25 April, 2016
Although Singapore has a reciprocal arrangement with India (except the State of Jammu and Kashmir) for the enforcement of judgments under the provisions of the Reciprocal Enforcement of Commonwealth Judgments Act (Cap. 264), the enforceability of Singapore High Court judgments in India is still subject to the requirements of section 13 of the Indian Code of Civil Procedure, 1908 (“Indian CPC”).
Section 13 of the Indian CPC provides as follows: “A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except-
(a) where it has not been pronounced by a Court of competent jurisdiction;
(b) where it has not been given on the merits of the case;
(c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable;
(d) where the proceedings in which the judgment was obtained are opposed to natural justice;
(e) where it has been obtained by fraud;
(f) where it sustains a claim founded on a breach of any law in forcein India.”
Default judgments for instance, potentially fall foul of section 13(b) of the Indian CPC, which provides that only foreign judgments that are given on the merits of the case are enforceable in India. In other words, default judgments, which are unreasoned judgments, are not enforceable in India. This presents a problem for the plaintiff where the defendant to a Singapore action, who has assets in India, chooses not to enter an appearance or file his defence, with the aim of defeating the enforcement of the Singapore High Court judgment in India.
The recent Singapore High Court decision in Seagate Technology International v Vikas Goel [2016] SGHC 12 (“ Seagate”) opens up the possibility of granting judgments on the merits of the case, even in instances where the defendant does not enter appearance, in order for such judgments to be enforceable in India, pursuant to section 13 of the Indian CPC.
BRIEF FACTS
The Defendant, an Indian national who was formerly the managing director and shareholder of a Singapore-incorporated company (“the Company”), was a guarantor of the payment obligations of the Company to the Plaintiff, a company incorporated in the Cayman Islands, under a settlement agreement.
After the Company defaulted on its payment obligations, the Plaintiff exercised its rights under, inter alia, the personal guarantee (“Personal Guarantee”) to demand that the Defendant cure the Company’s failure to pay by making the necessary payment within seven days of the demand. However, the Defendant failed to make any payment to the
Plaintiff within the stipulated period.
The Plaintiff then commenced an action against the Defendant in the Singapore High Court to claim for the sum owed under the Personal Guarantee and the interest thereon. The Defendant did not enter an appearance. Subsequently, the Plaintiff applied to proceed to full trial notwithstanding that the Defendant had not entered an appearance and was absent in the proceedings. After the Singapore High Court granted the Plaintiff’s application, the Plaintiff sought to obtain judgment on the merits of its case as it wanted to enforce the judgment against the Defendant in India wherein a judgment on the merits was a requirement for enforcement.
SUMMARY OF DECISION
As a preliminary point, the Singapore High Court referred to Order 35 rule 1(2) of the Rules of Court (Cap. 322) which provides as follows:
“If, when the trial of an action is called on, one party does not appear, the Judge may proceed with the trial of the action or any counterclaim in the absence of that party, or may without trial give judgment or dismiss the action, or make any other orders as he thinks fit.”
Based on the above-mentioned rule, the Singapore High Court observed that it had “complete discretion to decide whether to proceed with the trial of the action or to dismiss the action or to give judgment without trial”.
1 The Singapore High Court held that “in light of the circumstances of the case, the most appropriate course of action was to adduce evidence in the normal course of a trial to put it beyond doubt that the merits of the case had been duly considered”.
2 In so doing, the Plaintiff would be able “to enforce the judgment in India so that the [P]laintiff would not be forced to commence Indian proceedings and suffer further delay in obtaining relief and consequently, injustice”.
3 The Singapore High Court then considered the key issue of whether the Defendant was liable to pay the Plaintiff under the Personal Guarantee.
After hearing the Plaintiff’s evidence and considering the documentary evidence presented, the Singapore High Court granted judgment in favour of the Plaintiff on, inter alia, the following grounds:
> The Defendant had undertaken to answer for the Company’s debt or default, specifically the obligations owed by the Company to the Plaintiff;
> As the Company had defaulted on its payment obligations, the Defendant’s liability as guarantor arose automatically;
> The Plaintiff had satisfied the conditions for demand of payment under the terms of the Personal Guarantee;
> The Plaintiff had duly made a demand against the Defendant for payment and the Defendant had failed to repay the sum and the interest thereon; and
> The Defendant was therefore liable to the Plaintiff for the sum owed under the Personal Guarantee and the interest thereon
CONCLUSION
The Singapore High Court in this case proceeded to adjudicate the case on its merits, in order to enable the plaintiff to satisfy section 13 of the Indian CPC and enable enforcement of the Singapore High Court
judgment in India.
This approach clearly highlights the Singapore High Court’s flexibility in dealing with the case in a manner which is consistent with the laws of the jurisdiction in which the judgment is sought to be enforced.
Even though multiple countries have reciprocal arrangements with Singapore for the enforcement of judgments, litigants who are suing foreign defendants should nevertheless be mindful of the different requirements for the enforceability of a Singapore judgment in foreign jurisdictions, before commencing an action in Singapore.
1 Seagate at [10].
2 Seagate at [10].
3 Seagate at [10].
Vernon Voon, Partner, RHTLaw Taylor Wessing
