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Case Update: Swift Fortune Ltd v Magnifica Marine SA - Court's Powers Under IAA Do Not Extend to Foreign Arbitrations
March 2007 | Arbitration | Litigation & Arbitration | Litigation Brief

The recent Court of Appeal ("CA") judgment in Swift-Fortune Ltd v Magnifica Marine SA [2006] SGCA 42 has clarified the scope and source of the Court's jurisdiction to grant Mareva interim relief under the International Arbitration Act ("IAA").

The CA held that the Court has no jurisdiction under the IAA to grant Mareva interim relief in aid of foreign arbitration proceedings (that is, arbitrations with their seat outside Singapore). This finding is significant because Singapore is a regional financial hub where substantial assets are parked, which assets may be the subject of potential Mareva applications in Singapore in support of foreign arbitrations.

Prior to this CA decision there was some uncertainly on this issue stemming from two conflicting prior decisions of the High Court.

The Swift Fortune Case
In Swift-Fortune Ltd v Magnifica Marine SA [2006] 2 SLR 323 (HC) ("Swift Fortune"), Judith Prakash J held that the Court had no power to grant Mareva relief in support of a London arbitration between a Panamanian seller and a Liberian buyer of a vessel. Prakash J held that such powers were derived entirely from statute, here from section 12(7) IAA, which applied only to arbitrations seated in Singapore. Article 9 of the UNCITRAL Model Law on International Commercial Arbitration (which has the force of law under the IAA) did not confer any such power. It merely permitted parties to international arbitrations to apply to domestic Courts for protection where the relevant domestic law already had provisions conferring such power on the Courts.

The Front Carriers Case
Subsequently, Belinda Ang J in Front Carriers Ltd v Atlantic & Orient Shipping Corp [2006] 3 SLR 854 (HC) ("Front Carriers") took a different view. She held that the Court was empowered to grant a Mareva injunction in support of a London arbitration between a Liberian company and a West-Indian company. Section 12(7) gave effect to article 9 which preserved the Court's jurisdiction to grant interim measures in support of arbitration proceedings irrespective of the place of arbitration. This was provided the Court had personal jurisdiction over the defendant and the range of interim measures is limited by section 12(7). Additionally, section 4(10) of the Civil Law Act ("CLA") applied with article 9 also conferred such a power, as long as there was a justiciable right between the parties recognised by the Singapore Courts.

Court of Appeal Decides
The CA then delivered its judgment in the Swift Fortune appeal, affirming Prakash J's decision below. The CA held that the Court had no jurisdiction under section 12(7) or article 9 to grant Mareva relief in aid of foreign arbitration proceedings.

The CA considered the genesis of article 9 and concluded that the article was not intended to, and did not, confer jurisdiction. It merely declared the compatibility between resolving a dispute substantively via arbitration and simultaneously seeking assistance from the Court for interim protection orders.

After an in-depth examination of the legislative history, language and context of section 12(7), the CA held that it was not intended to, and did not, apply to foreign arbitrations but only to international arbitrations seated in Singapore.

The CA emphasised that the Courts had no inherent extraterritorial jurisdiction. Unless authorised by statute, Singapore law has no extraterritorial application. The Court had to exercise great care in its approach to the existence and exercise of supervisory and supportive measures so that it did not go against the chosen law of the foreign arbitration. Section 12(7) had to be read in the context of section 12(1) (a) to (i) of the IAA, which sets out the measures the Court may grant under section 12(7). If section 12(7) was construed as applying to foreign arbitrations, the measures in section 12(1)(a) to (i) would become statutorily implied terms in all foreign arbitrations. These measures included the ordering of discovery or interrogatories or security for costs, which may be antithetical to the chosen law of the foreign arbitration. As such, Parliament could not have intended section 12(7) to apply the powers in section 12(1) to foreign arbitrations.

Further, section 12(7) did not independently confer any power on the Court. This power was instead derived from section 4(10) of the CLA (read with section 18(1) of the Supreme Court of Judicature Act). It was section 4(10) that conferred on the Court the powers under section 12(7), which could only be exercisable in respect of a Singapore international arbitration. However, the CA left unanswered the question whether, quite apart from section 12(7), section 4(10) of the CLA itself conferred jurisdiction on the Court to grant Mareva relief in aid of foreign arbitration proceedings where the cause of action is justiciable in Singapore, namely where the plaintiff has a recognisable cause of action under Singapore law, and the Court has personal jurisdiction over the defendant in Singapore (e.g. by reason of his having assets within jurisdiction). This was the alternative ground of the Court's decision in Front Carriers, where it was held that there was such a justiciable cause of action. There was no such holding here. The CA also emphasised that, as it was not sitting in appeal from the Front Carriers decision, it was not expressing any approval or disapproval of that decision vis-a-vis section 4(10).

Conclusion
The CA has clarified that the Court's jurisdiction under the IAA to grant interim relief, including Mareva relief, applies only to international arbitrations seated in Singapore, and do not extend to foreign arbitrations.

Nevertheless, the CA's decision not to comment on the decision in Front Carriers on the effect of section 4(10) leaves open the possibility (and hence uncertainty) that that section may be relied on to apply for Mareva relief in aid of a foreign arbitration in a case where the plaintiff's cause of action is recognised under Singapore law and the Court has personal jurisdiction over the defendant. [Note: An appeal was filed in Front Carriers but it is uncertain whether it will proceed or be discontinued].