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The Deadly Embrace of Politics - S'pore's Corrupt Courts

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  • Mellanie Hewlitt
    http://www.yawningbread.org/arch_2006/yax-588.htm Yawning Bread. May 2006 The deadly embrace of politics
    Message 1 of 1 , May 13, 2006
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      http://www.yawningbread.org/arch_2006/yax-588.htm

      Yawning Bread. May 2006

      The deadly embrace of politics


          

       

       

      You would not know it from the Straits Times' story headlined "Law Ministry rejects Canadian firm's charges of 'biased judiciary' " (10 May 2006), but a good part of Singapore's economic future is riding on the dry legal arguments in a case being heard in Toronto, Canada.

      That would be some case, wouldn't it?

      What's even more interesting is that it is actually a private commercial dispute between 2 companies -- one Singaporean and the other Canadian -- yet the case has now expanded to the broader question of whether the Singapore judiciary is of first world standard.

      The Singapore firm, Oakwell Engineering Ltd, won its case against the Canadian, Enernorth Industries Inc in previous rounds in Singapore. However, to enforce its claim of the court award, Oakwell had to go to the Canadian courts, since Enernorth's assets are primarily in that country.

      In the first Canadian hearing, the Ontario Superior Court, under Justice Gerald Day, ruled that Oakwell could seize the assets of Enernorth, pursuant to a judgment by the Singapore Court of Appeal.

      However, this has now been appealed to the Court of Appeal for Ontario, Enernorth's argument being that the Canadian judiciary cannot enforce an order coming from a state that does not have Canadian standards of justice. The Court of Appeal thus has to decide whether Singapore's judiciary meets Canadian standards of impartiality.

      If it rules in favour of Enernorth, then an earth-shaking precedent will be set. The ruling can be cited by other courts in the United States, UK, Australia, etc, to refuse to recognise and enforce judgments made by Singapore courts. Should that happen, our dream of marketing legal services, including arbitration and trial, as one more plank of the new "knowledge and services economy", will be impaired. Why would foreign companies rely on Singapore lawyers and our judicial processes when the results are not recognised elsewhere?

      Moreover, an adverse ruling would also cast doubt on all other commercial judgments rendered in Singapore, which may impact on other companies' perception of how safe their investments are from political bias.


       

      Why did the Straits Times break the story only now?

      These possible far-reaching consequences were not mentioned by the Straits Times in their story. In fact, what was notable to me was how long it took before this newspaper broke the story. The case had been brewing for at least 6 months and I myself heard about it some 3 months ago. It had been circulating on the internet, passed around because people could see the significance of it.

      But not the Straits Times, it seems.

      So why break the story now? I can't say for sure, but it's probably no coincidence that the print edition of the International Herald Tribune (IHT) had a 1,600-word article -- long, by newspaper standards -– the same day (10 May 2006).

      The IHT's article (dated 9 May 2006) was headlined, "Courts in Singapore come under scrutiny" which captures the essence of the proceedings.

      Not far down from the top, it said,

      But that reputation for reliability in arbitrating commercial disputes is under increasing scrutiny. It is an issue that analysts say could have far-reaching implications for all foreign investors who have sought out Singapore as a haven and for the important role the city-state has played as a reliable legal jurisdiction in Asia.

      thus pointing out how crucial the case is.

      The IHT reported that Singapore's Law Ministry, in response, said that the Ontario Superior Court (under Justice Day) had "refused to lend any credence to EnerNorth's spurious allegation of a biased Singapore judiciary."

      This is first of all inaccurate and secondly, quite beside the point. It's beside the point because the very reason the case has been appealed is because one side takes issue with the Superior Court's judgment. To cite that Superior Court's ruling as some kind of conclusive proof, as our Law Ministry has done in its response to the IHT, is meaningless.

