The Ministry of Rural Development, Fishery, Craft, Industry and Environment of the Union of Comoros v Chan Leng Leng and another

AR Tan Teck Ping Karen:

[2] The plaintiff is a department of the government of the Union of Comoros. The Union of Comoros is an archipelago island nation located in the Indian Ocean. One of the main industries of the Union of Comoros is the fishing industry, which contributes substantially to the economy of the Union of Comoros.

[3] The 1 defendant is the appointed liquidator of the 2 defendant. The 2 defendant was a company incorporated in Singapore. It was a holding company which owned the companies which owned the vessels (“the Vessels”) in respect of which the plaintiff’s claim arises.

[4] The plaintiff’s case is that the 2 defendant had previously obtained the right to carry the flag of the Union of Comoros. This right, however, did not confer the right to carry out fishing activities in the waters of the Union of Comoros. In or around early February 2005, it came to the plaintiff’s knowledge that the Vessels were carrying out fishing activities in the high seas of the Union of Comoros. The plaintiff commenced proceedings in the Court of 1 Instance in the Union of Comoros against the 2 defendant for losses incurred as a result of the 2 defendant’s action.

[5] There is some dispute between the parties as to the validity of the various judgments that were obtained in courts of the Union of Comoros. However, for the purposes of this application, it suffices to state that judgment was obtained against the 2 defendant in the Court of 1 Instance which was upheld on appeal to the Court of Appeal of the Union of Comoros.

[6] On 12 September 2011, the 2 defendant entered a Member’s Voluntary Liquidation. Information relating to the voluntary liquidation was published in the four local daily newspapers on 12 September 2011. The deadline for creditors to submit their claims or debts and prove the said claims or debts against the 2 defendant was on or before 12 October 2011.

[7] On 1 December 2011, the plaintiff’s solicitors wrote to the 1 defendant bringing to her attention the judgment of the Court of Appeal of the Union of Comoros and informing her that, pursuant to the judgment, the 2 defendant was to pay the sum of EUR3,298,000 (“Judgment sum”) to the plaintiff.

[8] The 1 defendant responded on 12 December 2011 stating that the Judgment sum was not referenced in the 2 defendant’s accounts. A Proof of Debt was lodged by the plaintiff with the 2 defendant on 5 January 2012. On or about 7 March 2012, the 1 defendant proceeded to adjudicate the plaintiff’s claim and rejected the Proof of Debt on 12 March 2012.

[9] As a result of the 1 defendant’s rejection of the Proof of Debt, the plaintiff commenced the current proceedings seeking an order that the 1 defendant’s decision to reject the Proof of Debt be reversed.

The law in respect of whether the plaintiff, as a State, may be ordered to provide security for the defendants’ costs (“the preliminary issue”)

[12] It would be helpful to begin by laying out the relevant portions of section 15 of the Act:

[13] Since s 15(2)(b) of the Act refers to the “process for the enforcement of a judgment”, it would be necessary to examine what would constitute a “process for the enforcement of a judgment” under the Rules of Court.

[20] A careful reading of s15(2)(b) of the Act reveals that the prohibition under this section only relates to “any process for the enforcement of a judgment”. This gives rise to two questions:

[21] It is clear from O45 r1(1) of the Rules of Court that a judgment or order for the payment of money, not being a judgment or order for the payment of money into Court, may be enforced by one or more of the following means (or processes):

(a) writ of seizure and sale;

(b) garnishee proceedings;

(c) the appointment of a receiver;

(d) in a case in which Rule 5 applies, an order of committal.

[24] Support for the above analysis may be found in NML Capital Ltd v Republic of Argentina [2010] EWCA Civ 41 at [51], where the English Court of Appeal stated that section 13(2)(b) of the United Kingdom’s State Immunity Act 1978 (which is in pari materia with section 15(2)(b) of the Act) “is aimed at cases where a party has obtained a judgment against a state (whether in the UK or elsewhere) and seeks to enforce it against the “property” of a state within the jurisdiction of a UK court”.

[25] In addition, Halsbury’s Law of England vol 61 (LexisNexis 5 Ed 2010) states at paragraph 262:

[28] Order 23 rule 1 of the Rules of Court provides:

(a) The merits of the plaintiff’s claim.

(b) Difficulty that a successful defendant would face in enforcing a judgment for costs in the jurisdiction in which the plaintiff is ordinarily resident.

(c) The conduct of the parties.

(d) Whether the order for security would stifle the plaintiff’s claim.

[31] One of the factors to be considered is the merits of the plaintiff’s claim. In Creative Elegance, the Court of Appeal at [24] referred to Omar Ali bin Mohd v Syed Jafaralsadeg bin Abdulkadir Alhadad & Ors [1995] 2 SLR(R) 407 where Chao Hick Tin J said at [21]:

[32] The plaintiff’s action was initially commenced by way of an Originating Summons. The defendants’ application for the action to be converted to a Writ of Summons came before me. Having heard the parties’ submissions, I found that that there are sufficient dispute of fact for the action to be converted to a Writ of Summons. Having made this finding, I am of the view that both parties have an arguable case and it would not be appropriate to investigate or consider in detail the likelihood or success of each party’s case.

[34] The next question is whether an order for security will stifle the plaintiff’s action. Sir Nicolas Browne-Wilkinson V-C in Porzelack at pp 1079-1080 stated:

[36] Next, there is the issue of the conduct of the parties. The plaintiff argued that the defendants acted in an unreasonable manner. It was submitted that the defendants’ concern regarding the decision of the Court of Appeal of the Union of Comoros was only expressed in affidavits that were filed in these proceedings and not in the correspondence between parties before the Proof of Debt was rejected. The plaintiff also pointed out that the 2 defendant had entered into a Member’s Voluntary Winding Up and at that point of time, appeared to have a surplus of USD5,235,863 after paying its debts. The bulk of this has been distributed and there is only a balance of USD20,000 left.

[37] The defendants asserted that the 1 defendant had at all times acted properly in adjudicating the plaintiff’s Proof of Debt. They rely on Fustar Chemicals Ltd (Hong Kong) v Liquidator of Fustar Chemicals Pte Ltd [2009] 4 SLR(R) 458 at [20] where the Court of Appeal held:

[38] The defendants submitted that the 1 defendant had sufficient reason to be suspicious of the genuineness or legal validity of the decision of the Court of Appeal of the Union of Comoros and since the plaintiff refused to provide further evidence as requested, the 1 defendant was entitled to reject the plaintiff’s Proof of Debt.