TMT Asia Limited v BHP Billiton Marketing AG (Singapore Branch) and another

JudgeJudith Prakash J
Judgment Date28 January 2015
Neutral Citation[2015] SGHC 21
Date28 January 2015
Docket NumberSuit No 580 of 2013 (Registrar’s Appeal Nos 55 and 56 of 2014 and Summons No 1710 of 2014)
Published date29 January 2015
Plaintiff CounselDeborah Barker SC, Ushan Premaratne and Priscilla Shen (KhattarWong LLP)
Hearing Date22 July 2014,30 May 2014,13 August 2014
Defendant CounselFrancis Xavier SC and Derek On (Rajah & Tann LLP)
CourtHigh Court (Singapore)
Subject MatterCivil procedure,Amendment,Pleadings,Fraud and deceit,Tort,Misrepresentation,Summary judgment
Judith Prakash J: Introduction

The parties are participants in a market on which forward freight agreements (“FFAs”) are traded over-the-counter (“OTC”). The Plaintiff claims that the Defendants abused their alleged market dominance to manipulate the market for FFAs and that it suffered loss as a result of this manipulation. The Plaintiff bases its claim on three alternative grounds: Breach of statute under s 208 read with s 234 of the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“SFA”); The tort of deceit; and/or A new tort of market manipulation that it argued ought to be recognised/developed.

TMT Asia Ltd (“the Plaintiff”), is a shipping company. The first and second defendants (collectively referred to as “the Defendants”) are members of the BHP Billiton Group (“BHPB”). BHPB comprises a group of companies engaged in the discovery, acquisition, development and marketing of natural resources. The Defendants operate the Marketing Head Office and the Minerals Exploration Head Office of BHPB in Singapore.

The claim

In its Statement of Claim, the Plaintiff contends that BHPB was and continues to be in a “dominant purchasing position in the ‘Downstream Capesize Market’”. The Downstream Capesize Market refers to the single global market for the chartering of Capesize bulk carriers (which are large vessels above 150,000 DWT) for the transportation of dry bulk cargoes. It is alleged that BHPB occupies this dominant position due to the fact that it is one of the three largest iron ore producing companies in the world. Its iron ore production operations are mainly in Australia and it exports extensively to China which is the world leading importer of iron ore. The Plaintiff avers that BHPB was responsible for 40% of the Capesize vessel charters from Australia in 2009. Therefore, it occupies a dominant position in the market for Capesize C5 route (“C5 route”) which covers voyage charters for a specific route in the Pacific, namely, Western Australia to Qingdao, China.

The Baltic Capesize Index (“BCI”) provides an assessment of freight costs of Capesize vessels on various routes and is issued daily by the London-based Baltic Exchange Limited. The market for Capesize C10 route (“C10 route”) covers time charters for the Pacific. The Plaintiff alleges that, therefore, freight prices on the C5 route influence the freight prices on the C10 route. The Baltic Exchange Limited uses freight prices on the C8, C9, C10, and C11 routes to compute the Baltic Capesize Index Time Charter Basket Average 4 Routes (“4TC BCI”). Therefore, the Plaintiff alleges, freight prices on the C5 route indirectly affect the 4TC BCI.

The Plaintiff purchased various FFAs based on the 4TC BCI between September and November 2012. FFAs are forward contracts on freight. One party agrees to pay a fixed rate of notional freight while the other party agrees to pay a rate derived from an index. One of the indices published by the Baltic Exchange Limited is commonly chosen. The BCI is one such index. The difference at the end of a specified period is payable by one party to the other depending on the movement of the index as compared with the fixed rate under the FFA. Therefore, parties are essentially betting on whether the actual rate for the specified charter will be higher or lower than the rate specified in the FFA.

It should be evident from the above that FFAs are purely financial agreements and do not involve any actual freight or ships. They are derivative products which can be traded. A useful definition of derivatives is that found in Lomas & Ors (together with the Joint Administrators of Lehman Brothers International (Europe) v JFB Firth Rixson Inc & Ors [2012] EWCA Civ 419 at [2]:

[A] transaction under which the future obligations of one or more of the parties are linked in some specified way to another asset or index, whether involving the delivery of the asset or the payment of an amount calculated by reference to its value or the value of the index. The transaction is therefore treated as having a value which is separate (although derived) from the values of the underlying asset or index. As a result, the parties’ rights and obligations under the transaction can be treated as if they constituted a separate asset and are typically traded accordingly.

