Resurrecting a Company to Enforce an Arbitral Award
This article explores the possibility of resurrecting a company under section 208(1) of the Insolvency, Restructuring and Dissolution Act or section 344(5) of the Companies Act. It considers the following issues: (a) whether the statutory time limits may be extended; (b) the circumstances in which the Court will exercise its discretion to resurrect a company; and (c) the extent to which resurrection retrospectively validates proceedings purportedly commenced by or against the company between its dissolution/striking off and resurrection.
In National Oilwell Varco Norway AS (formerly known as Hydralift AS) v Keppel FELS Ltd (formerly known as Far East Levingston Shipbuilding Ltd) (National Oilwell),1* This article is written in the author’s personal capacity. The opinions expressed are entirely the author’s own, and do not reflect the views of the Attorney-General’s Chambers.National Oilwell Varco Norway AS (formerly known as Hydralift AS) v Keppel FELS Ltd (formerly known as Far East Levingston Shipbuilding Ltd) (2021) SGHC 124 (“National Oilwell”). the Singapore High Court held that an award rendered in favour of a party (E) may only be enforced by E. Where E did not exist, there was simply no one with standing to enforce the award. In passing, the court suggested that if E – a corporation that had been struck off the register – were restored to the register, an enforcement action might lie. This article explores that possibility.
The Decision in National Oilwell
A dispute arose under a contract between the defendant in National Oilwell and a Norwegian company named Hydralift. In 2004, Hydralift merged with its parent company and was struck off the company register. The same year, the merged entity merged with, and took the name of, the plaintiff. In 2007 the defendant commenced a Singapore-seated arbitration against Hydralift. The plaintiff defended the claim and counterclaimed, all in the name of Hydralift. Twelve years later, the tribunal rendered an award against the defendant. The defendant resisted enforcement of the award.
The Court decided in favour of the defendant, refusing enforcement on three grounds.2National Oilwell at (186)–(188). First, the Court had no power to permit the plaintiff to enforce the award in place of Hydralift. Given that the tribunal objectively intended to issue, and did issue, the award in favour of Hydralift, permitting the plaintiff to enforce the award would go beyond enforcement “to the same effect” as the award. Second, the award was a nullity incapable of being enforced because the arbitration – having been commenced against a non-existent legal person – was a nullity from the outset. Third, the plaintiff was estopped from denying that Hydralift was the respondent in the arbitration.
Restoration to the Register
While the judgment touches on numerous interesting issues, this article focuses on the possibility of restoring a company to the corporate register for purposes of enforcing an arbitral award. The Court suggested that:3National Oilwell at (53).
“… only Hydralift has standing to apply for leave … to enforce the award. It is not to the point that Hydralift cannot now make any such application (unless, of course, it is restored to the Norwegian companies register under the Norwegian equivalent of section 208 of our Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) [IRDA] or of ss 344(5), 344D(1) and 344F of our Companies Act [CA] …
The facts of National Oilwell present a ready scenario to consider the application of section 208 of the IRDA and section 344(5) of the CA, which have received limited judicial attention in Singapore. Each provision will be analysed as follows, with reference to a fictitious struck-off Singapore company (Company H) that is otherwise in Hydralift’s position: (a) whether the preconditions for resurrecting Company H will be met; (b) whether the court will exercise its discretion to do so; and (c) what effect this will have on the validity of the arbitral proceedings and the award.
Section 208(1) of the IRDA
Section 208(1) provides:
“Where a company has been dissolved, the Court may at any time within 2 years after the date of dissolution, on the application of the liquidator of the company or of any other person who appears to the Court to be interested, make an order upon such terms as the Court thinks fit declaring the dissolution to have been void [“avoidance order”], and upon the making of that order, such proceedings may be taken as might have been taken if the company had not been dissolved.”
