Crossing Legal Fault Lines

Photo Credit: Cyril Ng

By Dora Yip

SMU Office of Research – Cross-border transactions are something most people living in developed countries take for granted. Consumers in Singapore may not think twice about buying a product from a Chinese or American website, or renting a car while on holiday overseas.

But if the purchase or rental goes awry, which country’s legal system should the consumer seek recourse from? By studying private transactions that connect two or more countries, Associate Professor Adeline Chong from the Singapore Management University (SMU) School of Law aims to shed light on how globalisation has affected the practice of private international law.

Class litigation suits

Traditionally, private international law research has focused on three key areas: whether a court in a particular country can hear the dispute; which country’s law will be applied to decide the dispute; and whether a judgment given by a court in one country is recognised and can be enforced in another.

Professor Chong’s latest research deals with the third key area: whether a court in country A should recognise and enforce a judgement given by a court in country B. The research also shines the spotlight on people who initiate a lawsuit, also known as plaintiffs. Specifically, she is interested in plaintiffs who are knowingly or unknowingly involved in class litigation suits, that is, when one or more representatives pursue a claim on behalf of a group of plaintiffs.

“In the US, where class action suits are most popular, some plaintiffs may be bound by the judgement under US law even if they have not positively indicated that they wish to opt into the litigation,” she explains. Interestingly, many plaintiffs who are given notice of the class action do not respond. This leads to the issue of whether to give effect to a judgement against a group of people who have, for whatever reason, not indicated whether they wish to opt in or opt out of the class action.

Professor Chong is working on a research paper looking at whether Singapore courts should recognise and enforce a judgement handed down from class litigation in the US. “In a normal context, we assess whether or not foreign judgement can be enforced against a defendant in Singapore. Looking at class action suits shifts the focus to plaintiffs. If a US court finds in favour of the defendant, would we then not allow the plaintiff to sue in the future?” she asks.

Unlike American lawyers who usually take on class action cases on a contingency fee basis (a fee that is payable only if there is a favourable result), Professor Chong notes that Singapore law does not allow for a contingency fee system. Calls have been made in Singapore to reconsider this particular rule, but it has so far not been reformed. “In this light, one tentative conclusion is that it is against Singapore’s public policy to give effect to such US judgements,” she says.

The risks of midnight clauses

Professor Chong is open to collaborating with colleagues in the business school to look at dispute resolution clauses in international business contracts. “I have found that when parties are working on finalising a contract, they negotiate very hard on most terms. But when it comes to things like the choice of law clause – or which jurisdiction a case will be heard in should any problems arise – they don’t put as much real thought into it, as this is usually decided at the end of a long day of negotiations,” she comments.

These ‘midnight’ clauses, or clauses which have been whisked into a contract at the last minute, can have a profound impact on businesses and firms need to be alerted to the potential risks they could face. “Whether parties choose a civil-law jurisdiction or a common-law one to govern the contract could have significant implications on the interpretation of the other clauses in the contract they have negotiated so hard for. Some clauses could even become invalid,” she adds.

An exercise in discretion and subtlety

As for the immediate future, Professor Chong will have her hands full working on a revised edition of International Commercial Disputes: Commercial Conflict of Laws in English Courts, a textbook she co-authored five years ago on English private international law. The book looks at how commercial disputes that have connections with more than one country are dealt with by the English courts, and focuses on how recent regulations that have reshaped European Union (EU) law interact with English common-law.

But revising the book has not been a walk in the park. Obtaining English language versions of certain articles and cases has not been easy, and Professor Chong has relied on the goodwill of her colleagues to help with translations. In addition, she admits that there is much updating to do given recent legislative changes in the EU. “The EU has updated key pieces of legislation in private international law. And with the relentless tide of cases being heard before the European Court of Justice, there is so much to read and update,” she shares.

Despite these challenges, Professor Chong says that she maintains a simple philosophy while researching on the increasingly complex subject of private international law – to never to forget the human element behind it. “My research on international commercial disputes and class action litigation suits may appear factual and impassive. But that couldn’t be further from the truth, as the application of the law ultimately involves an exercise of discretion and subtlety,” she muses.

Back to Research@SMU Issue 25