Bumi Armada v Tozzi: Right of First Refusal & Inducement of Breach of Contract Dispute
In a civil appeal before the Court of Appeal of the Republic of Singapore, Bumi Armada Offshore Holdings Limited and Bumi Armada Berhad appealed against the decision of the Singapore International Commercial Court in favor of Tozzi Srl. The dispute arose from a project for the supply of facilities and services in connection with the development of the Madura BD Gas and Condensate Field in Indonesia. Tozzi claimed BAOHL breached a right of first refusal and BAB induced that breach. The Court of Appeal dismissed BAOHL's appeal on liability but allowed the appeal on quantum in part, and allowed BAB's appeal on liability in full.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal allowed in part. BAOHL's appeal on liability dismissed, appeal on quantum allowed in part. BAB's appeal on liability allowed in full.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court case involving Bumi Armada and Tozzi Srl concerning breach of contract and inducement of breach related to a right of first refusal.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Bumi Armada Offshore Holdings Limited | Appellant, Defendant | Corporation | Appeal on liability dismissed | Lost | |
| Bumi Armada Berhad | Appellant, Defendant | Corporation | Appeal allowed in full | Won | |
| Tozzi Srl (formerly known as Tozzi Industries SpA) | Respondent, Plaintiff | Corporation | Partial Win | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | No |
| Beverley Marian McLachlin | International Judge | No |
| David Edmond Neuberger | International Judge | Yes |
4. Counsels
4. Facts
- BAOHL was awarded a contract for a project in Indonesia.
- Tozzi and BAOHL entered into a Pre-Bid Agreement granting Tozzi a right of first refusal.
- The PBA expired, but the parties continued to work together.
- Husky awarded the Project to BAOHL.
- Bumi issued a Request for Quote inviting proposals for the supply of all seven Modules.
- BAOHL awarded the subcontract for the supply of the TI Packages to VME without giving Tozzi the opportunity to exercise its right of first refusal.
- BAOHL has no employees of its own.
5. Formal Citations
- Bumi Armada Offshore Holdings Ltd and another v Tozzi Srl (formerly known as Tozzi Industries SpA), Civil Appeal No 199 of 2017, [2018] SGCA(I) 05
6. Timeline
| Date | Event |
|---|---|
| Husky invited companies, including BAOHL, to bid for the Project. | |
| Tozzi and BAOHL entered into a Pre-Bid Agreement. | |
| Tozzi submitted a proposal for the supply of EPC services for the TI Packages. | |
| Tozzi sought to extend the scope of its services to all seven Modules, but this was rejected by Bumi. | |
| The PBA expired. | |
| Husky informed BAOHL that it would be awarded the Project. | |
| BAB called for an urgent meeting with Tozzi, and the parties met. | |
| Bumi prepared the minutes of the 31 July Meeting. | |
| Husky awarded the Project to BAOHL. | |
| Bumi issued a Request for Quote inviting proposals for the supply of all seven Modules. | |
| Tozzi submitted its quote for the EPC supply of the seven Modules. | |
| Bumi informed Tozzi that it had decided to subcontract only the supply of the TI Packages. | |
| Tozzi submitted a revised quote for the supply of the TI Packages. | |
| Mr Schiavo met with Mr Jesse van de Korput and raised Tozzi’s right of first refusal. | |
| Mr Schiavo sent an e-mail raising Tozzi’s right of first refusal. | |
| Mr Schiavo met with Bumi’s team to discuss the commercial aspects of Tozzi’s proposal. | |
| Tozzi submitted its final bid for the supply of the TI Packages. | |
| The subcontract for the supply of the TI Packages was awarded by BAOHL to VME. | |
| Commencement of proceedings by Tozzi against BAOHL and BAB. | |
| SICC Judgment issued. | |
| Civil Appeal No 199 of 2017 filed. | |
| Judgment reserved. | |
| Judgment delivered. |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that BAOHL had breached a valid and binding right of first refusal granted to Tozzi.
- Category: Substantive
- Sub-Issues:
- Failure to honor right of first refusal
- Inducement of Breach of Contract
- Outcome: The court found that BAB was not liable for inducing BAOHL’s breach of contract.
- Category: Substantive
- Interpretation of 'Subject to Contract' Clause
- Outcome: The court found that despite the 'subject to contract' clause, a binding oral agreement was reached regarding the right of first refusal.
- Category: Substantive
- Burden of Proof
- Outcome: The court held that Tozzi failed to establish a prima facie case that BAOHL had subcontracted the supply of the four Modules to third parties, and therefore the burden of proof did not shift to BAOHL.
