Case Details
- Citation: [2021] SGHC 278
- Case Title: Haribo Asia Pacific Pte Ltd v Aquarius Corp
- Court: High Court of the Republic of Singapore (General Division)
- Case Number: Suit No 331 of 2018
- Decision Date: 02 December 2021
- Judge: Lee Seiu Kin J
- Plaintiff/Applicant: Haribo Asia Pacific Pte Ltd
- Defendant/Respondent: Aquarius Corp
- Counsel for Plaintiff: Chou Sean Yu, Oh Sheng Loong Frank, Daniel Lee Wai Yong, and Eve Dana Ng (Shi Ying (WongPartnership LLP))
- Counsel for Defendant: Gregory Vijayendran SC, Kevin Tan, Devathas Satianathan, Low Weng Hong, and Ng Shu Wen (Rajah & Tann Singapore LLP)
- Legal Areas: Civil Procedure — Damages; Contract — Breach; Evidence — Admissibility of evidence (foreign law and expert evidence)
- Statutes Referenced: German Civil Code (Bürgerliches Gesetzbuch (“BGB”))
- Key Contractual Instruments: 2016 Distributorship Agreement (“2016 DA”); 2014 Distributorship Agreement (“2014 DA”); Settlement and Contribution Agreement (“SCA”)
- Judgment Length: 66 pages; 33,710 words
- Disposition (high level): Plaintiff’s claim allowed in full for principal sum; contractual interest allowed in part; counterclaim allowed in part; set-off applied; Plaintiff ordered to pay Defendant ₩1,969,018,000 with judgment interest of 5.33% from 30 August 2018
Summary
Haribo Asia Pacific Pte Ltd v Aquarius Corp [2021] SGHC 278 arose out of a distributorship relationship between a Singapore-based confectionery supplier and a South Korean distributor. The parties entered into a 2016 distributorship agreement (“2016 DA”) governed by German law, following an earlier 2014 agreement that had ended through a settlement and contribution agreement (“SCA”). Although the 2016 DA was intended to restart the relationship “on a clean slate”, the parties’ relationship deteriorated and the Plaintiff terminated the 2016 DA by notice under cl 7.2.
The Plaintiff sued to recover unpaid invoices for products delivered, amounting to €1,526,224.76, together with contractual default interest. The Defendant did not seriously dispute the underlying debt but counterclaimed for damages in the form of lost profits, contending that the Plaintiff’s termination was legally invalid and that the Plaintiff breached multiple obligations under the 2016 DA. The High Court (Lee Seiu Kin J) allowed the Plaintiff’s claim for the principal sum in full, allowed contractual interest in part, and allowed the counterclaim in part. The Court further held that the requirements for set-off were satisfied and set out how the set-off should be applied, resulting in an order that the Plaintiff pay the Defendant ₩1,969,018,000 with judgment interest of 5.33% from 30 August 2018.
What Were the Facts of This Case?
The Plaintiff, Haribo Asia Pacific Pte Ltd, is part of the Haribo Group, which manufactures and sells confectionery products. The Plaintiff is responsible for sales and distribution of Haribo products in Southeast, West, and East Asian markets. The Defendant, Aquarius Corp, is incorporated in South Korea and distributes food and beverage products in South Korea. Their commercial relationship was governed first by a 2014 distributorship agreement (“2014 DA”), and later by a 2016 distributorship agreement (“2016 DA”).
Disputes arose under the 2014 DA. The parties negotiated a settlement, which was formalised through a settlement and contribution agreement (“SCA”). Under the SCA, the parties agreed to bring the 2014 DA to an end and settle outstanding and potential claims arising from it. The 2016 DA then served to enable the parties to restart their contractual relationship on a “clean slate”, with revised terms. Importantly, the 2016 DA was governed by German law, and the parties called experts to address German law issues relevant to the dispute.
Even after the 2016 DA and SCA were executed, the relationship remained strained. The Plaintiff was the party that took the first step to end the relationship. It invoked cl 7.2 of the 2016 DA, which permitted termination “with six (6) months’ notice to the end of a calendar month”. The Plaintiff’s first termination notice was issued on 25 October 2016. Given the notice period, the last day of the contract would have been 30 April 2017. After issuing the notice, the Plaintiff demanded payment for outstanding invoices totalling €1,526,224.76 for products delivered. The Defendant did not pay, and the Plaintiff commenced the suit to recover the outstanding sum with interest.
