Pertamina Energy Trading Ltd v Credit Suisse: Banker's Set-Off and Authority to Draw Down on Credit Facility
Pertamina Energy Trading Ltd, a Hong Kong company, sued Credit Suisse, a foreign bank, in the High Court of Singapore, seeking the return of US$9 million deposited under a fixed deposit contract. Credit Suisse had set off an US$8 million loan against the deposit, claiming the drawdown was instructed by Pertamina. Tay Yong Kwang J dismissed Pertamina's claim, finding that Credit Suisse lawfully effected the set-off based on instructions from Pertamina's officers and the terms of their banking agreements.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Claim dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Pertamina Energy Trading sued Credit Suisse for the return of a US$9m fixed deposit. The court dismissed the claim, finding Credit Suisse lawfully set off the loan against the deposit.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Credit Suisse | Defendant | Corporation | Judgment for Defendant | Won | |
| Pertamina Energy Trading Ltd | Plaintiff | Corporation | Claim Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tay Yong Kwang | Judge | Yes |
4. Counsels
4. Facts
- Pertamina Energy Trading Ltd deposited US$9m with Credit Suisse under a fixed deposit contract.
- Credit Suisse granted a credit facility to Pertamina Energy Trading Ltd.
- A drawdown of US$8m was made under the credit facility.
- Credit Suisse set off the loan against the money held in the fixed deposit.
- Pertamina Energy Trading Ltd alleged it did not instruct any drawdown.
- Pertamina Energy Trading Ltd claimed forgery of documents.
- Pertamina Energy Trading Ltd terminated the banking relationship with Credit Suisse.
5. Formal Citations
- Pertamina Energy Trading Ltd v Credit Suisse, Suit 1222/2003, [2006] SGHC 4
6. Timeline
| Date | Event |
|---|---|
| Second meeting held in Singapore hotel to discuss opening an account with Credit Suisse. | |
| Directors’ resolution signed to open bank account with Credit Suisse, Singapore Branch. | |
| Ariefin authorised the transfer of US$9m from BNP Paribas to Credit Suisse. | |
| Pertamina Energy Trading submitted account opening documents to Credit Suisse. | |
| Ariefin requested a drawdown of US$8m on the plaintiff’s credit facility. | |
| Plaintiff faxed over to the defendant an undated directors’ resolution. | |
| The charge was sealed with the plaintiff’s company seal at the office of the plaintiff’s then company secretary in Hong Kong. | |
| Drawdown of US$8m from the plaintiff’s account was effected and the money was credited to Aceasia’s account with the defendant. | |
| Terms of the loan were confirmed in a letter entitled “Fixed Term Loan Drawdown”. | |
| Plaintiff requested that all mail marked “Private and Confidential” be forwarded to Ariefin’s home address in Singapore. | |
| Defendant complied with the request and forwarded all such mail with effect. | |
| Ariefin informed Wahjoe that he had already given the instructions to the defendant. | |
| Wahjoe met Dedy at the plaintiff’s offices in Jakarta to seek clarification about the arrangement with Aceasia. | |
| Wahjoe met Dedy in Singapore to seek clarification about the arrangement with Aceasia. | |
| Wahjoe informed Dedy that the plaintiff wanted to transfer the deposit with the defendant to BNI. | |
| An audit was conducted on the plaintiff’s accounts. | |
| The defendant provided the plaintiff’s deposit and loan details to the internal auditor. | |
| The internal auditor, in his report, recommended that the plaintiff’s management “really put efforts to avoid company’s loss. | |
| Wahjoe telephoned Lim C C and asked about the deposit. | |
| Wahjoe telephoned Lim C C again to enquire about the matter. | |
| Wahjoe met Dedy to discuss the plaintiff’s deposit with the defendant. | |
| Representatives from the plaintiff’s subsidiary, Pertamina Energy Services Ltd (“PES”), went to the defendant and took away copies of the account and credit facility documents. | |
| The plaintiff held a meeting to discuss the recent events. | |
| A further meeting was called by Wahjoe. | |
| Ariefin gave oral and written instructions to the defendant to set off the plaintiff’s outstanding loan amount of some US$8.25m against its deposit. | |
| Defendant notified the plaintiff through Wahjoe by fax, repeating Ariefin’s instructions about the set-off. | |
| The defendant had already effected the set-off at about 5.30pm. | |
| Wahjoe faxed a letter to the defendant’s Conrad Lim. | |
| The defendant wrote to Wahjoe explaining the sequence of events and declining to reverse the set-off. | |
| Ariefin made a police report here. | |
| The plaintiff asked the defendant for the return of the undisputed balance (US$890,413.91) in its account. | |
| The defendant released the money (US$899,120.36). |
7. Legal Issues
- Banker's Set-Off
- Outcome: The court held that the bank's set-off was lawfully effected.
- Category: Substantive
- Authority to Draw Down on Credit Facility
- Outcome: The court found that the bank was entitled to rely on the instructions of the plaintiff's officers.
- Category: Substantive
- Forgery
- Outcome: The court found that the plaintiff failed to prove forgery.
- Category: Substantive
- Duty of Care
- Outcome: The court found that the bank was not negligent.
- Category: Substantive
8. Remedies Sought
- Return of Deposit
- Accrued Interest
9. Cause of Actions
- Breach of Contract
- Unjust Enrichment
10. Practice Areas
- Commercial Litigation
- Banking Litigation
11. Industries
- Banking
- Energy
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Consmat Singapore (Pte) Ltd v Bank of America National Trust & Savings Association | N/A | Yes | [1992] 2 SLR 828 | Singapore | Cited for the principle that 'conclusive evidence' clauses preclude bank customers from denying transactions listed in statements if they fail to object within a specified period. |
| Stephan Machinery Singapore Pte Ltd v Overseas-Chinese Banking Corporation Ltd | N/A | Yes | [2000] 2 SLR 191 | Singapore | Cited for the principle that 'conclusive evidence' clauses preclude bank customers from denying transactions listed in statements if they fail to object within a specified period. |
| Northside Developments Pty Ltd v Registrar-General | N/A | Yes | (1990) 93 ALR 385 | N/A | Cited to support the principle that the defendant was entitled to rely on the formal validity of the document. |
| Yogambikai Nagarajah v Indian Overseas Bank | N/A | Yes | [1997] 1 SLR 258 | Singapore | Cited for the principle that the standard of proof required to establish forgery or fraud is higher than the ordinary civil standard of proof on a balance of probabilities. |
| Khoo Tian Hock v Oversea-Chinese Banking Corporation Limited | N/A | Yes | [2000] 4 SLR 673 | Singapore | Cited for the principle that a bank customer owes a duty to his bank not to facilitate the commission of forgery or fraud. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2004 Rev Ed) O 18 r 8 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Hong Kong Companies Ordinance (Cap 32) s 83(2) | Hong Kong |
15. Key Terms and Keywords
15.1 Key Terms
- Banker's Set-Off
- Credit Facility
- Drawdown
- Fixed Deposit
- Forgery
- Directors' Resolution
- Company Mandate
- Account Opening Conditions
- Ratification Resolution
- Charge on Deposit
15.2 Keywords
- Banker's Set-Off
- Credit Facility
- Fixed Deposit
- Forgery
- Singapore High Court
- Pertamina
- Credit Suisse
17. Areas of Law
16. Subjects
- Banking
- Finance
- Commercial Law