Preconditions – Time Limit
Preliminarily, while section 208 applies “[w]here a company has been dissolved”, it has been interpreted as being wide enough to cover the situation of a striking off under section 344 of the CA, and not only a case where dissolution follows a winding up.4Woon’s Corporations Law (LexisNexis, online edition, updated as at April 2021) at (6804). The test for standing to make a section 208(1) application is also broad.5The wording “any other person who appears to the Court to be interested” has been interpreted to encompass any applicant who can demonstrate an “interest of a proprietary or pecuniary nature in resuscitating the company” that is “not merely shadowy”: Lee Hung Pin v Lim Bee Lian and another (“Lee Hung Pin”) (2015) 4 SLR 1004 at (24). On this test, the entity in the plaintiff’s position in National Oilwell would be able to apply to resurrect Company H.
The first real hurdle is the two-year time limit within which the Court must make an avoidance order (recall that Company H was struck off in 2004). The question then is whether the Court has power to extend time. This has not been considered in Singapore.
Recent Malaysian authority holds that the time limit under the Malaysian equivalent of section 208 is absolute. In Ketua Pengarah Hasil Dalam Negeri v Suruhanjaya Syarikat Malaysia and another (Ketua), the Court so decided in view of the “plain and obvious” wording of the statute, which provided, quite simply, for the Court’s power to make avoidance orders within two years after dissolution.6Ketua Pengarah Hasil Dalam Negeri v Suruhanjaya Syarikat Malaysia and another (2019) 12 MLJ 509 (“Ketua”) at (10), (14) and (21)–(22). The Court also noted that the Malaysian provision was not amended despite Parliament having had the opportunity to do so in the wake of amendments in Hong Kong and England7English authority interpreting the pre-amendment English statute described the two-year time limit from the date of the dissolution of the company as “an absolute limit without qualification or power of extension”: Re Powis (Philip) Ltd (1997) 2 BCLC 481 at 486. to provide for a power to extend time. This clearly indicated that Parliament did not intend the courts to be able to extend time. The same might be said for the Singapore provision, such that an attempt to resurrect Company H would not get off the ground.
Separately, Ketua also stands for the proposition that the avoidance order and not merely the application for the order must be made within two years of the date of dissolution.8Ketua at (14). A Singapore court appears to have taken a different view in Lee Hung Pin v Lim Bee Lian and another (Lee Hung Pin), where it observed (in respect of the predecessor to section 208(1) of the IRDA) that an applicant was still within time where it applied for an avoidance order on 4 December 2014 when the company had been dissolved on 5 December 2012.9Lee Hung Pin at (42). The issue of time bar was not fully explored, as it would not have made a difference given the Court’s dismissal of the application on the merits. The possibility of a subsequent Singapore decision preferring the reasoning in Ketua cannot be ruled out, meaning that practically speaking an applicant may have less than two years to make a section 208(1) application for the avoidance order to be made in time.
Court’s Exercise of Discretion
Even if Company H surmounts the time limit hurdle, it would still have to persuade the Court to exercise its discretion to make an avoidance order. In Lee Hung Pin the Court explained that the discretion was to be exercised “carefully and judicially, being in mind the likely objectives of the grant of that power”, in circumstances where a winding up ought to be reversed “to ensure fairness and justice”.10Lee Hung Pin at (25)–(26). The Court identified several non-exhaustive scenarios, such as the presence of overlooked realisable assets, prejudice or fraud, or where “broader considerations of justice” warranted doing so.
It is unlikely that the Court would declare Company H’s dissolution void in the interests of fairness and justice, not least because the dissolution itself cannot be impugned. An underlying theme of the circumstances cited in Lee Hung Pin is that the alleged unfairness and injustice to the applicant must have some nexus to the circumstances of dissolution. For instance, in Vasudevan v Icab Pte Ltd (cited in Lee Hung Pin),11Vasudevan v Icab Pte Ltd (1987) SLR(R) 46, cited in Lee Hung Pin at (25). the Court declared the dissolution void so that an erstwhile employee of the company could continue proceedings against it for work-related injuries. The claim had been commenced when the company was in existence and had simply been overlooked by the company’s liquidators. The same cannot be said for the arbitration involving Company H. The arbitration was only commenced in 2007, whereas Company H had already ceased to exist in 2004. Hence there would be scant basis for “undoing” any dissolution; again, timing is critical.