      It is also inaccurate, because reading from the appeal submission ("Memorandum of fact and law by the appellant") by the lawyers for Enernorth, while Justice Day ruled that the Singapore Court had not shown any bias specifically against Enernorth, he did not address the question as to whether the Singapore judiciary as a whole had examples of bias.

      It is precisely on this point that Enernorth felt it had grounds for appeal. They felt that Justice Day had misdirected himself into looking for bias specific to the case. They contend that the entire judicial system of Singapore is tainted generally, and therefore no Canadian court should help enforce its judgments.

      But I'm running too deep into the legal intricacies of the case. I'll come back to this later, but right now, I wish to stay on the tail of the Straits Times.


      The Law Ministry and its statement

      Both the IHT and the Straits Times' stories mentioned a statement by the Law Ministry, but a check on the Ministry of Law's website on 11 May 2006 showed that no press release had been issued on this matter, so the statement was not a general announcement but a response to specific enquiries.

      But who made the first enquiry, the International Herald Tribune or the Straits Times? Simply from the depth and exhaustiveness of the 1,600-word IHT story, it must have taken them a few days at least to put it together. It contained quotes from the legal submissions and comments from Michael Backman, a London-based author of several books on doing business in Asia. The 500-word Straits Times' article was something that could be slapped together in a day, based largely, as it was, on the Ministry's statement alone.

      Thus my guess is that the Ministry of Law, on receiving questions from the IHT about the case, realised that it was about to break out of cyberspace into mainstream media. But would the IHT's story be reliably pro-government? It must have been useful to have the Straits Times do a similar story highlighting the ministry's position.

      In the Straits Times' version, the headline was, surprise, surprise, the Ministry's stand: "Law Ministry rejects Canadian firm's charges of 'biased judiciary' "

      Woven throughout the story were the points mentioned by the Law Ministry. The only sentence that balanced it with the viewpoint of Enernorth was this: "[Enernorth] asked the Ontario Court of Appeal to decide if legal decisions made in Singapore are fair and impartial enough to meet Canadian standards of justice."

      As soon as that was said, the Straits Times went back to recounting the gist of the case or repeating the Law Ministry's points.


      The originating case

      The original case itself was quite complex. Oakwell and Enernorth had a June 1997 joint venture to build 2 barge-mounted power stations in Andhra Pradesh, India, generating electricity from furnace oil.

      However, licences and other needed approvals from federal and state government never came through. These approvals were necessary to achieve "financial closure" -– the release of funds for the project -- which was the responsibility of Enernorth, and so 14 months later, Oakwell commenced arbitration proceedings against Enernorth for failure to do its part. Enernorth naturally responded by saying that the final steps were out of its control.

      Nonetheless, this was settled by a Settlement Agreement in December 1998, in which both parties agreed that the earlier contract was "terminated" and "discharged", and that Enernorth was "released" from any obligations under them.

      Under the Settlement Agreement too, Oakwell sold its stake in the joint venture to Enernorth. The latter paid an initial sum to Oakwell for its interest in the joint venture company, but it also agreed to pay an additional sum within 30 days of "financial closure" based on a formula.

      One would imagine that based on prior experiences, Enernorth would have doubts that the project would ever obtain the necessary licences. Hence, Enernorth's position is that it never guaranteed Oakwell that financial closure would ever be achieved. The Settlement Agreement "did not contain any express obligation on Enernorth to procure financial closure", appellants' lawyers said.

      However, the Singapore courts would later find that such a guarantee was implied.

      Subsequently, the Indian authorities stipulated that furnace oil generators were not allowed and that all power generation projects had to be based on natural gas. The government also demanded a reduction in the electricity tariff. These two changes rendered the project impossible, so Enernorth sold the project to an Indian company which had the natural gas concession, and which therefore had a better prospect of bringing the project to fruition.

      3 years later, Oakwell sued Enernorth for the further payment described in the Settlement Agreement. The Singapore courts found in Oakwell's favour. Justice Lai Kew Chai ruled that the Agreement contained an "implied" obligation on Enernorth to obtain financial closure within 6 months of the Settlement date.

