Prestige Marine v Marubeni: Setting Aside Arbitration Award & Leave to Appeal on SGA s50(3) Damages

Prestige Marine Services Pte Ltd ("Prestige") applied to the High Court of Singapore to set aside an arbitration award in favor of Marubeni International Petroleum (S) Pte Ltd (“Marubeni”) and for leave to appeal on four questions of law. The dispute arose from a contract where Prestige failed to lift an agreed quantity of High Sulphur Fuel Oil from Marubeni. The arbitrator awarded damages to Marubeni based on section 50(3) of the Sale of Goods Act. Tan Lee Meng J dismissed Prestige's application to set aside the award and for leave to appeal, finding that Prestige had not met the conditions for appeal under the Arbitration Act.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application for leave to appeal dismissed with costs.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Prestige Marine sought to set aside an arbitration award favoring Marubeni and appeal on points of law regarding damages under s50(3) SGA. The court dismissed both applications.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Prestige Marine Services Pte LtdPlaintiff, ApplicantCorporationApplication for leave to appeal dismissedLost
Marubeni International Petroleum (S) Pte LtdDefendant, RespondentCorporationApplication dismissedWon

3. Judges

Judge NameTitleDelivered Judgment
Tan Lee MengJudgeYes

4. Counsels

Counsel NameOrganization
Lim Wei LeeWongPartnership LLP
Jenny TsinWongPartnership LLP
Wendy LinWongPartnership LLP
Andre ManiamWongPartnership LLP
Toh Kian SingRajah & Tann LLP
Nathanael LinRajah & Tann LLP
Maureen PohRajah & Tann LLP
Ritchie NgRajah & Tann LLP

4. Facts

  1. Prestige contracted to buy 120,000 mt of HSFO 380CST from Marubeni for delivery in July-September 2008.
  2. Prestige failed to lift approximately 61,761 mt of the cargo by the agreed deadline.
  3. Marubeni demanded a US$12m standby letter of credit from Prestige under clause 10(a) of the contract.
  4. Prestige failed to provide the letter of credit by the deadline.
  5. Marubeni terminated the contract on 22 October 2008 due to Prestige's failure to provide the letter of credit.
  6. Marubeni sold the unlifted cargo in smaller quantities on the spot market, incurring losses.
  7. The arbitrator awarded Marubeni US$11,957,748.43 in damages based on the market price on 22 October 2008.

5. Formal Citations

  1. Prestige Marine Services Pte Ltd v Marubeni International Petroleum (S) Pte Ltd, Originating Summons No 1143 of 2010, [2011] SGHC 270

6. Timeline

DateEvent
Contract entered into for delivery of HSFO 380CST in July, August, and September 2008.
Prestige failed to lift approximately 21,761 mt of the August 2008 cargo as at 1 October 2008.
Entire 40,000 mt of the September 2008 cargo had not been lifted.
Deadline for lifting the agreed cargo expired.
Marubeni sent Prestige a letter setting out letters of credit projections relating to the August/September 2008 outstanding cargo.
Prestige replied to Marubeni's letter.
Marubeni sent a second letter to Prestige to remind the latter to procure the issuance of letters of credit for the remaining unlifted cargo.
10,955 mt of the outstanding August 2008 contractual quantities lifted.
Marubeni emailed Prestige regarding performance of Aug-priced and Sept-priced liftings.
Parties met to discuss a possible booking-out of the unlifted cargo.
Parties met to discuss a possible booking-out of the unlifted cargo.
Marubeni decided to rely on cl 10(a) of the contract.
Marubeni sold paper positions on HSFO 180CST.
Marubeni served written demand under cl 10(a) on Prestige for a standby letter of credit for US$12m.
Marubeni sold paper positions on HSFO 180CST.
Deadline for issuing standby letter of credit.
Marubeni's solicitors wrote to Prestige to accept the latter’s repudiatory conduct, and to terminate the contract.
Marubeni sold paper positions on HSFO 180CST.
Prestige's solicitor's letter claimed Marubeni's letter of termination of 22 October 2008 constituted “further repudiatory conduct by Marubeni”.
First spot contract was made.
Remaining unlifted cargo sold by Marubeni to various third parties under 10 spot contracts.
Remaining unlifted cargo sold by Marubeni to various third parties under 10 spot contracts.
Arbitration award dated 11 October 2010 in favour of the defendant, Marubeni International Petroleum (S) Pte Ltd (“Marubeni”).
Prestige sought to set aside the Award and obtain leave to appeal against the Award on four questions of law.
Hearing on 8 February 2011, the parties agreed to seek a clarification from the Arbitrator.
Arbitrator stated what he meant by “hedge” in para 213 of the Award.
WongPartnership wrote to the Arbitrator to seek a clarification of the latter’s letter of the same date.
Rajah & Tann, wrote to the Arbitrator regarding WongPartnership's letter.
The Arbitrator replied to WongPartnership.
Rajah & Tann wrote to the Supreme Court Registry.
Hearing before me on 22 September 2011.
Judgment reserved.

