Reed Smith Client Alerts

In National Oilwell Varco Norway AS (f/k/a. Hydralift AS) v. Keppel FELS Ltd (f/k/a. Far East Levingston Shipbuilding Ltd), the Singapore Court of Appeal (COA) has overturned a High Court decision setting aside leave to enforce an award by a party not named in the award. The COA did so on the basis that there was a true misnomer regarding one of the parties named in the award.

This decision provides helpful clarity on how an enforcing court will determine misnomers in Singapore. First, courts can deviate from the name in an award if the enforcing party is the same legal person as the named party. Second, same legal personhood requires a transfer of all rights and liabilities and sufficient continuity of legal personality. Third, the test for misnomers is asking whether, objectively, the wrong legal person was named. The COA also affirmed that in Singapore, a transfer of rights in a merger is not an assignment.

We have previously written about the High Court decision in this matter.

Authors: Timothy Cooke

What happened between the parties?

The salient facts for the appeal are as follows:

(i) In 1996, the respondent (KFELS) and A/S Hydralift (Hydralift) (incorporated in Norway) entered into a contract governed by Singapore law which contained an arbitration agreement (Contract).

(ii) By 2004, Hydralift had undergone two mergers and the appellant (NOV) had assumed all its rights and obligations. Hydralift was removed from Norway’s company registry and ceased to exist.

(iii) In 2007, KFELS commenced arbitration against Hydralift under the Contract. NOV defended the claim and brought a counterclaim. Throughout the arbitration, NOV represented that it, as the respondent, was Hydralift.

(iv) In 2019, the tribunal issued a final award (Award) in favour of Hydralift. Thereafter, NOV applied to and obtained ex parte leave from the Singapore High Court to enforce the Award. KFELS applied to set aside that leave arguing that NOV was not named as a party in the Award.

At the first instance, the High Court judge (Judge) allowed KFELS’s application and set aside the leave granted for enforcement. The Judge reasoned that section 19 of Singapore’s International Arbitration Act (Cap 143A, 2002 Rev Ed) (IAA) required a mechanical approach to enforcement, with the effect that a party not named in the Award could not be allowed to enforce it.

Section 19 of the IAA empowers courts to enforce an award “in the same manner as a judgment or an order to the same effect and to enter judgment against the debtor only in terms of the award”. NOV appealed the Judge’s decision.

What did the COA decide and why?

The COA overturned the High Court’s decision for the following reasons:

1. NOV was the same legal person as Hydralift

The COA held that for the purposes of section 19, the question should be whether NOV and Hydralift are the same legal person. To be the same legal persons, NOV had to have acquired all of Hydralift’s rights and liabilities with sufficient continuity of Hydralift’s legal personality. In Singapore, that question would be determined by reference to the law of the place of incorporation (here, Norway).

The expert evidence on Norwegian law indicated that a transferee acquires the rights and liabilities of a transferor in a corporate merger. However, Norwegian law is silent on the inheritance of legal personality, meaning the COA had to assess whether there was such inheritance in effect. The COA found such inheritance based on four points of Norwegian law:

a. Preparatory materials for Norwegian company law emphasised a continuity of legal personality in the transferee in a merger;

b. After a merger, (i) the transferor ceases to exist by operation of law, and (ii) case law permits a claimant transferor’s name to be substituted by the transferee’s name;

c. In a case on similar facts, the Norwegian Supreme Court held that in a merger where rights are transferred in breach of contract, acquirers may not claim those rights but do assume all liabilities in transfers of obligations. This was aligned with the notion that legal personality continues in the transferee as the transferee assumes the transferor’s contractual constraints; and

d. Any procedural steps to perfect a transfer of rights and liabilities are legal formalities and do not disrupt continuation of legal personality in the transferee if the steps are not taken.