GONZALO GIL WHITE v ORO NEGRO DRILLING PTE. LTD. & 5 Ors

1 The six respondents are companies incorporated in Singapore (hereinafter and collectively, the “respondents”). The respondents were the plaintiffs in the underlying suit in OS 126, where they sought declaratory and injunctive relief against, among others, the appellant.

2 The appellant, Mr Gonzalo Gil White was a director of each of the respondents until September 2017, and also a former director of Integradora de Servicios Petroleros Oro Negro, SAPI de CV, of which the first respondent was its wholly owned subsidiary until September 2017.

3 A company that features in the background but who is not a party to the present dispute is a Mexico-incorporated company, Perforadora Oro Negro S de RL de CV (“Perforadora”). Perforadora is 99.25% owned by Integradora.

4 CA/CA 10/2023 was the appellant’s appeal against the decision of the General Division of the High Court in OS 126 which granted final declaratory and injunctive relief which the respondents sought against the appellant. Among other things, the appellant was restrained from continuing or maintaining any insolvency proceeding in Mexico purportedly on behalf of the respondents.

5 On 31 August 2017, without the Independent Director’s knowledge and approval, Mr Alonso Del Val Echeverria (“Mr Alonso”) and the appellant granted a power of attorney on behalf of each respondent to lawyers in a Mexican firm called Guerra González y Asociados (the “Guerra Lawyers”). These powers of attorney empowered the Guerra Lawyers, among other things, to file all kinds of proceedings on each respondent’s behalf, which extended to the filing of insolvency proceedings in Mexico (the “Guerra POAs”).

6 On 11 September 2017, the Guerra Lawyers filed an insolvency petition in Mexico on behalf of Perforadora.

7 On 29 September 2017, the Guerra Lawyers filed an insolvency petition on behalf of Integradora. The same day, the Guerra Lawyers also filed six insolvency petitions, one in the name of each respondent (the “Oro Petitions”). This led to the commencement of insolvency proceedings in respect of the six respondents (the “Oro Concursos”).

8 The respondents’ articles of association contain a provision in the form of “Art 115A” prohibiting each of the respondent and its directors from initiating the Oro Concursos without the affirmative vote of the respondents’ independent director duly appointed by a bond trustee. However, no such vote was obtained.

9 On 6 October 2017, Oro Negro Drilling Pte Ltd, as the respondents’ shareholder, and the respondents’ directors, Mr Roger Hancock, Mr Roger Bartlett and Mr Noel Cochrane Jr, discovered the Oro Petitions. Hence, on 9 October 2017, the directors of each respondent passed a directors’ resolution resolving, among other things, to revoke all authority previously given by that respondent to any person to represent that respondent, whether by way of a power of attorney and to appoint and grant powers of attorney to nine named lawyers from a Mexican law firm called Cervantes Sainz Abogados S.C. (the “Sainz Lawyers”) to represent each of the respondents in all Mexico proceedings in respect of any disputes with Integradora and Perforadora. From this point on, both the Guerra Lawyers and the Sainz Lawyers claimed to be the lawful legal representatives of the respondents in the Oro Concursos.

10 On 26 January 2018, four months after the Guerra Lawyers filed the Oro Petitions, the respondents filed OS 126 in the Singapore High Court seeking final relief against the three defendants in the suit, namely, Integradora, Mr Alonso and the appellant. In particular, an injunction was sought to restrain Integradora, Mr Alonso and the appellant from commencing, continuing or maintaining the Oro Petitions.

11 In the interim, the respondents filed HC/SUM 482/2018, where they sought and obtained ex parte: (a) interim injunctions against Integradora, Mr Alonso and the appellant which mirrored the injunctions prayed for in OS 126 (“Interim Injunctions”); and (b) the court’s leave to serve OS 126 out of Singapore (“Overseas Service Order”). In response, Integradora, Mr Alonso and the appellant filed HC/SUM 2473/2018 to set aside the Interim Injunctions and the Overseas Service Order. This was heard by a judge of the High Court who set aside the Overseas Service Order as well as the Interim Injunctions.

