Tozzi Srl v Bumi Armada Offshore Holdings Limited & Anor

"A contract was formed at the 31 July Meeting for Tozzi to be granted a right of first refusal in respect of all the Topside Process Modules." — Per Steven Chong JA, Para 24

Case Information

• Citation: [2017] SGHC(I) 8 (Para 0)
• Court: Singapore International Commercial Court of the Republic of Singapore (Para 0)
• Date Heard: 10–11, 13 July 2017 (Para 0)
• Date Decided: 21 September 2017 (Para 0)
• Coram: Steven Chong JA, Carolyn Berger IJ, Henry Bernard Eder IJ (Para 0)
• Counsel for the Plaintiff: Mohammed Reza s/o Mohammed Riaz and Lee Wei Han Shaun (JWS Asia Law Corporation) (Para 0)
• Counsel for the Defendants: Chou Sean Yu and Kevin Tan (WongPartnership LLP) (Para 0)
• Case Number: Suit No 6 of 2016 (Para 0)
• Area of Law: Commercial contract; right of first refusal; breach of contract; inducement of breach of contract (Paras 19, 32, 35)
• Judgment Length: The extracted judgment is not answerable on page count or word count, but the court’s reasoning spans the issues of formation, breach, inducement, and costs (Paras 19, 24, 32, 35, 45)

Summary

This dispute arose out of a major offshore project and turned on whether Tozzi Srl had obtained a binding right of first refusal over subcontract work for the Topside Process Modules. The court traced the parties’ dealings from the pre-bid stage, through the 31 July Meeting and the 1 August Minutes of Meeting, to the later award of the TI Packages subcontract to VME Process Asia Pacific Pte Ltd, and held that the right of first refusal had been agreed at the 31 July Meeting. The court further held that the “subject to contract” wording in the 1 August MOM did not defeat that standalone right. (Paras 1, 8, 13, 24, 29)

The court rejected the defendants’ attempt to characterise the entire arrangement as non-binding. It found that the right of first refusal was independent of the later EPC and FEED contracts, and that the surrounding correspondence and conduct showed the parties understood that such a right had already been agreed. On the facts, BAOHL breached that right by awarding the TI Packages subcontract to VME without first giving Tozzi the opportunity to match the third-party offer. (Paras 25, 26, 28, 32, 33)

The court also held that BAB induced BAOHL’s breach. It applied the orthodox test for inducement of breach of contract, requiring knowledge of the contract and an intention to interfere with contractual rights, and concluded that BAB’s conduct satisfied that test. Tozzi therefore succeeded against both defendants, with damages to be assessed and liability costs ordered against the defendants. (Paras 37, 44, 45)

What Was the Commercial Setting and How Did the Dispute Arise?

The dispute was rooted in a project for the supply of facilities and services for the development of the Madura BD Gas and Condensate Field in Indonesia. The court explained that Tozzi was brought in because of its expertise in gas processing facilities, and that the parties’ relationship developed in the context of Bumi’s bid to Husky for the Project. The commercial background mattered because it explained why the parties were negotiating not merely a single contract, but a package of related arrangements involving engineering, procurement, and subcontracting work. (Paras 1, 8)

"This dispute can be traced to a project for the supply of facilities and services in relation to the development of the Madura BD Gas and Condensate Field in Indonesia (“the Project”)." — Per Steven Chong JA, Para 1

On 6 February 2013, Tozzi and BAOHL entered into the Pre-Bid Agreement, which governed their working relationship in preparation for Bumi’s bid to Husky. The court noted that the parties continued working together after the PBA expired, and that the later documents and meetings had to be understood against that continuing commercial relationship. The factual chronology was important because the court treated the later 31 July Meeting and 1 August MOM not as isolated events, but as part of a sequence of negotiations and performance. (Paras 8, 9, 10, 11, 12, 13)

"On 6 February 2013, Tozzi and BAOHL entered into the PBA which was to govern their working relationship in preparation for Bumi’s bid to Husky." — Per Steven Chong JA, Para 8

