Allens

Asia

Focus: Forum shopping not a numbers game

13 July 2010

In brief: The Singapore Court of Appeal has decided that on the question of whether a particular jurisdiction's court is the appropriate forum to hear a dispute, the answer should be based on the weight given to each connecting factor pointing to or away from it, rather than on the number of each. Partner Matthew Skinner and Senior Associate Justin Simpkins report.

How does it affect you?

  • A recent decision1 has found that in the forum non conveniens analysis undertaken by a court to determine whether it is the appropriate forum to hear a dispute, what matters is the weight to be given to each connecting factor pointing to or away from Singapore in the light of all the circumstances of the case. A single connecting factor may well be decisive.
  • In the absence of an express choice of jurisdiction, a choice of Singapore law as the governing law of an agreement will not constitute an implied choice of Singapore as the jurisdiction.
  • To avoid uncertainty, parties to a contract should ensure they stipulate not only the governing law but the choice of jurisdiction.

Background

Siemens AG (Siemens) is a company registered in, and operating out of, Germany. Holdrich Investment Ltd (Holdrich) is a company registered in, and operating out of, Hong Kong. A substantive dispute between the parties arose from a consultancy agreement entered into on 21 August 2003, under which Siemens agreed to pay commission to Holdrich for its consultancy services if orders were received by Siemens from certain entities located in Sweden, Austria, India, the Nordic regions and Indonesia. The consultancy agreement was governed by Singapore law but there was no express choice of forum.

To commence proceedings against Siemens, Holdrich needed to seek leave of the court to serve the originating process out of jurisdiction. The requirements that must be met before a court will grant leave for service out of jurisdiction include:

  • the claim must come within the scope of one or more paragraphs of O 11 r 1 of the Rules of Court (Cap 332, R5, 2006 Rev Ed);
  • the claim must have a sufficient degree of merit; and
  • Singapore must be the forum conveniens (that is, the most appropriate court for the resolution of the dispute).

Holdrich had successfully sought and obtained leave for service out of jurisdiction. Siemens appealed the decision to grant leave, on the basis that Singapore was not the forum conveniens.

Siemens argued that a Singapore court deciding the issue of forum conveniens should compare all the connecting factors pointing towards Singapore against all the connecting factors pointing away from Singapore and that, on the appropriate analysis, a German court was the appropriate forum to hear the dispute.

The connecting factors to Germany that Siemens highlighted included:

  • Siemens was a German company;
  • the witnesses for Siemens were located in Germany; and
  • the documentary evidence to be adduced was written in German.

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The decision

The court held that the only factor that decisively connected both parties and their dispute to a jurisdiction was the parties' choice of Singapore law as the governing law of the consultancy agreement.2 While the Court of Appeal did not go so far as to say that, in the absence of any express choice of jurisdiction, the parties' choice of Singapore law was an implied choice of jurisdiction, it did find that significant weight must be given to the parties' choice of governing law.3

Importantly, the court held that Singapore is forum non conveniens only if there is a more appropriate forum. The fact that there may have been more connecting factors pointing to other jurisdictions (including Germany) did not mean that Singapore was not the appropriate forum to hear the dispute.

The court held that it is sufficient for a plaintiff seeking leave for service out of jurisdiction to show that Singapore is, on balance and in the final analysis, the most appropriate forum to try the dispute, 'and it matters not whether Singapore is the most appropriate forum by a hair or by a mile'.4

The court also reiterated that in the absence of countervailing circumstances, there is much to be said for a Singapore court applying Singapore law, and likewise for a foreign court applying its own law.5 The court noted that in this case the alternative forum was Germany, a civil law jurisdiction, and in the absence of more evidence than had been adduced, it could not 'with respect, say that the German courts would be able to fluently apply Singapore law'.6

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Conclusion

The Court of Appeal has made it clear that the purpose of the forum non conveniens analysis is to identify the most appropriate forum to hear the substantive dispute. It is not an exercise in comparing the sheer number of connecting factors pointing to this or that jurisdiction. What matters is the weight to be given to each connecting factor in light of all the circumstances of the case. In a finely balanced case such as this one, a single connecting factor may well be decisive.

Footnotes
  1. Siemens AG v Holdrich Investment Ltd [2010] SGCA 23, 23 June 2010, per Chao Hick Tin JA and Andrew Phang Boon Leong JA.
  2. At [13].
  3. Ibid.
  4. At [8].
  5. At [14], referencing Rickshaw Investments Ltd and another v Nicolai Baron von Uexkull [2007] 1 SLR(R) 377 at [24] and John Reginald Stott Kirkham and Others v Trane US Inc and Others [2009] 4 SLR(R) 428 at [44].
  6. At [16].

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