POSH SEMCO PTE LTD v MAKAMIN PETROLEUM SERVICES CO & Anor

"The plaintiff is, therefore, entitled to judgment against OWG in the further sum of US$771,779.98 and to interest thereon." — Per Jeremy Lionel Cooke IJ, Para 29

Case Information

• Citation: [2020] SGHC(I) 26 (Para 0)
• Court: Singapore International Commercial Court (Para 0)
• Date of hearing: 15 December 2020 and 18 December 2020 (Para 0)
• Coram: Jeremy Lionel Cooke IJ (International Judge) (Para 0)
• Case number: Suit No 1 of 2019 (Para 0)
• Counsel for the plaintiff: Chan Tai-Hui, Jason (“Chan”), Oh Jialing, Evangeline and Gan Yun Han, Rebecca (Allen & Gledhill LLP) (Para 35)
• Defendants: unrepresented, absent (Para 35)
• Area of law: Commercial litigation; guarantees; foreign law; procedural default; interest and costs (Paras 6, 16, 18, 33)
• Judgment length: The extracted material does not state the judgment’s page count or word count, and that is not answerable from the extraction. (Not answerable)

Summary

This judgment arose after the defendants failed to appear, and the court had to decide whether it should proceed to judgment on the evidence already before it or require a fuller trial. The plaintiff submitted that OWG had no intention of defending the remaining claim, while the court considered that it was not appropriate to give judgment without exploring the evidence already adduced, including earlier expert evidence on Saudi law. The court therefore proceeded to determine the claim on the materials before it. (Paras 6, 7, 10)

The substantive dispute concerned the plaintiff’s entitlement to recover the balance of the Outstanding Debt under the OWG Guarantee, in circumstances where the underlying charter and settlement arrangements involved MOS and where Saudi-law good faith obligations were said to affect MOS’s liability. The court accepted the evidence of Dr Baassiri on the principles and ambit of good faith obligations under Saudi law, and it held that the plaintiff had acted in good faith while MOS had not. On that basis, the court concluded that the balance of the debt remained recoverable. (Paras 16, 18, 27, 28)

The court ultimately entered judgment for the plaintiff for US$771,779.98, awarded pre-judgment interest of US$519,855.72, ordered continuing interest at 12% per annum, and granted indemnity costs together with interest on costs at 5.33% per annum. The judgment also records the court’s acceptance that the plaintiff had shown patience and forbearance, and that the defendants had no intention of defending the remaining claim. (Paras 29, 32, 33, 34, 35)

Why Did the Court Proceed to Trial Despite OWG’s Absence?

The court began from the procedural position that the defendants were absent when the trial was called on. The plaintiff relied on Order 35 rule 1(2) of the Rules of Court, as applied to the SICC by Order 110 rule 3(1), which permits the judge to proceed in the absence of a party, give judgment without trial, dismiss the action, or make any other order as the judge thinks fit. The plaintiff’s submission was that OWG had no intention of defending the remaining part of the claim, and that judgment should therefore be entered without trial. (Paras 6, 7)

"If, when the trial of an action is called on, one party does not appear, the Judge may proceed with the trial of the action or any counterclaim in the absence of that party, or may without trial give judgment or dismiss the action, or make any other order as he thinks fit." — Per Jeremy Lionel Cooke IJ, Para 6

The court did not accept that it should simply enter judgment without examining the evidence. It expressly stated that it would not be appropriate to give judgment without exploring the evidence, including the evidence adduced by the plaintiff and the earlier expert material already before the court. That approach reflects the court’s concern that the substantive issues, particularly those involving foreign law and the structure of the guarantee, required judicial examination even in the defendants’ absence. (Paras 7, 10)

The court therefore proceeded on the basis of the evidence before it and the previous evidence from Mr Al-Qahtani. It is significant that the court’s decision to continue was not a mechanical default judgment exercise; rather, it was a considered determination that the available record was sufficient to permit adjudication. The court’s approach shows that absence does not eliminate the need to test the claim where the issues are legally and factually complex. (Paras 10, 16)

What Were the Underlying Commercial Arrangements and How Did the Debt Arise?

