusive one where A is concerned Only B is bound by the forum selected by A 4 Whether the court accepts the agreement as binding on jurisdiction depends on the facts of the case 6 2 30 What amounts to strong cause depends on the facts of the case The Eastern Trust 1994 2 SLR R 511 6 2 31 If the agreement is the product of actual close negotiations between the parties the court will be very slow to release the parties from their bargain If the agreement is a standard clause especially in complex transactions involving multiple parties where it may be difficult for the defendant to ascertain which country the choice of court clause may point to or where the defendant may not even be aware that there is a choice of court clause the court may require less to be shown by way of strong cause 6 2 32 In any event all factors will be taken into consideration by the court including factors which were foreseeable by the parties at the time they had agreed to the exclusive choice of court clause However such factors are likely to bear less weight than factors which had not been foreseeable 6 2 33 Moreover if the Singapore court is of the view that there is no defence to the plaintiff s claim it is likely to find that the defendant is not genuinely desiring to seek trial in the contractually chosen jurisdiction and this is an exceptional circumstance that is likely to amount to strong cause justifying the plaintiff suing in Singapore in breach of an exclusive choice of foreign court agreement The Hyundai Fortune 2004 4 SLR R 548 5 Applicability of the Spiliada test in cases of non exclusive choice of court agreements 6 2 34 This does not mean that the Spiliada test would apply in all cases of non exclusive choice of court agreements Sometimes the court may find that the defendant had impliedly agreed not to raise any natural forum objections to the plaintiff s right to sue the defendant in the chosen Singapore court Thus if the defendant argues that the plaintiff should not sue him in Singapore because another forum is more appropriate that is a breach of contract that needs to be justified 6 2 35 At other times the court may find by an express term or by inference that the defendant has agreed not to object to the chosen Singapore court exercising its jurisdiction it would be a breach of contract to argue that the Singapore court should not exercise its jurisdiction and at least something like strong cause would need to be shown to justify the breach of contract In every case it is a question of interpretation what the parties have agreed to Citibank NA v Robert 2011 3 SLR 465 Quite apart from the question of breach of contract the very existence of a non exclusive jurisdiction bears weight in the Spiliada test and the weight it bears depends on all the circumstances of the case Orchard Capital I Ltd v Ravindra Kumar Jhunjhunwala 2012 2 SLR 519 For example the choice would obviously bear more weight as a conscious choice by the parties of a neutral court than it would had it been just one of several jurisdictions listed as possible places where legal action could be taken G Anti suit injunctions 1 An order to prevent a party from commencing or continuing legal proceedings in a foreign country 6 2 36 An anti suit injunction is an order by the Singapore court to prevent a party from commencing or continuing legal proceedings in a foreign country It is an order that is made personally against the person subject to the injunction The court has no power and does not purport to give the foreign court any direct orders 2 Local courts takes into account comity in exercising its discretion to grant these injunctions 6 2 37 Nevertheless the anti suit injunction is recognised as a rather extreme measure amounting to an indirect interference with foreign legal proceedings and the court will apply great caution in exercising its discretion to grant such an injunction Djoni Widjaya v Bank of America 1994 2 SLR R 898 John Reginald Stott Kirkham v Trane US Inc 2009 4 SLR 428 6 2 38 As a matter of comity generally the court would only consider granting an anti suit injunction if it is the natural forum to try the case Airbus Industrie GIE v Patel 1999 1 AC 119 The Ever Glory 2004 2 SLR R 457 this justifies the exercise of power which could indirectly interfere with foreign proceedings On the other hand the court will not grant an anti suit injunction simply because it is the natural forum to try the case It must also be shown that the party to be enjoined the respondent has in pursuing the foreign legal proceedings behaved in a vexatious oppressive or unconscionable manner against the applicant H Breach of contract 1 Comity bears little weight when the court chooses to enforce the agreement 6 2 39 However comity bears comparatively less weight when the court is enforcing an agreement between the parties WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka 2002 1 SL R R 1088 John Reginald Stott Kirkham v Trane US Inc 2009 4 SLR 428 Donohue v Armco Inc 2002 1 Lloyd s Rep 425 Thus the breach of an exclusive choice of forum court agreement in the pursuit of foreign proceedings is a sufficient reason for an anti suit injunction without further inquiry as to the vexatiousness or oppressiveness of the foreign conduct unless exceptional circumstances amounting to strong cause are shown to justify the breach of contract 6 2 40 The test here is the mirror of that above in the enforcement of exclusive choice of court agreements within the forum This is not surprising since in both cases the court is enforcing an agreement Nevertheless considerations of comity are necessarily weightier when considering whether to grant an anti suit injunction than when the court is considering the exercise of its own jurisdiction The Singapore court has refused to enforce an exclusive choice of court agreement where it was not the contractually chosen court People s Insurance Co Ltd v Akai Pty Ltd 1997 2 SLR R 291 I Jurisdiction of the Singapore International Commercial Court 6 2 41 The Singapore International Commercial Court SICC is a division of the Singapore High Court It has jurisdiction over any action which the High Court may try if the action is international and commercial in nature and satisfies such other conditions that may be prescribed in the Rules of Court 6 2 42 The SICC will have jurisdiction if the parties have agreed to its jurisdiction either before after the dispute has arisen The SICC will not apply principles of natural forum or strong cause to stay proceedings in respect of defendants who have agreed to its jurisdiction Instead the SICC has discretion to transfer a case to the High Court if the subject matter is more appropriately tried there In addition the High Court may transfer suitable cases within its jurisdiction to the SICC whether or not the parties have agreed to the jurisdiction of the SICC 6 2 43 In addition an agreement to submit to the jurisdiction of the SICC has the following consequences under Singapore law unless the contracting parties have expressly provided otherwise a the parties are taken to have agreed to submit to the exclusive jurisdiction of the SICC b the parties are taken to have agreed to carry out the judgment or order of the SICC and c the parties are taken to have agreed to waive any recourse to any court or tribunal outside Singapore against any judgment or order of the SICC or its enforcement insofar as such recourse can be validly waived Return to the top SECTION 3 CHOICE OF LAW A Introduction and methodology 6 3 1 Choice of law problems can arise when a dispute involves parties from or facts occurring over different countries The underlying basis of choice of law is the recognition of the pluralism of legal values and its corollary that the application of the forum law may not do justice to the parties in all cases involving foreign elements 6 3 2 Another important objective of choice of law analysis is as far as possible to promote the uniformity of outcome whichever country happens to try the case Singapore follows the common law choice of law methodology Generally the court analyses the situation in these steps B International mandatory rules must be applied irrespective of any