      The court awarded Oakwell a sum of S$4.39 million (US$2.79 million).

      The case was appealed to Singapore's Court of Appeal. Presided over by then-Chief Justice Yong Pung How, it too found in favour of Oakwell.

      Then the story moved to Canada, for Enernorth has no assets in Singapore. To seize Enernorth's assets in Canada, Oakwell had to apply to a Canadian court.


      The Canadian extension of the case and the principle of comity

      Once again, Enernorth lost. Justice Gerald Day of the Ontario Superior Court allowed Oakwell's claim to be enforced.

      But Enernorth, in its appeal to the Ontario Court of Appeal, submits that the lower court erred. The company said that Justice Day essentially required them to prove that they had suffered bias in the Singapore courts in their particular case, when in fact the burden should have been on Oakwell to prove to the court that Singapore's standard of justice in general was similar to Canada's.

      This would mean that any failure of justice in non-commercial cases would also become relevant to the Oakwell-Enernorth appeal.

      At this point, it is necessary for me to explain the principle of comity, for the case now revolves around this concept.

      Comity is the principle by which a sovereign state recognises the validity -- "full faith and credit" -- of the judicial acts of another state. It is not automatic. Only if Canada extends comity to the judicial acts of Singapore, can the judgment of a Singapore court be enforced with the aid of the Canadian judiciary, e.g. in seizing Enernorth's assets.

      But on what basis should Canada extend comity to Singapore, or to any other country, for that matter? Canadian legal precedent provides some guidance. Enernorth's lawyers maintain that, based on two preceding cases, Morguard Investments v. De Savoye, [1990] 3 S.C.R. 1077, and Beals v. Saldanha, [2003] 3 S.C.R. 416, there are three "filters" through which a case must pass before comity is extended.

      1. the foreign legal system must have had jurisdiction of the original case. 
         
      2. the foreign legal system must "meet Canada's constitutional standards" – this is the critical issue now.
         
      3. "the foreign proceeding must not be impeached under Canadian law due to fraud, procedural defects, or by reason of Canadian public policy."

      Interestingly, these Canadian precedents relied on a US precedent, -- Hilton v. Guyot, 159 U.S. 113 (1895) -- so the ramifications of the Enernorth case stretch broader still.

      The US court, citing an even earlier case in Louisiana, said comity cannot be automatic, for

      no nation will suffer the laws of another to interfere with her own to the injury of her citizens; that whether they do or not must depend on the condition of the country in which the foreign law is sought to be enforced, the particular nature of her legislation, her policy, and the character of her institutions… [emphasis added]

      Enernorth's appeal rests on precisely this argument, that going by political cases, Singapore's judiciary does not met the same standards of impartiality as Canada's.

      But should a Canadian court apply the experience of political cases to commercial cases?

      Whether or not the Ontario Appeal Court finds Enernorth's plea for such a broad test persuasive is not yet known. It may be many months before it issues a ruling.

      But if it does rule in Enernorth's favour, then, as mentioned above, it will have a serious effect on the all other cases emanating from Singapore. To have our commercial judgments treated as suspect abroad makes it very hard for us to do business with other countries. In particular, it makes it hard to sell Singapore as a good place for legal services (much like how, if others refuse to recognise our currency, it makes it very hard to be a global trading centre). One big chunk of our new economic vision falls apart. All because of a history of ministers suing their opponents ruthlessly.

      © Yawning Bread 


      PAP MP accused of unprofessional legal conduct while he was MP

      Another case that puts our domestic media in very bad light is that of lawyer Ahmad Khalis Abdul Ghani. It was reported on 11 May 2006 that he is scheduled to appear before a Court of Three Judges over allegations of unprofessional conduct.