The factual matrix was a charter dispute involving the vessel “POSH Pelican.” The plaintiff’s pleaded case, as recorded in the judgment, was that MOS was the charterer of the vessel under a time charter on an amended Supplytime 2005 form with additional clauses dated 28 October 2013. The settlement agreement later recorded MOS’s acknowledgment of a substantial outstanding debt due under the charter. (Para 12)

"MOS is the Charterer of the vessel ‘POSH Pelican’ from [the plaintiff] under a time charter on an amended Supplytime 2005 form with additional clauses dated 28 October 2013 (‘Charter’)" — Per Jeremy Lionel Cooke IJ, Para 12

"MOS agrees and acknowledges that as of 30th June 2015, MOS’ total outstanding debt due and owing to [the plaintiff] under the Charter … is US$2,891,241.54 (‘Outstanding Debt’) …" — Per Jeremy Lionel Cooke IJ, Para 12

The chronology also included the plaintiff’s eventual withdrawal of the vessel and termination of the charter on 26 March 2016. The extracted material states that MOS defaulted on instalments under the settlement agreement, and the court later observed that the plaintiff had shown “much patience and forbearance.” Those facts were relevant to the court’s assessment of whether the plaintiff had acted in good faith and whether the debt could properly be enforced against OWG under the guarantee. (Paras 12, 27)

The court’s treatment of the facts was closely tied to the contractual structure. The debt was not treated as an abstract sum; it was linked to the charter, the settlement agreement, the instalment defaults, and the guarantee. The court’s reasoning therefore depended on the interaction between the underlying liability of MOS and the secondary liability of OWG. (Paras 12, 16, 28)

How Did the Court Characterise the OWG Guarantee and Why Did That Matter?

A central issue was the legal character of the OWG Guarantee. The court had previously held that the guarantee was a true guarantee, described as a “see to it guarantee,” rather than an “on demand” guarantee. That distinction mattered because, on the court’s reasoning, a true guarantee only “bites” if there is an established liability of the principal debtor, MOS, to the plaintiff. The guarantee did not operate as an independent payment obligation divorced from the underlying debt. (Para 16)

"Because I held that the OWG Guarantee was a true guarantee (a “see to it guarantee”) as opposed to an “on demand” guarantee … it follows that, for the OWG Guarantee to “bite” it is necessary for there to be an established liability of MOS to the plaintiff." — Per Jeremy Lionel Cooke IJ, Para 16

This characterisation drove the rest of the analysis. If Saudi law prevented the plaintiff from recovering the relevant sum from MOS, then OWG could not be liable for that same sum under a guarantee that depended on MOS’s established liability. The court therefore had to examine the Saudi-law evidence carefully, because the enforceability of the guarantee depended on whether the underlying debt remained legally recoverable. (Paras 16, 17, 18)

The court’s approach also explains why the foreign-law evidence was not peripheral. The guarantee issue was not simply a matter of Singapore contract law; it required the court to understand whether, under Saudi law, the plaintiff’s conduct had affected the enforceability of the underlying debt. The court treated that as a substantive question going to liability, not merely a procedural or remedial issue. (Paras 16, 17)

What Did the Court Decide About Saudi-Law Good Faith Obligations?

The court accepted expert evidence on Saudi law and, in particular, on the principles and ambit of the good faith obligations that rest on a commercial party under Saudi law. The judgment records that such obligations have the force of law by reason of Articles 1 and 7 of the Basic Law of Governance of Saudi Arabia, and it states that under Saudi law a commercial party is bound by obligations of good faith found in the Qur’an and the Sunnah. (Paras 18, 27)

"Under Saudi law, a commercial party is bound by obligations of good faith found in the Qur’an and the Sunnah." — Per Jeremy Lionel Cooke IJ, Para 18

"Such obligations have the force of law by reason of Art(s) 1 and 7 of the Basic Law of Governance of Saudi Arabia." — Per Jeremy Lionel Cooke IJ, Para 18

