Singapore International Commercial Court issues its first judgment in cross-border dispute

On 12 May 2016, the Singapore International Commercial Court (SICC) issued its first written judgment.  The dispute, which arose out of a joint venture agreement between Australian and Indonesian and Singaporean parties, was the first case brought before the SICC following its establishment in January 2015.  

BCBC Singapore Pte Ltd and Anor v PT Bayan Resources TBK and Anor [2016] SGHC(I) 01. Click here for the full judgment.

The dispute

BCBC Singapore Pte Ltd, a wholly owned subsidiary of Australian company Binderless Coal Briquetting Company Pty Ltd, had brought claims against Indonesian company PT Bayan Resources TBK and its Singapore associated company.  The claims and counterclaims (valued at over US$800million) arose primarily out of alleged breaches by the Defendants of a Singapore law governed joint venture deed for the application of patented technology to "upgrade" coal produced in East Kalimantan in Indonesia.

In dismissing the claims, the panel comprising Singapore High Court judge, Justice Quentin Loh, former English High Court judge, Vivien Ramsey, and former judge of the Court of First Instance in Hong Kong, Anselmo Reyes, ruled that:

1. the Defendants were not obliged to provide funding to the joint venture company, PT Kalsim Supacoal (KSC);
2. the agreements/side letters entered into by the parties were not illegal or void as a matter of Indonesian law; and
3. the Plaintiffs were not under an implied contractual duty to use the reasonable duty of skill and care to be expected of a competent designer in providing technical assistance to KSC or to achieve a particular output of upgraded coal briquettes within a particular time.

The panel also found that there was "insufficient evidence" to determine at this stage whether the Defendant had breached its obligation to provide coal to KSC, reserving this to be determined later when the necessary evidence could be fully explored.

Significance of the judgment

The judgment has been applauded for both its quality and the speed with which it was issued – just four months after the end of the hearing. It has been described in the press as a "masterclass" in dealing with rules of interpretation, public policy and the implication of terms, and showcased the ability of the SICC to deal with complex commercial disputes involving different systems of law.

The matter also represents the first time that a lawyer not qualified in Singapore has made legal submissions before a Singapore court.  The panel exercised its power under Order 110 rule 25 of the Rules of Court to enable Ms Arfidea Saraswati, one of the Defendants' experts on Indonesian law and a member of the Indonesian bar, to make oral submissions on relevant issues of Indonesian law.

Commentators have debated whether the judgment bolsters the argument that the SICC will eventually rival – or even supplant – the Singapore International Arbitration Centre as the preferred international dispute resolution forum in the state.  Whilst the formal goal is for the SICC to be a "companion, rather than a competitor, to arbitration…provid(ing) parties in transnational business with one more option among a suite of viable alternatives to resolve transnational commercial disputes", the efficiency, flexibility and transparency of the SICC suggests that parties are likely to consider the court as a viable alternative forum.

Time will determine whether the SICC's long-term stake in the international legal market can match its ambition; however, its first judgment is a good indication that the future is bright.

For further information, please contact Alastair Henderson, Partner, Emmanuel Chua, Senior Associate or your usual Herbert Smith Freehills contact.