ORO NEGRO DRILLING PTE LTD AND OTHERS V INTEGRADORA DE SERVICIOS PETROLEROS ORO NEGRO SAPI DE CV AND OTHERS AND ANOTHER APPEAL (JESUS ANGEL GUERRA MENDEZ, NON-PARTY) [2019] SGCA 74

This article focuses on the Court of Appeal’s views on the nature of an anti-suit injunction in the recent decision of Oro Negro Drilling Pte Ltd and others v Integradora de Servicios Petroleros Oro Negro SAPI de CV and others and another appeal (Jesus Angel Guerra Mendez, non-party) [2019] SGCA 74 (“Oro Drilling v Integradora”).

 

I.                 Background

As stated by the SGCA, the appeals were brought against the High Court Judge’s decision to set aside: (a) an order granting the appellants leave to effect service out Singapore; and (b) ex parte interim injunctions granted in the appellants’ favour against the first to third respondents (“the Interim Injunctions”) ([4] Oro Drilling v Integradora).

The appellants were a group of Singapore-incorporated companies ([5] Oro Drilling v Integradora). Oro Negro Drilling Pte Ltd (“Oro Negro”) was the holding company and sole shareholder of all the other appellants. Each of the other appellants owned an offshore jack-up drilling rig named after their respective owners (“the Rigs”). Oro Negro was solely owned by the first respondent, Integradora de Servicios Petroleros Oro Negro, SAPI de CV (“Integradora”) ([6] Oro Drilling v Integradora). Integradora was a Mexican-incorporated company and its sole client was the Mexican state-owned petroleum company, Petroleos Mexicanos (“Pemex”). Integradora provided its services to Pemex through Perforadora Oro Negro S de RL de CV (“Perforadora”) ([7] Oro Drilling v Integradora). The second and third respondents, Mr Alonso Del Val Echeverria and Mr Gonzalo Gil White were directors of the appellants at the material time who were subsequently removed from office ([9] Oro Drilling v Integradora).

The appellants’ constitutions contained an article (“Art 115A”) prohibiting the appellants’ directors from carrying into effect the filing of any petition to place the appellants in concurso unless two mandatory requirements were satisfied: (a) first, their shareholders had to approve of such a measure at a general meeting; and (b) the independent director had to separately approve of such a measure, if such an independent director had been appointed ([72] Oro Drilling v Integradora). A concurso was essentially a court-sanctioned debt restructuring process for insolvent companies, governed by a Mexican statute ([23] Oro Drilling v Integradora).

However, a concurso petition (the “Concurso Petition”) was filed without the independent director’s knowledge or approval ([27] Oro Drilling v Integradora).

This culminated in the appellants filing OS 126 on 26 January 2018 in the Singapore High Court seeking amongst other things permanent injunctions to restrain Integradora and the second and third respondents (“IAG”) from commencing, continuing and/or maintaining any concurso petition or insolvency action and/or any other legal action purportedly on the appellants’ behalf, whether in Mexico or elsewhere ([36(b)] Oro Drilling v Integradora). The appellants also filed HC/Summons No 482 of 2018, where they sought and obtained ex parte Interim Injunctions which mirrored the injunctions prayed for in OS 126 ([37(a)] Oro Drilling v Integradora).

II.               The Decision of the Court of Appeal

The Court of Appeal disagreed with the Judge’s (and IAG’s) characterisation of the Interim Injunctions as anti-suit injunctions. The Court of Appeal affirmed two definitions of anti-suit injunctions; “an injunction against a person enjoining him from commencing or continuing with proceedings in a court or tribunal abroad” and “an order of the court requiring the injunction defendant not to commence, or cease to pursue, or not to advance particular claims within or to take steps to terminate or suspend, court or arbitration proceedings in a foreign country, or court proceedings elsewhere in England” ([99] Oro Drilling v Integradora).

In comparison, the SGCA held that “…the Interim Injunctions did not specifically restrain IAG from commencing or continuing any proceedings against the appellants. They did not stop IAG from pursuing any personal claims that they may have had against the appellants in their own names. Instead, all that the Interim Injunctions did was to restrain IAG from purporting to act on the appellants’ behalf because the Oro Negro Concurso Petition was filed in contravention of Art 115AAs such, considerations of comity were not engaged and [the SGCA was not] persuaded that the Interim Injunctions would have the effect of interfering with justice in Mexico.” ([100] Oro Drilling v Integradora).

As the Court of Appeal found that Art 115A was a negative covenant, and there was a good arguable case that the former directors had breached Art 115A, the Court of Appeal was of the view that the Interim Injunctions should have been maintained to restrain the former directors from continuing to breach this negative covenant, absent any hardship or special circumstances ([101] – [102] Oro Drilling v Integradora). As such, the SGCA held  that the High Court Judge had erred in setting aside the Interim Injunctions and therefore ordered that they be restored ([105] Oro Drilling v Integradora).

III.              Observations of Oro Drilling v Integradora

Parties should note the Court of Appeal’s finding that not all injunctions which have the effect of restraining the pursuit of or participation in foreign proceedings can be classified as anti-suit injunctions ([1] Oro Drilling v Integradora).

As also noted by the Court of Appeal, this is important because the difference in classification is not just a matter of form but a distinction which carries crucial significance. A proper classification of the precise nature of the injunction bears on the correct appreciation of the issues before the court which in turn impacts on the correct application of the governing legal principles ([1] Oro Drilling v Integradora).

Tags: Conflict of laws; Constitution of companies; Injunction; Anti-suit injunction; Negative Covenant; Setting-aside.

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Crystl Hsu