choice of law rule 6 3 3 If there is a rule of the forum that is mandatory in the international sense ie it peremptorily directs itself to apply to the facts irrespective of the foreign elements in the case then such a rule must be applied irrespective of any choice of law rule 6 3 4 Generally it is a question of construction whether a statutory provision bears this character Some provisions are express Otherwise the forum engages in an exercise of construction often by asking whether the rule is intended to protect some fundamental value or interest of the forum or if the statutory objective was not intended to be circumvented by the existence of foreign elements in the dispute C An issue concerned with choice of law must be characterised before the court 1 The objective of characterisation is to identify the nature of the problem in the private international law sense 6 3 5 If the issue is one to which choice of law analysis is relevant the first step is to characterise the issue before the court The objective is to identify the nature of the problem in the private international law sense At this stage while domestic classifications are helpful they are not determinative 2 An example involving the doctrine of consideration 6 3 6 In domestic Singapore law the doctrine of consideration is an essential ingredient of a contract not made under deed Nevertheless an agreement not supported by consideration can be characterised as a contract for choice of law purposes in recognition that other legal systems do not use consideration to resolve the problems that the common law uses that doctrine to resolve Re Bonacina 1912 2 Ch 394 6 3 7 Issues will be characterised into categories which are delineated for choice of law purposes Every category has its own connecting factor which will indicate the applicable law see below Section 6 3 11 6 3 12 3 The basic level of characterisation is between substance and procedure 6 3 8 The most basic level of characterisation is that between substance and procedure Matters of procedure are always governed by the law of the forum Issues of substance are amenable to further characterisation for choice of law purposes The distinction is not necessarily drawn in the same manner as in domestic law a Local courts are concerned with the existence or enforceability of the content of the right 6 3 9 The traditional common law approach Huber v Steiner 2 Bing NC 202 132 ER 80 which appears to be the applicable approach in Singapore is that the distinction depends on whether the matter goes to the existence and content of the right or to its enforceability the former is substantive the latter is procedural Star City Pty Ltd v Tan Hong Woon 2002 1 SLR R 306 Dynasty Line Ltd in liquidation v Sukamto Sia 2014 3 SLR 277 b Other common law countries adopt a functional approach 6 3 10 However the trend in other major common law countries which has yet to be tested in Singapore take a functional approach that is the inquiry is whether the application of foreign law in the case would cause undue inconvenience to the administration and machinery of justice in the court of the forum Tolofson v Jensen 1994 3 SCR 1022 John Pfeiffer Pty Ltd v Rogerson 2000 203 CLR 503 Harding v Wealands 2005 1 WLR 1539 First Laser Ltd v Fujian Enterprises Holdings Co Ltd 2012 HKCFA 52 The Singapore Court of Appeal regarded this modern approach as persuasive though it did not have to decide the point in Goh Suan Hee v Teo Cher Teck 2010 1 SLR 367 4 If the issue is substantive the substantive category of choice of law it belongs to must be determined 6 3 11 If the issue is substantive the next step is to determine which substantive category of choice of law it belongs to The common law has developed a large number of categories and sub categories and they are being continuously redefined and reshaped Examples are contracts with sub categories of formal validity essential validity formation etc torts restitution property inter vivos succession family etc 6 3 12 Associated with each category or sub category are connecting factors pointing to the applicable law Once an issue is identified as belonging to a particular category the question of what law to apply is usually quite straightforward but complications can arise if a reference is made to the foreign legal system s choice of law rules This can create difficulties when the reference is returned renvoi but this problem generally does not affect most commercial transactions in contract and nothing more will be said about it D Foreign law is excluded 6 3 13 The application of foreign law is always subject to the fundamental public policy of the forum Contravention of domestic public policy is not enough there must be contravention of some essential moral social or economic value of the forum Moreover the forum will not enforce directly or indirectly any foreign penal revenue or other public laws The Republic of the Philippines v Maler Foundation 2014 1 SLR 1389 E Choice of law for contracts 1 Most issues arising in contract are governed by the proper law of the contract 6 3 14 The common law choice of law rules apply in Singapore but the rules are very similar to those in many civil law jurisdictions as well as the rules embodied in the Rome Convention applicable in the European Union especially in the respect for party autonomy The choice of law rules were considered by the Law Reform Committee of the Singapore Academy of Law Reform of the Law Concerning Choice of Law in Contract which recommended the retention of the common law Most issues arising in contract in the private international law sense are governed by the proper law of the contract 2 The proper law of contract is determined in the following stages 6 3 15 The proper law of the contract is determined in three stages 1 If the parties to the contract have expressly selected a law to govern the contract that will be the proper law the subjective proper law unless the choice was not made in good faith Pacific Recreation Pte Ltd v S Y Technology Inc 2008 2 SLR 491 Peh Teck Quee v Bayerische Landesbank Girozentrale 1999 3 SLR R 842 The exception is narrowly construed The choice of an unconnected law is not in itself objectionable 2 If the parties have not made any express selection the court may infer a choice from the contract and the surrounding circumstances at the time of the making of the contract 3 If the court cannot find any choice by the parties then the proper law is the law of the country or system of law with the closest and most real connection with the transaction and the parties the objective proper law 6 3 16 Although the second and third stages are conceptually different as the second is still a search for the subjective proper law while third is purely an examination of objective connections the same factors are scrutinised Practically the Singapore court may skip stage 2 in the absence of an express choice and go straight to stage 3 in cases where the factual circumstances are such that any inference of the parties intentions as to choice of law to be drawn from the fact is likely to be speculative Overseas Union Insurance Ltd v Turegum Insurance Co 2001 2 SLR R 285 6 3 17 The subjective proper law is found by the usual ascertainment of objective facts in the common law approach to the determination of the objective intention of the contracting parties It is not a reference to the subjective thinking of the parties 3 The doctrine of depeçage 6 3 18 Different parts of a contract may be governed by different laws although generally the court would be slow to arrive at such a conclusion 6 3 19 The proper law of the contract governs issues of essential validity interpretation whether consideration or causa in some civil law contracts is required content of the obligation mode of performance and the discharge of the obligation or of the contract 4 Formal validity of a contract 6 3 20 A contract is formally valid if it is valid either by the proper law of the contract or the law of the place of execution of the contract PT Jaya Putra Kundur Indah v Guthrie Overseas Investments Pte Ltd 1996 SGHC 285 5 Formation of contract 6 3 21 Formation of contract raises one of the most complex