Out-Law / Your Daily Need-To-Know

Singapore International Commercial Court hands down first decision

Out-Law News | 23 May 2016 | 11:22 am | 1 min. read

The Singapore International Commercial Court (SICC), which was set up last year to preside over cases between foreign parties governed by foreign law, has issued its first written judgment.

The three-judge panel, which consisted of two international judges and a presiding judge from Singapore, is to determine a S$1 billion (US$800 million) dispute involving coal production using patented technology. The dispute is to be resolved in tranches with this judgment concerning the first tranche and the determination of issues regarding the scope and effect of the various agreements, including regarding funding issues, coal supply issues and implied duties (110-page / 874KB PDF). 

"This decision makes history as the new SICC's very first written judgment in a S$1bn dispute concerning parties in Indonesia and Australia, with associated parties in Singapore, and held before two heavyweight international judges and a highly-regarded presiding local judge," said commercial dispute resolution expert Sean Hardy of Pinsent Masons MPillay, the Singapore joint law venture partner of Pinsent Masons, the law firm behind Out-Law.com.

Hardy said that although the decision was not itself particularly notable in a legal context, there were "high expectations" of the SICC itself. The court was established in 2015 to further strengthen Singapore's position as a cross-border legal services hub, and was the first of its kind to cater for disputes governed by foreign law.

The dispute involved various claims for breaches of a joint venture agreement involving the use of patented 'binderless coal briquetting' (BCB) technology developed by Australian company BCBC Ltd, to produce and sell coal from East Kalimantan, Indonesia. The SICC's task was to determine a number of funding issues and coal supply issues arising under the joint venture, as well as counterclaim issues on implied duties.

The panel of judges, which included former English High Court judge Sir Vivian Ramsay, found that the Indonesian party PT Bayan Resources was not obliged to provide additional funding to the joint venture during the period covered by the dispute. However, it declined to rule on the coal supply point on the grounds that it had heard insufficient evidence on the issue. This could be determined at a later stage in the proceedings, it said.

The court also found that it could not imply a duty to achieve particular output within "a reasonable time" into the contract, as argued by PT Bayan. The joint venture was entered into "on the basis that there were risks in scaling up the plant to achieve commercial production", and as such it was "difficult to impose an implied term which amounts to a guarantee of particular performance … by a particular date", it said in its judgment.

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