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    02:44 PM Ronald JJ Wong (Covenant Chambers LLC)

    Case Comment: Accent Delight International Ltd v Bouvier, Yves Charles Edgar [2016] SGHC 40

        

    Introduction

    Will the fact that a plaintiff's substantive claims may be unavailable under a foreign law which possibly applies to the dispute affect the application of the forum non conveniens doctrine for an application to stay Singapore proceedings? Will the availability of the newly established Singapore International Commercial Court sway the court's decision on forum non conveniens? The Singapore High Court (per Lai Siu Chiu SJ) held yes to the former and appears to opine positively to the latter.

    Brief Facts

    The plaintiffs and defendants may be referred to with reference to two individuals. The plaintiffs by Dmitry Rybolovlev, a Russian billionaire who made various purchases of expensive artworks for his private collection. And the defendants by Yves Charles Edgar Bouvier, a Swiss national who runs an art-related transport and storage business, including the Singapore Freeport. He was the art consultant to Rybolovlev after they were first introduced by one Tania Rappo, a Bulgarian national residing in Monaco, in 2003. Rybolovlev liaised with Bouvier through Rappo and/or Rybolovlev's representative Mikhail Sazonov. This was because Rybolovlev could not converse in English or French.

    Between 2003 and 2014, Bouvier would source for artworks for Rybolovlev to purchase. These acquisitions were generally for sums in excess of US$100m. In 2014, Rybolovlev purportedly discovered that Bouvier had been inflating the prices of the artworks, keeping the substantial difference for himself. The total excess payments are alleged to amount to about US$1 billion.

    The dispute between the parties turns on the characterisation of their relationship. Rybolovlev alleges that Bouvier was his agent and had breached his fiduciary duties. Rybolovlev thus brought a Singapore action against Bouvier for breach of fiduciary duties, dishonest assistance, conspiracy and alternatively a claim for a proprietary interest in the excess payments and their traceable proceeds. Bouvier denies this, arguing that Bouvier was merely the seller in a “willing buyer-willing seller” transaction vis-à-vis Rybolovlev.

    Bouvier moved to Singapore in 2009 but took up residence in Geneva again after commencement of this suit.

    Present Application

    The defendants represented by Bouvier applied to stay the proceedings in this suit on the basis of two main grounds: lis alibi pendens (in respect of Monaco proceedings commenced by the plaintiffs) and forum non conveniens, arguing that Switzerland was clearly the more appropriate forum for the determination of the dispute. At the hearing of the application, however, the plaintiffs conceded that they were prepared to abandon the Monaco civil proceedings if the Singapore court ruled in their favour on the stay of proceedings. The Court's decision thus focussed only on the forum non conveniens argument.

    The defendants argued that Switzerland was the clearly more appropriate forum. This is notwithstanding that Swiss law, which possibly applied to the plaintiffs' claims, does not grant proprietary remedies such as tracing and constructive trust because, the defendants argued, the issue of reliefs was a procedural one and could be re-characterised under Swiss law as other types of claims. Further, the defendants have submitted to the jurisdiction of the Geneva courts. See [41]-[47].

    Rappo's application and arguments are similar. However, Rappo argued that Monaco would be the appropriate forum as, inter alia, the witnesses for Rappo are compellable in Monaco but not in Singapore (see [53]).

    The plaintiffs argued, on the basis of foreign law expert opinion, that in the absence of proprietary remedies under Swiss law, the Swiss courts would consider the law applicable to most of the re-characterised claims to be Singapore law (see [65]).

    High Court's Decision

    Lai SJ found that the key issue was whether the plaintiffs can pursue the majority of their substantive claims under Swiss law. She held that they cannot (at [81]). This is because under Singapore conflict of laws rules, proprietary claims are matters of substantive not procedural law which are governed by the lex causae (at [82]-[84]). Lai SJ found that the plaintiffs’ substantive claims for breach of fiduciary duties, constructive trust, fraudulent misrepresentation and conspiracy need to be re-characterised as claims in tort, contract and unjust enrichment under Swiss law. And there was a risk that those claims cannot be so reclassified (at [86]). This was presumably a decisive connecting factor pointing to Singapore rather than Switzerland (see [101]).

