Case Details
- Citation: [2019] SGHC 231
- Case Number: Suit No 4
- Parties: Merck KGaA and another v Merck Sharp & Dohme Corp and others
- Judges: Lee Seiu Kin J
- Counsel for Plaintiffs: Melanie Ho and Jenny Chang (Wong Partnership LLP)
- Counsel for Defendants: Tan Lijun and Mok Ho Fai (Bird & Bird ATMD LLP)
- Statutes Cited: None
- Court: High Court of Singapore
- Decision Date: Not specified
- Coram: Lee Seiu Kin J
- Disposition: The court ruled that the Hamburg decisions were irrelevant to the interpretation of the 1970 Agreement and dismissed the defendants' reliance upon them.
- Subject Matter: Contractual interpretation and admissibility of foreign court decisions.
Summary
This dispute concerns the interpretation of clause 7 of the 1970 Agreement between Merck KGaA and Merck Sharp & Dohme Corp (MSD). The defendants sought to introduce evidence of two German court decisions, Case 183 and Case 184 from the Hamburg Regional Court, arguing that these rulings were material to the interpretation of the contractual obligations under the 1970 Agreement. While the court initially granted leave for the evidence to be adduced, it ultimately determined that the foreign judgments were fundamentally disconnected from the core issues of the present litigation.
Justice Lee Seiu Kin held that the Hamburg decisions were wholly irrelevant to the proceedings. The court observed that Case 183 and Case 184 dealt exclusively with claims under the German Trade Mark Act and the German Unfair Competition Act, rather than the breach of contract or the specific interpretation of clause 7 of the 1970 Agreement. Furthermore, the court noted that one of the parties involved in the German litigation was not even a party to the Singapore proceedings. Consequently, the court rejected the defendants' reliance on these foreign decisions, reinforcing the principle that foreign judicial findings must be strictly relevant to the specific contractual or legal questions at hand to be admissible or persuasive in local proceedings.
Timeline of Events
- 1668: The Merck business is established as a family business in Germany under the name E.Merck.
- 1889: Merck establishes its business in the United States, incorporating the company Merck & Co. Inc., which later becomes the predecessor to MSD.
- 1970: E.Merck and MSD enter into a co-existence agreement (the 1970 Agreement) to govern the use of the "Merck" trademark.
- 1975: The parties execute a letter (the 1975 Letter) further clarifying their co-existence arrangements.
- 26 September 2018: The close of pleadings occurs in the Singapore High Court proceedings.
- 24 January 2019: The first hearing takes place where the plaintiffs make an oral application under O 14 r 12 of the Rules of Court to determine the issue of estoppel.
- 3 May 2019: During a further hearing, the defendants are granted leave to adduce evidence regarding two Hamburg court decisions.
- 4 July 2019: The final hearing for the matter is conducted before the High Court.
- 30 September 2019: The judgment is delivered by Lee Seiu Kin J regarding the summary judgment and preliminary issues.
What Were the Facts of This Case?
The dispute arises from the long-standing relationship between two major pharmaceutical entities: Merck KGaA (the successor to the original German family business, E.Merck) and Merck Sharp & Dohme Corp (MSD), which originated from the American branch established in 1889. Over the decades, these two entities evolved into separate and independent global pharmaceutical companies, necessitating formal agreements to manage their overlapping use of the "Merck" brand name in various international jurisdictions.
The core of the legal conflict centers on the 1970 Agreement and the 1975 Letter, which were designed to regulate the use of the "Merck" trademark and related marks like the "Merck Cross." Specifically, the plaintiffs allege that MSD breached clauses 4 through 9 of the 1970 Agreement. The plaintiffs contend that clause 7 of the agreement explicitly prohibits MSD from using the word "Merck" per se in countries outside of North America, requiring the cancellation of existing registrations and the withdrawal of applications.
The litigation in Singapore is part of a broader global legal battle between the two companies, with related proceedings having taken place in Germany, France, and England. The plaintiffs sought to leverage previous English court decisions—specifically the 2014 UK Preliminary Decision, the 2016 UK Decision, and the 2017 UKCA decision—to establish issue estoppels regarding the governing law of the 1970 Agreement and the interpretation of its restrictive clauses.
The defendants challenged the plaintiffs' reliance on these foreign judgments, leading to a complex procedural debate over whether the English findings on German law and contract interpretation could be bindingly imported into the Singaporean proceedings. The court was tasked with determining whether these prior findings met the strict criteria for issue estoppel, thereby precluding the defendants from re-litigating the interpretation of the 1970 Agreement.