problems in private international law because it is an issue that precedes the existence of the contract Authorities from other common law jurisdictions suggest that the debate is likely to be between the proper law of the putative contract ie what the proper law would be assuming the contract to exist and the law of the forum Generally it may make practical sense to apply the former CIMB Bank Bhd v Dresdner Kleinwort Ltd 2008 4 SLR 543 6 The rule for choice of law for capacity of natural persons in contract is unclear 6 3 22 The common law has no clear rule on the choice of law for capacity of natural persons for contracting Various authorities in the past have suggested either the law of the domicile residence place of contract or the proper law of the contract 6 3 23 Many writers argue against using the law selected by the parties as it would amount to the parties pulling themselves up by the bootstrap Domicile and residence are seen by some writers as inconvenient connecting factors in commercial transactions Some writers have suggested that capacity should be validated by the objective proper law of the contract or alternatively the law of the residence A corporation has capacity to enter into a contract if it has capacity both by the law of its incorporation and the proper law of the contract 7 Illegal contracts are generally not enforceable 6 3 24 A contract that is illegal by its proper law will take its consequences from that law it will generally not be enforceable in Singapore A contract that is illegal by the law of the place where it is made will nevertheless be enforceable in Singapore A contract whatever its governing law will not be enforceable in Singapore if its enforcement will contravene the fundamental public policy of Singapore A contract that is illegal by the law of the contractual place of performance may not be enforceable in Singapore Whether this is the consequence of the application of the proper law of the contract or the public policy of the law of the forum has not been resolved A contract may not be enforced by the Singapore court if it involves the commission of acts which although not illegal by the law of the country of performance nevertheless contravene the domestic public policy of that country which is based on general principles of morality and which is shared by the proper law of the contract and or the law of the forum A contractual claim may not be enforced if it is tainted by a collateral illegality F Choice of law for torts 1 Local courts usually apply the double actionability rule for wrongs committed abroad 6 3 25 Singapore applies the double actionability rule for wrongs whether committed abroad or in Singapore Rickshaw Investments Ltd v Nicolai Baron von Uexkull 2007 1 SLR 377 Thus the plaintiff can sue in Singapore for a wrong wherever committed if 1 the wrong is actionable as a tort by the law of the forum if the tort had been committed in the forum and 2 the wrong gives rise to civil liability by the law of the place where the tort is committed 6 3 26 However in an exceptional case the court may apply the law of the forum to the exclusion of the law of the place of the wrong or the law of the place of the wrong to the exclusion of the law of the forum or the law of a third country which has the closest connection with the parties and the occurrence to the exclusion of both the law of the forum and the law of the place of the wrong in respect of specific issues or the entire cause of action Rickshaw Investments Ltd v Nicolai Baron von Uexkull 2007 1 SLR 377 Where the tort is committed is not always easy to determine but the court would look back at the series of events constituting the tort and ask itself where in substance the tort had occurred Jio Minerals FZC v Mineral Enterprises Ltd 2011 1 SLR 391 2 Other countries have dropped the requirement of the law of the forum and local courts may be receptive to such reform 6 3 27 In several major common law countries eg England Private International Law Miscellaneous Provisions Act 1995 Canada Tolofsen v Jensen 1994 3 SCR 1022 and Australia Regie National des Usines Renault SA v Zhang 2002 210 CLR 491 the requirement of the law of the forum has been dropped as being a relic of the past which is inconsistent with modern choice of law approaches towards civil obligations generally and which also encourages forum shopping The protection of the interest of the forum is today generally seen as something which can be dealt with by its fundamental public policy and international mandatory rules 6 3 28 The Court of Appeal in Rickshaw Investments Ltd v Nicolai Baron von Uexkull 2007 1 SLR 377 has observed that with the judicious application of the flexible exception to the general rule of double actionability results in Singapore will not be vastly different from the results in these other countries Choice of Law for Restitutionary Obligations 6 3 29 Restitutionary claims on a restitutionary obligation are claims seeking the reversal of the unjust enrichment of the defendant at the expense of the plaintiff Such claims are governed by the proper law of the restitutionary obligation The proper law of the restitutionary obligation is determined by the following guidelines a if the obligation arises from a contractual relationship between the parties the proper law is the law governing the contractual relationship b if the obligation arises out of an immovable property the proper law is the law of the country where the immovable property is situated c in other cases the proper law is the law of the place of where the enrichment occurred unless the obligation is more closely connected with some other legal system CIMB Bank Bhd v Dresdner Kleinwort Ltd 2008 4 SLR 543 Where there is an express choice of law in a contract the chosen law may be the proper law of a restitutionary obligation arising from the contractual relationship even if the contract is void or rescinded so long the reason for the non existence or avoidance of the contract does not directly affect the agreement between the parties with respect to that choice of law CIMB Bank Bhd v Dresdner Kleinwort Ltd 2008 4 SLR 543 Choice of Law for Equitable Obligations 6 3 30 Equitable obligations have their origins in the chancery jurisdiction in common law systems Today the important equitable obligations that may arise in the commercial context include the fiduciary obligation the obligation of confidentiality and obligations not to intermeddle with trust or fiduciary institutions In the Commonwealth there is considerable uncertainty relating to the choice of law for such obligations The question is settled in Singapore law to the extent that where such an equitable obligation arises from a factual matrix governed by a relationship recognized by the law eg in contract or tort the law which governs that underlying relationship will apply to the equitable obligation Rickshaw Investments Ltd v Nicolai Baron von Uexkull 2007 1 SLR 377 G Foreign currency obligations 6 3 31 The Singapore courts can and do regularly enter judgments in foreign currency where that is the currency in which the relevant loss or gain is felt and such a judgment is converted to local currency at the date of execution of the judgment Indo Commercial Society Pte Ltd v Ebrahim 1992 2 SLR R 667 Proof of Foreign Law 6 3 32 The correct application of foreign law in accordance with choice of law rules depends on the proof of foreign law before the Singapore courts As a rule of convenience in the absence of proof of foreign law Singapore law will be applied by default D Oz International Pte Ltd v PSB Corp Ltd 2010 3 SLR 262 Foreign law is regarded as a fact which needs to be proven under the common law In Singapore foreign law may be proven by the use of secondary sources like law reports and textbooks but generally these should be introduced and explained to the court by an expert familiar with that legal system Pacific Recreation Pte Ltd v S Y Technology Inc 2008 2 SLR 491 The Singapore court may direct the parties to refer a question of foreign law to be determined by a foreign court Westacre Investment Inc v The State Owned Company Yugoimport SDPR 2009 2 SLR 166 The Singapore