DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and others

• Jurisdiction: Singapore
• Judge: Kannan Ramesh J
• Judgment Date: 09 January 2020
• Neutral Citation: [2020] SGHC(I) 1
• Docket Number: Suit No 3 of 2017
• Date: 09 January 2020
• Published date: 14 January 2020
• Plaintiff Counsel: Yim Wing Kuen Jimmy SC, Teng Po Yew, and Eunice Lau Guan Ting (Liu Guanting) (Drew & Napier LLC)
• Hearing Date: 16 October 2019,14 October 2019,17 October 2019,15 October 2019
• Defendant Counsel: Dinesh Dhillon Singh, Margaret Joan Ling Wei Wei, Lim Dao Kai, Teh Shi Ying and Ling Ying Ming, Daniel (Allen & Gledhill LLP)
• Court: International Commercial Court (Singapore)
• Subject Matter: Damages,Assessment

Roger Giles IJ (delivering the judgment of the court):

We use the acronyms and other terms defined in our judgment in DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and others and another suit [2018] 5 SLR 1 (“the Judgment”). As described in the Judgment, DyStar became a joint venture company between Kiri and WPL/Senda in the dye industry. The conduct of the joint venture was governed by the SSSA. It contained, in cll 15.1(a) and (b), non-compete and non-solicitation provisions restricting the conduct of Kiri’s own business in the dye industry (see [286] of the Judgment).

In the Judgment, we held that Kiri had breached cll 15.1(a) and (b) in respect of FOTL. On appeal, in Senda International Capital Ltd v Kiri Industries Ltd and others and another appeal [2019] 2 SLR 1, the Court of Appeal held that Kiri had breached those provisions also in respect of Hayleys and Brandix. In the result, there was interlocutory judgment with damages to be assessed against Kiri and Manish, for DyStar in Suit 3 and for Senda in the counterclaim in Suit 4.

This is our judgment in the assessment of damages. Senda did not claim damages in addition to any damages to which DyStar was entitled, and the assessment proceeded in Suit 3 alone, without participation by Senda.

We note that the evidence of breach in the assessment hearing was in some respects fuller than in the hearing leading to the Judgment. No objection was made to this by either party.

FOTL

FOTL was a major DyStar customer in Morocco. DyStar supplied it with Remazol Black B 50%, a liquid reactive dye (and other dyes, but it claimed only in respect of that dye). Kiri’s approaches to FOTL did not result in any sales of its dyes, but DyStar claimed damages on the basis that it had to lower its prices for Remazol Black B 50% in order that it not lose the business to Kiri.

Kiri’s breaches

Kiri first approached FOTL on 2 February 2015. Mr Snehal Soni, Kiri’s International Marketing Manager based in Gujarat, India, emailed Mr Sean McCaffery of FOTL, introducing himself and Kiri’s reactive dyes and inviting requests for more information. A follow-up email produced a response, in which Mr McCaffery, apparently aware that the Kiri products were powder dyes, said that FOTL was set up with a liquid dye dispensing system “therefore powder dyes for our main products are not of major interest”. Mr Snehal replied that he understood that FOTL’s main requirement was for liquid dyes but that he believed “a little portion [of FOTL’s requirement] would be powder dyes also for which we can well associate”. He asked that Mr McCaffery “advise your interested products”.

Nothing came of these February emails. But, no doubt sparked by a follow-up email from Mr Snehal in early April 2015, on 8 April 2015 Mr Patrick McFeely of FOTL emailed him asking for a more detailed technical brochure of Kiri’s reactive dye range, saying “we will revert accordingly if any interest”.

Mr Snehal sent a product list and shade card, and after another follow-up email, received the response from Mr McFeely below:

As explained by Sean, our main reactive dyes are in liquid form for dispensing set-up, a lot of powder reactive dyes we use not the chemistry of Kiri e.g. Novacron, FN & Avitera, we use a lot more disperse dyes in powder form – do you supply disperse? I [do] not see disperse range on your website.

For interest could you send quotation CFR for the following products

Black B

Red RB

Black B was Kiri’s powder dye Kirazol Black B 150%. On DyStar’s case, it was competitive with its Remazol Black B 50%.

Mr Snehal replied on 4 May 2015, saying that Kiri was “focusing on Reactive dyes mostly” and giving prices for Kirazol Black B 150% and Kirazol Red RB 100%. The price for Kirazol Black B 150% was US$5.42 per kg.

There was no response from FOTL. On 30 June 2015. Mr Snehal followed up with “current price for your interested products”, the price for Kirazol Black B 150% being US$4.12 per kg. There was still no response from FOTL.

There was no further communication between Kiri and FOTL, and no business was ever done.

DyStar’s pricing

The narrative then turns to communications between FOTL and DyStar.

The FOTL account was managed by Mr Omar Orrego, the DyStar Vice President and Sales Manager in charge of Europe. His main point of contact with FOTL was Mr McFeely. He would speak to Mr McFeely on the phone two to four times a month, and meet him three to four times a year, to discuss FOTL’s dye needs and orders.