The court also recorded that on 1 August 2014, Bumi prepared the 1 August MOM, which was signed by Mr Schiavo for Tozzi and Mr Abela for BAOHL. That document became central to the dispute because it contained the “subject to contract” wording on which the defendants relied. The court ultimately held that the wording did not undo the earlier agreement on the right of first refusal, but the document was still significant because it reflected the parties’ understanding of what had been discussed and agreed. (Paras 13, 22, 29)

"On 1 August 2014, Bumi prepared the 1 August MOM, which was again signed by Mr Schiavo for Tozzi and Mr Abela for BAOHL." — Per Steven Chong JA, Para 13

The commercial sequence culminated in the award of the TI Packages subcontract to VME Process Asia Pacific Pte Ltd on or about 26 May 2015. The court treated that award as the act that triggered the alleged breach, because Tozzi was not given the chance to match the third-party offer before the purchase order was issued to VME. That factual step was decisive both for breach and for the inducement claim. (Paras 19, 33, 44)

"Eventually, on or about 26 May 2015, BAOHL awarded the subcontract for the TI Packages to VME Process Asia Pacific Pte Ltd (“VME”)." — Per Steven Chong JA, Para 19

How Did the Court Frame the Core Legal Questions?

The court framed the dispute around three principal questions: whether Tozzi was entitled to a right of first refusal, whether BAOHL breached that right, and whether BAB induced the breach. It also identified the legal significance of the “subject to contract” wording in the 1 August MOM, because the defendants’ central position was that no binding agreement had been reached. The structure of the judgment shows that the court treated formation, breach, and inducement as distinct but connected issues. (Paras 6, 19, 32, 35)

"This judgment will examine the legal effect of the “subject to contract” provision in the 1 August MOM, in particular whether it was intended to qualify the right of first refusal stated therein or the contract which the parties would have negotiated if the right of first refusal had been extended by Bumi and accepted by Tozzi." — Per Steven Chong JA, Para 6

The court’s issue framing was explicit. It asked: “Was Tozzi entitled to a right of first refusal?” It then asked: “Did BAOHL breach the right of first refusal?” and “Did BAB induce BAOHL to breach the right of first refusal?” Those questions were not merely procedural headings; they mapped the court’s reasoning path and the sequence in which it resolved the dispute. (Paras 19, 32, 35)

"Was Tozzi entitled to a right of first refusal?" — Per Steven Chong JA, Para 19

"Did BAOHL breach the right of first refusal?" — Per Steven Chong JA, Para 32

"Did BAB induce BAOHL to breach the right of first refusal?" — Per Steven Chong JA, Para 35

That framing mattered because the defendants’ case was not simply that they had not breached an existing right; it was that no such right ever came into existence. The court therefore had to decide whether the 31 July Meeting produced a binding contractual obligation, and if so, whether later documentation displaced it. Only after answering that question could the court assess breach and inducement. (Paras 20, 22, 24, 29, 32, 37)

Why Did the Court Hold That a Right of First Refusal Was Formed at the 31 July Meeting?

The court accepted Tozzi’s primary case that a binding agreement to extend a right of first refusal was reached at the 31 July Meeting. It held that the right was not merely aspirational or part of a future contract negotiation; rather, it was a standalone contractual right that had immediate legal effect. The court’s conclusion was grounded in the evidence of the parties’ communications and the way the commercial relationship was conducted after the meeting. (Paras 20, 24, 25, 28)

"Tozzi’s primary case is that Tozzi and BAOHL reached a binding agreement to extend a right of first refusal to Tozzi at the 31 July Meeting." — Per Steven Chong JA, Para 20

The court articulated the legal nature of a right of first refusal in clear terms. It observed that such a right is a standalone right and that, by its nature, it confers an opportunity to match a third-party offer. That proposition was central to the court’s reasoning because it meant the right could exist independently of the finalisation of other contractual arrangements, such as the EPC and FEED contracts. (Paras 25, 26)

"The right of first refusal is, in our view, a standalone right." — Per Steven Chong JA, Para 25

"it confers a right to be given an opportunity to match any third party offer which the grantor of the right might be otherwise minded to accept" — Per Steven Chong JA, Para 25