Supreme Court signed a Memorandum of Understanding with the Supreme Court of New South Wales in 2010 for such mutual references but the power of the Singapore court extends to directing parties to proceed in any other foreign court Return to the top SECTION 4 FOREIGN JUDGMENTS A Introduction 1 Foreign judgments may be recognised or enforced by action in Singapore 6 4 1 A foreign in personam judgment may be recognised in Singapore or enforced by action at common law in Singapore A foreign judgment that is recognised may be used to raise an estoppel on a specific issue or on a cause of action 2 Conditions to be met for foreign judgments to be recognised or enforced 6 4 2 The common law allows foreign judgments to be recognised or enforced if the following conditions are met A judgment from a court of law of a foreign country on a matter of substance which is final and conclusive by the law of that country where the court had international jurisdiction as defined by Singapore law over the party sought to be bound in the local proceedings binds that party to obey that judgment In addition a foreign judgment must be for a fixed or ascertainable sum of money to be enforceable Poh Soon Kiat v Desert Palace Inc 2010 1 SLR 1129 6 4 3 In enforcement proceedings the judgment is sued upon as a liquidated sum owed Foreign default judgments can be recognised and enforced although in the case of recognition the court will very carefully examine precisely what had been decided by

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  • Bradley Lomas Electrolok Ltd and Another v Colt Ventilation East Asia Pte Ltd and Others[2000] 1 SLR 673; [1999] SGCA 89
    should have been the standard of a serious question to be tried Second whether the appellants tendered sufficient evidence up to the requisite standard to enable the court to infer that there was a common design among Colt VEA Colt Intl and CG Ltd as joint tortfeasors The appropriate standard of proof 13 In determining that the test or standard to be applied is that of a good arguable case the judge had relied upon Unilever plc v Gillette UK Ltd 1989 RPC 583 where the plaintiffs sought to add the United States parent company of the tortfeasor as a joint tortfeasor At first instance Falconer J held that the matter involved a two step exercise First the plaintiffs must show a good arguable case on the merits something better than a mere prima facie case Second having overcome that hurdle the court would then have to exercise its discretion whether to grant leave In that case having examined the evidence Falconer J held that the plaintiffs had failed to overcome the first hurdle Although the Court of Appeal affirmed the test adopted by Falconer J it came to the conclusion that on the facts as pleaded there was a fair possibility that the parent company was a joint tortfeasor and granted leave to serve the writ out of jurisdiction 14 Counsel for the appellants submitted to us that the test laid down in Unilever plc v Gillette UK Ltd no longer holds good in the light of the decision of the House of Lords in Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran 1994 1 AC 438 1993 4 All ER 456 where the House had to consider the test to be applied in granting leave to serve a writ on a party out of the jurisdiction in relation to an action founded on breach of contract namely failure to pay on a letter of credit Seaconsar sought to serve the writ on Bank Markazi under O 11 r 1 1 d i and ii and e of the Rules of Supreme Court UK Bank Markazi did not dispute that the case fell under either limb d or e Its sole contention was that Seaconsar had not established a sufficiently strong case on the merits of its claim for service out of jurisdiction Lord Goff who delivered the only substantive judgment of the court first traced the development of O 11 r 1 and the relevant case law on it and then said that there were two separate issues to the point First it must be shown in accordance with the test of a good arguable case that the case falls within one of the circumstances mentioned in r 1 1 This is the jurisdiction issue Second assuming the jurisdiction issue is satisfied the court must consider the merits of the claim and on this no more is required than that the evidence should disclose that there is a serious issue to be tried 15 What would amount to a good arguable case is put as follows in the Supreme Court Practice 1999 Vol 1 1998 para 11 1 11 citing from The Brabo Tyne Improvement Commissioners v Armement Anversois S A 1949 AC 326 and Vitkovice Horni a Hutni Tezirstvo v Korner 1951 AC 869 It indicates that though the court will not at this stage require proof to its satisfaction it will require something better than a mere prima facie case The practice where questions of fact are concerned is to look primarily at the plaintiff s case and not to attempt to try disputes of fact on affidavit it is of course open to the defendant to show that the evidence of the plaintiff is incomplete or plainly wrong On questions of law however the court may go fully into the issues and will refuse leave if it considers that the plaintiff s case is bound to fail 16 As pointed out by Lord Goff in Seaconsar 1994 1 AC 438 at 454 1993 4 All ER 456 at 465 in relation to r 1 1 e all three elements of the existence of the contract breach and place of breach must be established to the level of a good arguable case before the plaintiff could successfully invoke the jurisdiction of the court under that limb A mere statement by a deponent that he believes there is a good cause of action is insufficient 17 On the other hand a court on such an application for leave is not called upon to try the action or express a premature opinion on its merits In the words of Lord Davey in Chemische Fabrik Vormals Sandez v Badische Anilin und Soda Fabriks 1904 90 LT 733 at 735 the application should be supported by an affidavit stating facts which if proved would be a sufficient foundation for the alleged cause of action and as a rule the affidavit should be by some person acquainted with the facts or at any rate should specify the sources or persons from whom the deponent derives his information A more difficult question is where it is in dispute whether the alleged or admitted facts will as a matter of law entitle the plaintiff to the relief which he seeks If the court is judicially satisfied that the alleged facts if proved will not support the action I think the court ought to say so and dismiss the application or discharge the order But where there is a substantial legal question arising on the facts disclosed by the affidavits which the plaintiff bona fide desires to try I think that the court should as a rule allow the service of the writ 18 We note that Seaconsar was concerned in particular with limbs d and e of O 11 r 1 of the Rules of the Supreme Court UK and not the limb concerned with torts As mentioned above Lord Goff said that to satisfy limb e all three elements of

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  • The "Rainbow Joy"[2005] 3 SLR 719; [2005] SGCA 36
