Significance: In a rare split decision, the majority of the Court of Appeal (Sundaresh Menon CJ and Tay Yong Kwang JA; Woo Bih Li J dissenting) refused recognition of foreign bankruptcy order due to breach of natural justice.
The majority found that the evidence did not prove that:
(i) notices of the bankruptcy application in Indonesia were properly served on the appellants;
(ii) the appellants had actual knowledge of the bankruptcy proceedings but chose not to appear in them.
The appellants were thus deprived of the opportunity to challenge validity of service or liability under the guarantees and object to the making of the bankruptcy orders.
The Court left open the issue of the correctness of the legal principles on recognition of foreign bankruptcy orders: at .
Supreme Court case summary found here.
It was irrelevant that the foreign court hearing the bankruptcy application considered and found that service of the notice of proceedings was valid. This is because the issue of whether a foreign judgment or order should be refused recognition or enforcement because of a breach of natural justice is a question for the recognition court alone to answer: .
The dissenting judge, Woo J, found on the evidence that the appellants must have had actual notice about the bankruptcy proceedings. Woo J found that the purported explanation as to when the appellants first knew about the bankruptcy proceedings, namely newspapers advertisements, could not have been true because as it turned out, they had executed powers of attorney to appoint lawyers for the proceedings before the advertisements were published.
Woo J also found that the respondents’ attitude towards the duty of full and frank disclosure of material facts in an ex parte application was disappointing: . A material fact was that at the time of the ex parte application, the first and second appellants had obtained a declaration from the District Court of Bekasi that the personal guarantees underlying the MLU loan were invalid, and an appeal to the High Court of Bandung was dismissed. The respondents did not explain why this was not disclosed. As the Indonesian bankruptcy orders were based on the appellants’ liability under the personal guarantees, the respondents ought to have disclosed the decisions in favour of the appellants and explained why the Singapore court should still recognise the bankruptcy orders despite those decisions.
This is a case update on a decision arising from an earlier High Court decision which was discussed in an earlier post.
If you need advice from a Singapore lawyer on cross-border legal matters or recognition or enforcement of foreign judgments or court orders, please feel free to contact me.