7. Legal Issues

  1. Application of Section 50(3) of the Sale of Goods Act
    • Outcome: The court upheld the arbitrator's application of section 50(3) of the Sale of Goods Act.
    • Category: Substantive
    • Sub-Issues:
      • Determination of relevant market price
      • Date of breach vs. date of termination
      • Mitigation of losses
  2. Setting Aside Arbitration Award
    • Outcome: The court declined to set aside the arbitration award.
    • Category: Procedural
    • Sub-Issues:
      • Reliance on deleted pleadings
      • Interpretation of 'hedge' in award
  3. Leave to Appeal on Questions of Law
    • Outcome: The court dismissed the application for leave to appeal.
    • Category: Procedural
    • Sub-Issues:
      • Conditions for granting leave
      • Distinction between question of law and error of law

8. Remedies Sought

  1. Setting aside of arbitration award
  2. Leave to appeal on questions of law

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Arbitration

11. Industries

  • Petroleum

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema)House of LordsYes[1982] AC 724United KingdomCited for the principle that the discretion to grant leave to appeal is strictly exercised for one-off contracts.
Antaios Compania Naviera SA v Salen Rederierna AB (The Antaios)House of LordsYes[1985] AC 191United KingdomCited for the test in situations involving a one-off clause or event is whether the arbitrator was so obviously wrong as to preclude the possibility that he might be right.
American Home Assurance Co v Hong Lam Marine Pte LtdCourt of AppealYes[1999] 2 SLR(R) 992SingaporeCited for reiterating that in the case of a one-off contract or clause, leave to appeal would normally be refused unless the judge is satisfied that the construction given by the arbitrator is obviously wrong.
Ahong Constuction (S) Pte Ltd v United Boulevard Pte LtdHigh CourtYes[1993] 2 SLR(R) 208SingaporeCited for the distinction between a question of law and an error of law, in respect of which there is no appeal.
Northern Elevator Manufacturing Sdn Bhd v United Engineers (Singapore) Pte LtdCourt of AppealYes[2004] 2 SLR(R) 494SingaporeCited for endorsing Selvam JC’s views and adding that a “question of law” must necessarily be a finding of law which the parties dispute, that requires the guidance of the court to resolve.
Ng Eng Ghee and Others v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appealCourt of AppealYes[2009] 3 SLR(R) 109SingaporeCited for explaining what an error of law entails in the context of an appeal to the High Court from a decision of the Strata Titles Board.
Campbell Mostyn (Provisions) Ltd v Barnett Trading CompanyNot AvailableYes[1954] 1 Lloyd’s Rep 65United KingdomCited to support the Arbitrator's finding that there was no causative link between Prestige’s breach of contract and the alleged profits.
AKAS Jamal v Moolla Dawood Sons & CoPrivy CouncilYes[1916] 1 AC 175United KingdomCited to support the principle that the speculation as to the way the market will subsequently go is the speculation of the seller, not the buyer.
Johnson v AgnewHouse of LordsYes[1980] AC 367United KingdomCited for the principle that if to follow the normal rule of assessing damages at the date of the breach would give rise to injustice, the court has power to fix such other date as may be appropriate in the circumstances.
Gold and Resource Developments (NZ) Ltd v Doug Hood LtdNew Zealand Court of AppealYes[2000] NZCA 131New ZealandCited for listing a number of factors which the court could take into account, one of which was whether the contract provides for the arbitral award to be final and binding.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Sale of Goods ActSingapore
Arbitration ActSingapore

15. Key Terms and Keywords

15.1 Key Terms

  • HSFO 380CST
  • Standby letter of credit
  • Repudiatory breach
  • Market price rule
  • Paper transactions
  • Mitigation of loss
  • Rollover
  • Booking-out

15.2 Keywords

  • arbitration
  • breach of contract
  • sale of goods
  • damages
  • HSFO
  • oil
  • Singapore
  • section 50(3) SGA

17. Areas of Law

Area NameRelevance Score
Contract Law90
Breach of Contract85
Sale of Goods80
Arbitration75
Damages70
Commercial Law65
Performance of Contract60
Liquidated Damages50
Fuel Oil40

16. Subjects

  • Arbitration
  • Contract Law
  • Sale of Goods
  • Damages