Case Details
- Citation: [2015] SGHC 327
- Title: Fan Heli v Zhang Shujing and others
- Court: High Court of the Republic of Singapore
- Date of Decision: 23 December 2015
- Case Number: Suit No 119 of 2015 (Summons Nos 3443 and 5042 of 2015)
- Tribunal/Coram: Aedit Abdullah JC
- Plaintiff/Applicant: Fan Heli
- Defendants/Respondents: Zhang Shujing and others
- Parties (as described): Fan Heli — Zhang Shujing — Zou Ping — Sino-Add (Singapore) Pte Ltd — Sino-Trust Shipping Pte Ltd
- Procedural Posture: Defendants sought a stay of Singapore proceedings; leave to appeal was granted
- Summons No 3443 of 2015: Application for stay of proceedings in Singapore commenced by the Plaintiff
- Summons No 5042 of 2015: Application for leave to appeal against the refusal of the stay
- Counsel for Plaintiff: Chan Hock Keng, Alma Yong and Ho Wei Jie (WongPartnership LLP)
- Counsel for First and Second Defendants: Philip Ling and Kam Kai Qi (Wong Tan & Molly Lim)
- Legal Area: Civil Procedure – Stay of proceedings; Conflict of Laws – Natural forum
- Statutes Referenced: Companies Act (Cap 50, 2006 Rev Ed)
- Cases Cited (as provided): [2015] SGHC 327; Spiliada Maritime Corporation v Cansulex [1987] AC 460; Transtech Electronics Pte Ltd v Choe Jerry and Ors [1998] 1 SLR(R) 1014; Rickshaw Investments Ltd and anor v Nicolai Baron von Uexkull [2007] 1 SLR (R) 377; Siemens AG v Holdrich Investment Ltd [2010] 3 SLR 1007; VTB Capital Plc v Nitrite International Corp [2012] EWCA Civ 808; Brinkerhoff Maritime Drilling Corp and anor v PT Airfast Services Indonesia and anor appeal [1992] 2 SLR (R) 345
- Judgment Length: 9 pages, 5,072 words
Summary
In Fan Heli v Zhang Shujing and others ([2015] SGHC 327), the High Court considered whether Singapore should stay a minority oppression action brought under s 216 of the Companies Act. The first and second defendants sought a stay on the basis that the People’s Republic of China (“PRC”) was the more appropriate forum, or alternatively that the Singapore proceedings be stayed pending the disposal of related PRC proceedings.
The court, applying the two-stage framework in Spiliada Maritime Corporation v Cansulex, declined to order a stay. The judge emphasised that the claim was a statutory minority oppression dispute concerning the affairs of a Singapore-incorporated company. That “connecting factor” was treated as significant in determining both the forum analysis and, in any event, the injustice that would result if the plaintiff were deprived of the specific statutory remedies available in Singapore.
What Were the Facts of This Case?
The plaintiff, Fan Heli, commenced an action in February 2015 for minority oppression under s 216 of the Companies Act against the defendants. The relevant corporate entities included Sino-Add (Singapore) Pte Ltd (the third defendant) and Sino-Trust Shipping Pte Ltd (the fourth defendant). The shareholding structure was described as a 25:65:10 split among the plaintiff, the first defendant, and the second defendant, respectively. The parties also had interests in a wider set of companies across multiple jurisdictions, including Singapore, Hong Kong, the PRC, and the British Virgin Islands, which some parties referred to as the “Sino-Trust Group”.
Although the companies were sometimes treated as a group, the court noted that there were no cross-shareholdings among them; thus, the group was not a corporate group in the strict sense. What was common across the companies was the shared ownership by the same three individuals. The dispute arose after the relationship between the plaintiff and the first and second defendants deteriorated towards the second quarter of 2014. The plaintiff then launched the minority oppression action seeking, in substance, a buy-out or, alternatively, the winding up of the Singapore-incorporated companies.
Before the stay application was heard, the plaintiff also applied for leave to serve the originating process out of jurisdiction in March 2015. In parallel, there were PRC proceedings initiated by Sino-Trust Corporation against the plaintiff. Those PRC proceedings alleged misappropriation of corporate funds and unlawful possession of original financial documents belonging to companies within the Sino-Trust Group. A Dalian first instance court had already given judgment in the latter proceedings, finding, among other things, that the actual place of business of the group’s companies was at Sino-Trust Corporation’s office in Dalian, that Sino-Trust was responsible for management and operation of the other companies, and that the financial documents held by the plaintiff were assets of the companies.
At the time of the Singapore hearing, the misappropriation proceedings were not complete. The defendants therefore argued that the PRC proceedings had a material effect on the oppression claim and that Singapore should defer to the PRC as the natural forum. The plaintiff, by contrast, maintained that the Singapore action was anchored in Singapore statutory rights and concerned the internal affairs of a Singapore company, which should be adjudicated in Singapore.
What Were the Key Legal Issues?
The central issue was whether the High Court should stay the Singapore proceedings on the ground that the PRC was the more appropriate forum. This required the court to apply the conflict-of-laws principles governing stays for forum non conveniens, as articulated in Spiliada Maritime Corporation v Cansulex. The question was not merely where the facts occurred, but where justice would be best served.
A related issue was how the court should treat the statutory nature of the minority oppression claim under s 216 of the Companies Act. The plaintiff argued that minority oppression is a Singapore-specific statutory remedy and that the Singapore court is the proper forum because the claim concerns the affairs of a Singapore-incorporated company. The defendants argued that the connecting factors pointing to the PRC—such as location of witnesses, language, and related proceedings—should outweigh the forum considerations.
Finally, the court had to consider the second stage of the Spiliada analysis: even if the PRC were the more appropriate forum at the first stage, would it be unjust to require the plaintiff to litigate there because he would be deprived of the specific remedies or juridical advantages available in Singapore?
