SUPREME COURT OF SINGAPORE

29 October 2020

Case summary

Civil Appeal Nos 31 and 32 of 2020
Recovery Vehicle 1 Pte Ltd v Industries Chimiques Du Senegal and another appeal and another matter [2020] SGCA 107

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Decision of the Court of Appeal (delivered by Justice Steven Chong):

Outcome: The Court of Appeal allows the appeal by Industries Chimiques Du Senegal (“ICS”), setting aside the order permitting service of the writ (“the Amended Writ”) on ICS in Senegal, on the basis that Recovery Vehicle 1 Pte Ltd (“RV1”) failed to satisfy the jurisdictional requirement under O 11 r 1(e) of the Rules of Court (Cap 322, R5, 2014 Rev Ed) (“Rules of Court”) and could not satisfy the merits requirement for service out of jurisdiction as its claims were time-barred under Senegalese law. The Court of Appeal holds that it is an abuse of process for RV1 to contend on appeal that the time bar under Senegalese law no longer applies, given that it had conceded in the proceedings below that its claims would be time-barred under Senegalese law. The Court of Appeal also dismisses the appeal by RV1 and holds that the contracts in question are governed by Senegalese law.  

Facts and procedural history

1 Affert Resources Pte Ltd (“Affert”) and ICS entered into six contracts for the sale of sulphur cargo (“the Sulphur Contracts”). RV1 was later assigned the debts purportedly owed by ICS to Affert and claimed the sum of US$17,007,263.60 from ICS (“the ICS Debt”). ICS’s defence was that Affert had previously waived the ICS Debt as part of an acquisition of Senfer Africa Ltd’s stake in ICS by Indorama Holdings B.V. ICS relied on a number of documents to prove its defence of waiver, amongst which was an email sent on 7 October 2014 in which Affert’s director, Mr Syam Kumar (“Mr Syam”), stated that Affert confirmed that it would not claim the ICS Debt (“the 7 October 2014 letter”). In contrast, RV1’s position was that Affert had not waived the ICS Debt and that the waiver (if any) was a sham in that it was devoid of consideration and/or should be set aside as an undervalued transaction.

2 On 7 February 2017, Affert was placed in creditor’s voluntary winding-up and appointed Foo Kon Tan LLP as its liquidators. Later, on 18 September 2017, Affert was compulsorily wound up by Solvadis Commodity Chemicals Gmbh in Companies Winding Up No 17 of 2017. On 26 September 2017, Affert’s new liquidators, AAG Corporate Advisory Pte Ltd (“the Liquidators”), sent a letter of demand to ICS to recover the ICS Debt. On 18 July 2018, the Liquidators filed a writ of summons with an endorsement of claim, seeking the repayment of the ICS Debt. After the assignment of the ICS Debt, RV1 filed the Amended Writ on 4 October 2018 replacing the Liquidators as the plaintiff in the underlying suit.

3 On 11 October 2018, leave was granted to RV1 to serve the Amended Writ out of jurisdiction (“the Leave Order”). ICS took out a summons seeking to set aside RV1’s Amended Writ and/or the Leave Order. The Assistant Registrar set aside the Leave Order on the basis that RV1 was in breach of its duty to give full and frank disclosure. On 24 April 2019, the Liquidators filed an application in Originating Summons No 544 of 2019 to set aside the waiver of the ICS Debt on the basis that it was a transaction at an undervalue. Amidst the Singapore proceedings, ICS commenced proceedings against RV1 in Senegal by way of a “Declaration to Extinguish Debt” on the basis of its waiver defence as evidenced by the 7 October 2014 letter.

4 The High Court Judge (“the Judge”) allowed RV1’s appeal against the Assistant Registrar’s decision and held that RV1 had satisfied the jurisdictional gateway under O 11 r 1(e) of the Rules of Court, namely, that RV1’s claim was brought in respect of a breach of contract committed in Singapore, and that Singapore was the forum conveniens to try the dispute. The Judge also exercised her discretion not to set aside the Leave Order on the basis that RV1 had breached its continuous duty to give full and frank disclosure.

Decision of the Court of Appeal

5 On appeal, RV1 submitted that the Sulphur Contracts are governed by Senegalese law and therefore satisfied the jurisdictional gateway under O 11 r 1(d)(iii). RV1 also sought to adduce additional evidence on appeal in Summons No 84 of 2020, in particular, the evidence of Mr Mouhamed Kebe (“Mr Kebe”), pertaining to the issue of whether RV1’s claims under the Sulphur Contract were time-barred under Senegalese law.

6 As for ICS, it argued, inter alia, that: (a) RV1 had failed to make out a good arguable case under O 11 r 1(e) as its claim was not brought “in respect of a breach of contract in Singapore”; (b) RV1’s claim lacked sufficient merit as it was time-barred under Senegalese law; and (c) Singapore was not the forum conveniens to try the dispute.