12 On 12 September 2019, the Court of Appeal in Oro Negro Drilling Pte Ltd and others v Integradora de Servicios Petroleros Oro Negro SAPI de CV and others and another appeal (Jesus Angel Guerra Mendez, non-party) [2020] 1 SLR 226 (“Oro Negro (CA)”) allowed the appeals brought by the respondents against this decision, thereby restoring the Interim Injunctions. As there was no time limit imposed on the Interim Injunctions, they remained in force from September 2019 up to March 2023, the time when final judgment was entered in favour of the respondents in OS 126 by the court below. As such, at all material times, the Interim Injunctions remained binding on the defendants including the appellant.

13 The respondents thereafter sought final judgment in OS 126 against Integradora and the appellant, seeking, among other things, a final injunction to restrain Integradora and the appellant from causing the respondents to continue or maintain any insolvency proceeding in Mexico or elsewhere purportedly on behalf of the respondents.

14 Litigation before the Mexican courts proceeded in parallel with the proceedings in Singapore.

15 As a result of various Mexican court’s decisions, the Oro Concursos continued on the footing that: (a) the respondents’ directors did not have to comply with Art 115A to carry into effect the Shareholders’ Resolutions before filing the Oro Petitions; and (b) the Guerra Lawyers (and not the Sainz Lawyers) have the authority to represent the respondents in the Oro Concursos and in Integradora’s and Perforadora’s insolvency proceedings.

16 The court possesses the power to grant the relief of a permanent injunction where an injunction had previously been granted on an interim basis. This is rooted in its power to provide equitable relief to prevent the continuance of harm to a plaintiff’s legal rights. This power finds statutory footing in s 18(2) read with para 14 of the First Schedule of the Supreme Court of Judicature Act 1969 (2020 Rev Ed) which provides that the General Division of the High Court has the power to grant all reliefs and remedies at law and in equity: at [63].

17 In assessing whether the merits of the case warrant the grant of a permanent injunction, the grant of final relief requires a legal basis which can lie in a cause of action recognised under Singapore law or statute: at [64].

18 In a case involving a situation where a defendant is about to breach or has already breached, a negative covenant in a contract, an interim (or final) prohibitory injunction is normally granted as a matter of course to restrain a prospective breach or a further breach following RGA Holdings International Inc v Loh Choon Phing Robin and another [2017] 2 SLR 997. There was no question that Article 115A was a negative covenant requiring the respondents’ directors to abstain from carrying into effect any petition to place the respondents in insolvency proceedings without securing the approval of the independent director. There was legal basis to grant the final relief sought against the appellant in the form of an implied contract between each of the respondents and the appellant that incorporated as a term the substance of Art 115A: at [65] to [66].

19 One of the primary pillars of the appellant’s case rested on his argument that the relief sought was, in essence, an anti-suit or anti-enforcement injunction and that such relief should not be granted as it would result in a breach of judicial comity. However, the reliefs sought in OS 126 could not be classified as either an anti-suit or anti-enforcement injunction. The effect of the injunctions in OS 126 did not per se restrain the respondents from maintaining the Oro Concursos. Instead, the injunctions merely and specifically restrained a former shareholder of the first respondent (ie, Integradora) and a former director of the respondents (ie, the appellant) from purporting to act on behalf of the respondent in maintaining the Oro Concursos in breach of the negative covenant that is Art 115A as a matter of Singapore law. They did not enjoin either Integradora or the appellant from commencing or continuing with the proceedings in a foreign court in their name: at [67] to [68].

20 Comity has been described as a concept of “very elastic content” and which serves as the basis for private international law. Each country possesses the sovereign right to determine the manner and process by which disputes should be resolved: at [70] to [71].

21 Comity has been expressed to lie somewhere between an absolute obligation, and mere courtesy and is closely connected to the principle of sovereignty that calls for respect to be accorded to the territorial sovereignty of other states: at [73].

