Oakwell Engineering v. Enernorth Industries

Oakwell Engineering v. Enernorth Industries (Canada, Court of Appeal File No. C43898, Superior Court File Nos. 04-CV-271121CM3 & 04-CV-274860 CM2) was 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]

The case is notable because Enernorth claimed that the Singapore judgment should not be recognized in Canada because judicial standards in Singapore were not the same as those in Canada. Among other things, Enernorth alleged that links between the judiciary, business and the executive arm in Singapore suggested a real risk of bias.^[2]

If Enernorth's appeal to the Ontario Court of Appeal had succeeded, a legal precedent would have been set for regarding judgments by Singaporean courts as unenforceable outside Singapore.^{[citation needed]} According to analyst Michael Backman, this might have had the effect of dissuading companies from using Singaporean law for arbitration and trial, and calling into question the fairness of the Singaporean legal system.^[3] However, Enernorth lost its appeals before the Court of Appeal and the Canadian Supreme Court.

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".^[4] Enernorth sold its remaining stake to an Indian company in 2000.^[3]

Court cases in Singapore

In 2002, Oakwell sued Enernorth in the High Court of 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 six 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 upheld Justice Lai's ruling.

Court cases in Canada

Superior Court of Ontario

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.^[5]

Ontario Court of Appeal

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 affidavit, 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 affidavit 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]

The Singapore Ministry of Law rejected the allegations of bias on the part of the Singapore judiciary as "spurious".^[2]

Enernorth's appeal was dismissed by the Court of Appeal for Ontario by a decision dated June 9, 2006. The judgement supports Justice Gerald Day's findings that the evidence of Enernorth's expert witnesses (Ross Worthington, Nihal Jayawickrama and Francis T. Seow) was "either unreliable ... or too general to prove that there was not a fair trial in this case". It also supports the findings that "there was a lack of evidence of corruption or bias [within Singapore legal system] in private commercial cases and no cogent evidence of bias in this specific case".^[6]

Canadian Supreme Court

Enernorth then appealed to the Canadian Supreme Court.^[7]

Before the Supreme Court, Enernorth argued that to recognize judgments such as those from Singapore meant that Canadian judges were "mere functionaries or sheriffs for foreign legal systems, no matter how corrupt they are". Oakwell responded that it was for Canadian courts to decide on this, based on the criteria laid out by the courts. Among other things, it pointed out that Enernorth had neither alleged bias nor contested the Singapore courts' jurisdiction when the case was heard in Singapore. When the case was moved to Canada, two of Enernorth's expert witnesses – including Francis Seow – had admitted they were unaware of any commercial case from Singapore that had been attacked as unfair or biased. In January 2007, the Supreme Court, presided over by Chief Justice Beverley McLachlin, dismissed Enernorth's appeal and ordered it to bear the costs of the appeal.^[2]

References

1. ^ ^{a b c} Oakwell Engineering Limited v. Enernorth Industries Inc.: Memorandum of Fact and Law of the Appellant, Enernorth Industries Inc., Court of Appeal File No. C43898 (September 16, 2005).
2. ^ ^{a b c} Vijayan, K.C. (2007-01-27). "Payout Fight Over 'Biased Judiciary' Rejected : Firm's Final Bid to Canada's Highest Court Fails, so S'pore Court Judgment Stands". The Straits Times. 
3. ^ ^{a b} Greenlees, Donald (2006-05-09). "Courts in Singapore Come Under Scrutiny". International Herald Tribune. http://www.iht.com/articles/2006/05/09/business/courts.php. 
4. ^ Au, Waipang (May 2006). "The Deadly Embrace of Politics". Yawning Bread. http://www.yawningbread.org/arch_2006/yax-588.htm. Retrieved 2007-04-20. 
5. ^ Oakwell Engineering Limited v. Enernorth Industries Inc. (2005) 76 O.R. (3d) 528.
6. ^ Oakwell Engineering Limited v. Enernorth Industries Inc., Docket No. C43898 (June 9, 2006).
7. ^ Rodan, Gary (October 2006). "Singapore's Founding Myths vs. Freedom". Far Eastern Economic Review. http://www.feer.com/articles1/2006/0610/free/p013.html.