A recent decision of Singapore's Court of Appeal, Swift-Fortune Ltd v Magnifica Marine SA [2006] SGCA 42, has confirmed that it has no jurisdiction to freeze local assets in support of foreign arbitration proceedings, except in limited circumstances. The decision settles, for the time being at least, the legal position in Singapore following two conflicting decisions given by Singapore's High Court last year. The conflicting cases were of interest as they involved a similar set of facts. In both, the defendant had assets in Singapore, but no place of business there. In both, the parties had agreed to refer the contractual dispute to arbitration outside Singapore and in accordance with English law.

The first instance decision was reported in our August e-bulletin. Readers will recall that the main issue was whether the powers given to the Singapore courts to support international arbitrations under the International Arbitration Act were limited to international arbitrations conducted with their seat in Singapore, or whether these powers extended to international arbitrations conducted outside Singapore. The court recognised that Singapore legislation only had territorial effect and that consequently, in the absence of specific provisions, an arbitration governed by foreign law with its seat outside Singapore is not subject to the laws of Singapore. The court also held that the only circumstances in which it would be able to make orders in support of a foreign international arbitration would be as to whether the plaintiff could legitimately commence an action in Singapore because the defendant or the subject matter of the dispute was subject to the jurisdiction of the Singapore courts. A subsequent ruling in Front Carriers Ltd v Atlantic & Orient Shipping Corp [2006] SGHC 127, muddied the waters by ruling that the court did have powers to freeze local assets in aid of foreign arbitration proceedings.

The Court of Appeal has recently clarified the position by upholding the decision in Swift-Fortune Ltd v Magnifica Marine SA. As such, it is now likely that if the seat of arbitration is overseas, Singapore courts will not grant a Mareva injunction over local assets, unless the plaintiff has a pre-existing right that would enable it to bring a claim against the defendant in Singapore.