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30 June 2015
In the recent case of Chopra v Bank of Singapore Ltd(1) the court considered whether the defendants had been validly served with a claim form and, if not, whether to dispense with service. The court also considered other issues relating to the law applicable to the claims in tort and whether the proceedings should be stayed on the grounds of forum non conveniens.
The first claimant, Ms Chopra, has lived permanently in the United Kingdom since 1976. She was described as being retired and having little understanding of financial matters and investing.
The second claimant, Mr Rattan, qualified as a chartered accountant in the United Kingdom in 1983. From 1988 to 2009 he was employed as an investment banker. He is presently self-employed and works as a financial consultant in the United Kingdom and Ireland.
ING Asia Private Bank Limited (IABP) is a company registered in Singapore with premises in Singapore. Before January 29 2010 it was part of the ING group of companies. IAPB is not, and was not at the relevant time, registered at Companies House as a foreign company. The defendants contended that it did not then, and does not now, carry on business or have any presence in the United Kingdom. IAPB was not and is not an authorised person under the Financial Services and Markets Act 2000. IAPB's shares were acquired by Overseas-Chinese Banking Corporation Limited (OCBC) from ING Bank NV on January 29 2010.
OCBC is also a company registered in Singapore. OCBC has a registered UK branch office in London (OCBC London). These premises are leased and paid for solely by OCBC and all of the staff who work there are employed by OCBC. OCBC London is an authorised person under the Financial Services and Markets Act and is regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Since June 16 2011 OCBC London has carried on a private banking business which trades under the name 'Bank of Singapore'. OCBC London acted as a referral intermediary for IAPB. OCBC London's employees were carefully trained to act only in a way that was consistent with this arrangement.
Opening of Rattan's account with IAPB
An account opening form was signed by Rattan and dated March 9 2006. This form was headed "ING ASIA PRIVATE BANK LTD" and was described as "Services Agreement (Version 06/05)" in the footer.
Salient terms of services agreement
The services agreement's cover page was marked "ING Private Banking". The first numbered page was headed "ING ASIA PRIVATE BANK LTD – 9 Raffles Place #08-01 Republic Plaza, Singapore 048619 Company Registration No. 197700866RR".
Clause 1 contained the following definitions:
"Bank refers to ING Asia Private Bank Ltd and its successors-in-title and assigns.
Contract refers to any contract concluded by you, or your behalf, with or though the Bank in respect of investment in, or the sale or purchase of, any Securities."
Clause A (30) provided:
"Applicable law and Jurisdiction
This Agreement shall be governed by, and construed in accordance with Singapore law.
Unless expressly otherwise provided or agreed, or unless the rules of the applicable Exchange specify otherwise, each Contract shall be governed by and construed in accordance with Singapore Law.
You hereby irrevocably submit to the non-exclusive jurisdiction of the Singapore Courts in connection with any action or proceeding that may arise out of or in connection with this Agreement or any Contract or Facility. Such submission shall not prejudice the Bank's right to commence action against you in any other court of competent jurisdiction."
Opening of Chopra's account with IAPB
Chopra's account opening form was in substantially the same terms as Rattan's. The form was signed by Chopra and dated April 18 2008.
On June 9 2008 a relationship manager employed by IAPB sent an email to Chopra and Rattan (among a number of other clients) strongly recommending the purchase of a bond in a "Russian Government-owned entity" called OJSC United Airlines Corporation.
On June 25 2008 Rattan purchased $200,000-worth of the bonds. Although the precise source of the funds that he used for the purchase is unclear, there is little doubt that he used money in his IAPB account.
Chopra purchased bonds worth a total of $200,084 around the same time.
The bonds were purchased in the name of IAPB, but on the specific instructions of clients, including Rattan and Chopra. The bonds were then held in the clients' accounts. IAPB acted as custodian of its clients' investments. As such, it seemed clear that the clients' instructions were executed in Singapore.
In January 2009 the bond issuer defaulted on the interest payments on the bonds and continued to do so until June 2013, when it defaulted on the capital repayment.
The claimants did not deal with any ING company, office or employee in England at any stage of their relationship with IAPB.
The claim form was issued on June 20 2014. The claimants relied on three causes of action against IAPB: misrepresentation, negligence and statutory torts under the Financial Services and Markets Act.
The claimants made no attempt to serve the claim form until the very end of the four-month period of its validity. Rattan attempted to serve the claim form and particulars of claim on both IAPB and OCBC on October 17 2014 in the following manner.
He took two envelopes each containing copies of these documents to the London office of OCBC, one marked for attention of OCBC and the other marked for the attention of an entity that Rattan referred to as "BOS". It therefore appears that the second envelope was addressed to the "Bank of Singapore" and not to "Bank of Singapore Limited". This was supported by two matters mentioned below.
Rattan went to the office reception and asked for "BOS" and OCBC. He spoke to a receptionist. According to Rattan, he said that he had documents to serve on OCBC and "BOS", and the receptionist replied: "That's fine, I can take them." Rattan asked for a receipt on headed paper. Accordingly, the receptionist wrote the following on OCBC-headed paper: "I have received two sets of documents from Mr V Rattan. [signature] 17.10.14 16:55pm."
