Xu Xiangrong & Anor v Fu Xianwei & 8 Ors

Facts

Mr Xu Xiangrong and Mr Fu Xianwei, both Chinese nationals, signed a Shareholders' Cooperation Agreement dated 1 April 2014 under which Mr Xu claimed an interest in a group of shipping companies run by Mr Fu, the Pacific Glory Group, later revised by a Supplementary Agreement. Mr Xu also claimed beneficial interests in nine vessels held through single-ship companies under an investment scheme. After disputes over profits, Mr Fu terminated Mr Xu's positions on 24 May 2024. Mr Xu and Shanghai Changzhou International Freight Transport Agency Co Ltd, of which he was legal representative, sued Mr Fu and eight companies in HC/OC 623/2024. The claims covered unpaid dividends and incentives, the vessel profits and sale proceeds, and allegedly unauthorised transfers out of Changzhou, including to Quan An International Pte Ltd. Mr Xu had also sued in the Shanghai Maritime Court.

On 16 August 2024 the court granted an ex parte worldwide freezing order with ancillary disclosure orders. An assistant registrar later dispensed with personal service on Mr Fu and allowed service by email on his Singapore solicitors. The defendants applied in HC/SUM 3555/2024 to set aside or vary the freezing order, and in HC/SUM 3645/2024 to set aside the service order, for a declaration of no jurisdiction and for a forum non conveniens stay.

Issues

1. Whether the order dispensing with personal service on a defendant abroad should be set aside
2. Whether Singapore was the appropriate forum for the claims against all the defendants
3. Whether the worldwide freezing order should be set aside for lack of merit, risk of dissipation or non-disclosure
4. Whether the freezing order or its disclosure orders should be varied and fortification ordered

Holding

The High Court allowed SUM 3555 in part, setting aside the disputed ancillary disclosure orders, and otherwise dismissed it; SUM 3645 was dismissed. The service order and the worldwide freezing order stood, and no stay was granted. The claimants were ordered to fortify their undertaking as to damages within four weeks in an agreed form, failing which S$200,000 was to be paid into court. Mr Xu was to discontinue the Chinese proceedings within a reasonable time, and the suit was allowed to proceed in Singapore.

Reasoning

Following Madison Pacific Trust Ltd and others v PT Dewata Wibawa and others [2024] SGHC 184, no permission to serve out was needed because ordinary service was effected on solicitors in Singapore. But the court held that, for good order and out of comity, an application to dispense with personal service on a foreign defendant who has not submitted to jurisdiction should consider whether Singapore is the appropriate forum. Personal service on Mr Fu was difficult given his several addresses and the time service through Chinese channels would take, while service on his solicitors was as effective.

On forum, the defendants had not shown a good arguable case that Article 11 of the agreement, referring to a local people's court, was a valid exclusive jurisdiction clause; it was ambiguous, and both sides had argued the opposite in Shanghai. Applying the Spiliada test, the shareholders' claims and the vessel claims leaned to Singapore, given the Singapore companies, compellable local directors and secretaries, and the implied choice of Singapore law for trusts held through Singapore-incorporated companies. The conspiracy claim pointed to China, but the claims shared witnesses and facts, and fragmentation weighed against splitting them, so Singapore was the appropriate forum overall.

The freezing order was supported under s 4(10) of the Civil Law Act. There was a good arguable case on each set of claims, including apparent inconsistencies in the debit notes said to support the transfers. Unexplained transfers moving money out of Singapore, some after the order, showed a real risk of dissipation. Failing to disclose the Chinese asset preservation order was material, and the court was disappointed by it, but it was innocent and the Chinese proceedings were to be discontinued, so the order was not discharged. The other alleged non-disclosures did not justify discharge either.

The disputed disclosure orders went beyond policing the injunction: they covered all vessel profits without a time limit and burdened nominal defendants. The defendants' loss estimate, based on falling ship valuations, was too speculative. Even so, the court ordered notional fortification because Mr Xu's undertaking was illusory without assets clear of the dispute, and third parties had interests in the vessels.

From the judgment