Oriental Insurance v Reliance National: Compound Interest & Adjudication
In The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd, the Singapore High Court heard an application by Oriental Insurance Co Ltd (OIC) to set aside a determination by an Independent Adjudicator (IA) regarding a Scheme of Compromise and Arrangement undertaken by Reliance National Asia Re Pte Ltd (RNA). The dispute arose from a reinsurance contract concerning an insurance policy issued by OIC covering a Single Point Mooring Buoy owned by Reliance Industry Limited. The court found manifest error in the IA's discount calculations and remitted the determination for re-determination.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Determination remitted to the Independent Adjudicator for re-determination.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment reserved
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court judgment on whether compound interest can be awarded as damages and setting aside an independent adjudicator's decision.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| The Oriental Insurance Co Ltd | Applicant | Corporation | Application allowed in part | Partial | N Sreenivasan, Palaniappan S |
| Reliance National Asia Re Pte Ltd | Respondent | Corporation | Application allowed in part | Partial | Michael Hwang SC, Muthu Arusu, Tay Yong Seng |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Seng Onn | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| N Sreenivasan | Straits Law Practice LLC |
| Palaniappan S | Straits Law Practice LLC |
| Michael Hwang SC | Michael Hwang |
| Muthu Arusu | Allen & Gledhill LLP |
| Tay Yong Seng | Allen & Gledhill LLP |
4. Facts
- OIC issued a US$20m insurance policy covering a Single Point Mooring Buoy owned by RIL.
- OIC reinsured 93.65% of the risk, with RNA accepting 38.35% of the risk as the lead reinsurer.
- The SPM was struck by a vessel on 12 October 1998 and sank on 16 October 1998.
- RIL commenced an action against OIC in Surat, India, claiming INR 991.9m plus interest.
- RNA took over management of the legal proceedings in Surat.
- RNA entered a voluntary run-off of its business in April 2001 and proposed a Scheme of Arrangement.
- OIC supported the Scheme, which was approved by creditors and the High Court.
- OIC submitted a proof of debt, which was disputed and referred to an Independent Adjudicator.
- The IA made a determination, which OIC sought to set aside.
5. Formal Citations
- The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd, OS 986/2006, [2008] SGHC 236
6. Timeline
| Date | Event |
|---|---|
| SPM struck by vessel | |
| SPM sank | |
| SPM retrieved | |
| RIL commenced admiralty action | |
| RIL commenced action against OIC | |
| RNA entered voluntary run-off | |
| Reliance Insurance Company put into liquidation | |
| RNA bought over by Whittington Investments Guernsey Ltd | |
| Scheme creditors approved the Scheme | |
| Scheme approved by the High Court | |
| OIC submitted proof of debt | |
| IA rendered final determination | |
| OIC filed application to set aside IA’s determination | |
| Judgment reserved |
7. Legal Issues
- Setting aside expert's decision
- Outcome: The court found manifest error in the IA's discount calculations and remitted the determination for re-determination.
- Category: Procedural
- Sub-Issues:
- Material departure from instructions
- Manifest error
- Failure to act with due care and diligence
- Compound interest as damages
- Outcome: The court discussed the principles for awarding compound interest as damages but did not make a definitive ruling.
- Category: Substantive
- Interpretation of Contractual Terms
- Outcome: The court interpreted the terms of the Scheme of Compromise and Arrangement to determine the scope of the Independent Adjudicator's powers and the finality of their decision.
- Category: Substantive
8. Remedies Sought
- Setting aside the Independent Adjudicator's determination
- Remitting the matter to the Independent Adjudicator for re-adjudication
9. Cause of Actions
- Breach of Contract
- Reinsurance Claim
10. Practice Areas
- Commercial Litigation
- Arbitration
- Insurance
- Reinsurance
11. Industries
- Insurance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd | Court of Appeal | Yes | [2008] 3 SLR 121 | Singapore | Cited for background on the Scheme of Arrangement. |
| Trans Elite Equipment Rental Sdn Bhd v PSC-Naval Dockyard Sdn Bhd | High Court | Yes | [2003] 4 MLJ 30 | Malaysia | Cited regarding the practice of courts in granting post-judgment interest. |
| NM Rothschild & Sons (Singapore) Ltd & Ors v Rumah Nanas Rubber Estate Sdn Bhd | High Court | Yes | [1994] 2 SLR 160 | Singapore | Cited regarding the practice of courts in granting post-judgment interest. |
| Chia Ah Sng v Hong Leong Finance Limited | High Court | Yes | [2001] 1 SLR 591 | Singapore | Cited regarding the practice of courts in granting post-judgment interest. |
| Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte Ltd | High Court | Yes | [2006] 1 SLR 634 | Singapore | Cited for principles regarding expert determination vs. arbitration. |
