Ont. energy firm challenges $5.4M judgment.
Richard Foot, CanWest News Service
Published: Wednesday, November 16, 2005
A Canadian company wants an Ontario court to dismiss a multimillion dollar judgment reached against it in Singapore on the grounds Singapore's justice system is corrupt and unlawful.
The landmark case has wide implications for Canadians doing business overseas. Never before, say lawyers for both sides, has a commercial case dealt with the question of whether a foreign judgment can be enforced in Canada because the courts that issued it may be inherently unfair.
Lawyers for EnerNorth Industries Inc., a Toronto-based energy services company, will make that argument before the Ontario Court of Appeal in April, in a bid to avoid paying a $5.4-million US judgment awarded to Oakwell Engineering Ltd., a Singapore firm.
One of EnerNorth's lawyers, David Wingfield, said if the Singapore decision is upheld in Canada, a precedent will be set which would turn the Canadian courts into "little more than a glorified sheriff's department for all foreign legal systems -- no matter how odious or compromised they are by reason of government influence or monetary bribery."
Oakwell's lawyer, Ed Babin, said Canadian courts enforce judgments from other countries all the time and that refusing to do so in this case would carve out "a dramatic change" in the law.
In 1997, EnerNorth embarked on a project with Oakwell to finance, build and operate two power plants in India. In 2002, after the project ran into problems, Oakwell sued EnerNorth in the Singapore courts -- where each company had previously agreed they would settle any disputes.
The trial and appeal courts in Singapore allowed Oakwell's claim, awarding it damages against EnerNorth. Because EnerNorth's assets are in Canada, Oakwell asked a Canadian court to enforce the decision.
Last August, Ontario Superior Court Justice Gerald Day agreed with Oakwell's request, dismissing arguments by EnerNorth that the Singapore judgment is tainted by that country's allegedly corrupt and biased legal system.
"If this court were to accept the argument of general bias in this case, it would mean that no judgments from Singapore courts would be enforceable in Ontario," wrote Day in his decision,
But in documents filed with the Ontario Court of Appeal, EnerNorth's lawyers say Day failed to apply the proper legal test required of Canadian courts when enforcing foreign judgments.
In 2003 -- in a case involving a decision from a U.S. court -- the Supreme Court of Canada said Canadian courts can only recognize a foreign judgment if the foreign legal system meets Canadian constitutional standards.
The Singapore decision is the first foreign judgment, issued in a country other than Britain or the U.S., to be tested under this principle, said Wingfield. EnerNorth says Singapore's justice system fails to meet Canadian standards by almost every measure.
"Singapore is ruled by a small oligarchy who control all facets of the Singapore state including the judiciary, which is utterly politicized," the company's court documents say. "The judiciary bends over backwards to support the government's and ruling elite's interests."
The documents also say Oakwell is a subsidiary of a Singapore conglomerate whose owners have close ties with Singapore's government and ruling party and that the judges who presided over the case in Singapore also have close ties with Singapore's leaders.
Day said he could find "no cogent evidence" that there was specific bias toward Oakwell by the Singapore courts. However, EnerNorth says evidence of general bias, or systemic corruption, is enough to reject the judgment in Canada.
"EnerNorth is faced with having its assets seized under Canadian law to pay a judgment that was granted by a corrupt legal system before biased judges in a jurisdiction that operates outside the rule of law," the company's documents say
© The Edmonton Journal 2005