STAY OF PROCEEDINGS ON THE GROUND OF FORUM NON CONVENIENS WHERE THERE IS NO SUBSTANTIVE CLAIM OR CONTROVERSY IN THE ACTION
In TA Private Capital Security Agent Limited & another v UD Trading Group Holding Pte Ltd & another [2021] SGHCR 10, the High Court dismissed an application for a stay of proceedings on the ground of forum non conveniens under Order 12 Rule 7(2) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) as the applicant was not confronted by any substantive claim or controversy in the action.
Facts. This was an application seeking a stay of court proceedings in Singapore on the ground of forum non conveniens under Order 12 Rule 7(2) of the Rules of Court.
For ease of convenience, Order 12 Rule 7(2) of the Rules of Court is set out below:
“A defendant who wishes to contend that the Court should not assume jurisdiction over the action on the ground that Singapore is not the proper forum for the dispute shall enter an appearance and, within the time limited for serving a defence, apply to Court for an order staying the proceedings.”
The applicant, Rutmet Inc (a Canadian registered corporate entity) (“Rutmet”), was a co-defendant alleged to have assigned to the plaintiffs a right to enforce a corporate guarantee against UD Trading Group Holding Pte Ltd (a Singapore registered company) (“UDT”), and was not the subject of any substantive claim in the action (at [1]).
The 1st Plaintiff was TA Private Capital Security Agent Limited (a British Virgin Islands registered corporate entity) and the 2nd Plaintiff was TransAsia Private Capital Limited (a Hong Kong registered corporate entity) (collectively “the Plaintiffs”) (at [2]).
Rutmet was initially joined by the Plaintiffs in the action as the 3rd plaintiff (at [3]) but after Rutmet sought an application to “wholly discontinue the claims” against UDT – which UDT consented to and the Plaintiffs objected – leave was granted to Rutmet to discontinue the claims in the action only as between itself and UDT, and Rutmet was removed as a co-plaintiff and joined as a co-defendant in the action (at [4]).
The application for stay on forum non conveniens. After the Statement of Claim (Amendment No 1) was filed and served, Rutmet brought the present application seeking that the action be stayed pursuant to Order 12 Rule 7(2) of the Rules of Court and/or the inherent jurisdiction of the Court, insofar as the action is now against Rutmet as a co-defendant, with the sole ground being that Singapore is forum non conveniens (at [6]-[7]). The counsel for Rutmet clarified that Rutmet is not seeking a case management stay of proceedings in any event (at [7]).
It was undisputed that the Statement of Claim (Amendment No 1) essentially made no substantive claim against Rutmet and there would be nothing of controversy arising from the Plaintiffs’ assertion of a default by Rutmet (at [8]). The Court also observed that there was no remedy framed by the Plaintiffs against Rutmet in the reliefs section of the Statement of Claim (Amendment No 1) (at [9]).
There was no Defence filed by Rutmet in the action; the filing of Rutmet’s Defence (if any) being held in abeyance pending the determination of the present application (at [10]).
The law. The issue was whether Rutmet could succeed in seeking a stay of the action against it in accordance with the principles laid out in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (“Spiliada”) (at [11]).
The Court found that the application could and “ought to be determined dispositively on a preliminary ground of principle” (at [13]) as the applicant “is not confronted by any substantive claim or controversy in the action” (at [14]). We set out [13] and [14] below:
“13 The Plaintiffs dispute Rutmet’s case in its entirety for a variety of reasons. For the analysis that follows, however, I find that the present summons application can and ought to be determined dispositively on a preliminary ground of principle, having regard to what is in essence the fact that the parties do not dispute that the Statement of Claim (Amendment No 1) raises nothing of controversy as between the Plaintiffs and Rutmet as far as the pleading goes, and makes no substantive claim or seeks no remedy against Rutmet at all (see [8]-[9] above).
14 The parties informed me at the hearing that it is their understanding that is no authority dealing directly with the situation, as in the present case, where an applicant seeking a stay of proceedings on the ground of forum non conveniens is not confronted by any substantive claim or controversy in the action. Be that as it may, a closer examination of the jurisprudence in this area of law suggests to me that an application for such a stay should not be entertained unless there is a real dispute or controversy underlying the specific proceedings which is the subject of the stay application.”
The Court pointed out that Spiliada contemplates some other available forum for the trial of the action in which the case may be tried more suitably (at [16]).
This “involves a comparative dimension” which, in order to be meaningful, requires “the existence of a real and genuine tension in the choice of deciding, as between two or more jurisdictions, which forum is clearly and distinctly the more appropriate one where a case may be tried more suitably for the parties concerned”, adding that “[t]he absence of such tension … would threaten an overreach of the principles in Spiliada …” (at [17]; emphasis added by Court).
The Court analogised this to the case of Baturina v Chistyakov [2014] All ER (D) 38 (Aug); [2014] EWCA Civ 1134, where the English Court of Appeal held that as “the monetary claim [was] unsustainable [there was] no point in granting a stay … For such a claim there is no natural forum, not because several factors point to different jurisdictions but because the claim itself is bad.” (at [19]-[21]; our emphasis added).
Application. The Court held at [22] that “… the matter [fits] squarely into the scenario where it can be said that there is no substantive claim to even begin with”.
“22 Applying the foregoing analysis to the present case, the application for stay on the ground of forum non conveniens must therefore fail. As highlighted earlier at [13], both the Plaintiffs and Rutmet do not dispute that the Statement of Claim (Amendment No 1) raises no controversy as between them and makes no substantive claim or seeks no remedy against Rutmet at all. This puts the matter squarely into the scenario where it can be said that there is no substantive claim to even begin with.”
(our emphasis added)
As such, since there was no tension between two jurisdictions as there was no substantive claim or controversy to be tried as between the Plaintiffs and Rutmet in the action before the Singapore courts, the Court was of the view that to determine substantively the issue of forum non conveniens on the facts of the application would stretch the principles in Spiliada beyond the basic parameters within which those principles are designed and equipped to operate (at [23]).
Hence, the Court dismissed the application on the basis that it was “legally flawed and/or misconceived” (at [24]).
Significance. The Court’s application of Spiliada is welcomed in providing clarity. The application for a stay of proceedings under Order 12 Rule 7(2) is on the basis that there is a more appropriate forum for the trial of the action. It follows that there should be a substantive claim to begin with before the question arises as to which of two or more jurisdictions is the more appropriate forum for the trial of the action.
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