The court accepted Dr Baassiri’s evidence on those principles and their ambit. It contrasted that evidence with the earlier evidence from Mr Al-Qahtani, whose opinion the court considered had strayed beyond the proper limits of an expert. The court’s acceptance of Dr Baassiri’s evidence was decisive because it supported the conclusion that the plaintiff had not breached the relevant good faith obligations. (Paras 20, 27)

The court then applied that legal framework to the facts. It found that good faith was exercised by the plaintiff, but not by MOS, which continued to break its contractual obligations, particularly in relation to the third and fourth instalments. That finding was central to the rejection of the argument that Saudi-law good faith principles prevented the plaintiff from claiming the balance of the debt. (Para 27)

Why Did the Court Reject the Argument That the Plaintiff Could Not Claim the Balance of the Outstanding Debt?

The court’s reasoning proceeded in stages. First, it recognised that the OWG Guarantee depended on an established liability of MOS. Second, it considered whether Saudi-law good faith obligations prevented the plaintiff from asserting that the entire Outstanding Debt had become payable. Third, it concluded that the plaintiff had acted in good faith and that MOS had not. On that basis, the court held that the balance of the Outstanding Debt was rightly claimed. (Paras 16, 20, 27, 28)

"The balance of the Outstanding Debt was rightly claimed." — Per Jeremy Lionel Cooke IJ, Para 28

The court’s treatment of the expert evidence was important. It noted that Mr Al-Qahtani appeared to have gone beyond the proper limits of an expert and had concluded that the plaintiff was not entitled to assert that the entire Outstanding Debt had become payable. By contrast, the court accepted Dr Baassiri’s evidence on the principles and ambit of Saudi good faith obligations. The court thus preferred the evidence that supported enforceability of the claim. (Paras 20, 27)

The court also emphasised the plaintiff’s conduct. It found that the plaintiff had shown patience and forbearance, and that it had given MOS time while MOS continued to default, particularly on the third and fourth instalments. That factual assessment underpinned the legal conclusion that the plaintiff had not acted in breach of good faith and that the debt remained recoverable. (Paras 27, 28)

How Did the Court Deal With Interest and Why Was the Rate 12% Per Annum?

Interest was a significant part of the monetary award. The court distinguished between substantive liability under Saudi law and the procedural or remedial question of interest in the Singapore forum. It stated that questions of substantive liability under Saudi law are different from issues of procedural law as to the award of interest in another forum. That distinction allowed the court to award interest even while analysing the underlying debt through the lens of Saudi law. (Para 17)

"Questions of substantive liability under Saudi law are different from issues of procedural law as to the award of interest in another forum" — Per Jeremy Lionel Cooke IJ, Para 17

The court then quantified interest. It recorded that the figure for interest up to 5 April 2016 at 12% per annum was US$84,191.21, and that interest at the same rate thereafter until the date of judgment was US$435,664.51, making a total of US$519,855.72. The court therefore awarded pre-judgment interest in that amount and ordered continuing interest on the principal judgment sum at 12% per annum and pro rata until actual payment. (Paras 32, 35)

"The figure for interest up to 5 April 2016 at 12% per annum has been calculated at US$84,191.21 and for interest at the same rate thereafter until today at US$435,664.51, making a total of US$519,855.72." — Per Jeremy Lionel Cooke IJ, Para 32

The court also noted that the Court of Appeal had upheld its earlier decision that, in awarding interest in respect of the OWG Guarantee claim governed by Singapore law, the court was entitled to take into account the contractual rate of interest. That appellate history reinforced the legitimacy of the interest award and showed that the rate was not chosen arbitrarily. (Para 15)

Why Did the Court Award Indemnity Costs and What Costs Were Fixed?

