The Singapore Court may grant freezing injunctions in aid of foreign court proceedings, but the Court must have jurisdiction over the defendant, and a substantive claim must nevertheless be brought against the defendant in Singapore
In Bi Xiaoqiong v China Medical Technologies, Inc (in liquidation) and
another  SGCA 50 (â€œChina Medicalâ€), the Singapore Court of Appeal
(â€œCoAâ€) confirmed that the Singapore Court may grant freezing (or Mareva)
injunctions in support of foreign court proceedings. However, the Singapore
Court must have jurisdiction over the defendant whose assets are targeted,
and a substantive claim must still be brought against the defendant in
Singapore, even if that claim is stayed in favour of the foreign proceedings.
The CoAâ€™s decision dismisses a conflicting line of past authorities which
suggested that a Mareva injunction could never be obtained in aid of foreign
court proceedings, on the basis that the Courtâ€™s power to grant interlocutory
relief is intended to support domestic court proceedings only.
The facts of the case
China Medical Technologies is a company incorporated in the Cayman
Islands. It was founded and led by Mr Wu Xiaodong until it went into
In 2007-2008, China Medical Technologies and its subsidiary CMED
Technologies Ltd (together, â€œCMTâ€) entered into two transactions to acquire
medical technology from Supreme Well Investments Limited (â€œSWâ€) for a
total cash consideration of approximately USD 520 million (â€œTransactionsâ€).
After investigating the affairs of CMT, the liquidators considered that CMTâ€™s
management had procured the Transactions fraudulently, including because
the medical technology which CMT acquired from SW was worthless.
The liquidators further discovered that after the Transactions, through a
series of payments, SW transferred significant amounts of the Transaction
proceeds to individuals who were either part of or had links to management
of CMT, including Mr Wu himself and his then-wife, Ms Bi Xiaoqiong.
CMT therefore had grounds to pursue a case against its former
management as well as various recipients of the funds in respect of the
fraudulent Transactions. They also sought injunctions against the
management and various recipients of funds to prevent the dissipation of
Contents The facts of the case 1 The procedural steps taken by the liquidators 2 The Court of Appealâ€™s decision 2 A welcome clarification 3 Practical considerations 5 Key contacts 6
The procedural steps taken by the liquidators
In Hong Kong
CMT (via the liquidators) first commenced proceedings in 2013 against four
individuals including Mr Wu claiming breach of fiduciary duties, breach of
trust, conspiracy, knowing receipt, and money had and received in respect of
four specific payments from CMT to SW.
In December 2016, CMT commenced a second set of proceedings in Hong
Kong against 23 defendants including Mr Wu and Ms Bi, alleging similar
claims but in relation to a much broader group of transactions. CMTâ€™s
intention was eventually to apply to consolidate both sets of proceedings in
In December 2017, after discovering certain facts suggesting that the
defendantsâ€™ assets were at risk of dissipation, CMT applied for and obtained
from the Hong Kong High Court a worldwide Mareva injunction against,
among others, Mr Wu and Ms Bi (the â€œHK Injunctionâ€). The HK Injunction
restrained Ms Bi from disposing of or dealing with her assets worldwide up to
a total value of USD 17.6 million (the amount she allegedly received).
In December 2017, CMT commenced proceedings in Singapore against Mr
Wu and Ms Bi setting out substantially the same claims as those advanced
in the Hong Kong proceedings. At the same time, CMT sought a Mareva
injunction restraining Mr Wu and Ms Bi from disposing of or dealing with their
assets in Singapore (the â€œSG Injunctionâ€).
On February 2018, CMT applied to stay the substantive proceedings in
Singapore pending the outcome of the Hong Kong proceedings, on the basis
that Hong Kong was the most convenient forum (the â€œStay Applicationâ€).
Only Ms Bi challenged the SG Injunction before the Singapore Court. Her
primary position was that the Singapore Court had no power to grant a
Mareva injunction purely in aid of foreign court proceedings, and that it is a
prerequisite to the exercise of the Courtâ€™s power to grant interlocutory relief,
that the substantive proceedings in Singapore would result in a judgment.