    On the other possible connecting factors, Lai SJ found that the defendants' purported personal connections (e.g. Bouvier's email address having a Singapore domain), the fact that negotiations and discussions took place on telephone and emails with Bouvier from his office in Geneva, the fact that the certificates of deposit for storage of the artworks were prepared and signed in Geneva, were neutral factors (at [91]).

    Lai SJ found that the relevant articles in the Swiss Federal Act on Private International Law of 18 December 1987 do not point to Swiss law as having jurisdiction over the parties as regards the plaintiffs' substantive claims (at [92]).

    Further, Lai SJ opined that the venue of the trial was of little consequence to the parties as they have sufficient means to pursue or resist the claims in any country. There are also competent French interpreters available in Singapore so this is also a neutral factor as between Singapore and Switzerland (at [95]).

    On compellability of witnesses as a connecting factor, Lai SJ found that this was a neutral factor as the alleged witnesses who may not be compellable will not be able to give relevant evidence or they are not truly compellable if the dispute was heard in the Swiss courts (at [97]-[101]).

    At Stage 2 of the Spiliada test (Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460), Lai SJ held that if the plaintiffs’ proprietary and equitable claims are not recognised under Swiss law, that would cause grave prejudice to the plaintiffs if this Suit is stayed in favour of Switzerland as the forum (at [102]).

    Finally, and this is where in the author's humble opinion it gets interesting, Lai SJ opined that "the perceived advantages (to the defendants) or disadvantages (to the plaintiffs) of Switzerland being the forum will be levelled out if this Suit remains in Singapore but is transferred to the SICC [the Singapore International Commercial Court]" (at [111]). She explained that "[t]he international judges who sit on the SICC are not only eminent and very able but some hail from countries that have civil law systems. In addition, one of them (Justice Dominique T Hascher of the Supreme Judicial Court in France) is equally fluent in French and English" (at [116]). She then opined that the Suit should be transferred to the SICC under O 110 of the Rules of Court.

    The defendants opposed the transfer of the Suit to the SICC. They argued inter alia that O 110 of the Rules of Court would not be applicable because the High Court should not apply the private international rules of the SICC to determine the stay application. Moreover, the possibility of a transfer to the SICC should not be a factor this court should take into account under either stage 1 or stage 2 of the Spiliada test (at [114]). However, Lai SJ appears to have rejected the defendants' arguments (at [116]).

    Comment

    Lai SJ's approach of taking into consideration the suitability of the Suit being transferred to the SICC is an interesting one that merits critical analysis. At the outset, it must be noted that it is not clear from the decision that Lai SJ's view that the Suit was transferrable to the SICC was actually a factor in the Spiliada analysis which led to her decision to refuse the stay of proceedings on forum non conveniens. Assuming it was, this approach while appearing to be consistent with O 110 is, in the author's view, practically confusing and procedurally incorrect. Unfortunately, the interaction of the relevant rules under O 110 and the application of the traditional Spiliada principles was not clearly analysed. I elaborate below.

    First, the Spiliada principles were developed (both in UK and in Singapore) in a context where there was no such statutory creature as the SICC, which could, as Lai SJ opined, presumably address potential disadvantages of having a dispute heard in Singapore as opposed to some foreign court. How then should the possibility of a suit being heard in the SICC be analysed in the Spiliada test? One possibility is that the Court should determine the Spiliada analysis as though the SICC would be the ultimate court hearing the matter. However, as the defendants had argued at [113], it could be premature to assume that the suit could be heard in the SICC. Yet, it may not be altogether premature for a court to determine that the suit could be heard in, and transferred to, the SICC. What difference would such a determination be from a determination on the governing law of the substantive claims? At this stage, it is inevitable that the court would have to make preliminary determinations on matters which would only be properly dealt with later.

    Second, O 110 r 12(4)(a)(iii) provides that it is a requirement for a case to be transferred from the High Court to the SICC that "it is more appropriate for the case to be heard in the [SICC]". O 110 r 7(2)(a) states that the SICC has "the jurisdiction to hear and determine ... a case transferred to the [SICC] under Rule 12". O 110 r 8(1) provides that "the [SICC] may decline to assume jurisdiction in an action under Rule 7(1) if it is not appropriate for the action to be heard in the [SICC]".

    However, the SICC will not decline to assume jurisdiction solely on the ground that the dispute between the parties is connected to a jurisdiction other than Singapore, i.e. Spiliada factors connecting to a foreign jurisdiction, where there is a written jurisdiction agreement between the parties: see Order 110, Rule 8(2).

