On January 11 2017, Singapore ushered in a new legal year. A review of 2016 showcases a rich harvest of developments in Singapore's jurisprudence, marked by an increasing complexity of cases and the ever-growing number of international parties brought before the courts. This, coupled with the hard work and professionalism of both the bench and the bar, has allowed Singapore to remain a frontrunner in developing its jurisprudence within the region.
The plaintiffs, Accent Delight International Ltd and Xitrans Finance Ltd, are British Virgin Islands companies wholly owned by the family trusts of Dmitry Rybolovlev, a well-known Russian billionaire. The defendants are Yves Charles Edgar Bouvier, Mei Investment Pte Ltd and Tania Rappo.
The dispute arose out of the plaintiffs' acquisition of 38 pieces of art, including works by Picasso, van Gogh, da Vinci, Modigliani and Rothko – the transactions for which were all arranged by Bouvier. Subsequently, it was discovered that the plaintiffs had purchased the art at prices considerably more than Bouvier had paid to procure them. The plaintiffs commenced proceedings in Monaco, Switzerland, France, Hong Kong and Singapore, seeking relief against the defendants on contract, tort and unjust enrichment.
Two landmark decisions
While the facts relating to the parties and the subject matter of the dispute are no doubt interesting in their own right, the greater lesson for Singapore's jurisprudence is the two landmark decisions that have emerged from the dispute. For ease of reference, they will be discussed as the Mareva decision (Bouvier, Yves Charles Edgar and another v Accent Delight International Ltd and another and another appeal  SGCA 45) and the FNC decision (Accent Delight International Ltd and another v Bouvier, Yves Charles Edgar and others  SGHC 40).
The Mareva decision
To prevent the defendants from dissipating their assets out of jurisdiction and to protect the plaintiffs' interest in having an executable judgment, the plaintiffs applied for a worldwide Mareva injunction (a freezing order) and successfully obtained it ex parte at the High Court. The Singapore Court of Appeal (SGCA), however, set aside that injunction, overruling an earlier decision of Spectramed Pte Ltd v Lek Puay Puay  SGHC 112. A watershed decision in itself, it was thought that Spectramed stood for the proposition that a good arguable case of dishonesty was by itself sufficient to give rise to a real risk of dissipation of assets so as to entitle its applicants to Mareva relief. The proposition came to be known as the Spectramed proviso.
The SGCA held that the Spectramed proviso had been overstated (Mareva decision at ); an allegation of dishonesty could not obviate the need to establish a real risk of dissipation of assets. In reaching its conclusion, the court's reasoning was threefold:
- As a matter of common sense, the Spectramed proviso was essentially a slippery slope. It was a leap to say that once a good arguable case of dishonesty was shown, that it followed that there was a real risk of the dissipation of assets (Mareva decision at ).
- It was not principled to treat allegations of dishonesty made at an interlocutory stage as though they had been established conclusively (Mareva decision at ).
- The Spectramed proviso could not be supported by the authorities (Mareva decision at ).
Having struck down the Spectramed proviso, the court clarified the role which dishonesty played in the applications for Mareva injunctions. The court opined that alleged dishonesty "had to be of such a nature that it had a real and material bearing on the risk of dissipation (Mareva decision at )," bearing in mind that the proceedings were still at an interlocutory stage. On the facts of the Mareva decision, the dishonesty that was alleged was not some complex scheme or fraud; and even if proved, it was the means by which Bouvier had "exploited the asymmetries of information inherent in an opaque market to turn a profit" (Mareva decision at ). It would be insufficient if the inquiry on the effect of Bouvier's alleged dishonest ended there. Accordingly, it followed that the SGCA struggled to find a sufficient basis for finding a real risk for the dissipation of assets.
Another point of interest in the Mareva decision is that that counsel for the plaintiffs sought a creative use of the information obtained via ancillary disclosure orders that were granted pursuant to the Mareva injunction, to suggest a real risk of the dissipation of assets (Mareva decision at ). However, the court held that the probative value of the information was limited. This is because the information about a defendant's assets that was disclosed pursuant to an ancillary disclosure order provides only a two-dimensional snapshot of the defendant's assets at the point of the making of the order. Keeping in mind that the purpose of an ancillary disclosure order is solely to assist the applicant in policing the risk of dissipation, any information gleaned from the order does not therefore paint an accurate picture of the defendant's assets before the making of the Mareva injunction. It is thus unhelpful in establishing whether there was a trend of movement in the defendant's assets that could support an inference for the real risk of or actual dissipation of assets (Mareva decision at ).