      He has been accused of giving "false assurances", a role in "breach of trust" and "suppressing relevant evidence", according to the Straits Times. All this was in relation to his client's family dispute about the ownership of a piece of property.

      Ahmad Khalis was the People's Action Party (PAP) Member of Parliament for Hong Kah. He first entered Parliament in 2001, but when the 2006 elections approached, it was announced that he would "retire" due to "work commitments".

      It is very unusual for PAP MPs to serve just one term, but typically, our media didn't investigate. Now it's revealed that a complaint against him had been lodged with the Law Society in April 2003 and a hearing was conducted in October 2004, which "culminated in the recent decision to bring the former MP to the High Court".

      The Straits Times didn't say when that decision was reached.

      It's extremely suspicious. One finds it very hard to believe that nobody delayed the news until the elections were over. Did the newspaper know about it and not report it?

      If the newspaper didn't know, did the Law Society hold back on announcing its decision?

      Did the PAP know that Ahmad Khalis was under a cloud when it said that he wasn't standing for reelection because of "work commitments"? Does the PAP understand the expression "work commitments" to include facing charges?

       

      Footnotes

      None

      Addenda

      1. Comment received: I agree with the most part of your article except your concluding statement: "All because of a history of ministers suing their opponents ruthlessly."

        I think this misses the point and can be misleading. The issue isn't that ministers have sued their opponents ruthlessly, but rather that these opponents might not have been accorded fair trial. This distinction is important because it allows us to understand what we need to fix.

        If the problem is the former, then the solution is to have our ministers stop suing political opposition or to change our defamation laws such that they can't. This solves nothing since the fact that no legal action has been taken does nothing to make our courts more just in the event that legal action is taken.

        The fix is in changing our system. A freer press, transparency, accountability, a judiciary which is not beholden to the executive. These are the things that we need. Whether ministers should sue is a separate issue.
       

       

       

       

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      http://www.iht.com/articles/2006/05/09/business/courts.php

      Courts in Singapore come under scrutiny

      By Donald Greenlees International Herald Tribune

      TUESDAY, MAY 9, 2006

      From the manicured tropical gardens to the litter-free streets and glistening shopping malls, there appears to be something fundamentally clean and decent about Singapore. And if the island republic's physical appearance is burnished to a high shine, so is its reputation as a place to do business.

       

      It regularly comes near the top of international surveys as an efficient and corruption-free place to invest. Hence, many multinational companies choose Singapore as a sanitary refuge to establish headquarters operations amid the pollution and administrative chaos of many of its Asian neighbors.

       

      One of the cornerstones of Singapore's appeal to multinational investors has been the soundness of its justice system, at least in commercial cases.

       

      But that reputation for reliability in arbitrating commercial disputes is under increasing scrutiny. It is an issue that analysts say could have far-reaching implications for all foreign investors who have sought out Singapore as a haven and for the important role the city-state has played as a reliable legal jurisdiction in Asia.

       

      A court of appeal in Canada is being asked for the first time to determine whether legal decisions made in Singapore are sufficiently fair and impartial to meet the standards of justice of other developed countries.

       

      In documents tendered to the appeals court in the province of Ontario, Singapore's judicial reputation has been subject to scathing attack. Lawyers have alleged in court documents that the Singapore legal system is an "utterly politicized component of executive rule" in which there is no guarantee of fairness even in commercial cases. The Singaporean Ministry of Law rejects these claims.

       

      The case, now before the Ontario Court of Appeal, has also become a forum for some critics of Singapore's political and justice system and served to resurrect grievances about old legal cases brought against opponents of the People's Action Party, which has been in power since 1959.

       

      "Whichever way this case goes, it is, and it is going to continue to be, quite damaging for Singapore because it's highlighted a lot of apparent or perceived problems with the Singapore judiciary," said Michael Backman, a consultant based in London and author of several books on doing business in Asia.