    confronted with an application for a stay on the ground of forum non conveniens must determine whether at 476 there is some other available forum having competent jurisdiction which is more appropriate for the trial of the action 20 We would observe that no authority has been cited by the appellant in support of his assertion that the doctrine only applies where the alternative forum is a court of law On the other hand the respondent brought to our attention authorities from Canada and the United States which held that an action could be stayed in favour of a foreign forum which was not an ordinary court of law 21 In Karin A Ruggeberg v Bancomer SA 1998 OTC Lexis 329 where the claim was for damages arising out of termination of employment the Ontario Court of Justice General Division stayed a proceeding brought by a Mexican claimant in favour of the Mexican Federal Conciliation and Arbitration Board On appeal 1999 OAC Lexis 511 the Ontario Court of Appeal upheld the decision given by the court below 22 The next case is Larry McLaughlin v Bankers Trust Company of New York 1998 US Dist Lexis 9703 Larry McLaughlin a decision of the United States District Court of New York There the plaintiff a citizen and resident of England brought an action in New York against his former employer for breach of contract Following a disciplinary hearing the plaintiff was given the option of either resigning on his own volition or facing dismissal He accordingly tendered his resignation and thereafter sued in New York In England such a labour dispute would have to be taken up before the Industrial Tribunal After considering all the pertinent factors the district judge stayed the New York proceedings in favour of the Industrial Tribunal It should be noted that one of the arguments advanced by the plaintiff to urge the New York court not to order a stay was that the remedies available before the Industrial Tribunal was limited The judge ruled that an adequate alternative forum need not provide for precisely the same remedies that were available in the chosen forum 23 The third case cited to us is Ivan Jones v Raytheon Aircraft Services Inc 120 SW 3d 40 Ivan Jones a decision of the Court of Appeal of Texas Fourth District There the plaintiffs who were relatives of the victims of a plane crash in New Zealand sought to sue in the United States The defendants were involved in the manufacture and modification of the private plane which crashed What was then in operation in New Zealand was a no fault accident insurance system covering all accidental injuries and deaths sustained by any individual A special tribunal called the Accident Compensation Commission was created and it would handle all such claims No action in tort could be instituted in New Zealand for such injuries or death Notwithstanding this restriction by majority the Texan Court of Appeal upheld the decision of the trial judge who ordered a stay of the US proceedings in favour of a claim being made in New Zealand before the Accident Compensation Commission 24 Accordingly as a matter of principle and on the basis of the authorities cited above we were of the opinion that the first contention of the appellant must fail No defence 25 We now move to consider the appellant s other main argument which involved several sub points The first point was that the court should not have ordered a stay as the respondent would not have any defence to the appellant s claim The appellant averred that what remained to be decided was only the question of quantum of damages In making this argument the appellant relied on a number of cases involving foreign jurisdiction clauses where this court had refused a stay where the defendant has no defence to the claim eg The Jian He 2000 1 SLR 8 The Hung Vuong 2 2001 3 SLR 146 The Hyundai Fortune 2004 4 SLR 548 The appellant submitted that where an application for a stay was made on the ground of forum non conveniens the court should more readily refuse a stay 26 It is settled law that where a party seeks to bring an action in our courts in breach of an exclusive jurisdiction clause he must show strong cause why the court should exercise its discretion in his favour and assist him in breaching his promise to bring the action in the contractual forum see Amerco Timbers Pte Ltd v Chatsworth Timber Corp Pte Ltd 1975 1977 SLR 258 Amerco Timbers What is strong cause and what are the circumstances the courts would take into account were set out in The El Amria 1981 2 Lloyd s Rep 119 at 123 124 and adopted by this court and stated in Amerco Timbers at 11 as follows The court in exercising its discretion should grant the stay and give effect to the agreement between the parties unless strong cause is shown by the plaintiff for not doing so To put it in other words the plaintiff must show exceptional circumstances amounting to strong cause for him to succeed in resisting an application for a stay by the defendant In exercising its discretion the court should take into account all the circumstances of the particular case In particular the court may have regard to the following matters where they arise a In what country the evidence on the issues of fact is situated or more readily available and the effect of that on the relative convenience and expense of trial as between the Singapore and foreign courts b Whether the law of the foreign court applies and if so whether it differs from Singapore law in any material respects c With what country either party is connected and if so how closely d Whether the defendants genuinely desire trial in the foreign country or are only seeking procedural advantages e Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would i be deprived of security for their claim ii be unable to enforce any judgment obtained iii be faced with a time bar not applicable here or iv for political racial religious or other reasons be unlikely to get a fair trial 27 Admittedly while the circumstances which the court should take into account in determining whether an action commenced in Singapore should not be stayed in spite of an exclusive jurisdiction clause are to some extent similar to those which the court would take into consideration in determining whether the action should be stayed on the ground of forum non conveniens they are not the same In weighing the balance of convenience under the doctrine of forum non conveniens the issue of whether there is a defence to the claim is not a relevant consideration as the court should not be required to go into the merits This is because the juridical basis of a stay based on forum non conveniens is different from that of a stay based on an exclusive jurisdiction clause Under the doctrine of forum non conveniens the object is in determining which forum is the more appropriate forum On the other hand for a party to be excused from his commitment to the exclusive jurisdiction clause he must show exceptional circumstances and the averment that the defendant has no defence to the claim could constitute exceptional circumstances to enable the court to excuse the plaintiff from complying with the jurisdictional clause 28 In any event we could not see how the appellant could seriously contend that its common law claim in tort could be determined without a trial Obviously evidence would be required to show the scope and responsibility of the appellant s work on board the vessel the training he received the nature of the repair job whether the appellant had been briefed on the repair to be undertaken and what were the standard safety measures which the appellant ought to have taken Indeed there was evidence to suggest that it was the appellant s duty to brief the workers under him on safety requirements Moreover there is a further claim in negligence based on the allegation that the respondent had failed to provide the appellant with urgent medical treatment In addition there is also the question as to whether the current state of his right eye was caused by his own default in refusing to go for a corneal transplant as recommended by the Philippine ophthalmologist It is clear that if this case were to proceed in Singapore the trial judge would have to address both the issues of liability and the appropriate quantum of damages It would not be an open and shut case Governing law 29 The appellant s next point was that the judge was in error in considering some of the connecting factors He submitted that the judge was wrong to hold that the governing law of the employment contract was that of the Philippines The judge relied on s 31 of the POEASTC in making his determination It reads Any unresolved dispute claim or grievance arising out of or in connection with this Contract including the annexes thereof shall be governed by the laws of the Republic of the Philippines international conventions treaties and covenants where the Philippines is a signatory 30 The appellant submitted that the governing law relating to his contract of employment was the law of the flag of the vessel namely Hong Kong law Moreover the instant claim could be framed either in contract or in tort and the tort having been committed on board the vessel Hong Kong law should apply 31 As a general proposition it is probably correct to say that the law of the flag country should apply in relation to a tort committed on board a vessel