Singapore - Mareva Injunctions In Aid Of Foreign Court Proceedings.

Legal News & Analysis - Asia Pacific - Singapore - Dispute Resolution

12 March, 2019

 

The success of Singapore as a financial, commercial, and business centre for the region means that a lot of foreign companies and individuals have assets here. As a result, we are often asked to obtain a Mareva injunction from the Singapore courts to preserve such assets pending the determination of an ongoing dispute. In many cases, the dispute has been referred to arbitration abroad or to a foreign court. The question whether a Singapore court has the power to grant a Mareva injunction in support of foreign arbitration proceedings has been answered by statute. However, rather surprisingly, the question whether a Singapore court has a similar power when the dispute is being litigated in a foreign court has until now not been clearly answered.

 

In China Medical Technologies v Wu Xiaodong [2018] SGHC 178, Audrey Lim JC held that section 4(10) of the Civil Law Act did in fact give the Singapore courts the power to grant a Mareva injunction in aid of foreign court proceedings. In doing so, she preferred the views of Chan Seng Onn J in Multi-Code Electronics Industries (M) v Toh Chun Toh Gordon [2009] 1 SLR(R) 1000 over those of Tay Yong Kwang J (as he then was) in Petroval SA v Stainby Overseas [2008] 3 SLR(R) 856.

 

However, Lim JC highlighted the pre-requisites before such power could be exercised. First, the plaintiff must have an accrued cause of action against the defendant that is justiciable in a Singapore court. Second, the Singapore court must have in personam jurisdiction over the defendant in respect of the Singapore action. Regarding the first pre-requisite, Lim JC explained that “a claim is justiciable if it is one for substantive relief which the court has jurisdiction to grant and is a claim that can be tried by that court. That the court (seized of jurisdiction and able to try the claim) subsequently declines to do so in favour of proceedings elsewhere, does not make the cause of action non-justiciable in that court” (emphasis in original).

 

Therefore, the first pre-requisite could still be satisfied even if the plaintiff took the view that the substantive dispute should be heard and determined in the foreign court and the application for a Mareva injunction was merely in support of that foreign court action. This pre-requisite would be satisfied if, in theory, the Singapore court could try the substantive dispute and grant the relief sought.

 

Lim JC did not discuss the second pre-requisite because “the concept of in personam jurisdiction is clear on the decided authorities”. However, another recent case has revealed a potential problem. That case is PT Gunung Madu Plantations v Muhammad Jimmy Goh Mashun [2018] SGHC 64 (“PT Gunung Madu”). Here, Woo Bih Li J refused to grant a Mareva injunction in aid of foreign court proceedings because he was of the view that the Singapore court did not have in personam jurisdiction over the defendant who was outside Singapore.

 

It must be remembered that jurisdiction is founded on proper service of the originating process. Where the defendant is outside Singapore, service may be effected outside Singapore with the leave of the court pursuant to Order 11 of the Rules of Court. To obtain such leave, the plaintiff will have to show the following three things:

 

(a) the claim must come within the scope of one or more of the paragraphs of O 11 r 1;

 

(b) the claim must have a sufficient degree of merit; and

 

(c) Singapore must be the forum conveniens.

 

The third requirement arises from judicial interpretation of O 11 r 2(2) which provides that no leave to serve out of jurisdiction will be granted unless it is “made sufficiently to appear to the court that the case is a proper one for service out of Singapore”. 

 

Woo J found that the plaintiff in PT Gunung Madu had stumbled on this last requirement because it could not be shown that Singapore was the forum conveniens. As a result, the court’s earlier order giving leave to serve the writ out of the jurisdiction was discharged and there could be no question of granting the Mareva injunction in aid of foreign proceedings sought by the plaintiff.

 

Woo J went on to make some important observations. In order to obtain a Mareva injunction in support of foreign court proceedings where the defendant is outside Singapore, two applications are required. First, an application for leave to serve the originating process outside Singapore; and second, the application for the Mareva injunction itself. The two applications may not be heard together or by the same judge. Woo J highlighted the importance of a judge hearing an application for a Mareva injunction, whether or not he is also hearing the leave application, to address his mind to the forum conveniens requirement. If the plaintiff is unlikely to satisfy the forum conveniens requirement and leave to serve the originating process outside Singapore is unlikely to be granted, the judge should also refuse to grant the Mareva injunction.

 

Further, even if leave to serve out of the jurisdiction has already been granted, the foreign defendant may subsequently challenge that order and even the originating process itself, on the ground that Singapore is not in fact the forum conveniens and there is no in personam jurisdiction over the foreign defendant. If the foreign defendant is successful, any Mareva injunction must also be set aside.

 

The problem is that, in such cases, the plaintiff is asking the Singapore court for a Mareva injunction specifically in support of foreign court proceedings. The plaintiff is therefore expressly saying that he believes the foreign court is the forum conveniens. However, by saying this, he will find it impossible to obtain leave to serve the originating process on the foreign defendant in the first place. The pre-requisite of in personam jurisdiction over the defendant may never be satisfied if the defendant is outside the jurisdiction and the Mareva injunction is sought in support of foreign court proceedings.

 

As highlighted by Woo J in PT Gunung Madu, the requirement of forum conveniens is not expressly spelled out in O 11 but is based on judicial interpretation of O 11 r 2(2), which is a general requirement that leave to serve out of the jurisdiction should only be made where the court is satisfied that the case is a “proper one” for service out of Singapore. It should not be too difficult for a court to pronounce that where a plaintiff is seeking a Mareva injunction against a foreign defendant and in support of foreign court proceedings, “the case is a proper one for service out of Singapore” without the need for the plaintiff to show that Singapore is the forum conveniens. To require a plaintiff to show that Singapore is the forum conveniens in circumstances where he has commenced the foreign court proceedings and wants to pursue such proceedings to judgment, would make it impossible for a plaintiff to obtain a Mareva injunction in support of such foreign court proceedings.

 

This is a significant and unnecessary limitation on the Singapore courts’ powers under section 4(10) of the Civil Law Act. However, it is within the power of the courts to remove this limitation if an appropriate opportunity arises. Given the frequency of enquiries we receive on obtaining Mareva injunctions in support of foreign court proceedings, such an opportunity should not be long in coming. 

 

Shook Lin Bok LLP 

 
For further information, please contact:

 

Probin Dass, Partner, Shook Lin & Bok

probin.dass@shooklin.com