Offshore Case Applications & Foreign Lawyer Representation

The SICC has recently confirmed the proper construction of the “offshore case” requirements under the Rules of Court, which facilitates representation by foreign lawyers in litigation before the Court: see Teras Offshore Pte Ltd v Teras Cargo Transport (America) LLC [2016] SGHC(I) 02 (22 June 2016).

As noted in my 21 May 2016 article on pending SICC cases, these proceedings had been transferred to the SICC on 29 March 2016 and concern various claims and counterclaims arising in connection with three liquefied natural gas projects in or near Queensland, Australia.

The Defendant, Teras Cargo Transport (America) LLC, entered into a series of contracts (the “Main Contracts”) with Bechtel Oil Gas and Chemicals Inc. and Bechtel International Inc. for the provision of various services and the supply of equipment in relation to these projects; and had then sub-contracted such work to the Plaintiff, Teras Offshore Pte Ltd, on what have been referred to as “back-to-back” terms (the “Sub-Contracts”). The Plaintiff’s claims total approximately US$29m. The Defendant denies liability and itself advances various counterclaims totalling approximately US$14m. In addition, both parties claim interest and costs.

In considering its first offshore case application, the Court (comprised of Henry Bernard Eder, International Judge) confirmed that the relevant inquiry under O 110 r 1(1) (Cap 322, R 5, 2014 Rev Ed: see this link) is whether the action has no substantial connection to Singapore. It is not the presence of substantial connections with other jurisdictions that is important but the absence of a substantial connection with Singapore (Judgment at [8]).

The Rules of Court do not provide a positive definition or description of what is meant by “substantial connection”. O 110 r 1(2)(f) puts the matter negatively by identifying two situations where an action has no substantial connection to Singapore:

for the purposes of the definition of “offshore case” in paragraph (1), an action has no substantial connection to Singapore where —

(i) Singapore law is not the law applicable to the dispute and the subject-matter of the dispute is not regulated by or otherwise subject to Singapore law; or

(ii) the only connections between the dispute and Singapore are the parties’ choice of Singapore law as the law applicable to the dispute and the parties’ submission to the jurisdiction of the Court.

Here, the Sub-Contracts were governed by Singapore law; and it was common ground that the present dispute does not fall within either of the categories set out in O 110 r 1(2)(f).

Paragraph 29(3) of the SICC Practice Directions sets out a list of factors and states that each of these factors will not, by itself, constitute a substantial connection between the dispute and Singapore for the purposes of O 110 r 1(2)(f)(ii) of the Rules of Court:

“Substantial connection to Singapore”

(3) For the purposes of Order 110, Rule 1(2)(f)(ii) of the Rules of Court, the existence of each of the following factors will not, by itself, constitute a substantial connection between the dispute and Singapore:

(a)  any of the witnesses in the case may be found in Singapore;

(b)  any of the documents that are relevant to the dispute may be located in Singapore;

(c)  funds connected with the dispute have passed through Singapore or are located in bank accounts in Singapore;

(d)  one of the parties to the dispute has properties or assets in Singapore that are not the subject matter of the dispute;

(e)  where one of the parties is a Singapore party, or where a party is not a Singapore party, but has Singapore shareholders.

The Court observed (at [12]) that the definition of an “offshore case” in O 110 r 1(1) of the Rules of Court refers to the absence of a substantial connection of the “action” with Singapore, while para 29(3) refers to the absence of a substantial connection between the “dispute” and Singapore. It also noted that para 29(3) refers specifically to O 110 r 1(2)(f)(ii) where the word “dispute” rather than “action” is used.

The Court was prepared to assume, in favour of the plaintiff, that the “broad” test should be adopted ie, that which embraces not only the underlying substantive dispute(s) between the parties but also other matters relevant to the action as a whole:

(a) The test for the existence of a substantial connection embraces not only the underlying substantive dispute(s) between the parties but also other matters relevant to the action as a whole, including the procedural and administrative matters identified in para 29(3) of the SICC Practice Directions; and

(b) The existence of more than one of the factors identified in para 29(3), taken either on their own or with other factors, is at least capable of justifying a conclusion that an action has a substantial connection with Singapore (Judgment at [13]).

In this case, the Court found that the action had no substantial connection with Singapore (Judgment at [19]), concluding that the action was an “offshore case” and allowing the application. Although the Court noted that there were several procedural or administrative factors connecting the action with Singapore, it did not find that such connection was “substantial”.

Significantly, after analysing the pleadings (to which the other party had lodged only a bare denial), the Court concluded that the various claims and counterclaims were all concerned with the provision of services in Queensland, Australia, and such services had nothing whatsoever to do with Singapore (Judgment at [17]).

In so doing, the Court found that these matters outweighed those factors listed in sub-paragraphs 29(3)(a)–(e) of the SICC Practice Directions relied upon by the Plaintiff (see Judgment at [14]-[16]), namely that:

(a) all the Plaintiff’s witnesses are located in Singapore; and the Defendant has a (small) operational office in Singapore (the Court agreed that this factor “indicate some connection of the “action” with Singapore in a procedural or administrative sense”);

(b) the relevant documents including the various charterparties for work done under the Main Contracts, the invoices, notices are all located in Singapore; and the Defendant’s servers are also located in Singapore (the Court agreed that this factor also “indicate some connection of the “action” with Singapore in a procedural or administrative sense”)

(c) funds connected with the dispute have passed through Singapore; in particular, the sum of US$3.5m advanced to the Defendant by the Plaintiff which forms part of the Plaintiff’s present claim was paid through the Plaintiff’s bank account in Singapore to the Defendant’s bank account in the USA (this factor was held to be “at best, peripheral”);

(d) the Plaintiff has assets in Singapore which are not the subject matter of the dispute (this was held to be “irrelevant or, at best, makeweight so far as the “action” is concerned”)

(e) the Plaintiff is a Singapore company (this too was held to be “irrelevant or, at best, makeweight so far as the “action” is concerned”).

 

Dated: 17 July 2016

Dominique Hogan-Doran SC is a Senior Counsel of the Australian Bar and Registered Foreign Lawyer of the Singapore International Commercial Court. This note is general only and does not constitute legal advice. Liability limited pursuant to a scheme approved under Australian professional standards legislation.