Kiri Industries Limited, a prominent player in the global dyes, intermediates, and chemical industries, recently achieved a significant legal victory in the Singapore International Commercial Court (SICC). The court ruled in favor of Kiri Industries in its ongoing legal battle against Senda International Capital Ltd, ordering Senda to reimburse Kiri Industries for substantial legal costs incurred during the enforcement proceedings of a buy-out order.

On August 29, 2024, the SICC delivered a judgment that awarded Kiri Industries S$360,050 in legal costs, along with disbursements amounting to S$17,053.81 and US$6,415.18. This ruling follows a series of legal confrontations between Kiri Industries and Senda International over the ownership and management of shares in DyStar Global Holdings (Singapore) Pte Ltd.

Background of the Case:

The dispute between Kiri Industries and Senda International originated from a disagreement over shareholdings in DyStar Global Holdings, a joint venture in which both companies hold significant stakes. In an earlier judgment, the SICC had ordered an en bloc sale of shares held by both Kiri Industries and Senda International in DyStar, to be managed by court-appointed receivers. This decision replaced the court’s previous order for Senda International to buy out Kiri's shareholding for a sum of US$603.8 million.

Kiri Industries initiated enforcement proceedings for this buy-out order, leading to further legal wrangling over compliance, costs, and procedural aspects. The recent judgment addresses these matters by clarifying the entitlement and apportionment of legal costs among the parties involved.

Court’s Determination on Costs:

The central issue before the court was the determination of which party was the “successful” one entitled to recover legal costs. The SICC, led by Justices Kannan Ramesh, Anselmo Reyes, and Roger Giles, adopted a pragmatic and commercially sensible approach in determining success. The court concluded that Kiri Industries was the successful party in the enforcement proceedings, as their legal actions were necessitated by Senda International’s failure to comply with the earlier buy-out order, whether due to inability or unwillingness.

The court highlighted that while Kiri Industries succeeded in its application for substitute relief, it did not win on all counts. Kiri's partial victory entitled it to recover 40% of its total legal costs from Senda International, equating to S$360,050 in costs and disbursements totaling S$17,053.81 and US$6,415.18.

Legal Costs Payable to DyStar:

However, the court also addressed the role of DyStar Global Holdings in the proceedings. As a third party in the litigation primarily involving its shareholders, DyStar was nevertheless drawn into the proceedings because of Kiri’s claim for relief. DyStar’s involvement, the court noted, was necessitated largely by Kiri's demands, including a request for a staged buy-back of shares and the appointment of a receiver over DyStar.

The court found that DyStar’s involvement in the proceedings was justified, and therefore, Kiri Industries was ordered to pay DyStar 50% of its legal costs, amounting to S$125,705 and disbursements of S$8,126.91 and US$1,223.57.

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Key Findings and Rationale:

The SICC’s judgment made several important findings:

Kiri Industries was deemed the successful party in substance, as it had to seek substitute relief due to Senda’s non-compliance with the initial buy-out order.

The court rejected a purely technical reading of success based on the parties’ specific prayers or proposals for relief. Instead, it adopted a holistic view focused on the necessity and outcome of the proceedings.

Kiri’s entitlement to costs was moderated to 40% due to its failure to succeed on all issues, including claims for post-judgment interest and an interim payment of sale proceeds.

DyStar’s participation was necessary, given the complexities of Kiri’s claims against it, but the court limited DyStar's cost recovery to 50% to reflect its overreach in addressing issues outside its purview.

Implications of the Judgment:

This judgment represents a significant victory for Kiri Industries in its ongoing legal disputes with Senda International. The ruling reinforces the principle that costs should reflect the true success of a party in substance and not merely on a narrow, technical basis. By recovering a substantial portion of its legal costs, Kiri Industries has been compensated for its efforts in pursuing enforcement actions against Senda.

At the same time, the decision sends a clear message about the role and conduct of third parties like DyStar in shareholder disputes. The court’s limitation on DyStar's cost recovery underscores the importance of staying within the appropriate bounds of participation, even when drawn into disputes by the actions of shareholders.

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Future Outlook:

The legal tussles between Kiri Industries and Senda International are unlikely to end with this ruling. The broader dispute over the valuation and management of DyStar Global Holdings, and the enforcement of court orders related to the same, will continue to play out in the courts. For Kiri Industries, the recent judgment is a step forward in its efforts to assert its rights and interests in the joint venture, but further challenges lie ahead.

Conclusion:

The SICC’s ruling on cost recovery in favor of Kiri Industries marks a critical development in the protracted legal battle with Senda International. While the judgment provides partial financial relief to Kiri, the complexities of enforcing the buy-out order and managing ongoing litigation indicate that both parties will need to prepare for further rounds in this high-stakes dispute.

The case also serves as a reminder of the evolving landscape of corporate law in Singapore and internationally, particularly concerning shareholder rights and enforcement mechanisms in complex cross-border joint ventures.

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