Effect of Avoidance Order
The final issue would be what effect an avoidance order would have – specifically, whether it would retrospectively validate proceedings commenced against Company H while it was non-existent. Only if that were the case could the arbitration proceedings (hence the resultant award) stand any chance of being valid, given the view in National Oilwell that proceedings commenced by or against non-existent entities are nullities from the start. Retrospective validation was mentioned in passing in JWR Pte Ltd v Edmond Pereira Law Corp and another, where the court noted that no authority had been cited to it for the proposition that reinstatement of a previously struck-off company under the predecessor provision to section 208(1) of the IRDA would “retrospectively confer validity on an action commenced when that same company did not possess legal status”.12JWR Pte Ltd v Edmond Pereira Law Corp and another (2020) 4 SLR 832 at (86).
An avoidance order arguably does not have retrospective effect. The English courts have held, interpreting old English statutes in pari materia with section 208(1) of the IRDA, that the dissolution is rendered void ab initio because the statute expresses the avoidance order in terms of the court declaring the dissolution to “have been void” [emphasis added].13Re CW Dixon Ltd (1947) Ch 251 at 254–255. However, this would not validate proceedings taken in the interim, because the statutory wording “point[s] rather to a declaration removing a bar to such action as might otherwise have been taken, than to one validating past proceedings”. Put another way, the words “describe an authority given to the parties concerned to do … things which they might have done but obviously had not done theretofore, and, but for the order, could not have done after the dissolution” [emphasis added].14Morris v Harris (1927) AC 252 at 257–258.
In view of the above, a section 208(1) application in respect of Company H would almost certainly fail. Would a section 344(5) application fare better?
Section 344(5) of the CA
Section 344(5) provides:
“If any person feels aggrieved by the name of the company having been struck off the register, the Court, on an application made by the person at any time within 6 years after the name of the company has been so struck off may, if satisfied that the company was, at the time of the striking off, carrying on business or in operation or otherwise that it is just that the name of the company be restored to the register, order the name of the company to be restored to the register [“restoration order”], and upon a copy of the order being lodged with the Registrar the company shall be deemed to have continued in existence as if its name had not been struck off [“deeming words”], and the Court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off [“proviso”].”
Preconditions – Time Limit
The test for standing to make a section 344(5) application is likewise broad,15While the provision refers to persons aggrieved, this has been interpreted as imposing a similar threshold to the section 208(1) IRDA test: Re Asia Petan Organisation Pte Ltd (2018) 3 SLR 435 (“Re Asia Petan”) at (31). and again the time limit is the first major obstacle. Unfortunately for Company H, its restoration would fail under section 344(5) too, for being out of time.
Apart from the statutory wording, the legislative history of section 344(5) also weighs against any power to extend time. The time limit for bringing applications under this provision was shortened to the current six years from 15 years. As explained in the 2011 Steering Committee Report,16Report of the Steering Committee for Review of the Companies Act (June 2011) at chapter 5, paras 75–76. whose recommendation was given effect to via the 2014 amendments to the Companies Act,17See Explanatory Statement to Companies (Amendment) Bill No 25/2014 regarding clause 152. the rationale was to reduce the waiting time for an interested person to use an identical name of the struck-off company to register a new entity. The six-year period would also be consistent with the six-year limitation period allowed for creditors to recover their debts from the company. Thus, any attempt to extend time would be roundly dismissed by the court for being contrary to the object or purpose of these statutory amendments.
Court’s Exercise of Discretion
The power to make a restoration order is enlivened where “it is just” that the name of the company be restored. The Court will consider all the circumstances of the case, including: (a) the purpose of restoring the company; (b) whether there would be any practicable benefit arising from the restoration; (c) and whether there would be prejudice to any persons.18Re Asia Petan at (31).
In our case, the purpose of restoring Company H to the register would be to enable it to enforce the award. This is not too far removed from cases where companies have been restored to the register so they may pursue contractual or other claims.19Ganesh Paulraj v Avantgarde Shipping Pte Ltd (2019) 4 SLR 617 (“Ganesh”) at (24).