which is then on the high seas However where in the contract of employment the parties have specified the governing law the contract term should prevail Dicey and Morris on The Conflict of Laws Sweet Maxwell 13th Ed 2000 Dicey and Morris states at para 32 005 At common law the starting point was that every contract was governed at its outset by its proper law a term coined by Westlake When the parties had expressed their intention as to the law governing the contract their expressed intention in general determined the proper law of the contract at any rate if the application of foreign law was not contrary to public policy and the choice was bona fide and legal Where there was no express selection of the governing law an intention with regard to the law to govern the contract could be inferred from the terms and nature of the contract and from the general circumstances of the case When the intention of the parties to a contract with regard to the law governing it was not expressed and could not be inferred from the circumstances the contract was governed by the system of law with which the transaction had its closest and most real connection 32 Notwithstanding this clear statement of principle in Dicey and Morris that where the contract provides for the governing law that should be the applicable law the appellant relied on the Canadian Federal Court of Appeal s decision in The Ship Mercury Bell v Amosin 1986 27 DLR 4th 641 Mercury Bell to contend that the proper law of this contract of employment between the appellant and the respondent was the law of the flag However we do not understand Mercury Bell as having held that the flag state law should apply in any event even in the face of an express governing law provision This can be seen from the main judgment in the case delivered by Marceau J at 644 There is no doubt that to determine the rights of seamen against the owners of the ship on which they are serving which is the subject matter of the action the law of the ship s port of registry is to be looked at This is required by the well established rule of international law that the law of the flag state ordinarily governs the international affairs of a ship McCulloch v Sociedad Nacional de Marineros de Honduras 1962 372 U S 10 at p 21 U S Sup Ct 1963 a rule formally confirmed in s 274 of the Canada Shipping Act R S C 1970 c S 9 as amended which reads as follows 274 Where in any matter relating to a ship or to a person belonging to a ship there appears to be a conflict of laws then if there is in this Part any provision on the subject that is hereby expressly made to extend to that ship the case shall be governed by that provision but if there is no such provision the case shall be governed by the law of the port at which the ship is registered That this action must be disposed of on the basis of the law of Liberia is therefore without question emphasis added It did not appear to us that Marceau J was there considering a case where the contract had a forum selection clause 33 A case which is somewhat similar to the instant is Rizalyn Bautista v Star Cruises 396 F 3d 1289 a decision of the Court of Appeal for the United States Eleventh Circuit which involved Philippine seamen and where there was a similar clause like our s 31 which provided for claims and disputes to be submitted to the NLRC or arbitrators At first instance 286 F Supp 2d 1352 the judge noted that the POEA supervised regulated promoted and monitored overseas employment programs for the purpose of ensuring the best terms and conditions of employment for Filipino contract workers In response to the further assertion that the claim in tort was distinct from the claim in contract the judge said Finally Plaintiffs assertion that their tort claims are not claims and disputes arising from this employment and thus are not subject to arbitration under Section 29 is without merit The employment contract in question specifically obligates the shipowner to provide a seaworthy vessel and further regulates the payment of sick pay repatriation and medical care As Plaintiffs Complaints seek damages for inter alia failure to use reasonable care to provide and maintain a safe workplace and failure to provide prompt and adequate medical care the Court finds that the claims and disputes arise directly from their employment with NCL and from NCL s obligations to Plaintiffs under the Standard Terms of the employment contract 34 In Ernany De Joseph v Odfjell Tankers USA Inc 196 F Supp 2d 476 Ernany De Joseph the plaintiff a Filipino seaman working on board a Norwegian vessel who had executed the POEA contract fell and broke two vertebrae in his neck while doing cleaning work He sued in the United States The POEA contract incorporated the POEASTC standard terms for seafarers There the Texas District Court granted the defendant s motion for a stay The court construed the relevant clauses of the POEA contract as follows Section 28 provides that the Philippine Overseas Employment Administration POEA or the National Labor Relations Commission NLRC shall have original and exclusive jurisdiction over any and all disputes or controversies arising out of or by virtue of this Contract Additionally the MWOFA grants the Labor Arbiters of the NLRC the exclusive jurisdiction to hear claims arising out of an employer employee relationship or by virtue of any law or contract involving Philippine workers for overseas employment including claims for actual moral exemplary and other forms of damages Because both of these provisions vest exclusive jurisdiction over seamen s disputes in the POEA and the NLRC they lend further and perhaps even more formidable credence to the view that the appropriate authority mentioned in the last sentence of Paragraph 4 refers only to the POEA and the NLRC not every permissible venue in the world 35 An English case which is highly illustrative of the correct approach to viewing such a contract where Filipino seamen are involved is the case of Dimskal Shipping Co SA v International Transport Workers Federation 1989 1 Lloyd s Rep 166 The Evia Luck No 2 There the vessel registered in Panama had on board 20 Filipino nationals employed under the POEA contract Also employed on board were ten Greek seamen The owner of the vessel sued the International Transport Workers Federation ITWF for moneys paid pursuant to a new contract of employment with the crew which the owner allegedly executed in Sweden under duress because of threat of industrial action Each of the new contracts of employment with the Philippine crew contained no choice of law clause The owner argued that the new contract was governed by the law of the flag ie Panama ITWF contended that it was Philippine law Phillips J agreed with ITWF and held at 172 Under English principles of private international law those contracts are governed by the system of law with which the transactions have their closest connection I am in no doubt that this is Philippine law Filipino seamen are widely employed on foreign flag vessels and Philippine law has provisions that are designed to protect their welfare In particular foreign shipping companies are required to engage Filipino crewmen only through authorized shipping or manning agents who are required to submit employment contracts and salary scales to a regulatory body That body was the National Seamen s Board and is now the Philippine Overseas Employment Agency I shall refer to it as the NSB Seamen s contracts have to be approved and registered by the NSB before they can be enforced in the Philippines The old crew contracts were so registered The new contracts were intended to be registered with the NSB and were so registered

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  • Murakami Takako (executrix of the estate of Takashi Murakami Suroso, deceased) v Wiryadi Louise Maria and Others[2007] 4 SLR 565; [2007] SGCA 43
