To Stay or not to Stay: Whether a Foreign Defendant is Deemed to Have Submitted to the Jurisdiction of the Singapore Courts

HDB-Extend-Stay.thesgrealtor.com_Singapore Court of Appeal: Zoom Communications Ltd v Broadcast Solutions Pte Ltd [2014] SGCA 44

A foreign defendant who is sued in Singapore is often faced with a conundrum. The foreign defendant may make an application to set aside the overseas leave order (i.e. the order granting the plaintiff leave to serve the originating process on the foreign defendant abroad), thereby challenging the existence of the Singapore courts’ jurisdiction over him. This may be done only so long as the foreign defendant has not yet submitted to the Singapore courts’ jurisdiction or otherwise accepted its existence. An alternative or fall-back position for the foreign defendant is to argue that Singapore is not the “proper forum” for the trial of the action against him, i.e. a stay application. The difficulty lies in the fact that it is well established that such a stay application is generally premised on the Singapore courts having jurisdiction over him, but being asked, as a matter of discretion, not to exercise it. In other words, a stay application may result in the foreign defendant as being taken to have submitted to the Singapore courts’ jurisdiction. It would appear that the foreign defendant cannot make both applications at the same time, even in the alternative. To stay, or not to stay: that is the question.

The Singapore Court of Appeal has recently taken the opportunity to provide guidance to the profession and has clarified in Zoom Communications Ltd v Broadcast Solutions Pte Ltd [2014] SGCA 44 that where a foreign defendant puts forward an application for a stay of proceedings on improper forum grounds as a fall-back to an application for an overseas service leave order to be set aside, it would generally not be appropriate to infer that he has submitted to the jurisdiction of the local court. 

Facts

The Appellant, Zoom Communications Ltd, is a foreign defendant company incorporated in India and is in the business of supplying broadcast equipment and services. The Respondent, Broadcast Solutions Pte Ltd, is a company incorporated in Singapore and is in much the same line of business as the Appellant. The Respondent sued the Appellant in Singapore for outstanding sums due under three Hire Agreements.

The Appellant sought to set aside the overseas leave order (“Leave Order”) granted to the plaintiff (the Respondent). In the alternative, the foreign defendant sought a stay of proceedings on the grounds that Singapore is not the proper forum for the trial of the dispute between the parties.

Issue

The main issue was: whether submission should be inferred where a foreign defendant both disputes the existence of the local court’s jurisdiction and also, as a fall-back, applies for a stay of proceedings on improper forum grounds?

Holding

In relation to the first issue, the Court held that where a foreign defendant puts forward an application for a stay of proceedings on improper forum grounds as a fall-back to an application for an overseas service leave order to be set aside, it would generally not be appropriate to infer that he has submitted to the jurisdiction of the local court. This is provided the latter application for a stay is made as a fall-back to the jurisdictional challenge. However, if the Appellant had argued for a stay as its primary relief and the stay prayer had been decided first, it could no longer protest that the Singapore courts had no jurisdiction over it.

The key consideration is that so long as the foreign defendant has not done anything which, considered in the context and circumstances of the case, is meaningful only if he has waived any objection to the existence of the local court’s jurisdiction, he should not be treated as having submitted to jurisdiction (applying the principles in English case of Williams & Glyn’s Bank plc v Astro Dinamico Compania Naviera SA [1984] 1 WLR 438).

The Court reiterated the well-established rule of private international law that submission to jurisdiction may be inferred if the foreign defendant has taken a step that is “only necessary or only useful” if: (a) any objection to the existence of the local court’s jurisdiction has been waived; or (b) no such objection has ever been entertained at all. The Court also held that as a matter of principle, a party should only be taken to have waived a legal right if his conduct is unequivocal.

The Court concluded that while the Appellant might not have fully appreciated the nuances of the law on submission to jurisdiction, its conduct as a whole did not constitute a waiver of its objection to the existence of the Singapore courts’ jurisdiction. The Court was satisfied that the true position is that the Appellant pursued the setting-aside prayer and the stay prayer as alternative prayers, with the former prayer being the primary relief sought, and presented its arguments for a stay before its arguments on the setting-aside prayer as a matter of convenience. The Appellant took the position that notwithstanding the order in which it presented its arguments, it never had any intention to submit to the jurisdiction of the Singapore courts.

Finally, the Court opined that the Appellant could have presented the argument that Singapore was not the proper forum in its application set aside the Leave Order (because proper forum was one of the requirements for obtaining an overseas service leave order), instead of adopting an unnecessary and unnecessarily risky strategy of having the stay prayer heard. In other words, the same improper forum arguments in the stay application could and should have been raised in the setting aside application.

In conclusion, the Court held that the Appellant did not submit to the jurisdiction of the Singapore courts either in making a stay application per se, or in presenting its arguments for a stay in court.

Comments

This is an important decision which lays down guidance for foreign defendants and their counsel on the proper procedural steps to take when served overseas with a Singapore writ, and where there is an intention to challenge the existence of the jurisdiction of the Singapore courts, or if such jurisdiction exists, the exercise of it.

First, if both a setting aside application and a stay application are sought at the same time, the setting aside application must be clearly stated as the primary relief, with the stay application being stated as the alternative relief. However, and as the Court cautioned in its overarching observation, it was not necessary at all to have a stay prayer heard simply to have a determination on the identical point (which can be raised during a setting aside application) of whether Singapore was the proper forum and thus raise an estoppel. In other words, a setting aside application alone may be sufficient, and the stay prayer would be entirely unnecessary.

Second, at all material times (including during the presentation of arguments by counsel in court), the foreign defendant must state clearly and unequivocally that there is no intention whatsoever to submit to the jurisdiction of the Singapore courts.

The usual disclaimer: All opinions expressed on www.singaporelitigationlawyer.com are entirely my own. Importantly, my opinions do not constitute legal advice and you should definitely formally engage a lawyer to confirm, vary or refute my views.

To Sue or Not to Sue: Demystifying Litigation in Singapore @www.singaporelitigationlawyer.com © Dominic Chan, a Singapore litigation lawyer. All rights reserved.

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