The court further reasoned that the fact that the precise terms of the later EPC and FEED contracts were still open to negotiation did not prevent the independent right of first refusal from having contractual effect. In other words, the court separated the existence of the right from the later commercial details that would govern performance if the right were exercised. That distinction was fatal to the defendants’ attempt to collapse all discussions into a single non-binding negotiation. (Paras 25, 26)

"the fact that the precise terms of those contracts were still open to negotiation does not preclude the independent right of first refusal from having contractual effect." — Per Steven Chong JA, Para 26

The court also relied on the surrounding evidence to conclude that the parties understood a right of first refusal had been agreed on 31 July 2014. It found Mr Schiavo credible and noted that the documentary record supported his account. The court’s factual finding was not merely that the parties discussed the right, but that they had reached agreement on it. (Paras 28, 24)

"We found Mr Schiavo to be a credible witness and resolved disputed questions of fact in Tozzi’s favour." — Per Steven Chong JA, Para 28

"That evidence clearly demonstrates the parties’ understanding that a right of first refusal was indeed agreed upon on 31 July 2014." — Per Steven Chong JA, Para 28

Why Did the “Subject to Contract” Wording Not Defeat the Right of First Refusal?

The defendants relied heavily on the final paragraph of the 1 August MOM, which stated that the matters discussed were “subject to contract.” Their argument was that this wording meant no binding agreement had been reached, or at least that any agreement was conditional on the execution of a formal contract. The court rejected that reading. It held that the “subject to contract” language was directed only to the EPC works and FEED works, not to the already-agreed right of first refusal. (Paras 22, 29)

"Bumi contends that, considering the 1 August MOM in its entirety, no agreement was reached at the 31 July Meeting." — Per Steven Chong JA, Para 22

"Further, the last paragraph of the 1 August MOM expressly rendered all matters discussed “subject to contract”." — Per Steven Chong JA, Para 22

The court’s answer was that the “subject to contract” clause had a narrower function than the defendants suggested. It observed that the last paragraph of the 1 August MOM was only intended to defer legal relations in respect of the EPC works and FEED works. It did not prevent a legally binding agreement to grant a right of first refusal from arising. This was a crucial interpretive move because it preserved the binding force of the right while acknowledging that other aspects of the commercial arrangement remained open. (Paras 29, 24, 26)

"the last paragraph of the 1 August MOM was only intended to defer legal relations in respect of the EPC works and FEED works." — Per Steven Chong JA, Para 29

"It does not prevent a legally binding agreement to grant a right of first refusal from arising." — Per Steven Chong JA, Para 29

The court’s reasoning also shows that it did not treat the “subject to contract” wording as a universal formula that automatically negates all prior consensus. Instead, it read the document in context and asked what the parties intended that wording to qualify. Because the right of first refusal was conceptually and commercially distinct from the later EPC and FEED contracts, the court held that the clause did not undo the earlier agreement. (Paras 6, 25, 26, 29)

What Evidence Persuaded the Court That the Parties Had Agreed the Right?

The court placed significant weight on the evidence of Mr Stefano Schiavo, who was “intimately involved” throughout the period leading up to Bumi’s bid for the Project. It contrasted his evidence with the defendants’ evidential position: although Bumi had many senior members involved in preparing the bid, none of them testified, and Bumi’s sole witness was in-house counsel who joined after the dispute had arisen. That evidential imbalance mattered because the court was required to resolve disputed questions of fact and assess the credibility of the competing narratives. (Para 6, 28)

"Tozzi called only one witness – Mr Stefano Schiavo, who was intimately involved throughout the period in the lead up to Bumi’s bid for the Project." — Per Steven Chong JA, Para 6

"On the other hand, although Bumi was represented by many senior members of its management in the course of preparing the bid, none of them was offered as a witness for the trial." — Per Steven Chong JA, Para 6

The court expressly stated that it found Mr Schiavo credible and resolved disputed factual issues in Tozzi’s favour. It then said that the evidence clearly demonstrated the parties’ understanding that a right of first refusal had been agreed on 31 July 2014. This was not a peripheral observation; it was the factual foundation for the court’s conclusion on contract formation. (Para 28)

"We found Mr Schiavo to be a credible witness and resolved disputed questions of fact in Tozzi’s favour." — Per Steven Chong JA, Para 28

"That evidence clearly demonstrates the parties’ understanding that a right of first refusal was indeed agreed upon on 31 July 2014." — Per Steven Chong JA, Para 28

The court’s approach illustrates that documentary context and witness credibility can be decisive where the parties dispute whether a commercial understanding had crystallised into a binding obligation. Here, the court did not rely on a single isolated sentence; it read the 31 July Meeting, the 1 August MOM, and the surrounding conduct together. That holistic approach led it to reject the defendants’ contention that no agreement had been reached. (Paras 24, 28, 29)

How Did the Court Define the Nature of a Right of First Refusal and Apply That Definition Here?

