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    04:30 PM Charleston Teo (LLB, Singapore Management University)

    Clarifying the forum non conveniens doctrine: Rappo, Tania v Accent Delight International Ltd and another and another appeal [2017] SGCA 27

        

    I.              Introduction

    In Rappo, Tania v Accent Delight International Ltd and another and another appeal [2017] SGCA 27 ("Accent Delight"), the Court of Appeal (the "CA") clarified, inter alia, that in applying the test enunciated in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 ("Spiliada") for natural forum cases, the availability of the Singapore International Commercial Court (the "SICC") to hear the dispute is a relevant consideration. However, the CA also clarified that, where a foreign forum is prima facie the natural forum, the Singapore court will not exercise its jurisdiction just because a particular type of remedy is available in Singapore but not in the foreign forum.

    II.           Facts

    The case concerned two appeals against the High Court's decision to dismiss the appellants' applications for a stay of proceedings in Singapore. The Appellants were: (a) for the first appeal, Tania Rappo ("Rappo"); and (b) for the second appeal, Yves Charles Edgar Bouvier ("Bouvier"), a businessman in the international art scene, and MEI Invest Limited, a company controlled and used by Bouvier. The two Respondents, Accent Delight International Ltd and Xitrans Finance Ltd, were companies wholly owned by family trusts by Dimitriy Rybolovlev ("Rybolovlev"), a Russian billionaire.

    Bouvier was engaged as Rybolovlev's art consultant and had from 2003 to 2014 arranged separate acquisitions of 38 art masterpieces for Rybolovlev. For the said acquisitions, only the first four transactions had written sale and purchase agreements, the last of which was dated 16 October 2006 (the "Written Agreements"). The Written Agreements included a clause "stating that Swiss law was to govern the agreements" (at [18]). However, the remaining transactions only had invoices.

    In 2014, Rybolovlev allegedly learnt that Bouvier, through MEI Invest Limited, sold the masterpieces at substantially higher prices to Rybovlovlev, through the Respondents, than the prices at which Bouvier had acquired those masterpieces from their original owners (the "Excess Payments").

    On 9 January 2015, Rybolovlev filed a criminal complaint in Monaco against Bouvier and Rappo, alleging that Bouvier had acted fraudulently by retaining for himself a portion of the sale prices paid by Rybolovlev.

    Subsequently, the Respondents commenced proceedings in Singapore against Bouvier and MEI Invest Limited for breach of fiduciary duties, dishonest assistance, conspiracy; alternatively, the Respondents asserted a proprietary interest in the Excess Payments and their traceable proceeds. The basis of the Respondents' claim was that Bouvier was acting as Rybololev's agent and had breached his fiduciary duties by selling the paintings at undisclosed mark-ups resulting in Bouvier receiving Excess Payments. However, Bouvier alleged that the transactions between him and Rybolovlev were on a "willing buyer-willing seller basis", with Bouvier bearing all the risks of acquiring the paintings from the original owner.

    Rappo who introduced Bouvier to Rybolovlev was involved in the dispute as Bouvier paid Rappo moneys each time an acquisition was completed. The Respondents argued that these moneys were part of the Excess Payments. Thus, the Respondents commenced proceedings against Rappo for knowing receipt and conspiracy, claiming alternatively a proprietary interest in the Excess Payments and their traceable proceeds.

    The Appellants sought a stay of proceedings: (a) Rappo argued that both Switzerland and Monaco were more appropriate fora than Singapore; and (b) Bouvier and MEI Invest Limited argued that there was lis alibi pendens in Monaco and that Switzerland was the more appropriate forum to hear the Respondents' claims.

    The High Court (the "HC") held in [2016] 2 SLR 841 that a determination of whether the proceedings in Monaco were lis alibi pendens was unnecessary since the Respondents undertook to abandon the Monaco civil proceedings if the HC dismissed the stay application. Applying the Spiliada test, the HC held that Singapore was clearly the more appropriate forum, placing significant weight on the risk that the Respondents would be unable to pursue the majority of their substantive claims, which arise in equity, under Swiss law. The HC thus did not grant a stay of proceedings on the condition that the Respondents discontinued the Monaco civil proceedings. The HC also considered that the substantive dispute was suitable for transfer to the SICC which would offer "all the advantages and none of the disadvantages … that were raised in [the parties'] submissions" (at [39]).

    III.         CA's decision

    While four issues arose on appeal (see [45]-[48]), this article focuses on the issues relating to the operation of the forum non conveniens doctrine in Singapore that have broader implications:

    (a) whether the Appellants could rely on the doctrines of forum election and forum non conveniens cumulatively; and

    (b) whether Switzerland and/or Monaco were more appropriate fora than Singapore.