7 The Court of Appeal held that the burden rests on the plaintiff to satisfy the following three requirements for service out of jurisdiction: (a) the claim must come within one of the jurisdictional gateways in O 11 r 1 (“the jurisdictional requirement”); (b) the claim must have a sufficient degree of merit (“the merits requirement”); and (c) Singapore must be the more appropriate forum for the trial or determination of the action (“the forum non conveniens requirement”). The court must also bear in mind that a finding on the jurisdictional requirement may inevitably have an impact on the merits requirement. The court should not examine the three requirements in isolation, but must proceed to examine whether its findings in relation to one requirement are consistent with its findings in relation to the other requirements for service outside of jurisdiction: at [51]–[52].

Whether the Sulphur Contracts are governed by Singapore law or Senegalese law

8 The authorities do not support RV1’s position that the court must disregard the place to which the goods were actually delivered (here, Senegal) in determining the governing law of a costs and freight (“CFR”) contract. The different contracts, viz, CFR, Cost, Insurance and Freight (“CIF”) and Free on Board (“FOB”) are all contracts for the sale of goods and their main difference lies in the allocation of obligations/expenses and the passing of risks in relation to the shipment of the goods. In determining the governing law of a CFR contract, the general position is that this must be identified in accordance with the general rules regarding the ascertainment of a contract’s proper law, without any special rules or factors being applicable merely by virtue of it being a CFR contract. This was consistent with the position in Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal [2008] 2 SLR(R) 491, which states the aim of the third stage of the test was not to divine any “intent” of the parties but was instead a pragmatic exercise in which various factors would be taken into account: at [53]–[59] and [62].

9 The Court found that RV1 was wrong to suggest that the court should attach significance to the contemplated place of performance as opposed the actual place of performance of the obligations under a contract. In any event, RV1 did not adduce any evidence that the contemplated performance of the obligations under the Sulphur Contracts was in Singapore. RV1 was simply relying on the incorporation of Affert in Singapore to invite the court to draw the inference that the contemplated place of the various CFR obligations was in Singapore. While RV1 was the assignee of the ICS Debt and this may have hindered its ability to obtain direct evidence of those actually involved in the actual performance of those obligations, RV1 cannot stand in a better position vis-à-vis the assignor, Affert: at [61], [64]–[66].

10 The Court found that the common commercial purpose underpinning all the Sulphur Contracts pointed to Senegal. The Sulphur Contract were not mere trading contracts but Affert had entered into the Sulphur Contracts for ICS to use the shipped sulphur for manufacturing fertiliser in Senegal. Furthermore, all the cargoes were eventually shipped to Senegal, even though they may have been sourced and shipped from different countries. The negotiations preceding the formation of the Sulphur Contracts also showed more connection to Senegal. The various documents referred to by RV1 were not relevant to the analysis as they were issued after the formation of the Sulphur Contracts. The Sulphur Contracts were therefore governed by Senegalese law. The Court rejected RV1’s submission that any determination of the governing law should only be provisional: at [67]–[71].

Whether RV1’s claim is brought in respect of a breach committed in Singapore such as to satisfy O 11 r 1(e)

11 The Court held that the ultimate burden rests on the plaintiff to show that the claim was brought in respect of a breach committed in Singapore in order to satisfy O 11 r 1(e). In order for the plaintiff to discharge this burden, it must first show the existence of a contractual obligation that was to be performed only in Singapore. In the absence of an express or implied term under the contract stating the place at which payment must be made, there is a general rule of law that the debtor must pay the creditor at the debtor’s place of business: The Eider [1893] Probate 119 (“The Eider”). However, this general rule would have no place in a situation where there is a history of past payments by the debtor to the creditor in respect of the transaction in question in a jurisdiction other than the place of business of the creditor. The Court also clarified that the rule in The Eider does not establish the proposition that the debtor must seek out the creditor at the creditor’s place of incorporation but instead, the place from which the creditor performs his business: at [72]–[85].

12 The Sulphur Contracts did not expressly provide where payment was to be made. The most material fact was that ICS had made various part payments to Affert’s Hong Kong bank account in respect of two of the cargo shipments. Affert’s main director, Mr Syam, was also based in Hong Kong, and Affert had no active employees in Singapore. The Court therefore found that there was no evidence that Affert had carried out any business in Singapore. The fact that payments were made and accepted in Hong Kong suggested that (a) Affert had waived to have payment made in Singapore or (b) it was legally permissible to make payment in either Hong Kong or in Singapore. As there was no evidence of a waiver, the more natural inference was that there was no exclusive obligation to make payment only in Singapore: at [86]–[90].