The court drew on authority to explain what a right of first refusal means in law. It quoted the proposition that such a right confers an entitlement to obtain the subject matter of the right and, more specifically, to be given the opportunity to match any third-party offer the grantor might otherwise accept. That definition was central because it established the content of the obligation BAOHL owed Tozzi once the right existed. (Para 25)

"a right of “first refusal” by its nature confers a right to obtain the subject matter of the right, whether it is land or another asset or a service or a business opportunity to enter a contract." — Per Steven Chong JA, Para 25

Applying that definition, the court held that the right of first refusal in this case was not satisfied merely because Tozzi had been involved in earlier discussions or had some general awareness of the project. What mattered was whether Tozzi was given the opportunity to match the third-party offer before BAOHL accepted it. The court’s analysis therefore focused on the mechanics of the later award to VME and whether Tozzi had been afforded the contractual chance the right guaranteed. (Paras 25, 33)

"what is required to comply with the obligation to grant a right of first refusal is that the grantee be afforded the opportunity to match that offer" — Per Steven Chong JA, Para 33

That principle led directly to the finding of breach. The court held that Tozzi was not given an opportunity to match VME’s offer before the purchase order was issued to VME. Because the essence of the right was the opportunity to match, the failure to provide that opportunity was a clear breach. The court’s reasoning was straightforward: once the right existed, BAOHL had to respect the matching mechanism, and it did not. (Paras 32, 33)

"Tozzi was not given an opportunity to match VME’s offer before a purchase order was issued to VME. This was a clear breach" — Per Steven Chong JA, Para 33

Why Did the Court Hold That BAOHL Breached the Right of First Refusal?

The court’s breach analysis followed directly from its interpretation of the right. Having found that a binding right of first refusal existed, it asked whether BAOHL had complied with the obligation to give Tozzi the chance to match the third-party offer. The answer was no. The court held that BAOHL awarded the TI Packages subcontract to VME without first giving Tozzi that opportunity, and that this omission constituted breach. (Paras 32, 33)

"we are satisfied that BAOHL breached the agreement to grant Tozzi a right of first refusal, in respect of all seven Topside Process Modules." — Per Steven Chong JA, Para 32

The court’s use of the phrase “all seven Topside Process Modules” is significant because it shows the breadth of the right as the court understood it. The breach was not limited to a subset of modules or a partial commercial opportunity; it extended to the full scope of the right that had been agreed. That breadth mattered both for liability and for the eventual assessment of damages. (Paras 24, 32, 45)

The court also made clear that the breach occurred at the point BAOHL proceeded to issue the purchase order to VME without first offering Tozzi the chance to match. The court did not require proof of bad faith for breach; the failure to comply with the matching mechanism was enough. In that sense, the breach analysis was contractual and objective, not dependent on motive. (Paras 33, 32)

How Did the Court Approach the Claim That BAB Induced BAOHL’s Breach?

The inducement claim required a separate analysis because BAB was not the direct contracting party to the right of first refusal. The court therefore had to determine whether BAB, through its conduct, intentionally interfered with Tozzi’s contractual rights and did so with the requisite knowledge. The court stated the test in terms of knowledge of the existence of the contract and an intention to interfere, with intention to be objectively ascertained. (Para 37)

"To establish that BAB induced BAOHL to breach the right of first refusal, Tozzi must show that BAB (a) acted with the requisite knowledge of the existence of the contract (although knowledge of the precise terms is unnecessary); and (b) intended to interfere with Tozzi’s contractual rights, with such intention to be objectively ascertained" — Per Steven Chong JA, Para 37