The court considered costs separately from the principal debt and interest. It stated that indemnity costs were appropriate in the circumstances. The extracted material does not reproduce a lengthy costs analysis, but it does show that the court accepted the plaintiff’s bill of costs without disallowance and fixed the costs and disbursements in specified amounts. (Paras 33, 34)

"I consider that indemnity costs are appropriate here" — Per Jeremy Lionel Cooke IJ, Para 33

The court fixed costs at US$577,070.10 plus S$132,306.50, and disbursements at US$37,758.62 plus S$5,889.74. It also ordered interest on those costs at 5.33% per annum from the date of judgment. The judgment therefore gave the plaintiff a complete monetary order covering principal, interest, and costs. (Paras 34, 35)

"The figure is US$577,070.10 plus S$132,306.50 and disbursements of US$37,758.62 plus S$5,889.74." — Per Jeremy Lionel Cooke IJ, Para 34

The costs order is notable because it reflects the court’s view of the defendants’ conduct and the procedural posture of the case. The court had already found that the plaintiff had shown patience and forbearance, while the defendants had not appeared and had no intention of defending the remaining claim. In that context, indemnity costs were treated as the appropriate response. (Paras 27, 33, 34)

What Was the Final Judgment and What Exact Orders Did the Court Make?

The final order was for judgment in favour of the plaintiff against OWG for the principal judgment sum of US$771,779.98, together with pre-judgment interest of US$519,855.72 to the date of judgment. The court also ordered that interest continue to run on the principal judgment sum at 12% per annum and pro rata until actual payment. (Para 35)

"Judgment will therefore be entered for the plaintiff for US$771,779.98 (the “principal judgment sum”), together with interest thereon of US$519,855.72 to today’s date." — Per Jeremy Lionel Cooke IJ, Para 35

"Interest will continue to run on the principal judgment sum at the rate of 12% per annum and pro rata from todays’ date up to the date of actual payment together with costs on an indemnity basis" — Per Jeremy Lionel Cooke IJ, Para 35

The court further ordered costs on an indemnity basis and interest on those costs at 5.33% per annum from the date of judgment. The judgment concludes with the signature of Jeremy Lionel Cooke, International Judge. The result was therefore a full monetary judgment in favour of the plaintiff, reflecting the court’s findings on liability, interest, and costs. (Paras 33, 34, 35)

In practical terms, the judgment resolved the remaining dispute in the plaintiff’s favour after the defendants failed to appear and after the court examined the foreign-law and contractual issues that remained live. The court’s final orders were comprehensive and left no unresolved monetary issue within the scope of the claim as extracted. (Paras 29, 32, 35)

Why Does This Case Matter?

This case matters because it shows that a court may proceed to determine a claim even when a defendant does not appear, but it will still scrutinise the evidence rather than automatically entering judgment. The court expressly said it was not appropriate to give judgment without exploring the evidence, and it proceeded on the basis of the record already before it. That is a useful reminder that procedural default does not eliminate substantive judicial review. (Paras 6, 7, 10)

The case is also important for its treatment of guarantees and foreign law. The court’s distinction between a true “see to it guarantee” and an “on demand” guarantee meant that the plaintiff had to establish MOS’s liability before OWG could be liable. The court then examined Saudi-law good faith obligations and accepted expert evidence that supported the plaintiff’s position. For practitioners, the case illustrates how foreign-law issues can directly affect the enforceability of a guarantee in Singapore proceedings. (Paras 16, 18, 27, 28)

Finally, the case is significant for its treatment of interest and costs. The court distinguished substantive liability from the procedural award of interest, upheld a 12% rate, and awarded indemnity costs with interest on costs. The result demonstrates that where a commercial defendant defaults and the plaintiff has acted with patience and forbearance, the court may still grant a robust monetary remedy. (Paras 17, 32, 33, 34, 35)

Cases Referred To

Legislation Referenced

• Rules of Court, Order 35 rule 1(2) (Para 6) [CDN] [SSO]
• Rules of Court, Order 110 rule 3(1) (Para 6) [CDN] [SSO]
• Basic Law of Governance of Saudi Arabia, Articles 1 and 7 (Para 18)

Source Documents

• Original Judgment — Singapore Courts
• Archived Copy (PDF) — Litt Law CDN

This article analyses [2020] SGHCI 26 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.