In the litigation, the Defendant’s position was that it owed the principal amount for products received, but it sought to avoid payment through set-off. It alleged that the Plaintiff committed numerous breaches of the 2016 DA and that those breaches caused the Defendant to suffer damages in the form of lost profits. The Defendant’s counterclaim was pleaded at a very high figure (approximately ₩54,719,088,182, or around €42.7 million). The Plaintiff denied the counterclaim entirely. The parties each called one factual witness: Mr Nikolay Karpuzov for the Plaintiff and Mr Eric Hahn for the Defendant. They also called experts: one set for quantification of the counterclaim (Mr Nicolson for the Plaintiff and Ms Teo for the Defendant) and another set for German law (Prof Matthias Lehmann for the Plaintiff and Prof Hans Christoph Grigoleit for the Defendant).
What Were the Key Legal Issues?
The case turned on two interrelated legal questions. First, whether the Plaintiff’s termination of the 2016 DA was legally valid. The Defendant advanced two alternative bases for invalidity. Contractually, it argued that the Plaintiff failed to initiate or participate in the dispute resolution process required by the 2016 DA, which it characterised as a precondition to exercising the termination right under cl 7.2. Statutorily and generally, it argued that the manner of termination offended restrictions in the German Civil Code, including provisions relating to exercise of contractual rights in a manner contrary to good morals, unlawful chicanery, or objectionable conduct under standards of good faith and fair dealing.
Second, assuming the termination was valid or invalid, the Court had to determine whether the Defendant could establish a counterclaim for damages for breach of the 2016 DA. The Defendant’s counterclaim, distilled, involved allegations that the Plaintiff (i) failed to aid in curing or investigating food safety issues and issues relating to parallel imports into South Korea; (ii) wrongfully halted deliveries and cancelled production of products ordered by the Defendant in response to requests for assistance; and (iii) did not attempt mandatory dispute resolution before issuing the termination notice, including alleged concealment of dissatisfaction from the Defendant. These alleged breaches were said to have caused lost profits, which the Defendant sought to set off against the Plaintiff’s claim.
How Did the Court Analyse the Issues?
Lee Seiu Kin J approached the dispute by first setting out the parties’ cases and then resolving factual disputes through the lens of the pleaded alternatives. The Court’s structure was significant: because there were substantial factual disputes and multiple alternative theories, it was necessary to build a coherent working set of facts before addressing each alternative. This method is particularly useful in complex commercial disputes involving foreign law, expert evidence, and overlapping contractual and statutory arguments.
On the Plaintiff’s claim, the Court treated the principal debt as essentially established. The Defendant did not seriously dispute that it owed €1,526,224.76 for products received. The main contest concerned interest. The 2016 DA provided for default interest at 8% over the applicable base interest rate pursuant to s 247 of the German Civil Code (BGB). The Plaintiff pleaded that the base interest rate was 7.12% and claimed interest from 1 July 2016 until full payment. The Defendant accepted that the rate structure (8% over 7.12%) was correct but challenged the start date. It argued that interest was payable only “from the expiration of the time provided for payment”. The earliest invoice relied upon was dated 1 November 2016 and required payment by the “3rd working day of [the] next month”. The Court therefore had to determine the correct contractual interpretation of when default interest began to accrue, taking into account the invoice payment terms and the concept of “working days”. The Court ultimately allowed contractual interest in part, indicating that it accepted the Defendant’s challenge to at least some portion of the Plaintiff’s interest computation.
On the counterclaim, the Court dealt with the Defendant’s first step—validity of termination—by examining both the contractual preconditions and the German law restrictions on the exercise of contractual rights. The Defendant’s contractual argument was that the Plaintiff’s termination was invalid because it did not initiate or participate in the dispute resolution process required by the 2016 DA. This required the Court to interpret the termination clause and the dispute resolution mechanism in the 2016 DA, and to decide whether the dispute resolution step was a genuine condition precedent to termination or merely a procedural step that could be bypassed without invalidating termination. The Court also had to consider the factual context: whether the Plaintiff’s conduct before termination demonstrated a failure to engage in the required process, and whether any such failure was material to the termination’s legal effect.
