The assessment of damages for breach of contract in international transactions should follow the lex fori principles while respecting the governing law of the contract related to remoteness and other substantive rights.

Introduction

[1] This is an appeal by Scandinavian Bunkering (Singapore) Pte Ltd (the plaintiff in the High Court) against the quantum of damages awarded by the Court of Appeal. The damages awarded were in respect of a claim by the plaintiff against the respondent, MISC Berhad (the defendant in the High Court) for breach of contract of a sale of fixed quantities Marine Fuel Oil ("MFO") also referred to as fixed price bunker supply agreement.

[2] We will describe the parties in this judgment as they appear in the High Court, namely the appellant as the plaintiff and the respondent as the defendant.

[3] It has to be highlighted at this point that the liability of the defendant to the plaintiff for breach of contract had been previously established following the summary judgment of the High Court dated 23 September 2009 pursuant to O 14 of the Rules of the High 1980 and the dismissal of the defendant's appeal from that judgment by the Court of Appeal on 6 July 2010. On the liability issue, it was determined that the defendant had no triable issues that should go for trial. The defendant had been held liable to pay damages to the plaintiff for breach of contract for its failure to take delivery of the MFO and for wrongful repudiation of the contract of a sale of fixed quantities MFO agreements, with damages to be assessed. The defendant was denied leave to appeal against the decision of the Court of Appeal by the Federal Court on 6 October 2010.

[4] By a separate hearing for assessment of damages for breach of contract, the High Court on 16 May 2011 awarded the plaintiff a total sum of USD25,246,233.17. On appeal against the said quantum of damages awarded, the Court of Appeal on 18 December 2012 reduced the quantum awarded by the High Court to a total sum of USD177,410.90.

[5] Aggrieved by the judgment of the Court of Appeal, the plaintiff applied for leave to appeal to the Federal Court under s 96(a) of the Courts of Judicature Act 1964 and on 16 January 2014, this Court granted leave to appeal to the plaintiff on four questions of law. Hence, the present appeal.

Background Facts

[6] The plaintiff is a private limited company incorporated under the laws of Singapore, carrying on the business of trade and transportation of petroleum and other liquid products. The defendant is a public listed company incorporated under the laws of Malaysia.

[7] On 16 September 2008, the defendant entered into a fixed price bunker contract ("the contract") with Marinehub Sdn Bhd ("Marinehub") whereby the defendant purchased and agreed to accept delivery of 102,600mt, +/- 5%, of MFO 380 cst over a fixed period of three months beginning 1 October 2008 until 31 December 2008, on the basis of 34,200 metric tons per month, at a fixed price of USD559.80 per mt, evidenced, among others, by the Letter of Award dated 16 September 2008 issued by the defendant to Marinehub. Delivery of the MFO was to be at Singapore to satisfy the defendant's fleet requirements. The total contract value was USD57,435,480.00. The contract was governed by English law.

[8] The defendant essentially wanted Marinehub to lock in the price of MFO over three months. In the early part of 2008, the price of MFO was rising rapidly. As ship owners, the defendant wanted certainty in their bottom line costs of MFO, and so entered into the contract to lock the defendant's costs of purchase of its required amount of MFO to a fixed price.

[9] At the same time, and back-to-back with the contract, Marinehub to the full knowledge of the defendant, entered into a fixed price bunker contract with the plaintiff