Shaikh Faisal trading as Gibca v Swan Hunter Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 30 May 1994
• Neutral Citation: [1994] SGHC 153
• Docket Number: Suit No 1611 of 1990
• Date: 30 May 1994
• Published date: 19 September 2003
• Year: 1994
• Plaintiff Counsel: Tan Tee Jim and Wilson Wong (Allen & Gledhill)
• Citation: [1994] SGHC 153
• Defendant Counsel: Arjan Chotrani and Haresh Kamdar (Arjan & Co)
• Court: High Court (Singapore)
• Subject Matter: Contract,Conflict of Laws,Relevant considerations,Choice of law,Enforcement of contract governed by Singapore law to be performed abroad,Illegality and public policy,Law with closest and most real connection,Whether agency contract unenforceable if entered into by agents knowing of prohibition,Relevance of public policy of country of performance,Prohibition of use of agents in terms of standard contract entered into by principal with Government and in directive from government department

Cur Adv Vult

This is an action by an agent for the recovery of commission. The plaintiff was at all material times operating in the United Arab Emirates (UAE) as an agent for overseas contractors and suppliers. The defendants, a Singapore company, were and are engaged in the business of, inter alia, naval shipbuilding. The defendants were previously known as Vosper Naval Systems Pte Ltd and Vosper-QAF Pte Ltd.

Before the plaintiff had any business relationship with the defendants, he had dealt with a company known as Vosper Pte Ltd, another Singapore company which went into receivership and was later wound up. In a sense, Vosper Pte Ltd was the link that brought the parties together. More will be said about this shortly.

Facts

The agency agreement between the plaintiff and the defendants was reached sometime in late June, early July 1986. This is evidenced particularly in two letters dated 20 June and 8 July 1986 from the defendants to the plaintiff. However, in view of the issues raised, I think it may be necessary for me to trace briefly how the parties became involved with each other.

It was in October 1984 when the plaintiff was formally appointed as the consultant of Vosper Pte Ltd within the UAE to promote the sales of craft designed and built by that company. The appointment was for a term of 12 months, which term could be extended by mutual consent. It would appear that the relationship continued until Vosper Pte Ltd went into receivership. Eventually the company was wound up in February 1986.

The receivers of Vosper Ptd Ltd sold the assets of the technical and design division of the company to QAF, a large diversified public listed company based in Singapore. QAF in turn incorporated a company called Vosper-QAF Pte Ltd, the defendants, to carry on the previous marine activities of Vosper Pte Ltd.

On 24 March 1986, one Brian Morrison (who was previously with Vosper Pte Ltd), the managing director of the defendants, informed the plaintiff that the defendants were taking over the marine business of Vosper Pte Ltd. The letter ended by saying that the defendants were `particularly interested in continuing our activities in the UAE and pursuing enquiries current at the time of Vosper Pte Ltd`s liquidation ...`

On 10 June 1986, the plaintiff advised the defendants that he was expecting `an enquiry for three landing craft to come out` and that he would arrange for the tender enquiry to be sent to the defendants.

On 20 June 1986, one Roger Cooper, the projects manager (sales) of the defendants, wrote to the plaintiff. After introducing the work and services the defendants could offer, Cooper went on to state:

We hope to visit Abu Dhabi next month and in this connection, I shall be grateful if you will advise the best time for such a visit to maximize effectiveness and meet the relevant people.

Finally, we look forward to receiving the tender documents for the three landing craft as you informed us in your telex no 35721 of 10 June and also to discussing this with you and the customer during our forthcoming visit.

On 25 June 1986, the plaintiff notified the defendants by telex that he had despatched the documents for the landing craft by DHL. The defendants were also told that the closing date for tender was 4 July 1986.

On receipt of the documents for the tender, the defendants telexed the plaintiff on 27 June 1986 to enquire why the period given for tender was so brief. They also asked whether it would be an open or closed tender and what the state of the competition was. It ended with the request:

Let us know as soon as possible when you have arranged all relevant meetings for our visits, and give dates to enable us to plan our itinerary.

On 30 June 1986, the plaintiff telexed the defendants to explain why the time remaining for tender was so brief. This was because the UAE Armed Forces General Headquarters (GHQ) thought that Vosper-QAF Pte Ltd was the same as Vosper, London, and thus did not invite Vosper-QAF Pte Ltd to tender. When the plaintiff became aware of the misunderstanding he managed to restore the defendants` name onto the invitation list. The plaintiff ended the message by advising the defendants as follows:

Please correspond directly with Director-General Purchasing, PO Box 2501, Abu Dhabi, UAE. Since the closing date is 4 July 1986, I believe the purchasing will accept your bid by 12 July 1986. Please send your offer directly to the purchasing via DHL.