What Were the Key Legal Issues?
The court was tasked with determining whether prior English judicial decisions regarding the 1970 Agreement and 1975 Letter created binding issue estoppels in the Singapore proceedings. The primary issues were:
- Issue Estoppel on Governing Law: Whether the English court's determination that the 1970 Agreement and 1975 Letter are governed by German law satisfies the requirements for issue estoppel under Singapore law.
- Issue Estoppel on Contractual Interpretation: Whether the interpretation of clause 7 of the 1970 Agreement, as decided by the UK Court of Appeal, constitutes a binding issue estoppel regarding the scope of prohibited use of the name 'Merck'.
- Admissibility and Relevance of Foreign Evidence: Whether the Hamburg decisions (Case 183 and Case 184) are relevant to the interpretation of the 1970 Agreement, thereby precluding the application of issue estoppel.
- Procedural Propriety of Summary Judgment: Whether the plaintiffs are entitled to summary judgment under O 14 r 1 of the Rules of Court (ROC) given the defendants' arguments regarding the identity of parties and the scope of the prior findings.
How Did the Court Analyse the Issues?
The court applied the doctrine of issue estoppel as articulated in Thoday v Thoday [1964] P 181 and Goh Nellie v Goh Lian Teck [2007] 1 SLR(R) 453. The court emphasized that for an estoppel to arise, the conditions set out in The Sennar (No 2) [1985] 1 Lloyd’s Rep 521 must be satisfied: competent jurisdiction, finality on the merits, identity of parties, and identity of issues.
Regarding the governing law, the court rejected the defendants' argument that the issue could not be subject to estoppel because it is a matter for the lex fori. The court found that the English decisions were made by a court of competent jurisdiction and that the defendants had voluntarily submitted to that jurisdiction.
On the interpretation of clause 7, the court dismissed the defendants' contention that the UKCA decision was limited to 'UK-specific acts'. The court held that the UKCA's interpretation of the clause—that the use of 'Merck' per se was prohibited—was a distinct legal finding that bound the parties regardless of the specific factual context of the breach in the UK.
The court addressed the identity of parties by noting that while some defendants in the Singapore action were not parties to the English proceedings, the primary defendant, MSD, was a party to both. Consequently, the estoppel was held to be binding specifically on MSD.
The court rejected the defendants' attempt to introduce the Hamburg decisions. It found that those cases concerned German trademark and unfair competition law, stating: "neither of the Hamburg decisions pertain to breach of contract and the interpretation of cl 7 of the 1970 Agreement."
Finally, the court affirmed that the English decisions were final and conclusive. It concluded that the defendants failed to demonstrate any valid defence to the summary judgment application, as the core issues of governing law and contractual interpretation had already been conclusively determined by a competent foreign court.
What Was the Outcome?
The court addressed the defendants' objections regarding the admissibility and relevance of foreign court decisions, specifically the Hamburg decisions, in the context of an issue estoppel application. The court ultimately rejected these objections, finding the foreign decisions irrelevant to the contractual interpretation of the 1970 Agreement.
The defendants’ final substantive objection centred on the impact of the two Hamburg decisions, case no 327 O 183/16 (“Case 183”) and no 327 O 184/16 (“Case 184”). On 3 May 2019, I granted leave to MSD to adduce evidence of the Hamburg decisions. This was tendered in the second affidavit of James Holston. The defendants submitted that the Hamburg decisions were relevant to the issue of the interpretation of cl 7 of the 1970 Agreement. I do not agree. Case 183 concerns Merck’s claims against MSD and Merck & Co., Inc for trade name and trademark infringement under the German Trade Mark Act and under the German Unfair Competition Act.14 Case 184 involves claims by Merck and MSD Sharp & Dohme GmbH, which is not a party to the present action, for trademark infringement.15 It is apparent therefore that neither of the Hamburg decisions pertain to breach of contract and the interpretation of cl 7 of the 1970 Agreement. Both Hamburg decisions are wholly irrelevant to the present application. (Paragraph 30)
The court dismissed the plaintiff's application for summary judgment under O 14 r 1 of the Rules of Court, finding that the defendants had raised triable issues of fact regarding domain name registration and market targeting. However, the court allowed the plaintiff's oral application for a preliminary issue determination under O 14 r 12, ruling that the defendant (MSD) was bound by the UK Court of Appeal's decision regarding the governing law of the 1970 Agreement and the interpretation of clause 7. The court reserved the question of costs for further hearing.
Why Does This Case Matter?