    In relation to (a), the CA rejected the Respondents' submission that the doctrines of forum election and forum non conveniens were alternative remedies. The court re-affirmed that the two doctrines had "different conceptual bases" (at [65]). The doctrine of forum election sought to prevent oppression in requiring a defendant to defend itself in multiple different jurisdictions and the risk of inconsistent findings by the different courts. On the other hand, the doctrine of forum non conveniens was to ensure that a dispute was decided by the more appropriate forum to achieve substantive justice.

    The CA then opined that, where a defendant raises both doctrines, a court should first consider whether Singapore is forum non conveniens and thereafter, if Singapore is the appropriate forum, put the plaintiff to forum election. This was considered to be "resource-saving" and "consonant with logic and principle in that there is simply no need to put the plaintiff to an election if Singapore turns out not to be an appropriate forum for the hearing of the matter in the first place" (at [67]).

    Having held that a court should first decide whether Singapore is forum non conveniens, the CA applied the Spiliada test and determined that Switzerland was clearly the more appropriate forum.

    At the first stage of the Spiliada test, the CA first considered the governing law of the substantive dispute as it was "the most significant connecting factor" (at [74]). It noted that the substantive dispute hinged on whether Bouvier had acted as an agent (thus owing fiduciary duties) or an independent seller vis-à-vis Rybolovlev. This depended on the undertakings that Bouvier and Rybolovlev agreed to during their formal introduction (the "alleged agency agreement"). Hence, the legal foundation of the Respondents' claim for breach of fiduciary duties was ascertained to be contractual.

    The CA held that whether there was an agency arrangement likely depended on the understanding between Bouvier and Rybolovlev at the time the Written Agreements were entered. Thus, the governing law of the alleged agency agreement was found to be Swiss law, the express choice of law in the Written Agreements.

    The CA opined that even if there was no express choice of law in the alleged agency agreement, the implied choice of law and, in the further alternative, the objective proper law pointed to Swiss law. For the implied choice of law, the CA found that the parties were unlikely to have intended Swiss law to govern the Written Agreements and a different law to govern the alleged agency agreement. For the objective proper law, the CA considered that parties' dealings were "intimately tied up with Switzerland and Swiss law" (at [82]). Regard was given to the parties' place of residence, the place of contract formation, the express choice of law of the Written Agreements and the payment obligations.

    The CA further held that the following events in 2008 and 2009 did not establish that the parties intended to change material aspects of their relationship: (a) Rybolovlev moving his endeavour to build his art collection to Singapore; (b) Rybolovlev taking steps to immunize or protect his assets from third parties; (c) Bouvier moving to Singapore; and (d) Bouvier performing his obligations substantially in Singapore. Finally, the CA considered that, although the dispute required careful factual investigation, the key witnesses resided in Switzerland but had no relevant connection to Singapore (and thus compellable to testify in Switzerland but not Singapore). Therefore, the CA found that Switzerland was prima facie the natural forum to hear the substantive dispute between the parties.

    The CA then dealt with the Respondents' submission that Switzerland was not an available forum and found that, under the Swiss Federal Act on Private International Law, the Swiss courts would have jurisdiction to hear the dispute. Further, the Appellants provided written undertakings to provide the Swiss courts "a firm footing on which to assume jurisdiction" (at [96]). In any case, if the Swiss courts determined that they do not have jurisdiction, the Respondents could "again seek to trigger the exercise of the Singapore courts' jurisdiction" (at [102]).

    Since Switzerland was clearly a more appropriate forum than Singapore, the CA found it unnecessary to decide on Rappo's alternative submission that Monaco was a more appropriate forum than Singapore, although it made two brief points (see [105] and [106]).

    At the second stage of the Spiliada test, the CA held that the Respondents would not be deprived of substantial justice if the dispute were to be heard in the Swiss courts. Although the Respondents could not avail themselves of the remedies of constructive trust and tracing in the Swiss courts, this was because Swiss law did not provide for these remedies. Given that Swiss law applied to the dispute, the Respondents would also be unable to obtain these remedies even if the dispute was heard in Singapore and the Respondents succeeded. Therefore, the Court granted a stay of the Singapore proceedings, holding that Switzerland was the more appropriate forum.

    Nonetheless, the CA examined the broader argument that a stay should be refused where a plaintiff would be unable to obtain a particular type of remedy available in Singapore but not in a foreign forum. The CA found this argument "questionable in principle", holding that “differences in procedure and remedies will generally be irrelevant, and not having the benefit of the procedures or remedies of the forum will not by itself amount to denial of substantial justice", especially "where the foreign forum operates a well-established and well-recognised system of justice" (at [109] and [110]).

