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.

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 front page 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.

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 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.

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.

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