The Plaintiff alleges that in October 2012, BHPB, through the Defendants who manage BHPB’s freight needs, abused its market dominance by procuring contracts for fixtures of Capesize vessels in such quantity as to cause the freight rates on the C5 route and consequently the 4TC BCI to rise sharply. This caused the price of iron ore reported on iron ore indices to rise as well because the iron ore reference price includes the price of freight. The Plaintiff contends that BHPB did not charter these vessels to service its legitimate business needs (ie, to transport iron ore and/or coal from Australia to China) as there was, at best, weak demand in China for these products between 30 September 2012 and 7 October 2012 due to the long national holiday there. According to the Plaintiff, BHPB chartered the vessels, through the Defendants, in order to cause freight prices to artificially rise. By so doing, the Defendants manipulated the price of FFAs based on the 4TC BCI in contravention of s 208(a) of the SFA which provides:

Manipulation of price of futures contract and cornering 208. No person shall, directly or indirectly —

(a) manipulate or attempt to manipulate the price of a futures contract that may be dealt in on a futures market, or of any commodity which is the subject of such futures contract …

[emphasis added]

The Defendants’ manipulative conduct caused the Plaintiff to suffer loss in the sum of US$70,000 on the positions it held on the FFAs it purchased between September and November 2012.

The Defendants have pleaded the following in their Defence: BHPB is not and was not at the material time in a dominant purchasing position in the Capesize market, including the market for the C5 route; BHPB and the Defendants did not manipulate freight prices, iron ore prices and prices of the FFAs; and The Defendants have not contravened s 208(a) of the SFA because FFAs are neither “futures contract[s]” nor are they dealt in on a “futures market”.

The applications before me

The Defendants took out two interlocutory applications seeking to have the Plaintiff’s claim dismissed. By way of Summons No 4064 of 2013 (“Sum 4064”), they sought summary determination of the following questions of law pursuant to O 14 r 12 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“ROC”): Are FFAs “futures contract[s]” for the purpose of s 208(a) read with s 2 of the SFA? Are FFAs dealt on a “futures market” for the purpose of s 208(a) read with s 2 and Part I of the First Schedule of the SFA? The Defendants submitted that if either of these questions was answered in the negative, the claim should be dismissed.

By way of Summons No 4852 of 2013 (“Sum 4852”) the Defendants sought the whole of the Plaintiff’s claim to be struck out pursuant to O 18 r 19 and/or the inherent jurisdiction of the court on the basis that it disclosed (a) no reasonable cause of action; (b) was frivolous or vexatious; and/or (c) was an abuse of process.

Both summonses were heard by an AR on 31 December 2013. In the course of the hearing, the Plaintiff’s counsel stated that in addition to the Plaintiff’s statutory claim under s 208(a) of the SFA, the Plaintiff had two tortious claims against the Defendants, namely, claims for deceit and market manipulation.

The AR delivered judgment on 11 February 2014. In respect of Sum 4064 she held that the questions set out at [9] were suitable for summary determination. She answered the first question in the negative and hence found it unnecessary to decide the second question. She also ordered the Plaintiff’s statutory claim premised on s 208(a) of the SFA to be struck out. In respect of Sum 4852, she ordered the whole of the Plaintiff’s claim to be struck out on the ground that there was no reasonable cause of action: The Plaintiff’s statutory claim failed because FFAs were not futures contracts for the purpose of s 208(a) read with s 2 of the SFA. The Plaintiff’s claim that the Defendants had committed the tort of market manipulation failed because that was not a tort recognised by law. The Plaintiff’s claim under the tort of deceit failed because it was not expressly pleaded. Further, amendment to the pleading would not cure the defect because of the inherent difficulties in classifying market manipulative conduct under the tort of deceit.

The Plaintiff appealed against both decisions. Registrar’s Appeal No 55 of 2014 (“RA 55”) is its appeal against the summary determination, and Registrar’s Appeal No 56 of 2014 (“RA 56”) is its appeal against the striking out.

Some two months after filing its appeals, the Plaintiff made an application for leave to amend its Statement of Claim (Summons No 1710 of 2014 (“Sum 1710”)). By means of the proposed amendments, the Plaintiff seeks to: clarify its claim against the Defendants in the tort of deceit and/or market manipulation; state that the FFAs the Plaintiff bought between September and November 2012 were purchased on the OTC market through brokers utilising multilateral trading facilities (“MTFs”) and cleared on the Singapore Exchange (“SGX”); and correct an error that it had made in its earlier pleading to clarify that it sought US$70,000 in compensation under s 234 of the SFA and not S$70,000. I heard both appeals and Sum 1710 and now give my decision.


