MARITIME LAW |
Creditors and Debtors |
Foresight Shipping Co. v. Union of India
T-455-02
2004 FC 1501, Tremblay-Lamer J.
26/10/04
17 pp.
Foresight Shipping Co. Ltd. (Foresight) appealing Prothonotary's decision granting Shipping Company of India Ltd. (SCI) permission to intervene in proceedings to oppose seizure of ship--Order also setting aside said seizure and returning bank guarantee filed as security--Foresight obtaining arbitral award against Union of India (India) and Food Corporation of India (FCI) subsequent to charter party dispute--Award registered as judgment of High Court of Delhi and judgment registered in England and in Federal Court in Canada--India and FCI failing to pay award amounting to more than C$1,000,000--Foresight seeking to execute judgment against India's assets outside country and obtaining writ of seizure and sale against ship Lok Rajeshwari (ship) owned by SCI, stationed in Sorel, Quebec-- Prothonotary finding under Indian law, SCI having distinct juridical personality from India such that assets and liabilities distinct and separate--Also finding Indian law not providing for piercing of SCI's corporate veil despite India's failure to pay debt--Piercing of corporate veil only justified by use to which person or entity has put company under person's or entity's control--Tolofson v. Jensen, [1994] 3 S.C.R. 1022 establishing that in cases involving conflict of laws, comity requiring courts apply lex loci (law of place where incident occurred) to substantive questions of case--Lex fori (law of place where case is heard) applying to questions of procedure--In present case, procedural rules of Federal Court applying to procedural matters and Indian law applying to substantive law--Execution on debt procedural matter to be determined after determination of substantive issues-- Foresight's ability to execute on debt resting on ability to demonstrate SCI's asset to be treated as asset of India because SCI alter ego of India or because piercing of SCI's corporate veil justified--Two substantive issues requiring application of Indian law--Indian law recognizing corporations have distinct legal personalities from shareholders--Cases under Indian law where corporation found to be alter ego of state concerning protection of fundamental rights, not property and contract law--No evidence SCI government instrument--Fact India major shareholder in SCI insufficient to deny SCI's existence as independent legal personality--SCI's business, income, undertaking and assets not controlled by India--No evidence SCI implicated in India's refusal to pay debt to Foresight--SCI not agent, instrument or alter ego of India--In conflict of law issue, courts must apply foreign law as exists, not as reformers would like--Indian case law governing issue of piercing corporate veil--Foresight unable to demonstrate SCI used by India to commit fraud, avoid paying debt--Fraud alleged by Foresight committed by shareholder India, separate and apart from SCI--Since SCI not involved in fraud or illegal transaction, piercing of SCI's corporate veil not justified--Allowing seizure of ship would amount to disregarding state of law in India and punishing SCI's minority shareholders--Foresight's reliance on Med Coast Shipping Ltd. et al. v. Cuba, [1993] Q.J. No. 750 (QL) (S.C.) to support claim for execution misplaced--Med Coast distinguished as involving assets held for and owned by Cuban government while present case involving asset owned by third party--Appeal dismissed.