Sompo Insurance v Royal & Sun Alliance: Subrogation & Performance Bonds

In Sompo Insurance Singapore Pte Ltd v Royal & Sun Alliance Insurance plc, the High Court of Singapore heard an appeal regarding the right of subrogation in marine insurance. Royal & Sun Alliance Insurance plc (RSA), as the insurer of the Government of Singapore, sought to exercise its right of subrogation to call upon a performance bond issued by Sompo Insurance Singapore Pte Ltd (Sompo) to the Government, following a loss of cargo during shipment. The High Court dismissed the appeal, holding that RSA's right of subrogation extended to calling upon the performance bond.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

The High Court held that an insurer's subrogation rights extend to calling on a performance bond provided to the insured.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Sompo Insurance Singapore Pte LtdAppellantCorporationAppeal DismissedLost
Royal & Sun Alliance Insurance plcRespondentCorporationAppeal DismissedWon

3. Judges

Judge NameTitleDelivered Judgment
Philip JeyaretnamJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Govintharasah s/o RamanathanGurbani & Co LLC
Sharma NeharikaGurbani & Co LLC
Beverly NahGurbani & Co LLC
Wong Wan CheeRev Law LLC
Ng Tse Jun RussellRev Law LLC

4. Facts

  1. The Government of Singapore contracted with Geometra for the shipment of cargo.
  2. Sompo issued a performance bond to the Government as security for Geometra's obligations.
  3. RSA insured the Government for losses to the cargo.
  4. Cargo was damaged during shipment.
  5. RSA indemnified the Government for the loss.
  6. RSA, as subrogee, sought to call on the performance bond issued by Sompo.
  7. Sompo refused to pay, arguing RSA had no right to call on the bond.

5. Formal Citations

  1. Sompo Insurance Singapore Pte Ltd v Royal & Sun Alliance Insurance plc, Registrar’s Appeal from State Courts No 12 of 2021, [2021] SGHC 152

6. Timeline

DateEvent
Government of Singapore and Geometra Worldwide Movers Pte Ltd entered into a Carriage Contract
Sompo issued a Performance Bond in favour of the Government
Cargo was loaded on board a vessel in good order and condition at Singapore
One of the containers fell into the sea during discharge
RSA indemnified the Government for the full quantified loss
RSA’s solicitors, Clyde & Co LLP, wrote to Sompo on behalf of RSA and the Government to call on the Performance Bond
Sompo denied RSA’s claim
The Government and RSA entered into a Deed of Assignment
RSA obtained judgment in the District Court
Hearing date
Judgment reserved

7. Legal Issues

  1. Strict Compliance with Terms of Performance Bond
    • Outcome: The court held that the demand made by RSA's solicitors complied with the terms of the Performance Bond.
    • Category: Substantive
    • Related Cases:
      • [2012] 3 SLR 125
  2. Extent of Subrogation Rights
    • Outcome: The court held that the right of subrogation extends to calling upon a performance bond provided to the insured by a third party.
    • Category: Substantive
    • Related Cases:
      • [1993] AC 713
      • [1883] 11 QBD 380

8. Remedies Sought

  1. Payment under Performance Bond

9. Cause of Actions

  • Breach of Contract
  • Subrogation

10. Practice Areas

  • Commercial Litigation
  • Insurance Litigation

11. Industries

  • Insurance
  • Shipping

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Master Marine AS v Labroy Offshore LtdCourt of AppealYes[2012] 3 SLR 125SingaporeCited for the principle that a demand on a bond must strictly comply with the terms of the bond.
Maridive & Oil Services (SAE) and another v CAN Insurance Co (Europe) LtdEnglish Court of AppealNo[2002] 1 All ER (Comm) 653England and WalesCited regarding the validity of a demand made by solicitors on behalf of a protection and indemnity club.
Lord Napier and Ettrick and another v Hunter and othersHouse of LordsYes[1993] AC 713England and WalesCited for the juridical basis of the law of subrogation.
Castellain v Preston and othersQueen's Bench DivisionYes[1883] 11 QBD 380England and WalesCited for the classic description of the doctrine of subrogation.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Marine Insurance Act 1906 (c 41) (UK), s 79(2)United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

  • Subrogation
  • Performance Bond
  • Marine Insurance
  • Indemnity
  • Strict Compliance
  • Carriage Contract
  • Beneficiary
  • Insured Loss

15.2 Keywords

  • subrogation
  • performance bond
  • marine insurance
  • insurance
  • contract

17. Areas of Law

Area NameRelevance Score
Subrogation95
Performance Bond90
Insurance75
Contract Law60
Admiralty and Maritime Law40
Breach of Contract30
Banking and Finance30
Commercial Law25
Assignment20
Shipping20

16. Subjects

  • Insurance
  • Contract Law
  • Shipping Law