Various matters were argued on the basis that the issues before the Court are: Whether the questions raised in RA 55 are suitable for summary determination. Assuming that the above question is answered in the affirmative, whether FFAs are “futures contract[s]” dealt on a “futures market” for the...

To continue reading

Request your trial
9 cases
  • Motor Insurers' Bureau of Singapore and another v AM General Insurance Bhd (formerly known as Kurnia Insurans (Malaysia) Bhd) (Liew Voon Fah, third party)
    • Singapore
    • High Court (Singapore)
    • February 23, 2018
    ...Corp of Singapore Ltd [1992] 2 SLR(R) 858; [1993] 1 SLR 1041 (refd) TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch) [2015] 2 SLR 540 (refd) Tohtonku Sdn Bhd v Superace (M) Sdn Bhd [1989] 2 MLJ 298 (refd) Tomlinson v Gill (1756) Amb 330; 27 ER 221 (refd) Total Liban SA v Vitol En......
  • Manas Kumar Ghosh v MSI Ship Management Pte Ltd
    • Singapore
    • High Court (Singapore)
    • August 27, 2020
    ...798 (refd) Then Khek Koon v Arjun Permanand Samtani [2014] 1 SLR 245 (refd) TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch) [2015] 2 SLR 540 (refd) Venkatraman Kalyanaraman v Nithya Kalyani [2016] 4 SLR 1365 (refd) Xia Zhengyan v Geng Changqing [2015] 3 SLR 732 (refd) Zurich Ins......
  • United Overseas Bank Ltd v Lippo Marina Collection Pte Ltd and others
    • Singapore
    • High Court (Singapore)
    • February 22, 2016
    ...the Court of Appeal case of Obegi Melissa v Vestwin Trading Pte Ltd [2008] 2 SLR(R) 540 at [42] (“Obegi”), and the High Court case of TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch) [2015] 2 SLR 540 (“TMT”) at [34]. This coheres with the observation in ANB at [32] that the phras......
  • Composers and Authors Society of Singapore Ltd v Fox Networks Group Singapore Pte Ltd
    • Singapore
    • High Court (Singapore)
    • October 26, 2021
    ...v Australasian Performing Right Association Ltd (1997) 146 ALR 649 (refd) TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch) [2015] 2 SLR 540 (folld) Total English Learning Global Pte Ltd v Kids Counsel Pte Ltd [2013] SGHCR 22 (distd) Tsai Jean v Har Mee Lee [2009] 2 SLR(R) 1; [200......
  • Request a trial to view additional results
4 books & journal articles
  • Tort Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2015, December 2015
    • December 1, 2015 manipulation conduct can amount to a claim in deceit was explored in TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch)[2015] 2 SLR 540 (‘TMT Asia’). This case concerned forward freight agreements (‘FFAs’) which were traded over the counter. The plaintiff company, which purc......
  • Civil Procedure
    • Singapore
    • Singapore Academy of Law Annual Review No. 2015, December 2015
    • December 1, 2015 tried and that there is no other reason why there should be a trial. 8.137 TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch)[2015] 2 SLR 540 dealt with the importance of public interest in a summary judgment application. The plaintiff had appealed against the assistant registra......
  • Securities and Financial Services Regulation
    • Singapore
    • Singapore Academy of Law Annual Review No. 2018, December 2018
    • December 1, 2018
    ...See also Tan Yock Lin, “Liability of Directors for Criminal Breach of Trust: Recovering a Lost Interpretation” [2018] SingJLS 57. 43 [2015] 2 SLR 540, discussed in (2015) 16 SAL Ann Rev 617. See also TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch) [2018] SGHC 228 where the court......
  • Securities and Financial Services Regulation
    • Singapore
    • Singapore Academy of Law Annual Review No. 2015, December 2015
    • December 1, 2015
    ...of licensing, issuer and product disclosure, and market misconduct. 25.4 In TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch)[2015] 2 SLR 540 (‘TMT Asia’), the relevant OTC product was forward freight agreements (‘FFAs’) which were traded by participants using multilateral trading......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT