Kiyue v Aquagen: Derivative Action & Arbitration - Interpretation of 'Action' under Companies Act

Kiyue Company Limited, a minority shareholder in Aquagen International Pte Ltd (AIPL), applied to the High Court of Singapore under s 216A of the Companies Act for leave to intervene in an arbitration proceeding between PG Seraya Investment Pte Ltd and AIPL, seeking to defend and counterclaim on behalf of AIPL. The High Court, presided over by Justice Choo Han Teck, dismissed the application, holding that the term 'action' in s 216A(2) of the Companies Act does not include arbitration proceedings. The court reasoned that the legislature had demonstrated a distinction between 'action' and 'arbitration proceeding' within the Companies Act itself.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Kiyue sought to intervene in arbitration on behalf of Aquagen. The court held 'action' in s 216A(2) of the Companies Act does not include arbitration.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Kiyue Company LimitedApplicantCorporationApplication dismissedLost
Aquagen International Pte LtdRespondentCorporationNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Choo Han TeckJudgeYes

4. Counsels

Counsel NameOrganization
Kenneth Tan SCKenneth Tan Partnership
Wang Wei ChiKenneth Tan Partnership
Gregory VijayendranWong Partnership
Melvin SeeWong Partnership

4. Facts

  1. PGSI commenced arbitration against AIPL and Kiyue.
  2. Kiyue, a minority shareholder in AIPL, sought to intervene in the arbitration on behalf of AIPL.
  3. AIPL's board of directors resolved not to contest the claim in the arbitration.
  4. Kiyue applied to the court under s 216A of the Companies Act for leave to intervene.
  5. PGSI held 42% of the shares in AIPL and nominated three of the seven members of the Board of Directors.
  6. STE had 25% of the shareholding and nominated two directors to AIPL.
  7. Kiyue held 7% of the shareholding and together with the other smaller shareholders, nominated two directors to AIPL.

5. Formal Citations

  1. Kiyue Company Limited v Aquagen International Pte Ltd, OS 561/2003, [2003] SGHC 156

6. Timeline

DateEvent
Shareholders Agreement dated
Legal advice rendered by Mr. Foo Maw Shen of Ang & Partners
Legal advice rendered by Mr. Foo Maw Shen of Ang & Partners
Decision Date

7. Legal Issues

  1. Interpretation of 'Action' in s 216A(2) of the Companies Act
    • Outcome: The court held that the word 'action' in s 216A(2) of the Companies Act does not include arbitration proceedings.
    • Category: Statutory
  2. Derivative Action
    • Outcome: The court determined that the statutory conditions for a derivative action were not met in the context of arbitration proceedings.
    • Category: Substantive
    • Related Cases:
      • Foss v Harbottle, 67 ER 189

8. Remedies Sought

  1. Leave to intervene in arbitration
  2. Authority to control the conduct of the arbitration
  3. Authority to appoint counsel for AIPL

9. Cause of Actions

  • No cause of actions

10. Practice Areas

  • Commercial Litigation
  • Arbitration

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Re Provinces & Central Properties Ltd and City of HalifaxUnknownYesRe Provinces & Central Properties Ltd and City of Halifax, 5 DLR (3rd) 28CanadaCited to support the argument that an arbitrator is not a court and proceedings before an arbitrator do not constitute an action.
Dorosh v Bentwood Chair & Table Mfg CoUnknownYesDorosh v Bentwood Chair & Table Mfg Co [1939] 3 DLR 344UnknownCited for the definition of 'action' as a civil proceeding commenced by writ or rules of court.
Re Cairns and McNairnUnknownYesRe Cairns and McNairn [1927] 2 DLR 444UnknownCited for the definition of 'action' as a civil proceeding commenced by writ or rules of court.
Foss v HarbottleUnknownYesFoss v Harbottle, 67 ER 189UnknownCited as the common law rule that s 216A of the Companies Act was enacted to alleviate.
Re CCourt Of AppealYesRe C [1993] 3 All ER 313EnglandCited regarding the application of the 'purposive approach' to statutory interpretation.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 1994 Rev Ed)Singapore
Arbitration Act, Ch 10Singapore
International Arbitration ActSingapore
Limitation Act, Ch 163Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration
  • Action
  • Derivative action
  • Companies Act
  • Minority shareholder
  • Intervention
  • Purposive interpretation
  • Foss v Harbottle

15.2 Keywords

  • Arbitration
  • Companies Act
  • Derivative Action
  • Singapore
  • Kiyue
  • Aquagen

17. Areas of Law

Area NameRelevance Score
Company Law85
Arbitration75
Shareholders Agreement70
Minority Oppression60
Commercial Disputes50
Contract Law40

16. Subjects

  • Company Law
  • Arbitration
  • Civil Procedure