       

      The case centers on a dispute between EnerNorth Industries, an Ontario-based oil and natural gas company, and a Singaporean company, Oakwell Engineering. In 1997, the two companies entered a joint venture to build and operate two barge-mounted electricity generating plants in India.

       

      When the project ran into trouble a year later, EnerNorth bought out Oakwell's stake in the venture in a deal that included promises to pay $2.79 million and royalties once financing was obtained and the project was operational. A settlement agreement provided for any further disputes to be settled in the Singapore courts. EnerNorth, based in Toronto, subsequently failed to raise the financing for the project and, in 2000, sold out to an Indian company. In 2002, Oakwell sued EnerNorth in Singapore for failure to pay the $2.79 million and royalties. The Singaporean High Court, and later the Singaporean Court of Appeal, which is the final appellate court in Singapore, awarded Oakwell the disputed amounts, full costs and interest amounting to about $5.4 million.

       

      As EnerNorth had no assets in Singapore, Oakwell applied to the Ontario Superior Court to have the award enforced in Canada. Last Aug. 2, the superior court ruled in Oakwell's favor.

       

      But EnerNorth's lawyers have appealed. At the heart of their case is a fierce attack on the integrity of the Singapore justice system. In a submission to the appeals court, David Wingfield, EnerNorth's lawyer, argued that foreign legal systems had to meet Canadian constitutional standards for their rulings to be upheld in Canada.

       

      "What EnerNorth is faced with, however, is having its assets seized under Canadian law to pay a judgment that was granted by a corrupt legal system before biased judges in a jurisdiction that operates outside the rule of law," he said in a submission to the court. He added: "The uncontradicted evidence in this case, from leading international experts, reveals that Singapore is ruled by a small oligarchy who control all facets of the Singapore state, including the judiciary, which is utterly politicized."

       

      In large part, Wingfield based his allegations on the record of prosecutions of political critics of the People's Action Party, including Joshua Benjamin Jeyaretnam, a lawyer of Sri Lankan descent, who for a time was Singapore's sole opposition member of Parliament. Jeyaretnam was convicted of fraud in a series of trials in Singapore in the 1980s in connection with donations made to his Workers' Party. He later managed to appeal to the judicial committee of the Privy Council in London over a decision to have him struck off the Singapore Law Society's rolls. The Privy Council, which was then the final court of appeal for such professional disciplinary actions, decided to review the initial conviction against Jeyaretnam. In a celebrated judgment in October 1988, it expressed "deep disquiet that by a series of misjudgments," Jeyaretnam and a co-defendant had suffered "a grievous injustice."

       

      Wingfield in his submission to the court in Ontario also cited the opinion of the International Commission of Jurists on a more recent case involving Jeyaretnam that "the High Court of Singapore has done little to overcome the Singapore courts' reputation as improperly compliant to the interests of the country's ruling People's Action Party."

       

      The conduct of legal actions against political figures in Singapore has long been the subject of controversy, but the country's courts have had a strong reputation for fair and impartial conduct in commercial proceedings.

       

      When Gerald Day, the Ontario Superior Court judge, agreed last year to uphold the award made in Singapore against EnerNorth, he wrote, "Historically, there is no evidence of bias or unfairness by the Singapore court in private commercial proceedings." He also found that there was no evidence of bias "in this specific case" and "no reason to doubt the impartiality of the judges who heard the case in Singapore."

       

      Pointing to Day's statements, the Singaporean Ministry of Law said the Ontario Superior Court had "refused to lend any credence to EnerNorth's spurious allegation of a biased Singapore judiciary." In a written response, it said EnerNorth had been represented in Singapore by lawyers of its choice and had not alleged that the Singapore courts or any of its judges were biased against it at the time of the initial court hearings.

       

      The ministry also said the Political and Economic Risk Consultancy, which is based in Hong Kong, had "consistently rated the Singapore judicial system as one of the best in the region, and emphasized that Singapore has one of the most fair and transparent legal systems in the world." The ministry added, "Singapore prides itself on having an independent and impartial judiciary."

