Case Commentary Cross-Border Insolvency Law Shipping / O&G

Invoking The Inherent Jurisdiction Of The Singapore Court In Aid Of Foreign Restructuring Proceedings [Insolvency Law] [Cross-Border Jurisprudence]

*Case Commentary:

Re Taisoo Suk (as foreign representative of Hanjin Shipping Co Ltd) [2016] SGHC 195

In the unreported decision of Re Taisoo Suk (as foreign representative of Hanjin Shipping Co Ltd) [2016] SGHC 195 (released on 13 September 2016), the Singapore High Court exercised its inherent jurisdiction to stay all claims and proceedings against Hanjin Shipping Co Ltd (“Hanjin”), a company incorporated in the Republic of Korea (“Korea”), and its subsidiaries. The stay included Admiralty proceedings to arrest any of Hanjin’s vessels (whether directly or indirectly owned). A copy of the decision may be found here.

The basis on which the Court granted the stay was that it was crucial to Hanjin’s ongoing restructuring in Korea, i.e., the Singapore Court granted a stay in the exercise of its inherent jurisdiction in aid of foreign restructuring proceedings. This is the first case of its type, and opens the door for future companies similarly invoking the Court’s inherent jurisdiction in similar and/or deserving circumstances.

It is unclear from a reading of the case whether the stay was limited to actions and proceedings in Singapore, or “extra-territorial” in nature (insofar as it would bind creditors in personam from pursuing claims or proceedings against Hanjin overseas if those creditors had notice of the stay order and submitted to the Singapore Court’s jurisdiction). On balance, it is likely that the stay is limited to actions, claims and/or proceedings in Singapore.

It is perhaps noteworthy that this decision was rendered on the ex-parte application of Hanjin’s foreign representative. A return date has been fixed at which time the Court may very well discharge the stay. That said, as a matter of law, the decision opens the way for troubled companies to seek the Singapore Court’s protection of its locally-based assets by invoking its inherent jurisdiction rather than obtaining a moratorium under Section 210(10) of the Companies Act.

‎The other remarkable aspect of the decision is that the stay in question expressly prevented Hanjin’s creditors bound by the order from pursuing their in rem rights against vessels calling to Port in Singapore. In this regard, Aedit Abdullah JC declined to follow the earlier High Court decision in Re TPC Korea [2010] SGHC 11, where the Court held that restraining vessel enforcement action was solely within the domain of the High Court exercising its statutory powers under the High Court (Admiralty Jurisdiction) Act).

This is therefore unlikely to be the last word on this matter, and clarification from the SGCA would be welcomed as it is one thing to enjoin creditors from exercising their legal rights, and another to prevent them from exercising proprietary rights in the subject matter of their security.

13 October 2016

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*The contents of this article represent the views of the author alone from a Singapore law perspective and are subject to copyright protection under the laws of the Republic of Singapore (as may from time to time be amended). No part of this article may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of the author.

Please note that whilst the information in this article is correct to the best of the author’s knowledge and belief at the time of writing, it is only intended to prove a general guide to the subject matter and should not be treated as a substitute for specific professional advice for any particular course of action as such information may not suit your specific business, operational and/or commercial requirements. You are therefore urged to seek legal advice for your specific situation. All the author’s rights are expressly reserved.

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