| Jones v Sherwood Computer Services Plc | English Court of Appeal | Yes | [1992] 1 WLR 277 | England and Wales | Cited for the principle that an expert's certificate is not binding if the expert departed from instructions in a material respect. |
| Jones (M.) v. Jones (R.R.) | High Court | Yes | [1971] 1 W.L.R. 840 | England and Wales | Cited for the principle that a valuation is vitiated if erroneous in principle. |
| Campbell v Edwards | English Court of Appeal | Yes | [1976] 1 WLR 403 | England and Wales | Cited for the principle that parties are bound by an expert's valuation given honestly and in good faith. |
| Baber v Kenwood Manufacturing Co Ltd and Whinney Murray & Co | English Court of Appeal | Yes | [1978] 1 Lloyd’s Rep 175 | England and Wales | Cited for the principle that parties accepting an expert's opinion accept the risk of misfortunes happening. |
| Shell U.K. v. Enterprise Oil | High Court | Yes | [1999] 2 Lloyd’s Law Reports 456 | England and Wales | Cited for the principle that a material breach of instructions renders an expert's act not binding. |
| Nikko Hotels (UK) Ltd v MEPC Plc | High Court | Yes | [1991] 28 EG 86 | England and Wales | Cited for the principle that an expert's decision is binding if the right question is answered, even if wrongly. |
| Pontsarn Investments Ltd v Kansallis-Osake-Pankki | High Court | Yes | [1992] 1 E.C.L. R. 148 | England and Wales | Cited for the principle that an expert's decision is final and binding even if patently wrong. |
| Veba Oil Supply & Trading GmbH v Petrotrade Inc | English Court of Appeal | Yes | [2002] 1 All ER 703 | England and Wales | Cited for the distinction between a mistake and a departure from instructions in expert determinations. |
| Riduan bin Yusof v Khng Thian Huat | High Court | Yes | [2005] 2 SLR 188 | Singapore | Cited for the principle that an expert's determination can be challenged for material departure from instructions or manifest error. |
| Tan Yeow Khoon v Tan Yeow Tat | High Court | Yes | [2003] 3 SLR 486 | Singapore | Cited for the principle that an expert's valuation can be challenged for manifest error. |
| Geowin Construction Pte Ltd (in liquidation) v Management Corporation Strata Title No 1256 | High Court | Yes | [2007] 1 SLR 1004 | Singapore | Cited for the interpretation of 'manifest error' as a patent error on the face of the award. |
| Nikko Hotels (UK) Ltd v MEPC Plc | High Court | Yes | [1991] 28 EG 86 | England and Wales | Cited for the principle that if an expert answers the right question in the wrong way, the decision is still binding. |
| Sempra Metals Limited v Her Majesty’s Commissioners of Inland Revenue and Customs | House of Lords | Yes | [2007] UKHL 34 | United Kingdom | Cited for the principle that compound interest is available in common law as a restitutionary remedy. |
| Commercial Union Assurance v Mander | Commercial Court | Yes | [1996] 2 Lloyd’s Rep 640 | England and Wales | Cited for the principle that the right to obtain disclosure of documents depends on a joint interest. |
| Winterthur Swiss Insurance Company The National Insurance & Guarantee Corporation Limited v AG ( Manchester) Limited (in liquidation) & others | English High Court | Yes | [2006] EWHC 839 (Comm) | England and Wales | Cited for the principle that a party with a common interest can obtain disclosure of communications. |
| Alliance v Regent Holdings Incorporated | England and Wales Court of Appeal (Civil Division) | Yes | [1999] EWCA Civ 1953 | England and Wales | Cited regarding the binding nature of an expert's determination even if the reasoning is not fully understood. |
| President of India v La Pintada Compania Navigation SA | House of Lords | Yes | [1985] 1 AC 104 | United Kingdom | Mentioned in passing. |
| Edward Wong Finance Co Ltd v Johnson Stokes & Master | Privy Council | Yes | [1984] AC 296 | England and Wales | Mentioned in passing. |
| Bernhard Schulte GmbH & Co KG v Nile Holdings Ltd | High Court | Yes | [2004] 2 Lloyd’s Rep 355 | England and Wales | Mentioned in passing. |
| PlanAssure PAC (formerly known as Patrick Lee PAC) v Gaelic Inns Pte Ltd | Court of Appeal | Yes | [2007] 4 SLR 513 | Singapore | Mentioned in passing. |
| JSI Shipping (S) Pte Ltd v Teofoongwonglcloong (a firm) | Court of Appeal | Yes | [2007] 4 SLR 460 | Singapore | Mentioned in passing. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Rules of Court (Cap 322, R5, 2006 Rev Ed) | Singapore |
| Civil Law Act (Cap 43, 1999 Rev Ed) | Singapore |
| Supreme Court of Judicature Act (Cap 322) | Singapore |
| International Arbitration Act (Cap 143A, 2002 Rev Ed) | Singapore |
| Arbitration Act (Cap 10, 2002 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Independent Adjudicator
- Scheme of Compromise and Arrangement
- Reinsurance
- Constructive Total Loss
- Valuation Date
- Cut-off Date
- Expert Determination
- Material Departure from Instructions
- Manifest Error
- Due Care and Diligence
- Compound Interest
- Discounting
15.2 Keywords
- Independent Adjudicator
- Scheme of Arrangement
- Reinsurance
- Expert Determination
- Compound Interest
- Singapore High Court
16. Subjects
- Civil Procedure
- Contract Law
- Insurance Law
- Reinsurance Law
- Arbitration
- Expert Determination
17. Areas of Law
- Civil Procedure
- Contract Law
- Arbitration Law
- Insurance Law
- Reinsurance Law