Holcim v Precise Development: Force Majeure & Indonesian Sand Ban Impact on Concrete Supply

In Holcim (Singapore) Pte Ltd v Precise Development Pte Ltd, the Singapore Court of Appeal heard an appeal regarding a breach of contract claim. The case arose from the Indonesian sand ban of 2007, which impacted the supply of ready-mixed concrete (RMC) under a contract between Holcim (Singapore) Pte Ltd (Appellant) and Precise Development Pte Ltd (Respondent). The Respondent sued the Appellant for breach of contract, and the Appellant raised a defense based on the force majeure clause. The Court of Appeal allowed the appeal, finding that the force majeure clause applied, discharging the Appellant from its obligation to supply RMC to the Respondent.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Court of Appeal case concerning a breach of contract claim due to the Indonesian sand ban, focusing on the interpretation of a force majeure clause.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Precise Development Pte LtdRespondentCorporationAppeal DismissedLost
Holcim (Singapore) Pte LtdAppellantCorporationAppeal AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Chan Sek KeongChief JusticeNo
Andrew Phang Boon LeongJustice of the Court of AppealYes
V K RajahJustice of the Court of AppealNo

4. Counsels

Counsel NameOrganization
Tan Kon Yeng EugeneDrew & Napier LLC
Tan Liam BengDrew & Napier LLC
Soh Chun YorkDrew & Napier LLC
Mohammed RezaRajah & Tann LLP
Francis XavierRajah & Tann LLP
Low Yi YangRajah & Tann LLP

4. Facts

  1. Holcim and Precise Development entered into a contract for the supply of ready-mixed concrete (RMC).
  2. The Indonesian government announced a Sand Ban, effective 6 February 2007.
  3. The Sand Ban created a shortage of sand and aggregates, materials required for RMC.
  4. Holcim informed Precise Development it could no longer supply RMC at pre-Sand Ban prices.
  5. Precise Development sued Holcim for breach of contract.
  6. Holcim raised a defense based on the force majeure clause in the contract.
  7. BCA implemented a system where only main contractors had access to sand stockpiles.

5. Formal Citations

  1. Holcim (Singapore) Pte Ltd v Precise Development Pte Ltd, Civil Appeal No 160 of 2009, [2011] SGCA 1

6. Timeline

DateEvent
Contract signed for supply of ready-mixed concrete
Indonesian government announced Sand Ban
Holcim informed Precise Development of Sand Ban
BCA announced release of sand from stockpiles
Holcim sent revised quotation to Precise Development
Huat Shua informed Holcim it could not supply sand
Precise Development stated there would be no disruption to supply of RMC
Sand Ban came into effect
Holcim informed Precise Development it had no access to BCA stockpiles
BCA announced increase in price of sand from stockpile
Holcim informed Precise Development supply of aggregates had stopped
BCA announced RMC companies could purchase aggregates from stockpile
Holcim informed Precise Development of increased prices of sand and aggregates
Holcim sent revised quotation to Precise Development
Meeting between Holcim and Precise Development
Precise Development replied to Holcim's letter of 1 March 2007
Holcim sent another quotation to Precise Development
Precise Development stated it would supply sand and aggregates at old rate
Holcim clarified the meeting on 19 March 2007 was to discuss manufactured sand
Summons No 697 of 2010
Judgment reserved
Decision Date

7. Legal Issues

  1. Breach of Contract
    • Outcome: The Court of Appeal found that the Appellant was not in breach of contract due to the application of the force majeure clause.
    • Category: Substantive
    • Sub-Issues:
      • Failure to supply concrete at the agreed price
  2. Force Majeure
    • Outcome: The Court of Appeal held that the force majeure clause applied, discharging the Appellant from its obligation to supply RMC.
    • Category: Substantive
    • Sub-Issues:
      • Interpretation of 'disrupted' in force majeure clause
      • Whether event was beyond the control of the supplier
      • Reasonable steps to avoid the operation of the clause

