Case Update: Bunge SA v Indian Bank [2015] SGHC 330 – Singapore High Court stayed local proceedings for India Court proceedings on basis of forum non conveniens

The court granted a stay of proceedings on the ground of forum non conveniens applying the principles in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (“Spiliada”), adopted in the Singapore courts: Rickshaw Investments Ltd v Nicolai Baron von Uexkull [2007] 1 SLR(R) 377, CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR(R) 543 and JIO Minerals FZC v Mineral Enterprises Ltd [2011] 1 SLR 391.

The Spiliada principles encompass a two-stage process. At stage one of the Spiliada test, the burden rests on the defendant to show that there is another available forum that is clearly or distinctly more appropriate than Singapore. At this stage, the court will have regard to the general connecting factors, the governing law of the claims and the places where the respective parties carry out business. The natural forum is the forum with which the proceedings have the most real and substantial connection. In other words, the natural forum is the forum in which the dispute can be adjudicated most cost-effectively: [34].

If the court is of the view that prima facie there is some other available forum that is clearly or distinctly more appropriate, it will ordinarily grant a stay unless the plaintiff can prove that there are special circumstances by reason of justice which require that a stay should nonetheless not be granted. In exercising its discretion, the court will also have regard to whether the defendant, in applying for a stay, genuinely desires a trial in the foreign country, or is only seeking procedural advantages, and whether the plaintiff would be prejudiced by having to sue in a foreign court. Where it is alleged that the plaintiff will not obtain justice in the foreign jurisdiction, cogent evidence must be led to establish this: [35].

Factors connecting to India which favour Indian courts as the proper forum for the dispute:

1. The relevant documents concerning the transactions in dispute are held by the defendant’s Mumbai branch: [38]. The defendant’s witnesses are located in India: [39]. However, the location of witnesses and documentary evidence may arguably be viewed as a neutral factor especially if the material witnesses are employees of the parties who would have no difficulty travelling to either country as witnesses of fact: [40].

2. A 3rd party entity, Varun, a company incorporated in India and headquartered in Mumbai, is a central figure in the factual matrix giving rise to the dispute. The officers from Varun who were involved in authorising and communicating with the plaintiffs and the defendant about the respective transactions giving rise to the dispute are material witnesses of fact: [42]. Varun’s officers who are located outside of Singapore are not compellable in Singapore. While it would have been preferable for the defendant to lead evidence establishing the location of the material witnesses from Varun, and the compellability of such witnesses in the Bombay High Court, following the approach in JIO Minerals FZC v Mineral Enterprises Ltd [2011] 1 SLR 391 and given that Varun is an Indian company subject to the Indian court’s jurisdiction, Varun’s officers are more likely to testify if the dispute is heard in India: [47].

Further, Varun was due to be wound up in India. In the event of a winding up order, the Indian courts would have jurisdiction to deal with the issue of joinder of an Indian company in liquidation under Indian insolvency law: [48].

3. The governing law of the plaintiffs’ claims for restitution and breach of undertaking was found to be Indian law, favouring the Indian courts as proper forum for the dispute. In this regard, the choice of law analysis for the plaintiffs’ claim for breach of undertaking is the choice of law rules for contractual claims set out in Pacific Recreation Pte Ltd v S Y Technology Inc [2008] 2 SLR(R) 491 (“Pacific Recreation”). Because there was no express or implied choice of law found or inferred on the facts, it was agreed that the proper law of the obligation is thus the law that has the closest and most real connection with the defendant’s alleged undertaking: [50].

As for the restitutionary claim, the approach in Singapore to determining the proper law of a restitutionary obligation has been comprehensively stated in CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR(R) 543 at [31] as follows ([55]):

(a) If the obligation arises in connection with a contract, its proper law is the law applicable to the contract. However, this is not an inflexible rule that must be applied without exception to every case connected to a contract; the rule seeks to assist in the identification of the proper law of the restitutionary obligation in circumstances of contractual failure (for eg, where the contract is void or ineffective) or where the contract was procured by fraud or duress which did not directly impact the choice of law clause in the contract (see CIMB Bank at [35], [41] and [46]).

(b) If the obligation arises in connection with a transaction concerning an immoveable, its proper law is the law of the country where the immovable is situated.

(c) If the obligation arises in any other circumstances, its proper law is the law of the country where the enrichment occurs.

In sum, the underlying basis of the choice of law rules for restitutionary claims is to identify the law that has the closest and most real connection to the restitutionary obligation.

On the facts, the court held at [56] that because the alleged enrichment and the alleged change of position both took place in India, the prima facie proper law of the plaintiffs’ restitutionary claim for money had and received is Indian law.

Under Stage 2 of the Spiliada test, the plaintiffs argued that there would likely be lengthy delays in the Indian courts if legal proceedings were commenced there. The Singapore High Court noted that cogent evidence is necessary to establish the presence of substantial delays in the Indian system (see Konamaneni and others v Rolls Royce Industrial Power (India) Ltd and others [2002] 1 WLR 1269 at [177]). Anecdotal evidence would not suffice: [59]. In this case, parties adduced expert opinion on the length of cases being heard in the Indian courts. The Court, citing The “Vishva Apurva” [1992] 1 SLR(R) 912, found that the expert evidence shows that at least in proceedings for summary judgment it cannot be seriously argued that substantial justice cannot
be done in India: [63]-[64].

Further, the defendant gave an undertaking to cooperate in a manner that would expedite litigation in Mumbai: [65].

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