Shenyin Wangou-APS v Commerzbank: Frustration of Contract & Exchange Control
In Shenyin Wangou-APS Management Pte Ltd and Another v Commerzbank (South-East Asia) Ltd, the Singapore High Court addressed a claim by Shenyin Wangou-APS Management Pte Ltd and its client against Commerzbank regarding Malaysian Ringgit (MYR) deposits. The plaintiffs claimed damages due to the defendant's payment in US dollars at an unfavorable exchange rate following the imposition of Malaysian exchange control measures in 1998. Commerzbank argued frustration of contract due to the eradication of the offshore MYR market. The court, presided over by Judicial Commissioner Choo Han Teck, dismissed the plaintiffs' claim, finding that the contract was frustrated by the Malaysian government's actions.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiffs' claim dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case regarding the frustration of contract due to Malaysian exchange control measures, impacting offshore MYR deposits.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Shenyin Wangou-APS Management Pte ltd (formerly known as Shanghai International-APS Management Private Limited) | Plaintiff | Corporation | Claim Dismissed | Lost | Fong Kwok Jen |
| Commerzbank (South-East Asia) Ltd | Defendant | Corporation | Judgment for Defendant | Won | Patrick Ang, Andrew Ang |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Choo Han Teck | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Fong Kwok Jen | Fong Partners & Associates |
| Patrick Ang | Rajah & Tann |
| Andrew Ang | Rajah & Tann |
4. Facts
- The plaintiffs deposited Malaysian Ringgit (MYR) in offshore accounts with the defendant bank.
- The deposits were made at various times, with an assumed maturity date of 3 September 1998.
- In 1997, the Malaysian government imposed exchange control restrictions.
- On 1 September 1998, the Malaysian government imposed further exchange control measures.
- The Malaysian government's measures effectively eradicated the offshore market for MYR.
- The defendant bank paid the plaintiffs in US dollars on 8 September 1998, at a rate of MYR4.00 to US$1.00.
- The plaintiffs had commitments to pay MYR to Public Bank in Kuala Lumpur and had to purchase MYR at a rate of MYR3.80 to US$1.00.
5. Formal Citations
- Shenyin Wangou-APS Management Pte ltd (formerly known as Shanghai International-APS Management Private Limited) and Another v Commerzbank (South-East Asia) Ltd, Suit 1335/1999, [2001] SGHC 260
6. Timeline
| Date | Event |
|---|---|
| Malaysian government imposed exchange control restrictions. | |
| Malaysian government imposed exchange control measures. | |
| Bank Negara announced the exchange rate for MYR was fixed at MYR3.80 to US$1.00. | |
| Maturity date for the total sum deposited by the plaintiffs. | |
| Bank Negara issued a clarification regarding settlements for forex transactions. | |
| Commerzbank made payment to the plaintiffs in US dollars. | |
| Deadline for settlements of transactions executed prior to 1 September 1998. | |
| Suit filed (Suit 1335/1999). | |
| Judgment issued. |
7. Legal Issues
- Frustration of Contract
- Outcome: The court found that the contract was frustrated due to the Malaysian economic control measures.
- Category: Substantive
- Sub-Issues:
- Impossibility of performance
- Radical difference in performance
- Related Cases:
- [1956] AC 696
- Interpretation of Contractual Terms
- Outcome: The court interpreted 'politically related measures' to include the Malaysian economic control measures. The court did not find an implied term allowing payment in an alternative currency.
- Category: Substantive
- Sub-Issues:
- Meaning of 'politically related measures'
- Implied terms regarding currency of payment
- Implied Terms
- Outcome: The court held that there was no implied term that the defendants were entitled to effect delivery in an alternative currency.
- Category: Substantive
- Sub-Issues:
- Necessity of implied term
- Business efficacy
- Related Cases:
- (1889) 14 PD 64
- [1939] 2 KB 206
- [1957] 1 AER 125
- [1977] AC 239
- [1992] 1 AC 294
- [2001] 2 SLR 458
- [1995] 1 SLR 1
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Banking Litigation
11. Industries
- Banking
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| R v Radio Authority, ex parte Bull | Queen's Bench | Yes | [1969] QB 169 | England and Wales | Cited for the approach to defining the word 'political' to include any matter that pertains to policy or government. |
| The Moorcock | Probate Division | Yes | (1889) 14 PD 64 | England and Wales | Cited as one of the well-known cases regarding when a court would imply a term into a contract. |
| Shirlaw v Southern Foundries (1926) Ltd | Court of Appeal | Yes | [1939] 2 KB 206 | England and Wales | Cited for MacKinnon LJ's 'officious bystander test' regarding implied terms. |
| Lister v Romford Ice & Cold Storage Co Ltd | Court of Appeal | Yes | [1957] 1 AER 125 | England and Wales | Cited for drawing a distinction between implying a term on the basis of business efficacy and implying a term from the nature of the contract itself. |
| Liverpool City Council v Irwin & Anor | House of Lords | Yes | [1977] AC 239 | England and Wales | Cited for drawing a distinction between implying a term on the basis of business efficacy and implying a term from the nature of the contract itself. |
| Scally v Southern Health & Social Services Board | House of Lords | Yes | [1992] 1 AC 294 | England and Wales | Cited for the opinion of Lord Bridge that the two forms of implying a term are clearly separate and distinct. |
| Hiap Hong & Co Pte Ltd v Hong Huat Development Co (Pte) Ltd | Court of Appeal | Yes | [2001] 2 SLR 458 | Singapore | Cited for emphasizing that 'in considering the question of implied terms, it must be borne in mind that the touchstone is necessity and not merely reasonableness.' |
| Bethlehem Singapore Pte Ltd v Ler Hock Seng | Court of Appeal | Yes | [1995] 1 SLR 1 | Singapore | Cited for the view that the courts do not imply a term merely because it is reasonable, but because the necessity of doing so was so obviously necessary. |
| James Scott & Sons Ltd v Del Sel | Court of Session | Yes | [1922] S.C. 592 | Scotland | Cited for the 'escaped tiger' illustration in Lord Sands' judgment, exposing the inadequacy of the implied term basis for the doctrine of frustration. |
| Davis Contractors Ltd v Fareham Urban District Council | House of Lords | Yes | [1956] AC 696 | England and Wales | Cited for Lord Reid's view that frustration depends on the true construction of the terms in the contract. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Offshore account
- Exchange control measures
- Frustration of contract
- Politically related measures
- Malaysian Ringgit
- External Account
- Currency speculators
- Multi-currency account
15.2 Keywords
- Contract
- Frustration
- Exchange Control
- Malaysian Ringgit
- Offshore Banking
16. Subjects
- Contract Law
- Banking
- Financial Regulations
- Currency Exchange
17. Areas of Law
- Contract Law
- Frustration of Contract
- Banking Law
- International Finance Law
- Exchange Control Regulations