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Construction Law

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Precise Development Pte Ltd v Holcim (Singapore) Pte LtdHigh CourtYes[2010] 1 SLR 1083SingaporeCited as the decision under appeal. The Court of Appeal overturned the High Court's decision.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte LtdCourt of AppealYes[2007] 4 SLR(R) 413SingaporeCited for the principle that the construction of a force majeure clause is paramount and the court should give full effect to the intention of the parties.
Goldlion Properties Limited v Regent National Enterprises LimitedHong Kong Court of Final AppealYes[2009] HKCFA 58Hong KongCited for its discussion on the interpretation of force majeure clauses and the requirement to take reasonable steps to avoid the effects of a force majeure event.
Tennants (Lancashire), Limited v C S Wilson and Company, LimitedHouse of LordsYes[1917] AC 495EnglandCited for the interpretation of the word 'hindering' in a force majeure clause and the principle that a mere increase in price is not sufficient to constitute a hindrance.
Peter Dixon & Sons, Limited v Henderson, Craig & Co, LimitedEnglish Court of AppealYes[1919] KBD 778EnglandCited for the principle that a rise in price alone does not constitute a hindrance to delivery within the meaning of a force majeure clause.
Brauer & Co (Gt Britain), Ltd v James Clark (Brush Materials), LtdEnglish Court of AppealYes[1952] 2 Lloyd’s Rep 147EnglandCited to distinguish that an astronomical increase in price may constitute a fundamentally different situation.
Tsakiroglou & Co Ltd v Noblee Thorl GmbHHouse of LordsYes[1962] AC 93EnglandCited to distinguish that increased costs might constitute a possible ground for frustration where they were so extreme as to be astronomical.
Glahe International Expo AG v ACS Computer Pte LtdCourt of AppealYes[1999] 1 SLR(R) 945SingaporeCited to distinguish that increased costs might constitute a possible ground for frustration where they were so extreme as to be astronomical.
Frontier International Shipping Corp v Swissmarine Corporation Inc (The “Cape Equinox”)English High CourtYes[2005] 1 Lloyd’s Rep 390EnglandCited for the principle that a holistic interpretation ought to be adopted with regard to both sub-issues.
Owners of Steamship Matheos v Louis Dreyfus and CompanyHouse of LordsYes[1925] AC 654EnglandCited as an illustration of a situation where loading by hand during frost was in the commercial sense impracticable.
Channel Island Ferries Ltd v Sealink UK LtdEnglandYes[1988] 1 Lloyd’s Rep 323EnglandCited for the argument that there is inherent in the concept of a force majeure clause the principle that the person who seeks to rely upon it must prove that they had taken all reasonable steps to avoid the force majeure effects of that event.
Channel Island Ferries Ltd v Sealink UK LtdEnglandYes[1987] 1 Lloyd’s Rep 559EnglandCited for the principle that the affected party ought to take reasonable steps to avoid the event or events stipulated in the clause.
B & S Contracts and Design Ltd v Victor Green Publications LtdEnglish Court of AppealYes[1984] ICR 419EnglandCited for the principle that the affected party ought to take reasonable steps to avoid the event or events stipulated in the clause.
Trade and Transport Incorporated v Iino Kaiun Kaisha Ltd (The Angelia)English High CourtYes[1973] 1 WLR 210EnglandCited for the principle that the party concerned ought to have taken steps to ascertain the non-availability of vehicles before the contract was concluded and could not avail itself of the force majeure clause as a consequence.
Bolckow, Vaughan, and Co v Compania Minera de Sierra ManeraEnglish High CourtYes(1916) 114 LT 758EnglandCited for the principle that the party concerned ought to have taken steps to ascertain the non-availability of vehicles before the contract was concluded and could not avail itself of the force majeure clause as a consequence.
Forefront Medical Technology (Pte) Ltd v Modern-Pak Private LtdSingaporeYes[2006] 1 SLR(R) 927SingaporeCited for the relationship between the two categories of implied terms.
Jet Holding Ltd v Cooper (Singapore) Pte LtdSingaporeYes[2006] 3 SLR(R) 769SingaporeCited for the relationship between the two categories of implied terms.
Magenta Resources (S) Pte Ltd v China Resources (S) Pte LtdSingapore High CourtYes[1996] 2 SLR(R) 316SingaporeCited for the principle that there was no duty to mitigate.
Review Publishing Co Ltd v Lee Hsien LoongCourt of AppealYes[2010] 1 SLR 52SingaporeCited for the legal principles governing an application to amend pleadings.
Chwee Kin Keong v Digilandmall.com Pte LtdSingaporeYes[2005] 1 SLR 502SingaporeCited for the principle that the court may grant leave to amend a pleading at any stage of the proceedings.
Lee Siew Chun v Sourgrapes Packaging Products Trading Pte LtdSingaporeYes[1993] 2 SLR 297SingaporeCited for the principle that our courts have allowed amendments to be made to pleadings even at the final stages of a trial after the parties have made their closing submissions.
Invar Realty Pte Ltd v Kenzo Tange Urtec IncSingaporeYes[1990] SLR 791SingaporeCited for the principle that our courts have allowed amendments to be made to pleadings even after summary or interlocutory judgment has been obtained.
Soon Peng Yam v Maimon bte AhmadSingaporeYes[1996] 2 SLR 609SingaporeCited for the principle that our courts have allowed amendments to be made to pleadings even pending an appeal or in the course of an appeal itself.
Asia Business Forum Pte Ltd v Long Ai SinSingaporeYes[2004] 2 SLR 173SingaporeCited for the principle that the court, in determining whether to grant a party leave to amend his pleadings, must have regard to the justice of the case.
Susilawati v American Express Bank LtdSingaporeYes[2009] 2 SLR 737SingaporeCited for the principle that the court, in determining whether to grant a party leave to amend his pleadings, must have regard to the justice of the case.
Hwa Lai Heng Ricky v DBS Bank LtdCourt of AppealYes[2010] 2 SLR 710SingaporeCited and applied the abovementioned principles.
Holcim (Singapore) Pte Ltd v Kwan Yong Construction Pte LtdSingapore High CourtYes[2009] 2 SLR(R) 193SingaporeCited to distinguish that the Appellant could not rely on cl 3.

13. Applicable Rules

Rule Name
Order 20 r 5(1) of the Rules of Court
O 57 r 13(1) of the Rules of Court

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Force Majeure
  • Sand Ban
  • Ready-Mixed Concrete
  • RMC
  • Disruption
  • Shortage of Material
  • BCA Stockpiles
  • Concreting Sand
  • Manufactured Sand

15.2 Keywords

  • Force Majeure
  • Sand Ban
  • Breach of Contract
  • Construction
  • Concrete
  • Singapore
  • RMC

17. Areas of Law

Area NameRelevance Score
Force Majeure95
Breach of Contract90
Contract Law85
Performance of Contract60
Construction of Contracts50
Contractual Interpretation50
Construction of Contract50
Interpretation of Contract50
Frustration40
Construction Law30
Litigation20

16. Subjects

  • Contract Law
  • Construction Law
  • Force Majeure
  • Breach of Contract