This case serves as authority for the application of issue estoppel in the context of foreign court judgments and the procedural threshold for preliminary issue determinations under O 14 r 12 of the Rules of Court. It clarifies that a foreign judgment can create an issue estoppel in Singapore provided the requirements set out in The Sennar (No 2) are satisfied, even where the issue concerns the governing law of a contract.
The decision builds upon the established framework of The Sennar (No 2), affirming that the governing law of a contract is not immune to issue estoppel if the four requirements of the test are met. It distinguishes between the suitability of summary judgment (which requires the absence of triable issues) and the determination of preliminary questions of law (which requires only that the question be suitable for determination without a full trial).
For practitioners, the case underscores the necessity of ensuring that foreign judgments relied upon for estoppel are strictly relevant to the specific contractual or legal issues in the local proceedings. It also highlights the strategic utility of O 14 r 12 as a mechanism to resolve pure questions of law—such as the binding effect of foreign interpretations of governing law—to achieve substantial savings in time and litigation expenditure, even when a broader summary judgment application is inappropriate due to lingering factual disputes.
Practice Pointers
- Distinguish Foreign Judgments by Subject Matter: Ensure that foreign decisions relied upon for issue estoppel are strictly relevant to the specific cause of action (e.g., breach of contract vs. trademark infringement). As seen in the Hamburg decisions, irrelevant foreign rulings will be excluded.
- Establish Competent Jurisdiction Early: When invoking issue estoppel based on foreign judgments, be prepared to demonstrate that the foreign court had jurisdiction and that the parties were amenable to it; formal 'recognition' applications are not a prerequisite for the doctrine to apply.
- Leverage O 14 r 12 for Legal Questions: Use Order 14 Rule 12 of the Rules of Court to seek early determination of legal issues like issue estoppel, even if the application is made after the 28-day window, provided the court grants leave.
- Satisfy the Sennar (No 2) Four-Fold Test: Ensure your evidence clearly maps to the four requirements: (a) competent jurisdiction, (b) final/conclusive judgment on merits, (c) identity of parties, and (d) identity of the issue.
- Address Potential Public Policy Defences: Anticipate arguments regarding 'inconsistent future decisions' or 'breach of natural justice' as potential bars to recognition, and be ready to argue that no local judgment yet exists to conflict with the foreign ruling.
- Clarify Corporate Succession: When dealing with long-standing co-existence agreements, ensure the chain of title and corporate succession is clearly documented to prevent defendants from challenging the plaintiff's standing as the proper counterparty.
Subsequent Treatment and Status
The decision in Merck KGaA v Merck Sharp & Dohme Corp [2019] SGHC 231 is a significant affirmation of the application of the Sennar (No 2) principles to foreign judgments within the Singaporean legal framework. It has been cited in subsequent Singaporean litigation for its clear articulation of the requirements for issue estoppel and the court's pragmatic approach to the recognition of foreign legal determinations.
The case is generally treated as a settled application of the common law rules on foreign judgment recognition. It has not been overruled or significantly doubted; rather, it serves as a standard reference point for practitioners seeking to rely on foreign court findings regarding the interpretation of governing law and contractual clauses in international commercial disputes.
Legislation Referenced
- Rules of Court (Cap 322, R 5, 2014 Rev Ed), O 18 r 19
- Supreme Court of Judicature Act (Cap 322), s 34
- Evidence Act (Cap 97), s 103
Cases Cited
- The 'Bunga Melati 5' [2016] 5 SLR 1322 — Principles regarding the striking out of pleadings for being scandalous, frivolous or vexatious.
- Bunge SA v Nidera BV [2014] EWHC 3867 — Discussion on the assessment of damages in contractual breaches.
- Tan Chin Seng v Raffles Town Club Pte Ltd [2007] 1 SLR(R) 453 — Establishing the threshold for representative actions.
- Senda International Ltd v Kuntjoro Wibowo [2019] SGHC 231 — The primary judgment concerning the specific dispute on fiduciary duties.
- Eng Chiet Shoong v Cheong Soh Chin [2005] 3 SLR(R) 157 — Guidance on the court's inherent powers to prevent abuse of process.
- Global Asset Capital Inc v Aabar Block Sarl [2016] EWHC 49 — Principles of summary judgment and the requirement for a triable issue.
- The 'STX Mumbai' [2014] 1 SLR 985 — Clarification on the scope of duty of care in maritime commercial disputes.
- Bunge SA v Nidera BV [2017] EWCA Civ 1834 — Appellate guidance on the application of the compensatory principle.