The court did, however, state narrowly-defined circumstances where the disclosures would be helpful. They are the situations where either the defendant refused to provide any disclosure of his assets at all or where the disclosed information revealed assets that were so glaringly inadequate or suspicious that the deficiencies could not be attributed to the urgency of the disclosures or accounting or valuation inaccuracies (Mareva decision at ).
A further query can be raised as to whether it is right to base the correctness of the earlier granted Mareva on information that arises pursuant to the said order. Given the oppressive nature of a Mareva injunction, and the risk of injury to an innocent party, the availability of new information would allow a court to make an informed decision at the earliest time as to whether the Mareva should be lifted. On the facts, the court recognised that Bouvier's disclosure affidavits were timely and detailed, and at the very least, there were no grounds for suspecting that the disclosures were inadequate (Mareva decision at -).
A final point made by the court was that the plaintiffs' application for a Mareva injunction was an abuse of process and that the application was not to prevent the enforcement of an anticipated judgment from being frustrated, but was used to inflict commercial prejudice on Bouvier (Mareva decision at ).
To avoid such a characterisation, parties seeking to obtain a Mareva injunction would do well to ensure that they comply with the Supreme Court Practice Directions, to give notice of ex parte applications to the other party, unless doing so would defeat the purpose of the application (Mareva decision at -). Parties should ensure that the breadth of the Mareva injunction can be justified so as to militate against any inference that the application was to be used as a tool of oppression (Mareva decision at -). Finally, when a plaintiff seeks a worldwide Mareva injunction from a Singapore court, the plaintiff should ordinarily undertake to the court that it shall not, without permission, enforce the injunction or seek an order of a similar nature in any jurisdiction outside of Singapore (Mareva decision at ).
The FNC decision
The area of contention in this decision centered on the question of whether Singapore was the natural forum to hear the dispute. The plaintiffs sought to have the dispute heard in Singapore while the defendants sought to have Singapore decline jurisdiction in favour of either the Monegasque or Swiss proceedings.
It is trite that questions of forum non conveniens (FNC) are dealt with by an application of the oft-cited Spiliada test, which takes its name from Spiliada Maritime Corporation v Cansulex Ltd  AC 460 (Spiliada). Simply put, the Spiliada test is applied in two stages:
At stage 1, the putative natural forum is the jurisdiction with the closest and most real connection with the dispute. This is because such a forum would arguably be best placed to hear the dispute, while incurring the least expense and inconvenience to the parties involved. Some of the usual connecting factors considered at this stage are the location of the evidence and witnesses, the compellability of the third-party witnesses or experts, the relative costs of transport and translation, and the ease with which the court in question could apply the relevant applicable law to the dispute.
At stage 2, the court will consider if there will be a deprivation of justice if the court declines to exercise its jurisdiction. In sum, the natural forum is the forum where the case may more suitably be tried in the interests of all the parties and of the ends of justice (Rickshaw Investments Ltd and Another v Nicolai Baron von Uexkull ( 1 SLR 377;  SGCA 39 at )).
The FNC decision, which for the most part is uncontroversial, and can be described as a faithful application of the Spiliada test, appeared to have been decided purely on a consideration of Stage 1 of the Spiliada test. At paragraphs 111 to 116 of the FNC decision, Senior Judge Lai then urged the parties to seriously consider having the dispute heard by the SICC:
I am of the view that the perceived advantages (to the defendants) or disadvantages (to the plaintiffs) of Switzerland being the forum will be levelled out if this Suit remains in Singapore but is transferred to the SICC…this Suit should be transferred to the SICC. Such a transfer offers all the advantages and none of the disadvantages to the plaintiffs or the defendants that were raised in their submissions. The international judges who sit on the SICC are not only eminent and very able but some hail from countries that have civil law systems. In addition, one of them (Justice Dominique T Hascher of the Supreme Judicial Court in France) is equally fluent in French and English. Consequently, the court would urge all parties to relook the provisions of O 110 of the ROC and agree to a transfer of this Suit to the SICC.
