IM Skaugen SE and another v MAN Diesel & Turbo SE and another

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 25 May 2018
• Neutral Citation: [2018] SGHC 123
• Court: High Court (Singapore)
• Docket Number: Suit No 96 of 2015 (Registrar’s Appeals Nos 163, 167 and 168 of 2016)
• Year: 2018
• Published date: 12 December 2019
• Hearing Date: 10 July 2017,03 July 2017,24 July 2017,02 August 2017
• Plaintiff Counsel: Lawrence Teh, Loh Jen Wei and Ravin Periasamy (Dentons Rodyk & Davidson LLP)
• Defendant Counsel: Danny Ong, Yam Wern-Jhien and Eunice Wong (Rajah & Tann Singapore LLP)
• Subject Matter: Choses in Action,Assignment,Conflict of Laws,Choice of Law,Tort,Jurisdiction,Discretionary,SICC,Natural Forum,Presumption of similarity,Evidence,Proof of evidence,Presumptions,Misrepresentation,Alteration of position,Fraud and deceit,Inducement,Negligent misrepresentation
• Citation: [2018] SGHC 123

Vinodh Coomaraswamy J: Introduction

The first plaintiff is incorporated in Norway and is the ultimate holding company of a multinational group of companies known as the Skaugen group. The Skaugen group provides marine transportation services in the oil and gas industry. ¹ The second plaintiff is a wholly-owned subsidiary of the first plaintiff and is incorporated in Singapore. It is one of the ship-owning arms of the Skaugen group.² The first defendant is incorporated in Germany and is the ultimate holding company of a multinational corporate group known as the MAN group. The MAN group, amongst other things, designs and manufactures marine engines.³ The second defendant is a wholly-owned subsidiary of the first defendant and is incorporated in Norway.⁴ It supports the business of the MAN group by maintaining contact with its customers in Norway.⁵

In 2000 and 2001, the first plaintiff sourced six marine engines of a single specific model from the MAN group. The six marine engines were sold and shipped directly to shipbuilders in China, to be installed in six ships which were being built there for the Skaugen group. The plaintiffs’ case is that, in the course of promoting this model of engine to the first plaintiff, the defendants negligently or fraudulently misrepresented to the first plaintiff that that model of engine consumed fuel at no more than a specific rate under certain specified conditions.

The plaintiffs now bring this action in Singapore to seek damages from the defendants for the alleged misrepresentation. The question which arises before me on this registrar’s appeal is whether the Singapore courts have jurisdiction over the plaintiff’s misrepresentation claim. The assistant registrar held that the Singapore courts do not have jurisdiction. He agreed with the plaintiffs that its claim falls within Order 11 r 1(f)(ii) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed). But he also agreed with the defendants that Singapore is forum non conveniens. That latter finding made this case “not a proper one for service out of Singapore” within the meaning of Order 11 r 2(2) of the Rules of Court.

The plaintiffs now appeal against the assistant registrar’s decision.

The issue before me now, quite simply, is whether the assistant registrar was correct. But the geographical reach of this case takes it beyond the anodyne procedural dispute over jurisdiction. The defendants authored the promotional material containing the representation in Germany. They delivered the material to the Skaugen group at sales and marketing meetings held either in Denmark or Norway. The six engines are the subject-matter of contracts of sale governed by English law,⁶ entered into between the first defendant and the Chinese shipbuilders. Before delivering each engine, the defendants carried out field tests on the engine in Germany in the presence of the plaintiffs’ representatives. The six engines were delivered to China and installed in the six ships there. The ships have, since delivery to the Skaugen group, been owned and operated by various entities incorporated in the Cayman Islands, Hong Kong, and Singapore.

I have held that the plaintiffs have established a good arguable case that this action comes within both Order 11 r 1(f)(ii) and Order 11 r 1(p) of the Rules of Court. Order 11 r 1(f)(ii) is satisfied because there is a good arguable case that owners of the ships who have assigned their claims to the plaintiffs suffered loss and damage in Singapore. Order 11 r 1(p) is also satisfied because there is a good arguable case that the plaintiffs’ assignors’ causes of action arose in Singapore. Further, I have also held that the plaintiffs have established that Singapore is clearly the appropriate forum for the trial of this action because of the possibility of a transfer to the Singapore International Commercial Court (“SICC”) and also because the appropriateness of both alternative forums – Germany and Norway – has been overstated. I have therefore allowed the plaintiffs’ appeal.

The defendants have appealed to the Court of Appeal against my decision. I therefore set out my reasons.

The background to the appeals

The assistant registrar has set out a comprehensive summary of the facts underlying this action in his wide-ranging grounds of decision in IM Skaugen SE and another v MAN Diesel & Turbo SE and another [2016] SGHCR 6 (“Skaugen”). I therefore need set out only a brief summary.