In early July 2015, Mr McFeely told Mr Orrego that Kiri was offering to supply “Black 5 powder” at prices lower than DyStar’s, and indicated that FOTL would consider moving its business to Kiri unless DyStar lowered its price. Black 5 powder was the base ingredient used to make Remazol Black B 50%. Mr Orrego did not know the Kiri prices or how different they were from DyStar’s, but he believed the difference was significant. The price difference also had to take into account the need to convert the power dyes into liquid dyes. Mr Orrego said that it was made clear to him that, unless DyStar was able to lower its present prices, FOTL “would evaluate moving its business to Kiri”. Mr Orrego took this indication very seriously given the significance of FOTL’s business to DyStar, and particularly the significance of FOTL’s purchases of Remazol Black B 50% – FOTL purchased 250 tonnes a year of that dye from DyStar.

In a 20 July 2015 email to Mr Orrego, Mr McFeely said that FOTL was “under pressure with costs” and had to ensure it got the best market prices; he said, “[t]he product is Kirazol Black B 150% prices are CFR, dilution option being researched to supply liquid”. Mr Orrego still did not know the competing price. Despite this, he said in an email dated 5 August 2015 that he would drop the price of Remazol Black B 50% for the next delivery and that the following delivery would have an “even better price”.

The price reduction was not immediate. Mr Orrego said that after July 2015 Mr McFeely “continued to inform [him] that they were still getting offers from Kiri for dyes that were in competition with Remazol Black B 50%”. On the evidence before us, this was not true, as Kiri’s last contact with FOTL was on 30 June 2015 (see [11] above). Mr McFeely conveyed the incorrect picture that Kiri was continuing to pursue FOTL’s business, for leverage in his negotiations with Mr Orrego to bring down the price of Remazol Black B 50%. On 20 August 2015, Mr McFeely emailed saying that FOTL was “under pressure on costs” and asked for the reduced price on Remazol Black B 50%. In a phone call, Mr McFeely said that Kiri’s offer was still being considered. Mr Orrego lowered the price for the August delivery from the previous price of €2.55 per kg to €2.35 per kg as a result.

However, Mr Orrego thought that he would have to lower the prices further to retain FOTL’s business and fend off what he perceived to be Kiri’s interest. They were lowered, but Mr Orrego’s evidence of FOTL’s pressure to lower them was less detailed. In what follows, it should be remembered that, with no response to its 30 June 2015 prices, Kiri had made no further approach to FOTL. As noted above, Mr McFeely was using Kiri’s continued pursuit as a gambit to pressure Mr Orrego.

In his affidavit of evidence-in-chief (“AEIC”), Mr Orrego said that Mr McFeely told him of Kiri’s “repeated offers and competitive behaviour”, and that he (Mr Orrego) told DyStar colleagues, “Kiri keeps putting [on] pressure. Think for October we will need something close to 2.1 €/kg to keep business running.” Mr Orrego said that DyStar was “continually under price pressures by Mr McFeely due to the low quotations from Kiri”, which was confirmed in phone calls in or around September 2015. This forced a further lowering of the price for the September delivery to €2.25 per kg.

At the end of September 2015, Mr Orrego lowered the price for the next (November) delivery to €2.12 per kg, explaining in his AEIC that this followed “several discussions with Mr McFeely … during which various issues including Kiri’s competition and the price of Remazol Black B 50% were discussed”.

Mr Orrego continued in his AEIC that the constant reduction in prices was “forced by Kiri’s using [sic] its extremely low price Kirazol Black B 150% to compete with our Remazol Black B 50%”. Mr Orrego’s evidence was that he had reduced the price for the January 2016 delivery (to €1.96 per kg) because of continued pressure from Mr McFeely and “in line with our previous discussions and agreement to yet again lower the price of Remazol Black B 50% because of Kiri’s competition”.

Mr Orrego said that FOTL “continued to use Kiri’s offers and competition” to force lower prices, and that although Mr McFeely’s request for price reduction in January 2016 was expressed to be because of low H-acid and oil prices, he (Mr Orrego) thought it “clear … from our phone calls that Kiri’s competition was the real driving force behind this request”. The price for the March 2016 delivery was initially set at €1.85 per kg, but after further discussion was settled at €1.91 per kg.

Mr Orrego says that he had a phone conversation with Mr McFeely in May 2016 in which the latter “again put pressure on me to further lower the price of Remazol Black B 50% in light of competing offers from Kiri”. Mr Orrego agreed to a price of €1.80 per kg. He stated in his AEIC that the June, July and October 2016 shipments were similarly priced “due to Kiri’s competition”.

In late 2016, Mr Orrego negotiated a price rise to €1.95. He did not explain how that price was struck. That was the price for the December 2016 delivery and the subsequent thirteen deliveries, the last in August 2018. Mr Orrego said only that “the ever looming threat of Kiri’s competition made it impossible for us to raise prices further”.

In October 2018, Mr Orrego felt able to...