The Court of Appealâ€™s decision
The CoA rejected Ms Biâ€™s appeal and upheld the SG Injunction. It also
granted the Stay Application. The CoA held that the Singapore Court had the
power to grant the SG Injunction. The source of the Courtâ€™s power is section
4(10) of the Civil Law Act (Cap 43) (the â€œCLAâ€), which provides that:
â€œA Mandatory Order or an injunction may be granted or a receiver
appointed by an interlocutory order of the courtâ€¦in all cases in
which it appears to the court to be just or convenient that such order
should be made.â€
â€¢ 2013: launched initial proceedings
â€¢ Dec 2016: second set of proceedings against additional defendants
â€¢ Dec 2017: worldwide freezing injunction against various defendants
â€¢ Dec 2017: launched proceedings and applied for Singapore freezing injunction against Wu and Bi only, targeting assets in Singapore
â€¢ Feb 2018: applied to stay the Singapore proceedings
The CoA held that pursuant to section 4(10), the Court could grant
injunctions in aid of foreign court proceedings, subject to two principal
ï€¾ the Court must have in personam jurisdiction against the defendant (the
â€œJurisdiction requirementâ€); and
ï€¾ the plaintiff must have a reasonable accrued cause of action against the
defendant in Singapore (the â€œCause of Action requirementâ€).
The CoAâ€™s endorsement of the Jurisdiction and Cause of Action
requirements is consistent with longstanding English authorities on the then-
English equivalents to section 4(10) of the CLA. The Courtâ€™s power to grant
injunctions under section 4(10) does not exist in isolation, but is intended to
be ancillary to (and exercised in aid of) the enforcement of a substantive
right before it. Therefore, the Court cannot grant an injunction purely in aid of
foreign court proceedings, without any substantive local proceedings on foot.
However, and overruling a divergent line of past judicial authorities, the CoA
further held that so long as the Jurisdiction and Cause of Action
requirements were met, it was not necessary that the proceedings in
Singapore must result in a judgment on the substantive issues in dispute
(the â€œForum requirementâ€). In principle, it does not matter that the plaintiff
seeks to stay the proceedings it has brought in Singapore in favour of
foreign court proceedings, since the Singapore Court would still retain a
â€˜residualâ€™ jurisdiction over the parties. The Court had the power to grant an
injunction based on this residual jurisdiction, and the plaintiffâ€™s purpose â€“ in
seeking the injunction in favour of foreign court proceedings â€“ was thus not
strictly relevant to the analysis.
A welcome clarification
The CoAâ€™s decision provides welcome clarification on the scope of injunctive
relief in favour of foreign court proceedings. The CoA itself acknowledged
that its interpretation of the Courtâ€™s powers pursuant to section 4(10) of the
CLA is consistent with the needs of modern international litigation. The
relative ease with which individuals, particularly perpetrators of international
fraud, may now move assets internationally means that the assets of a
defendant must often be secured in several jurisdictions simultaneously
(given the risk of dissipation), even if the substantive dispute is only litigated
in one jurisdiction. Such interim relief is now clearly available in Singapore,
so long as the Jurisdiction and Cause of Action requirements can be met.
Other jurisdictions have addressed the need for such ancillary relief directly
by way of legislative intervention. In England and Hong Kong, for example,
updated laws have conferred upon the courts the direct power to grant
injunctions and other ancillary relief in aid of foreign court proceedings,
without the need for substantive proceedings to be brought at the same time.
Such legislation is not in place in Singapore except in respect of international
commercial arbitration â€“ pursuant to the International Arbitration Act, the
Singapore Courts have the express power to grant interim relief (including
injunctive relief) in aid of foreign arbitrations, although the Court may decline
to do so if the fact that the arbitration is seated abroad makes it
The CoAâ€™s decision provides
welcome clarification on the
scope of injunctive relief in
favour of foreign court
proceedings. The CoA itself
acknowledged that its
interpretation of the Courtâ€™s
powers pursuant to section
4(10) of the CLA is consistent
with the needs of modern
â€œinappropriateâ€ to grant interim relief. It remains anomalous that no such
express power exists in respect of foreign court proceedings. In this context,
the need to meet threshold Jurisdiction and Cause of Action requirements
might still create difficulties for a plaintiff seeking injunctive relief in
Singapore in aid of foreign court proceedings.
The facts of China Medical itself were straightforward in that Ms Bi, the only
target of the SG Injunction who challenged it, was a Singaporean national
and the Court clearly had jurisdiction over her on that basis. But what if an
injunction is sought over a foreign defendant who has assets in Singapore?
ï€¾ In those circumstances, in order to meet the Jurisdiction requirement,
the plaintiff would usually require the Courtâ€™s leave to serve the foreign
defendant out of the jurisdiction.
ï€¾ While the existence of assets in Singapore is one ground for service out
of the jurisdiction (Order 11 rule 1(a) of the Rules of Court), the Court
must also be satisfied that the case is a â€œproper one for service out of
Singaporeâ€ (Order 11 rule 2(2) of the Rules of Court).
