Bassatne v El Gohary: Enforceability of MOU in Oil Trading Joint Venture

In Mohamed Bassatne and Others v Rifaat El Gohary and Others, the High Court of Singapore addressed a dispute over a memorandum of understanding (MOU) for a joint venture in oil trading between the Bassatne family and the Bakri family. The plaintiffs, Mohamed Bassatne, Bahaeddine Bassatne, and Walid Bassatne, sued Rifaat El Gohary, Bakri International Energy Co Ltd, and Bakri Trading Company Inc for losses incurred during the joint venture period. The court found the MOU to be an enforceable agreement and ruled in favor of the plaintiffs against the first and second defendants, holding them liable for a portion of the losses. The claim against the third defendant was dismissed, and the defendants' counterclaim was also dismissed.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Interlocutory judgment for the plaintiffs against the first and second defendants.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court case regarding the enforceability of a memorandum of understanding (MOU) for a joint venture in oil trading.

1.7 Decision Date

28 March 2004

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Mohamed Bassatne	Plaintiff	Individual	Interlocutory judgment for Plaintiff	Partial	Cavinder Bull of Drew and Napier Chia Voon Jiet of Drew and Napier Low Sze Gin of Drew and Napier
Bahaeddine Bassatne	Plaintiff	Individual	Interlocutory judgment for Plaintiff	Partial	Cavinder Bull of Drew and Napier Chia Voon Jiet of Drew and Napier Low Sze Gin of Drew and Napier
Walid Bassatne	Plaintiff	Individual	Interlocutory judgment for Plaintiff	Partial	Cavinder Bull of Drew and Napier Chia Voon Jiet of Drew and Napier Low Sze Gin of Drew and Napier
Rifaat El Gohary	Defendant	Individual	Interlocutory judgment against Defendant	Lost	Kenneth Tan SC of Kenneth Tan Partnership Foo Jien Huei of Kenneth Tan Partnership
Bakri International Energy Co Ltd	Defendant	Corporation	Interlocutory judgment against Defendant	Lost	Kenneth Tan SC of Kenneth Tan Partnership Foo Jien Huei of Kenneth Tan Partnership
Bakri Trading Company Inc.	Defendant	Corporation	Claim Dismissed	Dismissed	Kenneth Tan SC of Kenneth Tan Partnership Foo Jien Huei of Kenneth Tan Partnership

3. Judges

Judge Name	Title	Delivered Judgment
Lai Siu Chiu	Judge	Yes

4. Counsels

Counsel Name	Organization
Cavinder Bull	Drew and Napier
Chia Voon Jiet	Drew and Napier
Low Sze Gin	Drew and Napier
Kenneth Tan SC	Kenneth Tan Partnership
Foo Jien Huei	Kenneth Tan Partnership

4. Facts

The Bassatne family and the Bakri family discussed a joint venture using BBEA as the vehicle.
The parties signed a Memorandum of Understanding (MOU) on 19 April 1998.
The MOU outlined terms for the purchase of BBEA shares by the first defendant and the Bakris.
The first defendant joined BBEA on or about 20 April 1998.
The parties executed three addenda to the MOU, extending the share transfer date.
The Bakri brothers terminated the agreement by a letter dated 8 March 1999.
BBEA suffered a loss of US$1,525,654.40 during the joint venture period.

5. Formal Citations

Mohamed Bassatne and Others v Rifaat El Gohary and Others, Suit 1134/2001/D, [2004] SGHC 63