On the same day the defendants telexed the Director-General Purchasing of GHQ asking for an extension of time to 14 July 1986 for the submission of the tender. By a separate telex the defendants informed the plaintiff of the same and requested the latter to use his best endeavours to assist in obtaining an extension. The next day, 1 July 1986, the plaintiff replied asking the defendants to make their submission as soon as possible. The plaintiff also informed the defendants that GHQ would `usually accept bids one week to ten days after closing date.`

On 8 July 1986, the defendants wrote to the plaintiff in these terms:

Please find enclosed one copy of our proposal ref: BFMM/RNC/DN/SE1817/A & B for the supply of 2 x Landing Craft/to the UAE. This is in response to their tender ref: DGP/NG/84/1362A/30 dated 23 June 1986.

The proposal was couriered direct to DGP by DHL forwarding airbill no 88361906 dated 7 July 1986.

We discussed and agreed, an agency commission of 10% of the contract value of the project has been included for GIBCA should you be successful in obtaining this business.

We look forward to a successful conclusion to this business and shall be grateful if you will keep us fully informed of developments.

It may be appropriate for me at this juncture to make this observation. In the light of the events as outlined above, there is no doubt that the plaintiff was appointed an agent in relation to the proposed sale of two landing craft by the defendants to GHQ. There was clearly an agreement to pay the plaintiff a commission of 10% of the sale price of the landing craft. The letter of the 8 July 1986 confirmed that. It is not in dispute that the agreed commission was subsequently reduced to 8%. However, what is in dispute is whether there was a further agreement between the parties to reduce the commission from 8% to 71/2%. More will be said about this aspect later.

Reverting to the events, the tender submitted by the defendants was unfortunately routed to a wrong department of GHQ. It should have gone to the technical committee. When the plaintiff became aware of that he managed to have the tender redirected to the correct body.

Thereafter from time to time the defendants would make inquiries of the plaintiff as to the state of the tender and the plaintiff would enlighten the defendants of the same. By October 1986 the defendants were informed that they were one of four short-listed tenderers and that they would soon be asked to make a presentation. The defendants were pleased to hear that and asked the plaintiff for advice on strategy and for information on who their competitors were.

On 27 October 1986, following an advice from the plaintiff, the defendants telexed the Director-General Purchasing, GHQ, indicating that they would like to visit UAE to make a presentation on their tender and to have a technical discussion. On 4 November 1986 the Director-General Purchasing eventually accepted the offer on condition that it was without obligation. At about mid-November 1986, three officials of the defendants went to see the technical committee at GHQ. They were TT Durai, deputy chairman; Brian Morrison, the managing director; and Roger Cooper, projects manager (sales). The staff of the plaintiff met the three officials on arrival and attended to their hotel accommodation and visa requirements.

It was clear that the defendants were pleased with the meeting at UAE and with the arrangements made by the plaintiff so much so that on their return to Singapore Roger Cooper wrote a letter of appreciation. He also specifically thanked one David Bernard, who was a staff of the plaintiff.

On 9 December 1986, a very important memorandum was issued by His Highness Sheikh Khalifa bin Zayed Al Nahyam, the Deputy Supreme Commander (DSC) of the UAE Armed Forces, to the Under-Secretary of the Ministry of Foreign Affairs. It was marked `confidential` and it reads:

Subject: Arms purchases for the armed forces

With due consideration to the public interest and with a view to securing proper procedures for the purchase of armament items of various kinds for our armed forces.

You are kindly requested to advise the accredited ambassadors to the UAE whose countries manufacture and produce military equipment of various kinds of our desire to deal directly through their respective governments but without any other party as agent, mediator, distributor, representative or advisor for the companies and plants which produce military equipment, combat vehicles, weapons of various kinds and their ammunition, battle ships, aircraft and all such other electronic equipment and appliances, whether such party was a citizen or an alien, and that purchase operations should be under the supervision and guarantee of their governments.

Our instructions to this effect have been passed to the chief of staff, armed forces, to ensure compliance with the foregoing in dealing with the above subject matter.

We hope that their excellencies the ambassadors will comprehend the explicit purpose of this procedure to maintain cordial relations with their respective governments.

I shall hereinafter refer to the contents of this memorandum as either `the directive` or `the prohibition`.

It should be noted that the existence of this memorandum was not known to the parties until well after the tender had been successfully secured by the defendants in November 1987. Shaikh Khalid (PW1), the managing director of the plaintiff, said that he first...