However, the assessment of practicable benefit would turn on whether Company H’s restoration suffices to validate the arbitral proceedings. The situation is different from the case of pursuing a claim (where the mere pursuit of the claim is regarded as conferring sufficient practical benefit “[e]ven if the … claim were meritorious”),20Ganesh at (24). in the sense that the gateway issue is the validity of proceedings. If the proceedings remain invalid despite Company H being restored the register, there can simply be no practicable benefit in terms of enforcement, quite apart from the merits of any attempts at resisting enforcement. We therefore turn to the effect of restoring a company to the register.
Effect of Restoration Order
The issue here is similarly whether a restoration order retrospectively validates proceedings commenced against a non-existent company. A survey of the English and Australian authorities construing their statutory equivalents of section 344(5) of the CA demonstrates a wide spectrum of approaches. At one end is the view that restoration to the register provides for only the fictional deemed continuation of the company’s corporate existence during the period of deregistration, with no other automatic retrospective legal consequences in respect of corporate activities.21Bell Group & Ors v ASIC (2018) 358 ALR 624 at (137), interpreting section 601(5)AH of Australia’s Corporations Act 2001. At the other end of the spectrum is the view that proceedings taken during the period of striking off will always be retrospectively validated upon the making of a restoration order.22Joddrell v Peaktone (2013) 1 WLR 784 at (29) and (42), interpreting section 1032 of the English Companies Act 2006. There are also intermediate options of validating “internal” acts done in the company’s name but not “external” acts affecting third parties,23A view taken on one reading of Deputy Commissioner of Taxation v Action Workwear Pty Ltd (deregistered) (1996) 20 ACSR 712 at 725–726. or according different treatment depending on whether the limitation period for the claim sought to be treated as valid expired during the period of dissolution.
It is suggested that the first-mentioned narrow approach is preferable. First, automatic validation of all proceedings “threaten[s] to penalise the practically sensible and legally commendable course of not commencing invalid proceedings”24Davy v Pickering (2017) EWCA Civ 30 at (66), affirming the remarks at first instance. (or continuing to pursue them despite the known defect), whereas the intermediate approaches are likely to be difficult to apply and potentially arbitrary.
Second, if the concern is that justice will not be done in certain cases if proceedings are not validated, the answer is that it is unnecessary to read the deeming words in section 344(5) as retrospectively validating any and all corporate activities, since specific directions can be given under the proviso. To that end, the proviso is wide enough to encompass the power to give directions suspending the limitation period for all or some of the duration between a company’s striking off and restoration (a limitation direction). In Re Donald Kenyon,25Re Donald Kenyon (1956) 1 WLR 1397 at 1401. the Court found that it was “common justice” and “common fairness” that the period of dissolution be disregarded for limitation purposes, to achieve the “as-you-were” position as far as possible. The use of limitation directions would permit more fine-grained control over whether a “second bite” is permitted in respect of particular proceedings. This would arguably result in fairer outcomes, since the court will be able to factor in any prejudice to third parties or culpable conduct on the part of the applicant seeking restoration to the register.
Third, recognising only limited retrospectivity would align the positions under section 208(1) of the IRDA and section 344(5) of the CA. The adoption of opposite interpretations as to retrospective effect does not sit well with the substantive overlap between the jurisdictions under the two provisions,26See note iv above. The UK Companies Act 2006 goes further to merge the two: section 1032(1) provides that the “general effect of an order by the court for restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off”. though this might be a point for Parliament rather than the courts considering the apparent differences in wording between the two provisions.
But unfortunately for Company H, assuming the Court accepts the view that restoration to the register does not retrospectively validate proceedings, due to the parties’ conduct and the case history the Court is unlikely to make a limitation direction merely so Company H can repeat an arbitration that has spanned 12 long years. Thus, restoration to the register of Company H under section 344(5) of the CA is unlikely to facilitate enforcement of the award.
While this situation does not arise on the facts, it is worth noting that even if the Court decides to make a limitation direction, that alone may not suffice to establish practicable benefit. This is because the actual effect on the arbitration and award depends on the interplay between three laws: (a) the law governing the company’s restoration to the register; (b) the law governing the limitation period for the contract claim that was resolved in the arbitration; and (c) the law governing the validity of the arbitration. Intractable problems might arise where two or more laws differ and supply inconsistent answers.