- Category: Procedural
8. Remedies Sought
- Damages for breach of contract
- Damages for inducement of breach of contract
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 |
|---|---|---|---|---|---|
| Tozzi Srl (formerly known as Tozzi Industries SpA) v Bumi Armada Offshore Holdings Ltd and another | Singapore International Commercial Court | Yes | [2017] 5 SLR 156 | Singapore | The current appeal is against the decision of this case. The SICC found that BAOHL had breached the right of first refusal that it had granted to Tozzi, and that BAB had induced BAOHL’s breach of contract. |
| Norwest Holdings Pte Ltd (in liquidation) v Newport Mining Ltd and another appeal | Court of Appeal | Yes | [2011] 4 SLR 617 | Singapore | Cited regarding the interpretation of contracts and the need to consider all relevant and admissible features of the arrangement. |
| Toptip Holding Pte Ltd v Mercuria Energy Trading Pte Ltd and another appeal | Court of Appeal | Yes | [2018] 1 SLR 50 | Singapore | Cited regarding the interpretation of contracts and the need to consider all relevant and admissible features of the arrangement. |
| Phosagro Asia Pte Ltd v Piattchanine, Iouri | Court of Appeal | Yes | [2016] 5 SLR 1052 | Singapore | Cited regarding the application of Section 108 of the Evidence Act and the need to establish a prima facie case before invoking it. |
| Yap Son On v Ding Pei Zhen | Court of Appeal | Yes | [2017] 1 SLR 219 | Singapore | Cited regarding the application of Section 108 of the Evidence Act and the need to establish a prima facie case before invoking it. |
| Surender Singh s/o Jagdish Singh and another (administrators of the estate of Narindar Kaur d/o Sarwan Singh, deceased) v Li Man Kay and others | Court of Appeal | Yes | [2010] 1 SLR 428 | Singapore | Cited regarding the application of Section 108 of the Evidence Act and the need to establish a prima facie case before invoking it. |
| Tribune Investment Trust Inc v Soosan Trading Co Ltd | Court of Appeal | Yes | [2000] 2 SLR(R) 407 | Singapore | Cited for the elements required to establish the tort of inducing breach of contract. |
| PT Sandipala Arthaputra and others v ST Microelectronics Asia Pacific Pte Ltd and others | Court of Appeal | Yes | [2018] 1 SLR 818 | Singapore | Cited regarding the liability of a director for inducing a breach of contract by the company, but distinguished in the context of a shareholder. |
| Said v Butt | King's Bench Division | Yes | [1920] 3 KB 497 | England and Wales | Cited regarding the liability of a director for inducing a breach of contract by the company, but distinguished in the context of a shareholder. |
| Aron Salomon (Pauper) v A Salomon and Company Limited | House of Lords | Yes | [1897] AC 22 | United Kingdom | Cited for the principle of independent corporate identity. |
| Goh Chan Peng and others v Beyonics Technology Ltd and another and another appeal | Court of Appeal | Yes | [2017] 2 SLR 592 | Singapore | Cited for the principle of independent corporate identity. |
| ARS v ART and another | High Court | Yes | [2015] SGHC 78 | Singapore | Cited for the principle that a wholly owned subsidiary is a separate legal entity. |
| Stocznia Gdanska SA v Latvian Shipping Co and others | English Commercial Court | Yes | [2001] 1 Lloyd’s Rep 537 | England and Wales | Discusses the liability of a parent company for inducing a breach of contract by its subsidiary. |
| Stocznia Gdanska SA v Latvian Shipping Company and others (No. 2) | Court of Appeal | Yes | [2002] EWCA Civ 889 | England and Wales | Discusses the liability of a parent company for inducing a breach of contract by its subsidiary. |
| Public Prosecutor v Mohd Ariffan bin Mohd Hassan | Court of Appeal | Yes | [2018] 1 SLR 544 | Singapore | Cited regarding the conditions for adducing further evidence on appeal. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Right of First Refusal
- Pre-Bid Agreement
- Subject to Contract
- EPC Services
- TI Packages
- Modules
- Inducement of Breach
- Floating Production, Storage and Offloading unit
- Front End Engineering and Design
- Request for Quote
15.2 Keywords
- breach of contract
- inducement
- right of first refusal
- construction
- oil and gas
- singapore
- commercial
- contract law
- tort law
17. Areas of Law
16. Subjects
- Contract Law
- Tort Law
- Commercial Law
- Construction Law