ï€¾ As to the latter requirement, in the context of substantive proceedings
the courts have traditionally applied the Spiliada test to assess whether
the case is a proper one for service â€“ the plaintiff must show that
Singapore is the convenient forum before the Court would permit the
service of proceedings out of jurisdiction. Therefore, in such cases even
if the Forum requirement is not directly relevant to the Courtâ€™s decision to
grant an injunction (following the CoAâ€™s decision in China Medical), the
plaintiff may nevertheless still need to show that Singapore is the
convenient forum to satisfy the threshold Jurisdiction requirement.
ï€¾ If the Spiliada test must be met, then it would be difficult to obtain a
Mareva injunction against a foreign individual with assets in Singapore in
support of foreign court proceedings, since Singapore would naturally
not be the convenient forum to resolve the underlying dispute.
It remains to be seen if the Singapore Courts will be prepared to relax the
Spiliada requirement, where a plaintiff seeks leave to serve substantive
proceedings out of the jurisdiction solely for purposes of obtaining an
injunction in support of foreign court proceedings. The text of Order 11 rule
2(2) does not itself impose the Spiliada requirement and relaxing that
requirement would also be in line with the needs of international litigation
today. However, there are first instance authorities (decided before the
China Medical decision) to the effect that the Court would not exercise its
jurisdiction in such cases if the Spiliada test cannot be met (see PT Gunung
Madu Plantations v Muhammad Jimmy Goh Mashun  4 SLR). In the
absence of updated legislation, this issue may well invite further clarification
from the appellate courts in future.
It remains to be seen if the
Singapore Courts will be
prepared to relax the Spiliada
requirement, where a plaintiff
seeks leave to serve
substantive proceedings out of
the jurisdiction solely for
purposes of obtaining an
injunction in support of foreign
Establishing a cause of action in Singapore: A plaintiff seeking an
injunction in Singapore in support of foreign court proceedings must always
ensure that it brings substantive proceedings against the relevant
defendants at the same time, even if it would be accompanied by a stay
application. It would make sense if the defendants to the Singapore
proceedings are also defendants to the primary, foreign proceedings.
Establishing jurisdiction in Singapore: Establishing the Singapore Courtâ€™s
jurisdiction would be straightforward if the defendants are Singaporean
nationals or corporates. If the defendants are outside of Singapore, in light of
potential difficulties with meeting the Jurisdiction requirement (see above)
the plaintiff may consider:
ï€¾ whether it could structure the litigation such that the substantive dispute
is litigated in Singapore. This approach may be helpful if there are
enough links to make Singapore the convenient forum, and if necessary
accompanying injunctions can be obtained in foreign jurisdictions with
laws in place that expressly permit their courts to grant injunctions in aid
of foreign court proceedings; or
ï€¾ whether jurisdiction can be established via other means. If the assets
are held via Singapore nominees, the plaintiff may consider if a direct
cause of action can be asserted against them, so that the substantive
cause of action and supporting injunctions can be directed at them.
A clear rationale about the need for Singapore proceedings: In China
Medical the CoA opined that, while the plaintiffâ€™s purpose in seeking an
injunction is irrelevant to the existence of the Courtâ€™s power to grant it, if the
plaintiff had no real intention to pursue the substantive action in Singapore,
but only sought a free-standing injunction, the Court may nevertheless
refuse to grant the injunction on grounds that the Singapore proceedings
were brought for a collateral purpose (tantamount to an abuse of process).
However, the Court accepted that in this case, the plaintiff reserved the right
to pursue the Singapore proceedings after the foreign main proceedings
were concluded, and that this purpose was legitimate. The plaintiff should
therefore (at least) take care not to make any statements to the effect that it
has no intention to pursue substantive proceedings in Singapore.
Good arguable case and real risk of dissipation: While this note has
focussed on jurisdictional thresholds, it is also important to remember that
when seeking an injunction, a plaintiff must be able to demonstrate that it
has a good arguable case on the underlying merits of the dispute, and that
the injunction is necessary because of a real risk of dissipation of assets.
The latter would typically require a plaintiff to make its injunction application
without undue delay. On the facts of China Medical, while the CoA
acknowledged that there was a long period of time (of about five years)
between the commencement of substantive proceedings in Hong Kong and
the applications for injunctive relief, the CoA was satisfied that the
applications were properly brought soon after the liquidators became aware
of steps attempted by the defendants to dissipate their assets.
The appointment of receivers
A plaintiff may also consider
whether, in tandem with its
application for a freezing injunction
(typically accompanied by
disclosure orders), it should also
seek to appoint receivers over the
assets to be frozen. The Court has
the power to appoint receivers
pursuant to section 4(10) of the
CLA (see above) and may do so if
satisfied that receivers are needed
to improve the prospects of
securing the assets (for example,
where a defendant has obscured
his assets via various onshore and
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