22 The manner in which sovereignty features in comity can be viewed from two perspectives. On one hand, it is the sovereignty of foreign States which is the basis on which their actions are to be respected. On the other hand, comity also serves to protect the sovereignty of states from a domestic perspective. For courts tasked with determining whether, and to what extent, it would be appropriate to recognize the laws or power of a foreign state within their jurisdiction, comity calls for recognition where there is a judicial need to do so unless it would offend domestic sovereignty. Therefore, there is no question that comity must be balanced against the court’s role in protecting its domestic legal regime: at [77] to [78].

23 A court would not recognise or enforce a foreign sovereign act where to do so would undermine the operation of the laws of the forum state. In this connection, it would be against public policy to recognise or enforce a foreign judgment on the application of a party, who having notice of an anti-suit injunction from the court of the forum, proceeds to carry on with the foreign proceedings and subsequently procures the judgment from the foreign court. This reflects the broader principle that this would be against the fundamental public policy of the forum stemming from the abuse of process which would result from the contempt of an order of the court of the forum: at [79].

24 The above principles were at play in the present case where the appellant sought to invoke considerations of comity by relying on a foreign judgment which post-dated, and were in breach of, the Court of Appeal’s earlier decision in Oro Negro (CA) that restored the Interim Injunctions. In these circumstances, judicial comity could not be applied at the expense of the court’s role to protect its jurisdiction and orders: at [80].

25 The appellant’s remaining arguments against final relief on the basis of transnational issue estoppel, abuse of process and res judicata are predicated on the existence of an identity of issues between OS 126 and the Oro Concursos: at [82].

26 The requirement of identity of issues requires that “identical” issues are presented in both the earlier proceeding and the later proceeding sought to be impugned. The issues had to be identical in the sense that the prior decision must have traversed the same ground as the subsequent proceeding, and the facts and circumstances giving rise to the earlier decision must not have changed or were incapable of change: at [83].

27 According to the case of Kabab-Ji SAL (Lebanon) v Kout Food Group (Kuwait) [2021] UKSC 48 (“Kabab-Ji”), the question of identity of issues can be analysed at two levels. First, whether the issues as framed before the two competing courts have been framed in the same manner. If the answer is yes, it remains necessary to examine the second and next level: whether the legal issues, albeit the same or substantially similar, arose from different laws of the competing jurisdictions. If yes, it would not give rise to issue estoppel as in Kabab-ji. The differences in the two laws must relate to substance and not just form: at [87].

28 The present case disclosed no identity of issues on either of the two levels of analysis as suggested in Kabab-Ji. At the first level, the issues as framed before the two competing courts were clearly different. The issues in OS 126 concerned: (a) whether the appellant breached his implied contract with the respondents which incorporates as a term the substance of Art 115A; (b) whether Integradora induced the appellant to breach that contract; and (c) whether the corporate acts which the respondents undertook in light of the event of default were valid. On the other hand, the issues before the Mexican courts in the Oro Concursos concerned whether the Mexican courts were entitled under Art 87 of the LCM and Mexican public policy to, among other things, disapply Art 115A in deciding whether to admit the Oro Concursos: at [92].

29 On the second level, the dissimilarity of the issues was further reinforced by the differences in the applicable laws to the questions stated above. Taking the appellant’s case at its highest, even if the issues as framed at the first level were the same, they would be governed by different laws such that there would in any case, be no identity of issues for the operation of the doctrines of abuse of process or transnational issue estoppel: at [93].

30 The Court rejected the appellant’s argument that injunctive relief should be withheld merely because there was a distinct possibility that another court might not give effect to it. The relief in OS 126 was granted to restrain breaches of Singapore law, a role which is squarely within the remit and constitutional duty of the Singapore courts. Whether a foreign court may choose to give or not to give effect to Singapore’s orders was strictly irrelevant and should not operate to bar the granting of the relief: at [111].