Oakwell Engineering v. Enernorth Industries

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Oakwell Engineering v. Enernorth Industries (Canada, Court of Appeal File No. C43898, Superior Court File Nos. 04-CV-271121CM3 & 04-CV-274860 CM2) is an appeal by Enernorth Industries Inc. (Enernorth), a Canadian company, from a judgment granting an application brought by Oakwell Engineering Limited (Oakwell), a Singaporean company, for an order recognizing and enforcing in Ontario a judgment granted against Enernorth by the High Court of the Republic of Singapore on October 16, 2003 and affirmed by the Court of Appeal of the Republic of Singapore on April 27, 2004 [1].

Contents

[edit] History of case

Oakwell and Enernorth formed a joint venture in June 1997 to build two barge-mounted power stations in Andhra Pradesh, India. However, the licenses necessary for the project were never obtained, and a new Indian government requirement to use natural gas instead of furnace oil made the project infeasible.

Oakwell commenced arbitration against Enernorth for failure to release the funds for the project. The two sides signed a Settlement Agreement in December 1998, agreeing that the earlier contract was "terminated" and "discharged", and that Enernorth was "released" from any obligations under the contract. Oakwell sold its stake in the venture to Enernorth. Enernorth paid an initial sum to Oakwell and agreed to pay the remainder within 30 days of "financial closure".

However, Enernorth later posited that as the Indian government had not granted the licenses necessary, the project had not achieved "financial closure", and according to Enernorth's lawyers, the Agreement "did not contain any express obligation on Enernorth to procure financial closure".[2] Enernorth sold its remaining stake to an Indian company in 2000.[3]

[edit] Court cases in Singapore

In 2002, Oakwell sued Enernorth in Singapore to obtain the further payment. The court found in Oakwell's favor, with Justice Lai Kew Chai ruling that Enernorth had an "implied" obligation to obtain financial closure within 6 months, and awarding Oakwell the sum of S$4.39 million. The case was appealed to Singapore's Court of Appeal, but Chief Justice Yong Pung How sided with Justice Lai's ruling.

[edit] Court cases in Canada

As Enernorth had no seizable assets in Singapore, Oakwell brought the case against Enernorth to Canada. Justice Gerald Day of the Superior Court of Ontario allowed Oakwell's claim to be enforced.

However, Enernorth appealed to the Ontario Court of Appeal on the grounds that the lower court erred. According to Enernorth, the Superior Court had considered only whether there was bias against Enernorth in this particular case, but enforcing the judgment would require that Oakwell prove to the court that the standard of justice in Singapore in general must "meet Canada's constitutional standards".

As evidence, Enernorth obtained the testimony of expert witnesses including Ross Worthington, Adjunct Professor of Governance at the National Key Centre for Ethics, Law, Justice and Governance at Griffith University, Australia, and Francis Seow, former Solicitor General of Singapore. In his affadavit, Worthington stated that "all aspects of the governance of Singapore, including the judiciary, are carefully manipulated and ultimately controlled by a core executive of individuals who use their powers to maintain their own power and further their own political, economic, social and familial interests."[1] In turn, Seow's affadavit noted the government's use of the Internal Security Act and defamation suits to suppress opposition politicians and non-compliant media, citing the example of the prosecution of J.B. Jeyaretnam.[1]

[edit] Implications

If Enernorth's appeal were to succeed, a precedent would be set for considering judgments by Singaporean courts unenforceable outside Singapore. This would dissuade companies from using Singaporean law for arbitration and trial and call into question the fairness of the Singaporean legal system.

[edit] Status

Enernorth's appeal was dismissed by the Ontario Court of Appeal by decision dated June 9, 2006 [4]. Enernorth is currently appealing to the Canadian Supreme Court[5].

[edit] References

  1. ^ a b c Oakwell Engineering v. Enernorth Industries, Court of Appeal File No. C43898
  2. ^ "The deadly embrace of politics", Au Waipang, May 2006.
  3. ^ "Courts in Singapore come under scrutiny", Donald Greenlees, International Herald Tribune, May 9, 2006.
  4. ^ http://www.ontariocourts.on.ca/decisions/2006/june/C43898.htm
  5. ^ Singapore’s Founding Myths vs. Freedom, Garry Rodan. Far East Economic Review, October 2006.
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