Econ Corp v Ballast-Nedam: Service Out of Jurisdiction & Performance Bond Dispute

In Econ Corporation International Limited v Ballast-Nedam International BV, the Singapore High Court heard an appeal regarding an order to set aside leave to serve an originating summons out of jurisdiction. Econ Corporation, a Singapore company, sought a declaration to prevent Ballast-Nedam, a Dutch company, from calling on a Bond and Advance Payment Guarantees. The High Court allowed the appeal, ruling that leave to serve the Originating Summons out of jurisdiction ought to have been granted. The court found that Singapore was the appropriate forum, given that the Bond and Advance Payment Guarantees were governed by Singapore law.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case regarding service out of jurisdiction and the entitlement to call on a performance bond and advance payment guarantees. Appeal allowed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Econ Corporation International LimitedPlaintiff, AppellantCorporationAppeal AllowedWon
Ballast-Nedam International BVDefendant, RespondentCorporationAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Lai Kew ChaiJudgeYes

4. Counsels

Counsel NameOrganization
Cheah Kok LimAng and Partners
Christopher LauAng and Partners
Lam Wei YawWong and Leow LLC
Felicia ChuaWong and Leow LLC

4. Facts

  1. Plaintiffs commenced proceedings against the defendants on 28 August 2002.
  2. Plaintiffs sought a declaration to prevent defendants from calling on a Bond and Advance Payment Guarantees.
  3. The Bond and Advance Payment Guarantees were expressly made in accordance with the laws of Singapore and subject to the decision of the courts of Singapore.
  4. The Bond was issued by American Home Assurance Company to secure performance of a sub-contract.
  5. The sub-contract was for the construction of a detached breakwater for a project in India.
  6. The plaintiffs had given counter-indemnities in favour of AHA as security for the Bond.
  7. The plaintiffs alleged that the defendants have been in breach in many respects and that it would be unconscionable for them to call upon the Bond and the Advance Payment Guarantees.

5. Formal Citations

  1. Econ Corporation International Limited v Ballast-Nedam International BV, OS No 1190 of 2002, RA No 258 of 2002, [2002] SGHC 293

6. Timeline

DateEvent
Sub-contract for construction of detached breakwater awarded by defendants to plaintiffs
Bond and Advance Payment Guarantee issued
Advance Payment Guarantee issued
Plaintiffs commenced proceedings against the defendants
Plaintiffs obtained Order of Court for leave to serve Originating Summons out of jurisdiction
Assistant Registrar ordered that the Order of Court dated 30 August 2002 be set aside
Plaintiffs gave notice of arbitration
Appeal allowed

7. Legal Issues

  1. Service out of Jurisdiction
    • Outcome: The court ruled that leave to serve the Originating Summons out of jurisdiction ought to have been granted.
    • Category: Procedural
    • Sub-Issues:
      • Whether a good arguable case exists
      • Whether substantial relief sought by way of injunction
  2. Appropriate Forum
    • Outcome: The court found that Singapore was the most appropriate forum for deciding rights under the Performance Bond and Advance Payment Guarantees.
    • Category: Jurisdictional
  3. Entitlement to call on Bond and Advance Payment Guarantees
    • Outcome: The court determined that there were serious questions to be tried on the various claims and counterclaims of the parties regarding the entitlement to call on the Bond and Advance Payment Guarantees.
    • Category: Substantive

8. Remedies Sought

  1. Declaration that the defendants shall not be entitled to call or demand payment in respect of the Bond and Advance Payment Guarantees until the final outcome of the arbitration proceedings
  2. Restraint from taking any steps to demand or receive payment under the Bond and Advance Payment Guarantees

9. Cause of Actions

  • Breach of Contract
  • Injunction

10. Practice Areas

  • Commercial Litigation
  • Arbitration
  • Construction Law
  • Performance Bonds

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Bradley Lomas Electrolok Ltd & Another v Colt Ventilation East Asia Pte Ltd & OrsCourt of AppealYes[2000] 1 SLR 673SingaporeCited for the principle that a court in granting leave to serve a writ or originating process out of jurisdiction has to consider whether jurisdiction under Order 11 rule 1 of the Rules of Court has been sufficiently established on the basis of a good and arguable case.
Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami IranHouse of LordsYes[1994] 1 AC 438United KingdomCited for the principles governing leave to serve out of jurisdiction.
PT Garuda Indonesia v Bergen AirHigh CourtYes[2002] 1 SLR 393SingaporeCited regarding the power of the court to grant interim injunctions as provided by section 12(1)(g) and (6) of the International Arbitration Act.
Mercedes-Benz AG v LeiduckJudicial Committee of the Privy CouncilYes[1995] 3 All ER 803United KingdomCited regarding the grant of leave to serve out of jurisdiction under Order 11 rule 1 (b) of the Rules of Court.
B.P. Exploration v HuntCommercial CourtYes[1976] 1 Q.B. 471United KingdomCited regarding the proper law of the contract being the predominating factor in determining the appropriate forum.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 11 rr 1(b), (d), (r)

14. Applicable Statutes

Statute NameJurisdiction
Supreme Court of Judicature Act (Cap. 322) section 16Singapore
International Arbitration Act (Cap 143A)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Performance Bond
  • Advance Payment Guarantee
  • Service out of jurisdiction
  • Interim preservation order
  • Unconscionable
  • Sub-contract
  • Arbitration
  • Originating Summons

15.2 Keywords

  • Service out of jurisdiction
  • Performance bond
  • Advance payment guarantee
  • Injunction
  • Arbitration
  • Singapore High Court

17. Areas of Law

Area NameRelevance Score
Jurisdiction80
Civil Practice75
Submission to Jurisdiction70
Injunctions65
Advance Payment Guarantees60
Performance Bond60
Arbitration60
Commercial Litigation50
Contract Law40
Breach of Contract40
International Commercial Law30
Estoppel30

16. Subjects

  • Civil Procedure
  • Conflict of Laws
  • Contract Law
  • Arbitration