Tozzi Srl v Bumi Armada: Right of First Refusal, Contract Formation & Breach
Tozzi Srl (formerly known as Tozzi Industries SpA) sued Bumi Armada Offshore Holdings Limited and Bumi Armada Berhad in the Singapore International Commercial Court, alleging breach of contract related to a right of first refusal for the supply of Topside Process Modules for a gas project in Indonesia. The court, presided over by Steven Chong JA, Carolyn Berger IJ, and Henry Bernard Eder IJ, found in favor of Tozzi, holding that Bumi breached the agreement to grant Tozzi a right of first refusal for all seven Topside Process Modules and that Bumi Armada Berhad induced Bumi Armada Offshore Holdings Limited to breach the right of first refusal.
1. Case Overview
1.1 Court
Singapore International Commercial Court1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Tozzi sued Bumi for breach of contract regarding a right of first refusal for a gas processing project. The court found in favor of Tozzi.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Bumi Armada Offshore Holdings Limited | Defendant | Corporation | Claim Dismissed | Lost | |
| Bumi Armada Berhad | Defendant | Corporation | Claim Dismissed | Lost | |
| Tozzi Srl (formerly known as Tozzi Industries SpA) | Plaintiff | Corporation | Judgment for Plaintiff | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Steven Chong | Judge of Appeal | Yes |
| Carolyn Berger | International Judge | No |
| Henry Bernard Eder | International Judge | No |
4. Counsels
4. Facts
- Tozzi and Bumi entered into a Pre-Bid Agreement (PBA) for a project in Indonesia.
- The PBA granted Tozzi a right of first refusal for the supply of Topside Process Modules.
- The PBA expired after one year, but the parties continued to work together.
- A meeting on 31 July 2014 resulted in an agreement regarding the right of first refusal.
- Bumi was awarded the contract for the Project.
- Bumi issued a Request for Quote (RFQ) without honoring Tozzi's right of first refusal.
- BAOHL awarded the subcontract to VME Process Asia Pacific Pte Ltd.
5. Formal Citations
- Tozzi Srl (formerly known as Tozzi Industries SpA) v Bumi Armada Offshore Holdings Ltd and another, Suit No 6 of 2016, [2017] SGHC(I) 8
6. Timeline
| Date | Event |
|---|---|
| Bumi invited Tozzi to submit a proposal for engineering, procurement and construction services. | |
| Tozzi submitted its first unpriced proposal. | |
| Tozzi and Bumi discussed working together to prepare a bid to Husky. | |
| Tozzi submitted a range of price proposals. | |
| Tozzi and BAOHL entered into the Pre-Bid Agreement. | |
| Tozzi submitted a lump-sum price proposal to Bumi. | |
| BAB’s Head of Proposal Engineering visited Tozzi’s facilities. | |
| BAB’s Project Manager requested an updated material selection diagram. | |
| BAB’s CEO assured Tozzi it would get orders for the modules. | |
| Mr. Gupta informed Mr. Schiavo that they would have to go through competitive bidding. | |
| Mr Basma called for an urgent meeting with Tozzi. | |
| Tozzi and Bumi held a meeting regarding the right of first refusal. | |
| Bumi prepared the Minutes of Meeting. | |
| Husky awarded the bid to BAOHL. | |
| Mr. Schiavo emailed Mr. Gupta a revised version of Tozzi's technical proposal. | |
| Tozzi sent a draft FEED proposal to Bumi. | |
| Mr. Gupta conveyed certain management directions to Mr. Schiavo via email. | |
| Mr. Schiavo drew Bumi's attention to a clause which he perceived as conflicting with the right of first refusal. | |
| Tozzi and Bumi signed a contract for Tozzi to perform the FEED works. | |
| Bumi issued a Request for Quote. | |
| Mr. Mohamed Sharil bin Zulkifli responded to Mr. Schiavo. | |
| Mr. Gupta told Mr. Schiavo not to worry about the proposal. | |
| A contract was signed by Husky, BAOHL and its joint venture company. | |
| Tozzi submitted a bid to supply the Topside Process Modules. | |
| A revised bid for the TI Packages was submitted. | |
| Mr Schiavo met with Mr Jesse van de Korput. | |
| Mr van de Korput denied that Tozzi was entitled to a right of first refusal. | |
| Mr Schiavo met with Bumi’s Project team. | |
| Tozzi submitted a final proposal. | |
| BAOHL awarded the subcontract for the TI Packages to VME Process Asia Pacific Pte Ltd. | |
| Trial began | |
| Judgment reserved. |
7. Legal Issues
- Breach of Contract
- Outcome: The court held that BAOHL breached the agreement to grant Tozzi a right of first refusal.
- Category: Substantive
- Sub-Issues:
- Failure to honor right of first refusal
- Inducement of Breach of Contract
- Outcome: The court found that BAB induced BAOHL to breach the right of first refusal.
- Category: Substantive
- Contract Formation
- Outcome: The court found that a contract was formed at the 31 July Meeting for Tozzi to be granted a right of first refusal.
- Category: Substantive
- Sub-Issues:
- Intention to create legal relations
- Subject to contract clause
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Inducement of Breach of Contract
10. Practice Areas
- Commercial Litigation
- Breach of Contract
- Inducement of Breach of Contract
11. Industries
- Oil and Gas
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Norwest Holdings Pte Ltd (in liquidation) v Newport Mining Ltd and another appeal | Singapore Court of Appeal | Yes | [2011] 4 SLR 617 | Singapore | Cited for the proposition that the phrase “subject to contract” makes clear that even if the parties agree on all essential terms, neither party intends to be contractually bound until a contract is signed, unless there is strong and exceptional evidence to the contrary. |
| Astrazeneca UK Ltd v Albemarle International Corporation and another | England and Wales High Court | Yes | [2011] EWHC 1574 | England and Wales | Cited to clarify the content of a right of first refusal, stating that it confers a right to obtain the subject matter of the right and to be given an opportunity to match any third party offer. |
| Tribune Investment Trust Inc v Soosan Trading Co Ltd | Singapore High Court | Yes | [2000] 2 SLR(R) 407 | Singapore | Cited for the elements required to establish inducement of breach of contract, specifically knowledge of the contract and intention to interfere with contractual rights. |
| ARS v ART and another | Singapore High Court | Yes | [2015] SGHC 78 | Singapore | Cited to show that the fact that a company controls another does not, ipso facto, mean that the parent company is liable for the subsidiary's breach. |
| Stocznia Gdanska SA v Latvian Shipping Co, Latreefer Inc and others | England and Wales High Court | Yes | [2001] 1 Lloyd’s Rep 537 | England and Wales | Cited for the view that the mere fact that a company is a wholly owned subsidiary controlled by the parent company does not enable the court to draw the inference that the directors of the subsidiary treated the requests of the parent company as if they were instructions to be executed. |
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
- Right of First Refusal
- Pre-Bid Agreement
- Topside Process Modules
- FEED works
- Subject to contract
- EPC services
15.2 Keywords
- Contract
- Breach
- Right of First Refusal
- Tozzi
- Bumi
- Singapore
- International Commercial Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Right of first refusal | 85 |
| Contract Law | 80 |
| Breach of Contract | 75 |
| Inducement of Breach of Contract | 70 |
| Agency Law | 30 |
16. Subjects
- Contract Law
- Breach of Contract
- Right of First Refusal