6. Timeline

Date	Event
1989-01-14	BB Energy (Asia) Pte Ltd incorporated.
1998-03-16	Oil conference held at Dubai.
1998-04-02	First plaintiff wrote proposal letter to Zohair.
1998-04-16	Plaintiffs met with first defendant and Bakri brothers in Jeddah.
1998-04-19	Memorandum of Understanding signed.
1998-04-19	First Addendum signed.
1998-04-20	First defendant joined BBEA.
1998-07-07	Second Addendum executed.
1998-09-10	Third Addendum executed.
1999-01-11	Hani sent letter to second plaintiff regarding BBEA's financial position.
1999-01-19	Second plaintiff replied to Hani's letter.
1999-02-20	Hani reiterated points in his earlier letter.
1999-03-04	Third plaintiff replied to Hani.
1999-03-08	Hani turned down third plaintiff’s proposal and treated the MOU as having expired.
1999-03-27	Bakri Trading Asia Pte Ltd incorporated.
1999-05-08	Hani gave notice that Bakri Asia had been set up.
1999-05-10	Third plaintiff agreed to termination and enclosed profit and loss accounts.
1999-05-25	First defendant supported Hani's stand on accounting documents.
1999-05-29	Hani agreed to engage an external auditor.
1999-06-21	Officers of PWC visited the office of BBEA.
1999-07-01	First plaintiff wrote to Zubir and Hani requesting their decision on matters.
1999-07-11	Hani stated that all partners in a joint venture have the right to have an auditor go through the accounts.
1999-10-01	PWC commenced their review of the joint venture accounts.
2000-01-24	Draft report prepared by PWC forwarded to Hani.
2000-09-21	Plaintiffs’ English solicitors sent a letter of demand to the first defendant.
2000-10-02	First defendant replied to letter of demand.
2000-10-05	Clyde & Co’s letter of demand to the second defendant.
2000-10-10	First defendant responded to Clyde & Co’s letter of demand to the third defendant.
2001-09-07	Writ filed by the plaintiffs.
2004-03-29	Judgment reserved.

7. Legal Issues

Enforceability of Memorandum of Understanding
- Outcome: The court found the MOU to be an enforceable agreement.
- Category: Substantive
- Sub-Issues:
  - Intention to create legal relations
  - Effect of addenda on MOU
- Related Cases:
  - [1995] 3 MLJ 141
  - [2002] 4 SLR 48
  - [1996] 3 MLJ 385
Conditional Liability
- Outcome: The court held that liability was not conditional on the execution of a sale and purchase agreement.
- Category: Substantive
Privity of Contract
- Outcome: The court found the second defendant, but not the third defendant, to be a party to the contract.
- Category: Substantive
- Related Cases:
  - [1970] Ch 85
  - (1867) LR 2 CP 559
Locus Standi
- Outcome: The court held that the plaintiffs had locus standi to sue.
- Category: Procedural

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract

10. Practice Areas

Commercial Litigation

11. Industries

Oil and Gas

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Sia Siew Hong v Lim Gim Chian	N/A	Yes	[1995] 3 MLJ 141	N/A	Cited to support the principle that the legal effect of a document is determined by its language and surrounding evidence, not its label.
Cendeka Candranegara Tjiang v Yin Kum Choy	N/A	No	[2002] 4 SLR 48	N/A	Cited by the defendants to argue that the MOU was only intended to facilitate further discussions and was not a binding agreement.
Abdul Rahim bin Syed Mohd v Ramakrishnan Kandasamy	N/A	No	[1996] 3 MLJ 385	N/A	Cited by the defendants to argue that the MOU was only intended to facilitate further discussions and was not a binding agreement.
F Goldsmith (Sicklesmere) Ltd v Baxter	N/A	Yes	[1970] Ch 85	N/A	Cited to support the principle that extrinsic evidence can be used to determine the true contracting parties.
M’Laren v Baxter	N/A	Yes	(1867) LR 2 CP 559	N/A	Cited to support the principle that the court should find that the expression meant all the companies which bear the Bakri name, set up by the Bakri family and based in Jeddah.
Babanaft International Co SA v Bassatne	N/A	No	[1989] 1 All ER 433	N/A	Cited by the defendants to suggest that the plaintiffs conducted their business secretively, through a network of family companies.

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

Memorandum of Understanding
Joint Venture
Oil Trading
Share Transfer
Executive Director
Trading Committee
Financial Committee
Clean Credit Lines
Repudiatory Breach
Estoppel by Convention

15.2 Keywords

MOU
joint venture
oil trading
contract law
Singapore
Bassatne
El Gohary
Bakri

17. Areas of Law

Area Name	Relevance Score
Contract Law	90
Commercial Disputes	60
Estoppel	40
Agency and Distributorships	30
Company Law	20

16. Subjects

Contract Law
Commercial Law
Oil and Gas Law