The OCBC-headed paper stated that OCBC is incorporated in Singapore and regulated by the Monetary Authority of Singapore. It also stated that OCBC is regulated by the FCA and the PRA.
The receptionist said that she handed both envelopes to OCBC London's private banking team.
Rattan also posted two sets of the documents by recorded delivery on the same day. In this case, Rattan expressly stated that one was addressed to "Bank of Singapore", while the other was addressed to OCBC.
The defendants applied for orders declaring that IAPB had not been validly served and to strike out the claim against OCBC. In particular, the court was asked to consider seven issues:
Counsel for the defendants submitted that since neither IAPB nor OCBC was domiciled in an EU member state, Article 4 of the Brussels I Regulation applied and therefore Article 15 of the Brussels I Regulation did not. Counsel for the claimants had no answer to this submission and so the court accepted that Article 15 did not apply (ie, Article 4 applied to exclude Article 15).
Civil Procedure Rule 6.9(2) provides that where a company does not provide an address for service, the place of service is any place within the jurisdiction where the corporation carries on its activities or any place of business of the company within the jurisdiction.
The leading case on this issue is Adams v Cape Industries Plc, in which the Court of Appeal held that a trading corporation is present in a foreign country if either:
The claimants failed to show that IAPB carried on its activities or had a place of business in England. On the contrary, the evidence indicated that the defendants were "extremely careful" to ensure that:
The court rejected the claimants' assertion that OCBC London was a representative of IAPB. Rather, the evidence indicated that OCBC London acted "solely as a referral intermediary" for IAPB.
Accordingly, the claim form had not been validly served on IAPB in accordance with Civil Procedure Rule 6.9(2).
Service would not be dispensed with (pursuant to Civil Procedure Rule 6.16). The court will exercise its power retrospectively to dispense with service only in truly exceptional cases.(4) The case at hand was not exceptional. The claimants had left service until the last minute and had not served at the place specified by Civil Procedure Rule 6.9(2). Retrospectively dispensing with service would enable them to avoid compliance with Civil Procedure Rule 6.9(2) and establish the court's jurisdiction in circumstances not permitted by the Civil Procedure Rules.
The court held that the claim arose out of events which occurred well before IAPB was acquired by OCBC. There was no factual or legal basis for the claimants' assertion that OCBC had assumed all of the material liability of IAPB.
Accordingly, the court held that the claim against OCBC should be struck out under Civil Procedure Rule 3.4(2) on the grounds that the particulars of claim disclosed no reasonable cause of action for bringing the claim.
It was common ground that the law applicable to the claimants' tort claims was to be determined in accordance with Sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995.
As to the misrepresentation claim, the elements of the tort were misrepresentation, reliance and loss. The court held that the misrepresentations originated in Singapore, but were received by the claimants in England. Their initial reliance occurred in England when the claimants decided to make their investment, but the claimants implemented those decisions in Singapore by instructing IAPB to purchase the bonds using funds held on their behalf in their accounts in Singapore. Consequently, the claimants suffered loss in Singapore when the bond issuer defaulted. Accordingly, the court considered that the most significant elements of the tort of misrepresentation occurred in Singapore.
As to the negligence claim, the claim was for negligent misstatement and so the court took a similar approach to the misrepresentation claim. The court considered that that the breach occurred in Singapore. Accordingly, the most significant elements of the tort of negligent misstatement also occurred in Singapore.
Clause A(30) of the services agreement was held to be enforceable. Article 7(2) of the Rome I Regulation merely permits the application of mandatory rules of law of the forum. Although the claimants relied on the Unfair Contract Terms Act, it did not apply, because the essential steps necessary for the making of the contracts had been taken in Singapore. Even if it had applied, it would not have rendered Clause A(30) unenforceable, because it was not contrary to good faith and did not lead to a significant imbalance between the parties.(5)
The court has discretion to stay proceedings brought before it if another forum is clearly or distinctly more appropriate than the English court.(6) In determining this issue, the court will consider with which forum the issues in the proceedings have the most real or substantial connection, including with regard to:
Had it been necessary, the court stated that it would have granted a stay on the grounds of forum non conveniens for the following reasons:
This case offers a number of helpful reminders to any litigant seeking to establish the jurisdiction of the English court when claiming against and seeking to serve an ostensibly foreign-based entity. In the case of Chopra and Rattan, a number of crucial failings occurred which led to this outcome. Perhaps those failings might have been identified and avoided had the step of serving the proceedings not been left to the very last minute.
For further information on this topic please contact Adam Forster or Geraldine Elliott at RPC by telephone (+44 20 3060 6000) or email (email@example.com or firstname.lastname@example.org). The RPC website can be accessed at www.rpc.co.uk.
(1)  EWHC 1549 (Ch).
(2) EU Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
(3) EU Regulation 593/2008 on the law applicable to contractual obligations.
(4) Olafsson v Gissurarson  EWCA Civ 152.
(5) Standard Bank London Ltd v Apostolakis (No 2)  Lloyd's Rep Bank 240.
(6) Spiliada Maritime Corp v Cansulex Ltd  AC 460.
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