BNP Paribas v Jurong Shipyard: Injunction Against Winding-Up Petition for Contested Debt
The Singapore Court of Appeal heard an appeal by BNP Paribas against the decision of the High Court to grant Jurong Shipyard Pte Ltd (JSPL) an injunction to restrain BNP Paribas from commencing winding-up proceedings against JSPL. The dispute arose from foreign exchange contracts, and JSPL offered to place funds in escrow to cover the debt. The Court of Appeal dismissed the appeal, holding that it was inappropriate for BNP Paribas to use the threat of winding up to force JSPL to pay a contested debt when JSPL was a solvent company and had offered security. The court found that filing a winding-up petition in these circumstances would be an abuse of process.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal dismissed BNP Paribas' appeal, affirming an injunction against its winding-up petition against Jurong Shipyard for a contested debt.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Jurong Shipyard Pte Ltd | Respondent | Corporation | Injunction Granted | Won | |
| BNP Paribas | Appellant | Corporation | Appeal Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | Yes |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | No |
| V K Rajah | Justice of the Court of Appeal | No |
4. Counsels
4. Facts
- Jurong Shipyard Pte Ltd (JSPL) entered into FX contracts with BNP Paribas (BNP).
- Instructions for the FX contracts were given by Mr. Wee Sing Guan, a director of JSPL.
- JSPL's board repudiated the contracts, alleging BNP was aware Wee lacked authority.
- JSPL alleged collusion between Wee and BNP to cover up losses.
- JSPL and BNP agreed to close out the FX contracts, crystallizing losses at US$50m.
- BNP demanded US$50m from JSPL, claiming an immediate payment obligation.
- JSPL offered to place US$50m in escrow, conditional on BNP commencing legal proceedings.
- BNP rejected the escrow offer and served a statutory demand.
- JSPL applied for an injunction to restrain BNP from commencing winding-up proceedings.
5. Formal Citations
- BNP Paribas v Jurong Shipyard Pte Ltd, CA 91/2008, [2009] SGCA 11
- Jurong Shipyard Pte Ltd v BNP Paribas, , [2008] 4 SLR 33
6. Timeline
| Date | Event |
|---|---|
| JSPL offered to place funds in escrow to cover the US$50m debt. | |
| BNP Paribas served a statutory demand to JSPL for payment. | |
| JSPL applied to the High Court for an injunction to restrain BNP from commencing winding-up proceedings. | |
| Court of Appeal dismissed the appeal with costs. |
7. Legal Issues
- Whether a winding-up petition can be filed when the alleged debtor offers to fully secure the claim
- Outcome: The court held that in a case where a solvent company does not admit the debt and is prepared to offer security to defend the claim, the court should not allow a claimant to file a winding up petition against the solvent company.
- Category: Substantive
- Related Cases:
- [2008] 4 SLR 33
- [1968] 1 WLR 1091
- Whether the statutory demand ought to spell out that the debtor could pay the sum demanded or secure or compound for it
- Outcome: The court noted that the statutory demand was misleading in stating that JSPL would be deemed unable to pay its debts if it did not pay the sum demanded within 21 days. However, since this point was not argued, the court left it to be raised at another time in another case.
- Category: Procedural
- Related Cases:
- (1992) 108 ALR 402
8. Remedies Sought
- Injunction to restrain winding-up proceedings
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Insolvency Law
11. Industries
- Banking
- Shipping
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Jurong Shipyard Pte Ltd v BNP Paribas | High Court | Yes | [2008] 4 SLR 33 | Singapore | Affirmed the High Court's decision to grant an injunction restraining BNP from commencing winding-up proceedings. |
| Mann v Goldstein | Not Available | Yes | [1968] 1 WLR 1091 | England and Wales | Cited for the principle that the winding-up jurisdiction is not for the purpose of deciding a disputed debt. |
| Re Yet Kai Construction Co Ltd | Deputy Judge Woolley | Yes | [2000] HKEC 186 | Hong Kong | Cited for the principle that using winding-up proceedings as a debt-collecting operation is discouraged. |
| Consolidated Press (Finance) Ltd v Australian Horticultural Finance Pty Ltd | Federal Court of Australia | Yes | (1992) 108 ALR 402 | Australia | Cited regarding the requirements of a statutory demand, specifically whether it must inform the debtor of the option to secure or compound the debt. |
| Metalform Asia Pte Ltd v Holland Leedon Pte Ltd | Court of Appeal | Yes | [2007] 2 SLR 268 | Singapore | Cited for public policy considerations regarding the use of winding-up petitions for disputed debts. |
| Bowes v The Hope Life Insurance and Guarantee Company | House of Lords | Yes | (1865) 11 HLC 389; 11 ER 1383 | England and Wales | Cited for the principle that a creditor is prima facie entitled to a winding-up order when a debt is established and not satisfied. |
| In re Southard & Co Ltd | Not Available | Yes | [1979] 1 WLR 1198 | United Kingdom | Cited for the principle that the court has discretion in deciding whether to wind up a company. |
| In re P. & J. Macrae Ltd | Not Available | Yes | [1961] 1 W.L.R. 229 | United Kingdom | Cited regarding the court's discretion in winding-up matters. |
| Pilecon Engineering Bhd v Remaja Jaya Sdn Bhd | High Court of Malaysia | Yes | [1997] 1 MLJ 808 | Malaysia | Cited for the principle that the court should consider the public interest when deciding whether to wind up a company. |
13. Applicable Rules
| Rule Name |
|---|
| Companies (Winding Up) Rules (Cap 50, R 1, 2006 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 253(1)(b) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 254(1)(e) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 254(2)(a) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 257(1) of the Act | Singapore |
| Section 392 of the Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Foreign Exchange Contracts
- Winding-Up Petition
- Statutory Demand
- Escrow Account
- Close-Out Agreement
- Triable Issues
- Security for Debt
- Injunction
- Abuse of Process
- Solvent Company
15.2 Keywords
- Winding up
- Injunction
- Companies Act
- Statutory demand
- Contested debt
- Abuse of process
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Winding Up | 95 |
| Company Law | 70 |
| Contract Law | 60 |
| Foreign Exchange Contracts | 50 |
| Statutory Demand | 40 |
| Banking and Finance | 30 |
| Injunctions | 30 |
16. Subjects
- Companies
- Winding Up
- Civil Procedure
- Insolvency