    s order and fails to take into account the context in which the order was made Indeed a cursory reading of the order as a whole indicates that when the SAR used the words bringing causes of action he clearly meant to refer to claims Claimants bring claims not causes of action A cause of action forms the legal basis of the claim It was simply a wrong choice of words As to the appellant s emphasis on the words in Singapore we do not think that these qualifying words were intended to broaden the scope of the preclusion order Rather they were meant to do no more than to emphasise that the condition applied only to the first and second respondents with respect to the same claims being made in Singapore and not elsewhere The reason is that the SAR s order was binding on the first and second respondents personally and if the qualifying words were omitted the order could leave it open to the appellant to argue that the said respondents could not claim against the appellant with respect to the assets the subject matter of the original counterclaims in any jurisdiction There is no reason for the SAR to regulate the parties disputes outside Singapore 25 The second reason for rejecting the appellant s construction of the SAR s order is that in our view where an order of court which seeks to bar or limit a party from pursuing existing legal rights is ambiguous the order should be construed narrowly rather than broadly as existing rights should not be allowed to be abrogated or reduced by unclear and ambiguous language A party who claims that a court order has abrogated the existing rights of the other party must show from the words used by the court that that is clearly its intention Conversely a party who claims that a court order has given him certain rights against the other party must show from the words used by the court that that is clearly its intention In this appeal the appellant has failed the applicable test Are the respondents counterclaims under the application time barred 26 The next issue before us is whether the Limitation Act applied to bar the respondents proposed counterclaims under the application In this context the relevant issue would be whether Judgment 203 is a judgment in personam or a judgment in rem as mentioned above the trial judge had decided that the Limitation Act did not apply by virtue of his determination that Judgment 203 was a judgment in rem The parties arguments 27 Judgment 203 was delivered on 23 February 2000 It is not a judgment that is registrable under the Reciprocal Enforcement of Foreign Judgments Act Cap 265 2001 Rev Ed as that Act does not apply to Indonesian judgments However it may form the basis of an action and may be sued upon under the common law The appellant argued that such an action was merely an action on a simple debt citing Halsbury s Laws of England vol 8 3 LexisNexis UK 4th Ed Reissue 2003 at para 140 and the decision of the Supreme Court of Nova Scotia in Pollier v Laushway 2006 NSJ No 215 and as such was subject to s 6 of the Limitation Act which provides for a six year limitation period Accordingly as the proposed counterclaims were founded on Judgment 203 they were time barred as they were made only on 4 July 2006 more than six years after the date of the judgment The trial judge disagreed with such a submission As mentioned above in his view Judgment 203 decided that certain assets were the joint property of the first respondent and the testator under Indonesian law and was a judgment in rem and therefore not subject to any limitation period under the Limitation Act In support of his holding the trial judge referred to Halsbury s Laws of England vol 8 1 Butterworths 4th Ed Reissue 1996 at para 1019 in which it was noted as follows A judgment in rem may be defined as the judgment of a court of competent jurisdiction when it determines the status of a person or thing or the disposition of a thing as distinct from the particular interest that a party to the litigation has in it Thus the judgment in rem vests in a person the possession of or property in a thing or decrees the sale of a thing in satisfaction of a claim against the thing itself or is a judgment as to the status of a person emphasis added 28 Before us counsel for the appellant contended that this passage did not apply to Judgment 203 as it did not vest and did not have the effect of vesting any property in the appellant or the respondents indeed if Judgment 203 had such an effect there would have been no need for the appellant or indeed the first respondent to sue on Judgment 203 to recover the assets whether situated in Indonesia Singapore and Australia Instead Judgment 203 merely decided that the matrimonial assets listed therein were the joint property of the testator and the first respondent and ordered the parties to distribute the assets accordingly From the perspective of Singapore law Judgment 203 was a judgment in personam Accordingly the respondents proposed counterclaims were time barred 29 By way of response counsel for the respondents contended that Judgment 203 was a judgment in rem as it decided the ownership of the joint assets under Indonesian law Alternatively it was contended that even if Judgment 203 were a judgment in personam the proposed counterclaims would still not be time barred as the appellant had claimed against the first respondent in her statement of claim that she was entitled to a half share of the assets in the testator s estate thereby implicitly acknowledging that the first respondent was still entitled to the other half share This argument although canvassed before the trial judge was not considered by him in the GD Is Judgment 203 a judgment in personam or in rem 30 In our view in order to determine whether Judgment 203 is a judgment in personam or a judgment in rem it is necessary to consider the nature of the judicial proceedings that led to Judgment 203 and the intention of the Supreme Court of Indonesia as to the effect of the order on the parties to the proceedings In this connection it is not relevant to this court whether Indonesian law recognises the concepts of a judgment in rem and a judgment in personam What is relevant to this court is the substance of Judgment 203 and its effect or intended effect on the parties thereto 31 Judgment 203 was made pursuant to divorce proceedings between the testator the executrix of whose estate is the appellant and the first respondent in which the testator sought a judgment of the Indonesian courts as to the respective rights of the parties to the matrimonial assets In this context we are of the view that Judgment 203 merely declared the respective rights of the parties The judgment also ordered the first respondent to transfer one half of the assets to the appellant as executrix of the testator s estate but in our view that did not amount to a disposal of the assets so as to constitute it a judgment in rem 32 In Pattni v Ali 2007 2 AC 85 Pattni an appeal from the Isle of Man the Privy Council had to consider similar arguments in relation to a judgment and order made by a Kenyan court declaring the contractual rights of the parties to certain shares in an Isle of Man company called World Duty Free Co Ltd WD The Privy Council stated the principles as follows at 21 For present purposes a judgment in rem in the sense of rule 40 of Dicey Morris is thus a judgment by a court where the relevant property is situate adjudicating on its title or disposition as against the whole world and not merely as between parties or their privies in the litigation before it The distinction is shortly and accurately put in Stroud s Judicial Dictionary 7th ed 2006 p 2029 A judgment in personam binds only the parties to the proceedings as distinguished from one in rem which fixes the status of the matter in litigation once for all and concludes all persons Jowitt s Dictionary of English law 2nd ed 1997 pp 1025 1026 contains fuller definitions to the same effect A judgment in rem is an adjudication pronounced upon the status of some particular subject matter by a tribunal having competent authority for that purpose Such an adjudication being a solemn declaration from the proper and accredited quarter that the status of the thing adjudicated upon is as declared it precludes all persons from saying that the status of the thing or person adjudicated upon was not such as declared by the adjudication So a declaration of legitimacy is in effect a judgment in rem A judgment of divorce pronounced by a foreign court is in