Oro Negro Drilling Pte. Ltd. and others v Integradora De Servicios Petroleros Oro Negro, S.A.P.I. De C.V. and others

The six plaintiffs are Singapore companies with their centre of main interests in Mexico. The first plaintiff holds all the shares in the other five, each a special purpose vehicle owning one offshore jack-up drilling rig chartered to Perforadora, a Mexican subsidiary of the first defendant. To finance the rigs, the first plaintiff issued bonds under a Norwegian-law bond agreement. As the agreement required, each plaintiff amended its constitution in April 2016 to add an article ("Art 115A") under which no insolvency or restructuring proceeding could be carried into effect unless the shareholder passed a resolution and the bondholders' Independent Director, Mr Cochrane, voted in favour.

On 31 August 2017 the second and third defendants, then directors, granted powers of attorney to Mexican lawyers (the "Guerra Lawyers"). After Perforadora filed for a concurso (Mexican court-supervised restructuring), the Bond Trustee declared an event of default on 25 September 2017, replaced the directors and later took the first defendant's shares in the first plaintiff. On 29 September 2017 the Guerra Lawyers filed concurso petitions in each plaintiff's name. The third defendant accepted that Art 115A had not been complied with. After years of litigation in Mexico, the Mexican courts admitted the petitions and recognised the Guerra Lawyers as the plaintiffs' representatives; an appeal there is pending.

The plaintiffs filed Originating Summons No 126 of 2018 seeking declarations, injunctions and damages. Interim injunctions were restored by the Court of Appeal. The claim against the second defendant was settled and discontinued. Only the third defendant opposed final judgment; the first defendant did not appear. These grounds followed the third defendant's appeal against the final judgment.

1. Whether the third defendant was bound by an implied contract incorporating Art 115A and breached it.
2. Whether the first defendant was liable for inducing the third defendant's breach of that contract.
3. Whether the claim was an abuse of process, a collateral attack on the Mexican decisions or barred by res judicata.
4. Whether permanent injunctions should be refused on grounds of judicial comity or futility.

Despite the third defendant's concession, the court tested the legal basis on the merits, partly because the first defendant was absent. Drawing on the cases the Court of Appeal had analysed in the interlocutory appeal, it held that a person who knows of a term in a company's constitution, accepts appointment as director and then acts as one is, absent contrary agreement, bound by an implied contract containing that term. The third defendant knew of Art 115A, had helped insert it, and caused the petitions to be filed without Mr Cochrane's vote. Liability in contract is strict, so his claimed good motives were irrelevant, and the court rejected his reliance on Mexican law and fiduciary duty as after-the-event rationalisations.

The first defendant, as ultimate parent, knew of Art 115A. The court inferred from the defendants' conduct, and from the third defendant's position as its director, that it intended to bring about the breach so that the rigs would stay out of the bondholders' reach.

The court accepted identity of parties with the Mexican proceedings, but held that the issues and relief differed: the Singapore claim turned on Singapore contract, tort and company law, while the Mexican courts decided whether Mexican insolvency law and public policy allowed them to disregard Art 115A and the event-of-default clause. There was therefore no duplication, collateral attack or res judicata.

The injunctions were not anti-suit or anti-enforcement injunctions. They bound only a former shareholder and a former director, enforced a negative covenant, and left each plaintiff free to pursue a concurso with Mr Cochrane's approval. Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd [2019] 1 SLR 732 was distinguished because the plaintiffs came to court promptly. Nor was the relief futile, since the court did not accept that the Guerra Lawyers acted independently of the defendants.

The High Court allowed the plaintiffs' application for final relief against the first and third defendants. It declared that none of the shareholders' resolutions was enough on its own to authorise any director to carry an insolvency matter into effect, declared who the plaintiffs' only directors were, and declared that neither defendant had authority to cause the plaintiffs to commence or maintain such proceedings. It granted permanent injunctions restraining both from doing so or instructing lawyers to do so, ordered the third defendant to pay damages to be assessed, and ordered costs of $25,000 including disbursements. The assessment of damages was adjourned pending the appeal.