Separately, the Defendant’s statutory argument invoked German Civil Code provisions (including ss 138, 226, and 242 BGB) to contend that the Plaintiff’s termination was an abuse of rights. In broad terms, these provisions address conduct that is contrary to good morals, “unlawful chicanery” (exercise of rights for no reason other than to cause damage), and objectionable conduct under good faith and fair dealing standards. The Court therefore had to evaluate whether the Plaintiff’s termination was exercised for legitimate commercial reasons or whether it was tainted by bad faith or an improper motive. The Defendant’s pleaded narrative was that the Plaintiff was not interested in securing the continued operation of the 2016 DA and that it concealed dissatisfaction from the Defendant. The Court’s reasoning would necessarily involve assessing credibility and the documentary and expert evidence relating to the parties’ conduct around October 2016.
After addressing termination validity, the Court turned to the second step: whether the Defendant established breaches of the 2016 DA that caused damages in the form of lost profits. This required the Court to identify the relevant contractual obligations, determine whether the Plaintiff breached them, and then assess causation and quantification of damages. The case involved expert evidence on quantification, with the Court receiving competing economic analyses from Mr Nicolson and Ms Teo. The Court also had to consider the admissibility and weight of foreign law expert evidence, since German law governed the contract and the parties relied on expert testimony to explain German legal concepts and their application to the facts. Ultimately, the Court allowed the counterclaim in part, which suggests that while some breaches and/or some heads of loss were established, the Defendant did not succeed in proving the full extent of its claimed lost profits or did not establish all elements required for the entire counterclaim.
Finally, the Court addressed set-off. Set-off in this context required the Court to determine whether the Defendant’s counterclaim was sufficiently established to operate against the Plaintiff’s debt, and how to apply set-off in light of the Court’s partial allowance of both claim and counterclaim. The Court found that the requirements for set-off were satisfied and explained the application from [236] to [240] of the judgment. The practical effect was that the Plaintiff’s liability was not extinguished entirely; instead, the net result was that the Plaintiff had to pay the Defendant a substantial sum in won (₩1,969,018,000) together with judgment interest.
What Was the Outcome?
The Court allowed the Plaintiff’s claim for the principal sum of €1,526,224.76 in full. It also allowed the Plaintiff’s claim for contractual interest in part, reflecting a partial acceptance of the Defendant’s challenge to the interest start date and/or calculation. In parallel, the Court allowed the Defendant’s counterclaim in part, meaning that the Defendant succeeded on some aspects of its breach and damages case but not to the full extent pleaded.
Applying set-off, the Court ordered that the Plaintiff pay the Defendant ₩1,969,018,000 with judgment interest of 5.33% from 30 August 2018 (the date of the Defence and Counterclaim). The order demonstrates that even where the underlying debt is admitted, a counterclaim—if partially successful—can produce a net monetary liability against the claimant.
Why Does This Case Matter?
This decision is significant for practitioners dealing with cross-border commercial contracts governed by foreign law, particularly where termination rights and abuse-of-rights concepts are central. The case illustrates how Singapore courts handle foreign law questions through expert evidence and how they evaluate whether termination clauses operate as condition precedents or whether procedural steps are merely contractual mechanisms. For lawyers drafting distributorship agreements, the case underscores the importance of clear drafting around dispute resolution steps and termination preconditions.
From a civil procedure perspective, the judgment is also useful for understanding how set-off operates in practice when both claim and counterclaim are partially successful. The Court’s approach shows that set-off is not an “all-or-nothing” remedy; rather, it depends on the extent to which the counterclaim is established. This is particularly relevant in commercial disputes where the counterclaim is pleaded at a high figure but may be reduced after evidential and legal scrutiny.
Finally, the case provides a practical example of interest computation disputes in contract claims. Even where the rate is not contested, the start date and the interpretation of payment terms (including “working days”) can materially affect the outcome. Lawyers should therefore pay close attention to invoice wording, contractual interest clauses, and the mechanics of default interest under the governing law.
Legislation Referenced
- German Civil Code (Bürgerliches Gesetzbuch (“BGB”)), including:
- Section 247 (base interest rate for default interest)
- Section 138 (contrary to good morals)
- Section 226 (unlawful chicanery / abuse of rights)
- Section 242 (good faith and fair dealing)
Cases Cited
- [2006] SGHC 27
- [2021] SGHC 278
Source Documents
This article analyses [2021] SGHC 278 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.