Whether RV1’s claim is time-barred under Senegalese law such that it cannot satisfy the merits requirement for service out of jurisdiction

13 The Court noted that RV1 had advanced a positive case before the Judge that its claim under the Sulphur Contracts was time-barred, and that it had conceded to the Judge that irrespective of whether the limitation period under Senegalese law was two years or five years, it would have already set in. The Judge’s factual finding that RV1’s claim was time-barred under Senegalese law was, however, not taken into account in the assessment of the merits requirement. The Judge only took it into account in the context of assessing the availability of Senegal as an alternative forum in the forum non conveniens analysis: at [94]–[96].

14 RV1’s shift in position on appeal that the applicable limitation period under Senegalese law no longer applies engages both the doctrine of approbation and reprobation and the doctrine of abuse of process. While the Court found that the doctrine of approbation and reprobation did not strictly apply as RV1 did not receive any benefit as a result of its earlier position on the time bar, it was noted that RV1’s starkly contradictory position on appeal was highly unsatisfactory and attracted the circumspection and scepticism of the court: at [98]–[102].

15 The Court found that RV1 had rightly conceded that the time bar would have already set in under Senegalese law, given the evidence of its expert, Mr Kebe, in the hearing before the Judge. Although RV1 may not have appreciated that its concession on the time bar would have consequential impact on the merits requirement, this does not alter the abuse of process analysis. A factual concession remains a factual concession irrespective of the nature of the legal argument under which it was made. In seeking to resile from the concession and submitting that the time bar no longer applied, the Court would no longer be considering whether the Judge was wrong in arriving at her conclusions but would effectively be conducting a fresh examination of the merits (in this case, the issue of the time bar). It was therefore an abuse of process for RV1 to contend on appeal that the time bar under Senegalese law no longer applies: at [103]–[111].

16 In any event, the Court was of the view that it would not have accepted RV1’s revised submission on the time bar. The Court also refused to admit Mr Kebe’s latest affidavit as it was unsupported and incoherent. The Court found that whether the limitation period was two years or five years, RV1’s claim would be time-barred: at [112]–[120].

Whether RV1 can avail itself of the undue hardship exception under the Foreign Limitation Periods Act

17 RV1 submitted that the applicable time bar under Senegalese law would not apply because of the “undue hardship” exception under the Foreign Limitation Periods Act (Cap 111A, 2013 Rev Ed) (“Foreign Limitation Periods Act”), arguing that Affert was not in a position to collect the ICS Debt as it was controlled by directors who had no intention to collect the debt.

18 In assessing whether the application of the foreign limitation period would cause undue hardship, the court must take into account all the relevant facts and circumstances of the case: at [121]–[129].

19 It is crucial to bear in mind that the undue hardship contemplated under s 4(2) of the Foreign Limitation Periods Act must be caused by the application of the limitation period under Senegalese law. The Court found that, in the present case, any hardship suffered by RV1 arose from its considered commercial decision to obtain the assignment of the ICS Debt knowing full well that the claim might already be time-barred. It is objectionable in principle that a party like RV1, as an assignee of a debt, should be permitted to revive a time-barred claim simply by pointing to the alleged mala fides of the assignor’s former directors in failing to commence the proceedings within the applicable limitation period, with the full knowledge that the claim was already time-barred. Even if there was any uncertainty as to the applicability of the Senegalese time bar, that would have made it necessary to bring the proceedings sooner rather than later: at [130]–[138].

20 Any undue hardship caused to Affert did not arise from the application of the Senegalese time bar, but from the omissions of Affert’s former directors in commencing any proceedings against ICS. In the circumstances, the Court found that RV1 could not find assistance under s 4(2) of the Foreign Limitation Periods Act: at [139]–[140].

Whether Singapore is the forum conveniens

21 In the light of its findings on the time-bar under Senegalese law, the Court found that the governing law of the ICS waiver defence was no longer a significant factor in the forum non conveniens analysis. Regardless of whether ICS can succeed in establishing the waiver, RV1 would not be able to satisfy the merits requirement since its claim was already time-barred under Senegalese law. The Liquidator’s application in OS 544 was also not a weighty factor as, regardless of the merits of the waiver defence, RV1’s claim would be time-barred under Senegalese law. The Judge’s finding that Singapore was the forum conveniens because Singapore was the place of the breach of the Sulphur Contracts could no longer stand, given the Court’s finding that ICS does not have a contractual obligation under the Sulphur Contracts to make payment to Affert (and consequently, RV1) in Singapore. On balance, the factors tilt towards Senegal as the forum conveniens: at [144]–[150].

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

Version No 1: 29 Oct 2020 (22:42 hrs)