The shipbuilding contracts

In 2000 and 2001, the Skaugen group and GATX Corporation (“GATX”) entered into a joint venture to commission, own and operate six gas carrying ships.⁷ To that end, the Skaugen group entered into six shipbuilding contracts with shipbuilders in China. The first plaintiff entered into the first four of the six contracts in July 2000.⁸ These four contracts were almost immediately novated to a special purpose company known as Somargas Limited (“Somargas”).⁹ The last two of these six contracts were entered into in May 2001 by another special purpose company known as Vintergas Limited (“Vintergas”).¹⁰ Somargas¹¹ and Vintergas¹² are both Cayman Islands companies and are both owned equally by the Skaugen group and the GATX group.

In the summary of the facts which follows, I do not distinguish between the position of the four entities involved: the first plaintiff, GATX, Somargas and Vintergas. That is because the first plaintiff conducted all negotiations with the defendants on behalf of Somargas and Vintergas.¹³ Further, all four of the following features of this case are, for all material purposes, identical: (a) the six shipbuilding contracts; (b) the six ships; (c) the terms on which the first four shipbuilding contracts were novated to Somargas; and (d) the ownership of Somargas and Vintergas.

The fuel consumption representation

The first plaintiff had the right, under the first four shipbuilding contracts, to approve the model of engine to be installed in those ships.¹⁴ In mid-2000, the first plaintiff initiated a process to select the engine to be approved from those available on the market.¹⁵ The first defendant participated in that process and promoted to the first plaintiff a particular model of four-stroke diesel engine which it designed and manufactured.¹⁶ I shall refer to this engine as the “MAN Engine”. In the course of that process, in or around July 2000, the first defendant delivered to the first plaintiff a document known as the Project Planning Manual (“PPM”). The PPM is part of the defendants’ standard promotional and marketing materials. It is a general document which is not tailored to a specific customer or to a specific engine¹⁷ but which sets out the general specifications of a range of marine diesel engines available from the first defendant. One of those engines is the MAN Engine. So the PPM does state that the MAN Engine consumes fuel at no more than a specific rate under certain specified conditions.¹⁸

In or around November 2000, the defendants delivered to the shipbuilders a second document known as “6. Kraftstoffsystem Fuel System” (“FSI”).¹⁹ The shipbuilders duly passed the FSI on to the plaintiffs.²⁰ Like the PPM, the FSI sets out general information about a range of marine diesel engines produced by the first defendant and is not tailored to a specific customer or to a specific engine.²¹ But the FSI, in effect, maintained that the MAN Engine consumed fuel at no more that the specific rate set out in the PPM under the same specified conditions.²²

The first plaintiff eventually granted formal approval under the shipbuilding contracts for the MAN Engine to be installed in the first four ships.²³ As for the last two ships, the first plaintiff caused Vintergas to enter into contracts with the shipbuilders which stipulated that the MAN Engine was to be installed in those two ships.²⁴

As a result, the shipbuilders duly entered into six contracts to purchase six MAN Engines from the first defendant: four in September 2000²⁵ and a further two in June 2001.²⁶ The technical specifications in all six of these contracts between the shipbuilders and the first defendant stipulated that the MAN Engine ultimately delivered was to consume fuel at no more than the rate specified in the PPM under the conditions specified in the PPM.²⁷

Between May 2001 and June 2002, the six MAN Engines became ready to be handed over to the shipbuilders.²⁸ As and when a particular engine was ready for handover, the first defendant conducted a field acceptance test (“FAT”) on that engine at the first defendant’s factory in Germany.²⁹ Representatives of the Skaugen group and of the defendants were present to witness each of the six FATs.³⁰ The purpose of each FAT was to: (i) run the MAN Engine in the laboratory under the specified test conditions; (ii) measure the rate at which that particular MAN Engine consumed fuel; and (iii) verify for those present that the engine’s actual fuel consumption met the contractually-stipulated specification.³¹ The results of each FAT on each engine appeared to verify that each engine consumed fuel at a rate which was well below specification.³²

Between October 2002 and October 2003, the shipbuilders duly delivered to the Skaugen group all six ships.³³ Each ship had a MAN Engine installed in it which the first plaintiff believed met the fuel consumption specification.

Following delivery of the six ships in 2002 and 2003, a chain of entities related to the Skaugen and the GATX group owned each of the ships without noticing anything amiss with the rate at which the MAN Engines were consuming fuel. It is the plaintiffs’ case that all of these owners have assigned to the plaintiffs all of their claims in misrepresentation against the defendants arising from the facts which follow.³⁴

Irregularities in the FATs

In May 2011, the first defendant issued a press release reporting the interim results of its investigation into “possible...