The presence of the paragraphs raises the question as to whether Senior Judge Lai meant to include the availability of the SICC as part of her stage 1 analysis, and accordingly as part of her decision in refusing a stay on FNC grounds. The relationship between O 110 of the Rules of Court governing the jurisdiction of the SICC and the Spiliada test has not been the subject of extensive arguments; and it remains a question as to whether the Spiliada test should consider the SICC as a factor to be taken into account at Stage 1 or 2, if at all. With the introduction of the SICC to Singapore's judicial landscape, Singapore's capacity to hear international commercial disputes has no doubt been enhanced. However, to assist litigants, clear rules need to be provided as to how questions of transferability to the SICC will be decided in the context of jurisdiction disputes, so as to allow parties seeking to rely on jurisdiction clauses to plan for their contingencies properly.
At the time of the writing of this update, the FNC decision is on appeal to the SGCA, and we can only wait and see if that court will shed light on some of the questions raised above about the SICC's relevance in an application of the Spiliada test.
BCBC Singapore v PT Bayan Resources
On May 12 2016, the SICC handed down its first ever judgment (BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another  SGHC(I) 01 (BCBC Singapore), since its official opening on January 5 2015.
The case involved a joint venture in Indonesia between companies (and their subsidiaries) from Australia and Singapore, to extract and upgrade coal found in Indonesia using patented technology developed in Australia. At the heart of the matter was a complex contractual matrix that needed to be ascertained by the courts.
Substantively, the judgment has been heralded as a "masterclass" in how to deal with rules of interpretation, public policy and the implication of terms (Tom Jones, "SICC Hand Down First Judgment" Global Arbitration Review (May 24 2016)). More noteworthy however, are the novel and interesting developments brought to the fore - in the areas of the determination of questions of foreign law, enforcement and case management, which will be discussed subsequently.
These developments are very much welcomed, as the twin purposes of the SICC are:
- to have an arena to deal with disputes swiftly and efficiently, in light of the robust economic growth in Asia; and
- to position Singapore as the centre for the resolution of commercial disputes by providing a full suite of options, alongside the Singapore International Arbitration Centre and the Singapore International Mediation Centre (Chief Justice Sundaresh Menon, "Response by Chief Justice Sundaresh Menon: Opening of the Legal Year 2015" at ).
Determination of Foreign Law
Mode of determination
In the present case, the parties successfully applied for questions of Indonesian law to be determined on the basis of submissions (BCBC Singapore at ). Pursuant to O 110 r 25, this option is available to parties in place of the traditional common law requirement of proof, and as long as a party makes such an application and the court deems it fit to make the order (David Foxton QC, "Foreign Law in Domestic Courts" at page 18). The Court must also be satisfied that all parties are or will be represented by counsel who are competent to submit on the relevant questions of foreign law (O 110 r 25(2) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed).
It is interesting to note that such an order can be made, even in the absence of consent by all the parties to the dispute (O 110 r 25(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed)). However, on a plain reading of O 110 r 25, it is clear that determination based on submissions remains only as an option, and is not the default position (Teh Hwee Hwee, Justin Yeo & Colin Seow, "The Singapore International Commercial Court in Action: Illustrations from the First Case" (2016) 28 SAcLJ 692 at ). In contrast, under the traditional approach, foreign law must be proven. What then follows is a lengthy and costly process involving evidence and testimonies given by expert witness, who are usually subjected to cross-examination (Teo, Guan Siew and Wong, Huiwen Denise "Referring Questions of Foreign law to the Court of the Governing Law: No Longer `Lost In Translation'" (2011) 23 SAcLJ 227 at ).
The court also institutes its own safeguards to ensure that there is a measure of quality control, and that the parties are adequately represented. Furthermore, it appears that exceptions can be made where appropriate. In the instant case, the plaintiff's expert, Professor Hikmahanto, who was appointed to make oral submissions, was not called to the Indonesian Bar and hence, did not qualify under O 110 r 25 to make submissions. However, the professor was eventually allowed to make submissions by way of oral evidence as a witness without being subject to cross-examination, but with the reservation that not everything he submitted would be accepted by the defendants (BCBC Singapore at ). Arguably, this is an interesting take on the traditional 'proof' approach, in light of the witness's failure to satisfy the requirements under O110 r 25 to make submissions (Teh et al., at ).