       

      Still, EnerNorth's lawyers produced a number of affidavits from its own experts, including Francis Seow, a former Singapore solicitor general and judge turned prominent critic of the government; and Ross Worthington, a professor of governance and World Bank consultant. Both asserted that the People's Action Party, or PAP, and the executive controlled all aspects of public life, including the judiciary.

       

      Wingfield, the EnerNorth lawyer, also quoted a report in court from the New York City Bar Association that warned American companies to be wary of agreeing to let commercial disputes be settled in Singapore courts as EnerNorth did. The bar association said the Singapore government "had been willing to decimate the rule of law for the benefit of political interests." But it also warned U.S. companies that in doing business in Singapore, they were "likely to encounter a wide variety of enterprises in which the government has an economic interest."

       

      "The same forces which have led that judiciary to be sensitive to the PAP government's political interests would lead it to take account of its economic interests," the report said.

       

      The basis of EnerNorth's appeal is that Day, the superior court judge, required EnerNorth lawyers to prove specific bias against the company by the Singaporean courts, which the judge found they had failed to do. Wingfield argued that it was simply sufficient to establish that Singapore's legal system did not meet Canadian standards.

       

      The Ontario Appeals Court finished hearing the case in April and under an informal six-month rule is likely to announce its decision by the end of the summer, according to lawyers. But both sides have indicated that they will seek to appeal the verdict to the Supreme Court, meaning that the case could drag on and could become a test of recognition of foreign legal jurisdictions.

       

      Lawyers for Oakwell Engineering maintain in their submissions to the courts in Canada that the issue has already been resolved under Canadian law and should not be reopened. They said EnerNorth had chosen to attack the quality of justice only because it had lost the case in Singapore - a jurisdiction it had freely chosen for settlement of any disputes with Oakwell. They said the company had not raised objections during the trial in Singapore and had failed to prove or even establish a "reasonable apprehension" of bias against it.

       

      In its case before the Ontario Court of Appeal, Oakwell's lawyers said EnerNorth had in fact been represented by a lawyer who witnesses said had strong links to the People's Action Party, while Oakwell had been represented by Philip Jeyaretnam, the son of the opposition figure.

       

      They said the case had been "heard before the courts of a country built on foreign investment, with an impeccable reputation for fairness to foreign businesses like EnerNorth."

      But Backman, the consultant and author, said the risk for Singapore, regardless of the verdict in Canada, was that foreign companies might become increasingly wary about business transactions in the city-state. If EnerNorth wins, he said by telephone, courts in other countries might also come under pressure not to enforce Singapore legal judgments. "This will only impact on the desire of investors to invest and remain in Singapore," he said

      For more on Singapore's PAP controlled Kangaroo courts click on and visit the following links;

      File - Legitimized Corruption Understood

      Suffering Spore's slings - More On S'pore's Bogus Judiciary & Kangar

      S'pore's Kangaroo Courts Jail Opposition

      The politics of judicial institutions in Singapore - S'pore's Kangar

      S'pore's Bogus Corrupt Courts Imprison Opposition

      How S'pore's Bogus Kangaroo Courts Renders Judgements

      S'pore Courts Involved In PAP NKF Cover-up - Legitmised Corruption

      S'pore's Kangaroo Courts Suppress Free Speech

      S'pore Kangroo Court dimiss suit against PAP

      More on Singapore's Kangaroo Courts

      Selective Myopia In Singapore Law Enforcement

      Please Join My Corrupt Board - Legitimised Corruption

      Transparency Issue Hits Singapore Big Time

      Singapore's Kangaroo Courts

      Singapore's Kangaroo Judicial System

      Judgements of Singapore's Kangaroo Courts

      More On Singapore's Corrupt Courts

      Singapore's kangaroo courts & corrupt judges put on trial

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