    At this juncture, it is important to recall the distinction between a court having jurisdiction and a court declining to exercise or assume that jurisdiction. The former pertains to issues of whether the requirements for the court being seized of jurisdiction have been fulfilled. The latter pertains to the forum non conveniens doctrine (Zoom Communications Ltd v Broadcast Solutions Pte Ltd [2014] SGCA 44 at [32]).

    That clarified, it becomes clear that O 110 r 7 pertains to whether the SICC's jurisdiction exists. One basis for jurisdiction would thus be the transfer of a case from the High Court to the SICC pursuant to O 110 r 12. And a requirement for jurisdiction under O 110 r 12 is that "it is more appropriate for the case to be heard in the [SICC]" under O 110 r 12(4)(a)(iii). The phrase "more appropriate" must be read in the context of a transfer from the High Court and thus mean more appropriate for the SICC to hear the case than the High Court. Further, while the SICC may have jurisdiction, it may then decide whether or not to assume or exercise jurisdiction, the test being whether "it is not appropriate to be heard in the [SICC]", pursuant to O 110 r 8(1). 

    In the light of the above, the analytical framework in the case like the present should be as follows:-

    (1) a court must first analyse the issue of whether the SICC has jurisdiction to hear the matter at all;

    (2) part of the analysis in (1) is the question of whether the SICC is more appropriate than the High Court to hear that case;

    (3) if the answer to (1) and (2) is yes, then the court must determine whether it would nevertheless decline to assume jurisdiction because it is not appropriate for the action to be heard in the SICC.

    Since the analysis in (3) cannot be intended to replicate the analysis in (2), i.e. whether the SICC is more appropriate than the High Court, it appears that the analysis in (3) involves the forum non conveniens doctrine. That is, the analysis of whether it is not appropriate for the action to be heard in the SICC as opposed to a foreign court. Notably, this test is different from the forum non conveniens one which is whether there is a clearly or distinctly more appropriate forum elsewhere which can hear the case.

    This therefore raises the question of whether a court should apply the Spiliada test and not the O 110 r 8 test if there has not been a prior application for the case to be transferred to the SICC. It appears that the answer is not necessarily. This is because O 110 r 12(4)(b)(ii) provides that "the High Court may, after hearing the parties, order the transfer on its own motion". An application made by a party is not necessary.

    However, this means that the High Court must first determine the issue of transferring the case to the SICC before considering the issue of whether to refrain from exercising or assuming jurisdiction. Once the High Court makes an affirmative determination as regards the former, the case must be duly transferred to the SICC, and it would be for the SICC to determine under O 110 r 8 whether it would decline to assume jurisdiction. It would then apply the test set out in O 110 r 8(1), and not the traditional Spiliada test.

    With respect to Lai SJ, it appears therefore that if she had indeed taken the suitability of transferring the case to the SICC as a factor in determining the forum non conveniens issue (which she may have not), she should not have applied the traditional Spiliada test and taken the former factor into consideration. This would be to wrongfully conflate the conceptual and procedural distinctions between the jurisdiction, and exercise of jurisdiction, of the High Court and the SICC. Only if the High Court determines that the case is not suitable to be transferred to the SICC, should the High Court apply the traditional Spiliada test. It should not then take into account the SICC as a connecting factor in that analysis.

    This also means that a party who commences an action which could fall within the SICC jurisdiction must be careful to decide at the outset whether to commence action in the SICC or the High Court. This is because the tests for the respective courts declining to exercise or assume jurisdiction are different. Should a party commence an action in the High Court when it could have done so in the SICC, it would have to face a potential challenge on the ground of forum non conveniens and application of the Spiliada test and not the (presumably) more favourable test under O 110 r 8.

    Moving forward, it would be interesting to see how the SICC, and the procedural rules related to the same, could impact well-established legal principles and doctrines under the common law. Litigants would do well to carefully consider the advantages of the SICC prior to commencing any action.

    * This blog entry may be cited as Ronald JJ Wong, “Case Comment: Accent Delight International Ltd v Bouvier, Yves Charles Edgar [2016] SGHC 40” (11 April 2016)  (http://www.singaporelawblog.sg/blog/article/156)

    ** A PDF version of this entry may be downloaded here 

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