    The CA also examined the relevance of the SICC in determining whether Singapore is forum non conveniens. While the HC considered that the substantive dispute should be transferred to the SICC, its judgment did not make clear whether the possibility of transferring the substantive dispute to SICC should be a consideration in the Spiliada test or whether such a possibility was in fact considered within the Spiliada analysis.

    The CA noted that the HC subsequently clarified that the possibility of a transfer was not a factor in deciding to dismiss the stay applications.  Nevertheless, the CA held that as a matter of principle a Singapore court is entitled to take into account the possibility of a transfer of a substantive dispute to SICC when determining whether Singapore is forum non conveniens. The rationale is that all relevant factors are to be taken into consideration which includes the capabilities of the SICC (at [121]).

    IV.         Comment

    Given the uncertainty arising from the HC's judgment as to whether the possibility of transferring the dispute to SICC was taken into account in its determination of forum non conveniens, the CA's judgment in Accent Delight on this last point has shed much-needed clarity on the interaction between the SICC and the Spiliada test.

    First, the CA's judgment clarifies the issue of whether the HC's jurisdiction standards or those of the SICC apply when considering the international jurisdiction of a case that can be transferred to the SICC. This issue was raised by Professor Yeo Tiong Min in his speech at the Eighth Yong Pung How Professorship of Law Lecture 2015 titled "Staying Relevant: Exercise of Jurisdiction in the Age of the SICC" (the "Speech"). There, Professor Yeo highlighted that international jurisdiction may still be a live issue at the time a transfer to the SICC is being considered, since the HC "can initiate the transfer at any time" (at [40] of the Speech).

    In IM Skaugen SE v MAN Diesel & Turbo SE [2016] SGHCR 6 ("IM Skaugen"), Assistant Registrar Zhuang Wenxiong suggested (at [145]) that the SICC's private international rules would apply in determining international jurisdiction. However, given the CA's decision in Accent Delight that the possibility of a transfer is a factor in the Spiliada test, the implication is that a decision on whether the Singapore court has international jurisdiction would be determined by the HC's jurisdiction standards, ie the Spiliada test. While not expressly approving Professor Yeo's view, the CA noted his view that the HC should "determine whether it has 'international jurisdiction' according to its own rules of international jurisdiction before deciding whether the case should be transferred to the SICC" (at [118]).

    It is submitted that this view must be correct. First, the HC "is the court seised of the action" (at [41] of the Speech). Second, to apply SICC's jurisdiction standards would be harsh on a defendant who is applying to stay proceedings. The SICC's jurisdiction standards appears to exclude the Spiliada test and apply narrower grounds for declining jurisdiction (see [32] of the Speech; see also [145] of IM Skaugen). Distinguishing between a defendant whose case can prima facie be heard by the SICC and one whose case cannot be heard by the SICC and thus subjecting them to different jurisdiction standards is submitted to be unjustifiable. In determining whether the court has international jurisdiction, the court is only making a prima facie determination as to whether the case can be heard by the SICC. To then apply the SICC's jurisdiction standards would be unjustifiable for cases that are subsequently found not suitable for transfer to SICC. Furthermore, a defendant in a case that prima facie can be heard by the SICC would be subject to these narrower grounds notwithstanding that he never agreed to the SICC's jurisdiction.

    Second, the CA's judgment suggests that the relevance of the SICC in determining whether Singapore is forum non conveniens is in the first stage of the Spiliada test. The CA considered the example of a foreign law being the applicable law of the dispute. This was held to be of less significance where there was the possibility of a transfer to the SICC, since the International Judges in the SICC may be "familiar with and adept at applying that foreign law" (at [122]). The CA further clarified that "the qualities and capabilities of the SICC" is only one factor in the forum non conveniens analysis and that all connecting factors normally considered are still relevant and significant (at [123]).

    Therefore, given the judgment of Accent Delight, lawyers will have to consider whether the requirements in O 110 r 12(4) of the Rules of Court are met in future cross-border cases such that there is a possibility of the dispute being transferred to the SICC. The standard of proof at this stage is whether prima facie "a transfer to the SICC should succeed" (at [124]). Where this is satisfied, lawyers would do well to address the relevance of the SICC to the Spiliada test. Adopting the CA's approach of analyzing the example of a foreign law being the applicable law, such submissions should focus on demonstrating how the "qualities and capabilities of the SICC" address the concerns raised by the relevant connecting factors of the particular dispute. This can include the prevention of fragmentation of litigation over numerous jurisdictions where there are several different issues with different governing foreign laws. Importantly, such submissions "must be grounded in specificity of argument and proof by evidence" (at [124]).

    * The opinions contained in this commentary reflect the author’s own views and are not to be understood as reflecting the views of the author’s employer.

    ** This blog entry may be cited as Charleston Teo, “Clarifying the forum non conveniens doctrine”  (2 June 2017) (http://www.singaporelawblog.sg/blog/article/188)

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

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