How Did the Court Analyse the Issues?
The judge began by restating the two-stage approach in Spiliada. At the first stage, the defendants bear the burden of showing that the PRC is the more appropriate forum. If that threshold is met, the second stage requires the plaintiff to show that it would be unjust to send the plaintiff to that forum. The court also addressed a concern that some authorities conflate the two stages into a single inquiry about whether Singapore is the appropriate forum. The judge held that he was bound by the two-stage approach laid down in local authority, including Brinkerhoff Maritime Drilling Corp and anor v PT Airfast Services Indonesia and anor appeal.
In applying the first stage, the court focused on the nature of the claim. The judge distinguished between (i) the existence of a juridical or legitimate advantage and (ii) the legal character of the dispute itself. The analysis required an examination of the legal basis of the claim, the evidence likely required, the applicable law, and the parties with standing who would be affected by the determination. These considerations were treated as distinct from the later question of whether the plaintiff would be unjustly deprived of a juridical advantage.
The court characterised the plaintiff’s claim as one under s 216 of the Companies Act. That provision allows a shareholder to apply for orders where the affairs of the company or the powers of the directors are exercised in an oppressive manner, or where acts of the company unfairly discriminate against the shareholder. The court noted that the remedies under s 216 can include prohibitory orders, cancellation of transactions, authorisation of civil proceedings in the name of the company, compulsory purchase of shares, and winding up of the company. While these remedies were relevant more directly to the second stage, the court also treated the statutory character of the claim as central to the forum analysis.
Crucially, the judge held that the claim was primarily a shareholder’s dispute concerning his interest in a Singapore company, involving allegations about the company’s affairs and board decisions. The records relevant to such a dispute—including those that may need to be statutorily filed—would be in Singapore or at least accessible in Singapore. The law governing the company’s affairs and the corporate decision-making processes were also Singapore-centric. Against that backdrop, the factors pointing to the PRC were either neutral or of relatively little weight. The court therefore concluded that Singapore was the more appropriate forum at the first stage.
Even if the judge were wrong on the first stage, the second stage analysis reinforced the decision. The court emphasised that the plaintiff would not be able to obtain the same or equivalent remedies in the PRC. The judge treated this as a matter of injustice: requiring the plaintiff to litigate in the PRC would deprive him of the statutory minority oppression relief and the practical ability to obtain a buy-out or winding up of the relevant Singapore-incorporated companies. This was not merely a question of procedural inconvenience; it went to the substance of the rights asserted.
The judge also addressed the defendants’ argument that expert evidence suggested similar remedies could be obtained in the PRC. The plaintiff’s expert evidence, however, indicated that the PRC court would not have the power to order the relevant liabilities or to wind up the third and fourth defendants in the manner sought. The court thus treated the availability of remedies as a decisive factor in the second stage.
In addition, the judge noted that the defendants did not seek to set aside service out of jurisdiction on the basis that Singapore was not the appropriate forum. This mattered because a challenge to service out under Order 11 of the Rules of Court would have involved a different burden of proof. Nonetheless, the judge stated that nothing turned on this procedural point because he was satisfied that Singapore was, in any event, the appropriate forum.
What Was the Outcome?
The High Court declined to grant the stay sought by the first and second defendants. The practical effect of this decision was that the plaintiff’s minority oppression action in Singapore would proceed rather than being deferred to the PRC.
Although the stay was refused, the judge granted the defendants leave to appeal in Summons No 5042 of 2015. This meant that the forum question could be revisited by the appellate court, but the immediate status quo remained: Singapore proceedings would continue.
Why Does This Case Matter?
Fan Heli v Zhang Shujing is significant for practitioners because it illustrates how Singapore courts treat forum non conveniens arguments when the claim is rooted in Singapore’s statutory corporate governance framework. While the Spiliada test is fact-sensitive and often weighs international connecting factors such as witness location, language, and documentary evidence, the decision shows that the statutory nature of the claim and the internal affairs of a Singapore-incorporated company can be decisive.
The case also provides a clear example of the importance of the second stage of the Spiliada analysis. Even where there are substantial factual links to a foreign jurisdiction, Singapore may refuse a stay if the plaintiff would be deprived of the specific remedies or juridical advantages available under Singapore law. For minority shareholders, this is particularly relevant because s 216 remedies can be tailored and can include winding up or compulsory purchase—relief that may not be available in the same form abroad.
From a litigation strategy perspective, the decision underscores that defendants seeking a stay must do more than point to foreign proceedings or factual overlap. They must show that the foreign forum is clearly more appropriate at the first stage, and they must also overcome the injustice analysis at the second stage. Conversely, plaintiffs should frame their claims in terms of the legal basis, the evidence and records likely to be required, and the substantive remedies that would be lost if the matter were transferred.
Legislation Referenced
- Companies Act (Cap 50, 2006 Rev Ed), s 216
Cases Cited
- Spiliada Maritime Corporation v Cansulex [1987] AC 460
- Transtech Electronics Pte Ltd v Choe Jerry and Ors [1998] 1 SLR(R) 1014
- Rickshaw Investments Ltd and anor v Nicolai Baron von Uexkull [2007] 1 SLR (R) 377
- Siemens AG v Holdrich Investment Ltd [2010] 3 SLR 1007
- VTB Capital Plc v Nitrite International Corp [2012] EWCA Civ 808
- Brinkerhoff Maritime Drilling Corp and anor v PT Airfast Services Indonesia and anor appeal [1992] 2 SLR (R) 345
- Fan Heli v Zhang Shujing and others [2015] SGHC 327
Source Documents
This article analyses [2015] SGHC 327 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.