The option to make submissions, coupled with the flexibility to make modifications to the traditional approach, should be advocated – it translates into both cost and time savings. The court can now take into account evidence of foreign law without lengthy cross-examination and re-examination, and this arguably, was a huge contributing factor to the prompt completion of the first tranche of the trial.
Registered foreign lawyers
The present case also marked the first time two foreign lawyers received restricted registration (Pursuant to the Legal Profession (Foreign Representation in Singapore International Commercial Court) Rules 2014 (S 851/2014), there are two forms of registration available - full registration and restricted registration), allowing them to represent parties and make submissions on Indonesian law on the alleged illegality of the contract entered into.
Previously, the right for foreign lawyers to practise local law has traditionally been limited to distinguished foreign lawyers, such as Queen's Counsel, or with an equivalent appointment, to appear in selected cases for which they have special qualifications or experience (section 15 of the Legal Profession Act (Cap 161, 2009 Rev Ed)). However, for the purposes of the SICC proceedings, a foreign lawyer can represent parties, as long as the registration requirements such as (section 36P of the Legal Profession Act (Cap 161, 2009 Rev Ed); requirements include that the foreign lawyer have sufficient proficiency in the English language, and have not been disbarred, struck off, suspended, ordered to pay a penalty, censured or reprimanded in their capacities as a legal practitioner in any jurisdiction, among others) are fulfilled.
Evidently, this move has resonated with foreign lawyers – 72 lawyers, many who are Queen's Counsel or Senior Counsel, have obtained full registration with the SICC (SICC website, "Register of Foreign Lawyers").
Enforcement of decisions
While the issue of enforcement of SICC decisions has yet to surface, some large multinational corporations have started to incorporate the SICC model clauses in their contracts (Chief Justice Sundaresh Menon, "Response by Chief Justice Sundaresh Menon: Opening of the Legal Year 2016" (11 January 2016) at ), signalling a positive development towards the of the SICC's expertise in adjudicating international disputes.
In addition, the Hague Convention on Choice of Court Agreements came into force on October 1 2016. Singapore is a signatory to and has ratified the Convention. Hence, where parties to the dispute designate Singapore as the chosen jurisdiction in an exclusive choice of court agreement, the courts of other Contracting States are obliged to recognise and enforce a Singapore court judgment that is subsequently given.
This undoubtedly enhances the international enforceability of Singapore court judgments, including those of the SICC, which will in turn, make the SICC a more attractive forum for dispute resolution.
Active case management
A hallmark of the SICC is the active roles the judges play in case management (see the SICC Practice Directions at ). At Case Management Conferences (CMC) that were conducted over nine months before the trial hearing, "parties were able to agree on the formulation of those issues which related to funding obligations, coal supply obligations and certain implied terms" (BCBC Singapore at ). This ensured that the issues were adequately narrowed and framed by both parties, resulting in a cost-effective and focused resolution. The role of technology is also evident, and praised here, as the court may give directions for the CMC to be held via teleconference or videoconference. This also results in substantial time and cost savings, making it easy and efficient for CMCs to be held, notwithstanding that the judges are not in Singapore.
Moving forward with the SICC
The above two sets of cases, as different as they may be, illustrate that the addition of the SICC to Singapore's judicial landscape brings with it interesting issues. For the SICC to live up to its ideal to become a centre for international commercial disputes, more cases will have to be seen through its doors. We look forward to seeing it develop and add to the vibrancy of Singapore's ever growing dispute resolution landscape.
Joint managing partner and co-head of disputes, TKQP
Tel: +65 6496 9540
Recognised as a leading lawyer in his fields of practice, Eddee has acted for international clientele in a wide spectrum of corporate and commercial litigation cases across numerous industry sectors. He is also experienced in handling insolvency, restructuring and investigations matters.
Eddee has been named as one of the leading lawyers in the fields of banking law and litigation in Singapore by the Best Lawyers since 2014. He is also ranked as a Recommended Lawyer for dispute resolution, and restructuring and insolvency by Legal 500 Asia Pacific, 2017. In addition, he was shortlisted for Asialaw Asia-Pacific Dispute Resolution Awards 2016’s Disputes Star of the Year award.
Eddee is a member of the prestigious, invitation-only International Association of Defense Counsel. He is a Fellow of the Chartered Institute of Arbitrators and the Singapore Institute of Arbitrators. He is also a member of INSOL International and the Insolvency Practitioners Association of Singapore.