certain cases recognised by English courts and is then a judgment in rem 33 In Pattni the Privy Council in applying these principles to the case said at 29 While the Kenyan order may be regarded as irregular in its width in certain respects their Lordships do not consider that the judge can for a moment have thought that he was determining any issue as against the world at large or any third party in relation to the shares or affairs of WD The obvious aim and effect of his orders was to establish and give effect to the parties rights inter se with regard to such shares and affairs If some third party emerged subsequent to the Kenyan judgment and decree and claimed that one party had prior to the relevant date agreed to on sell the WD shares to him nothing in the Kenya n judgment and decree could or could have been intended to preclude the third party from showing this The Kenyan judgment and decree do not constitute or involve any form of adjudication or purported adjudication in rem relating to the shares in WD Nor were the Kenyan judgment and order even purporting actually to transfer or deal with the shares as opposed to determining the parties rights and duties relating to them In our view the above passage describes Judgment 203 to a T A divorce decree may be a judgment in rem in so far as it determines the status of the parties but an order obtained in ancillary proceedings declaring the interests of the parties to the matrimonial assets as is the case with Judgment 203 binds only the parties personally and is therefore a judgment in personam In Judgment 203 the Supreme Court of Indonesia did not decide or purport to decide that no one else might have a claim in those assets For these reasons we are of the view that the trial judge was in error in holding that Judgment 203 was a judgment in rem 34 It therefore follows that unless the first respondent s rights under Judgment 203 have been acknowledged by the appellant her claim would be time barred and the application to inter alia plead the proposed counterclaims should have been rejected We turn now to consider this question Has the appellant acknowledged the rights of the first respondent under Judgment 203 1 Re amended statement of claim 35 The respondents argument under this head is premised on para 20 b of the re amended statement of claim dated 15 March 2006 the RSOC which pleads as follows On 23 February 2003 it was adjudged by the Supreme Court of the Republic of Indonesia in Judgment 203 in relation to proceedings brought in Indonesia by the appellant against the first respondent b that the doctrine of common property applied to the property acquired by the first respondent and the testator during their marriage ie that both the testator and the first respondent were entitled to an equal share in these properties and that among other properties the Properties in Singapore formed part of the common property emphasis added It was argued by the respondents that para 20 b of the RSOC constituted a clear admission by the appellant that Judgment 203 had the effect of creating an entitlement between the testator and therefore the appellant and the first respondent of each party to a half share of the properties in question Counsel for the appellant in reply denied that this pleading amounted to a direct admission of the first respondent s entitlement that is being sued for in these proceedings 36 Our view of the effect of para 20 b of the RSOC is this First it is not necessary that to operate as an acknowledgement an admission has to be direct or explicit so long as the statement or act constitutes a sufficiently clear admission of the title or claim to which it is alleged to relate emphasis added see Terence Prime Gary Scanlan The Law of Limitation Oxford University Press 2nd Ed 2001 at para 2 7 6 Nonetheless it is important to stress that an acknowledgement of a claim or a debt must stem from a voluntary desire to admit such claim or debt see Chuan Company Pte Ltd v Ong Soon Huat 2003 2 SLR 205 Chuan at 18 Second a mere reference in subsequent proceedings to the rights of a party under an existing judgment may be nothing more than that ie a mere reference Indeed it may be a prelude to and for the purpose of denying the existence of such rights on account of limitation see for example In re Flynn decd No 2 1969 2 Ch 403 It is therefore necessary to consider whether para 20 b shows a desire to admit the first respondent s claims under Judgment 203 In our view para 20 b is not an admission of the first respondent s rights nor does it have that effect 37 In our view in the context of the subsequent paragraphs in the RSOC it is clear that the appellant intended the opposite ie to implicitly deny that the first respondent had any subsisting rights under Judgment 203 Paragraph 20 b is itself no more than a prelude to paras 22 24 and 25 of the RSOC which plead that the first respondent had failed to transfer title of the three properties in Singapore to the appellant and had also failed to account for the rents collected from those properties Paragraph 25 pleads that the property at Faber Drive was purchased with the testator s moneys and that therefore the first respondent was holding it on a constructive or resulting trust for the testator s estate Paragraph 26A makes the alternative claim that under Judgment 203 the Faber Drive property is the common property of the first respondent and the testator but that the first respondent has failed to surrender half of the property to the appellant Paragraph 26B makes a similar claim to para 25 but with respect to the Ardmore Park property 38 In our view paras 22 24 25 26A and 26B of the RSOC clearly evidence the appellant s intention to claim the entire beneficial interest in these assets They are not intended to acknowledge the first respondent s rights under Judgment 203 but are to have the opposite effect by claiming the entire beneficial title to all these assets 2 The statement of claim 39 Accordingly the argument of counsel for the first respondent has to be rejected However all is not lost The first respondent may rely on the original paras 22 24 25 of the statement of claim which had pleaded and here we have to observe that counsel has disappointingly failed to notice a claim to only one half of the Faber Drive and the Ardmore Park properties These paragraphs were amended on 1 March 2005 to delete the words half share appearing in them with the effect of converting them into claims for the entire beneficial interests Following this paras 26A and 26B were then inserted as alternative claims in the RSOC In our view paras 22 24 and 25 of the statement of claim dated 29 April 2005 in which the appellant had claimed only one half of the Faber Drive and the Ardmore Park properties had the effect of acknowledging the first respondent s rights to the other one half of the same properties In this connection s 26 1 of the Limitation Act extended the period of limitation with respect to this claim as it provides that the right shall be deemed to have accrued on the date of the acknowledgment emphasis added Accordingly there was an effective acknowledgement at the time the statement of claim was served on the first respondent see the comments of Stuart Smith LJ in Horner v Cartwright Court of Appeal 11 July 1989 and Andrew McGee Limitation Periods Sweet Maxwell 5th Ed 2006 at para 18 020 40 In view of our conclusion that there was an acknowledgement of the first respondent s counterclaims as early as 29 April 2005 thus extending the limitation period for reliance on Judgment 203 from that date it would not be necessary for us to consider and we express no view on whether the alternative claims of the appellant under paras 26A and 26B of the RSOC are in themselves capable of constituting an acknowledgement of the first respondent s claims under Judgment 203 Jurisdiction of Indonesian court on judgments in rem on movables and immovables situated outside Indonesia 41 The next issue which counsel raised is the jurisdiction of the Indonesian court on a judgment in rem on movables and immovables situated outside Indonesia Following from the above

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