What constitutes an offshore case?: An analysis of the Singapore International Commercial Court's second decision - International Courts & Tribunals

A recent decision by the Singapore International Commercial Court (SICC) in Teras Offshore Pte Ltd v Teras Cargo Transport (America) LLC [2016] SGHC(1) 02 (Teras) provides guidance as to when a dispute will constitute an "offshore case" under the Rules of the Court. Such cases are those with no substantial connection to Singapore, and which permit the appointment of foreign representation.¹

The Teras case is important because it will inform parties going to the SICC when they can appoint legal counsel with no expertise in Singapore law. The classification of the proceeding as an "offshore case" by Sir Henry Bernard Eder (an SICC International Judge and former judge of the High Court of England and Wales), demonstrates the SICC's commitment to being a forum for the resolution of international commercial disputes.

THE FACTS OF THE CASE

In Teras, the dispute arose from claims and counterclaims relating to three liquefied natural gas (LNG) projects in or near Queensland, Australia.

The Defendant contracted with two Bechtel entities for the provision of services and supply of equipment for these projects. This work was then sub-contracted to the Plaintiff on back-to-back terms.

The most important issue, however, was whether the proceeding was an "offshore case" under the Rules of the Court.

AN "OFFSHORE CASE"?

An "offshore case" is defined as "an action which has no substantial connection with Singapore" under O 110 r 1(1) of the Rules of Court.² The Defendant submitted that, under the Court's Practice Directions, the predominant purpose of determining that a case is an offshore one is to allow foreign representation:

... given the role of the SICC to provide a dispute resolution framework for the resolution of international commercial disputes, a "parochial" insistence that parties appoint Singapore qualified lawyers (even when there are only a handful of coincidental or procedural connections with Singapore) would be anomalous and self-defeating.³

Determining whether an action is an "offshore case" is done by reference to the particular action. This is a negative proposition that looks not at whether there is a substantial connection with a place other than Singapore, but whether the action has no substantial connection to Singapore.⁴ The Rules of the Court also put this negatively and state there will be no substantial connection to Singapore where:

Singapore law is not the law applicable to the dispute and the subject-matter is not otherwise regulated by or subject to Singapore law; or
the only connections between the dispute and Singapore are the parties' choice of Singapore law as the law applicable to the dispute and the parties' submission to the jurisdiction of the Court.⁵

The SICC identified wording differences for "offshore case" in the Rules of the Court and SICC Practice Directions. The former referred to a substantial connection between the "action" and Singapore, and the latter referred to the "dispute". His Honour noted that this gave rise to some debate, with "action" being much broader than a "dispute", which would only be concerned with the underlying substantive dispute between the parties.⁶ The SICC adopted the broader "action" as it embraced the substantive dispute in addition to other relevant matters.

Next, his Honour considered paragraph 29(3) of the Practice Directions which provided (again in the negative) that the existence of each of the following factors would not, by itself, constitute a substantial connection between the dispute and Singapore:

any of the witnesses are in Singapore;
any documents relevant to the dispute are in Singapore;
funds connected to the dispute passed through Singapore;
one of the parties has properties or assets in Singapore;
one of the parties is a Singaporean entity or has Singaporean shareholders.

Even though, on the facts, each factor was made out by the Plaintiff, his Honour found that the claims and counterclaims of the dispute were all connected to the LNG projects in or off Queensland, Australia.

Further, the majority of the issues relating to these claims had nothing to do with Singapore.⁷ Thus, his Honour concluded that the proceeding was an offshore case.

The decision can be read in full here: Decision by the Singapore International Commercial Court (SICC) in Teras Offshore Pte Ltd v Teras Cargo Transport (America) LLC [2016] SGHC(1) 02

Footnote

¹ SICC Practice Directions, Part IV

² [6]

³ [10]

⁴ [8]

⁵ [9]

⁶ [12]

⁷ [17]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.