This article has explored the possibility of resurrecting a company to enforce an award purportedly rendered in its favour while it was not in existence. The way forward is difficult, if not impossible. In that light, the outcome in National Oilwell serves as a stark warning to always do proper background checks before commencing or responding to an arbitration, to avoid wasted time and effort.
|↑1||* This article is written in the author’s personal capacity. The opinions expressed are entirely the author’s own, and do not reflect the views of the Attorney-General’s Chambers.National Oilwell Varco Norway AS (formerly known as Hydralift AS) v Keppel FELS Ltd (formerly known as Far East Levingston Shipbuilding Ltd) (2021) SGHC 124 (“National Oilwell”).|
|↑2||National Oilwell at (186)–(188).|
|↑3||National Oilwell at (53).|
|↑4||Woon’s Corporations Law (LexisNexis, online edition, updated as at April 2021) at (6804).|
|↑5||The wording “any other person who appears to the Court to be interested” has been interpreted to encompass any applicant who can demonstrate an “interest of a proprietary or pecuniary nature in resuscitating the company” that is “not merely shadowy”: Lee Hung Pin v Lim Bee Lian and another (“Lee Hung Pin”) (2015) 4 SLR 1004 at (24). On this test, the entity in the plaintiff’s position in National Oilwell would be able to apply to resurrect Company H.|
|↑6||Ketua Pengarah Hasil Dalam Negeri v Suruhanjaya Syarikat Malaysia and another (2019) 12 MLJ 509 (“Ketua”) at (10), (14) and (21)–(22).|
|↑7||English authority interpreting the pre-amendment English statute described the two-year time limit from the date of the dissolution of the company as “an absolute limit without qualification or power of extension”: Re Powis (Philip) Ltd (1997) 2 BCLC 481 at 486.|
|↑8||Ketua at (14).|
|↑9||Lee Hung Pin at (42).|
|↑10||Lee Hung Pin at (25)–(26).|
|↑11||Vasudevan v Icab Pte Ltd (1987) SLR(R) 46, cited in Lee Hung Pin at (25).|
|↑12||JWR Pte Ltd v Edmond Pereira Law Corp and another (2020) 4 SLR 832 at (86).|
|↑13||Re CW Dixon Ltd (1947) Ch 251 at 254–255.|
|↑14||Morris v Harris (1927) AC 252 at 257–258.|
|↑15||While the provision refers to persons aggrieved, this has been interpreted as imposing a similar threshold to the section 208(1) IRDA test: Re Asia Petan Organisation Pte Ltd (2018) 3 SLR 435 (“Re Asia Petan”) at (31).|
|↑16||Report of the Steering Committee for Review of the Companies Act (June 2011) at chapter 5, paras 75–76.|
|↑17||See Explanatory Statement to Companies (Amendment) Bill No 25/2014 regarding clause 152.|
|↑18||Re Asia Petan at (31).|
|↑19||Ganesh Paulraj v Avantgarde Shipping Pte Ltd (2019) 4 SLR 617 (“Ganesh”) at (24).|
|↑20||Ganesh at (24).|
|↑21||Bell Group & Ors v ASIC (2018) 358 ALR 624 at (137), interpreting section 601(5)AH of Australia’s Corporations Act 2001.|
|↑22||Joddrell v Peaktone (2013) 1 WLR 784 at (29) and (42), interpreting section 1032 of the English Companies Act 2006.|
|↑23||A view taken on one reading of Deputy Commissioner of Taxation v Action Workwear Pty Ltd (deregistered) (1996) 20 ACSR 712 at 725–726.|
|↑24||Davy v Pickering (2017) EWCA Civ 30 at (66), affirming the remarks at first instance.|
|↑25||Re Donald Kenyon (1956) 1 WLR 1397 at 1401.|
|↑26||See note iv above. The UK Companies Act 2006 goes further to merge the two: section 1032(1) provides that the “general effect of an order by the court for restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off”.|