The court then considered BAB’s role in the events leading to the award to VME. It concluded that BAB induced BAOHL’s breach of Tozzi’s right of first refusal. The judgment’s reasoning indicates that the court was satisfied BAB knew of the contractual right and acted in a way that interfered with it, even though the precise terms need not have been known. This was enough to satisfy the inducement test as the court applied it. (Paras 37, 44)

"we find that Tozzi succeeds in establishing that BAB induced BAOHL’s breach of Tozzi’s right of first refusal." — Per Steven Chong JA, Para 44

The court’s conclusion on inducement is important because it shows that a parent or related entity may incur liability where it is the real actor behind a subsidiary’s breach. The court did not accept the defendants’ attempt to insulate BAB by pointing to corporate separateness alone. Instead, it examined the evidence of who knew what, who acted, and how the decision to award the subcontract was made. (Paras 37, 39, 41, 44)

Why Did the Court Reject the Defendants’ Corporate-Structure Arguments?

The defendants relied on authorities dealing with corporate separateness and the limits of inferring inducement merely from parent-subsidiary control. They cited cases such as ARS v ART and Stocznia Gdanska SA v Latvian Shipping Co to argue that the mere fact of control does not justify an inference of inducement. The court acknowledged those authorities but distinguished them on the facts. (Paras 39, 41)

"the mere fact that a company is a wholly owned subsidiary controlled by the parent company does not enable the court to draw the inference" — Per Steven Chong JA, Para 39

The court also considered the defendants’ reliance on Australian Development Corporation Pty Ltd v White Constructions (Act) Pty Ltd & Ors, where the proposition was that a subsidiary made the decision even if persons employed by the parent were involved. The court distinguished that case as well. The key point in the present case was not simply that BAB employees were involved, but that the evidence showed BAB’s executives were the real actors in the impugned decision and that BAB had the requisite knowledge and intention. (Para 41)

"The subsidiary made the decision, albeit by or with the involvement of persons employed by [the parent company]." — Per Steven Chong JA, Para 41

By distinguishing these authorities, the court made clear that corporate form does not shield a parent where the evidence shows active, knowing interference with contractual rights. The court’s reasoning was fact-sensitive rather than categorical: it did not hold that parent-subsidiary involvement always amounts to inducement, but it did hold that the evidence in this case crossed the legal threshold. (Paras 39, 41, 44)

What Was the Court’s Final Disposition and What Relief Did It Grant?

Having found for Tozzi on formation, breach, and inducement, the court granted the plaintiff’s claim against both defendants. It did not quantify damages in the judgment itself; instead, it ordered that damages be assessed. That meant liability was determined, but the monetary consequences were left for a later stage. (Para 45)

"For the foregoing reasons, we grant the plaintiff’s claim against both defendants with damages to be assessed." — Per Steven Chong JA, Para 45

The court also ordered the defendants to bear the costs of the trial on liability, to be taxed if not agreed following the assessment of damages. It further directed that the costs of the assessment would be dealt with separately. Those orders reflect a common bifurcated approach in commercial litigation where liability is tried first and quantum later. (Para 45)

"We also order the defendants to bear the costs of this trial on liability, to be taxed if not agreed following the assessment of the damages." — Per Steven Chong JA, Para 45

"Costs of the assessment will be dealt with separately." — Per Steven Chong JA, Para 45

The final orders therefore gave Tozzi complete success on liability while preserving the later process for quantifying loss. The judgment did not set out a damages methodology, and the extraction expressly indicates that damages were not quantified. The practical consequence was that the parties would need to return to the assessment stage unless they settled quantum. (Para 45)

Why Does This Case Matter?

This case matters because it clarifies that a right of first refusal can be a standalone binding contractual right even where related commercial arrangements remain “subject to contract.” That distinction is commercially important in complex project negotiations, where parties often agree some rights immediately while leaving detailed supply or engineering contracts for later formalisation. The court’s analysis shows that a “subject to contract” clause will not necessarily undo a separately agreed right if the context shows the clause was aimed at other aspects of the deal. (Paras 25, 26, 29)

"the last paragraph of the 1 August MOM was only intended to defer legal relations in respect of the EPC works and FEED works. It does not prevent a legally binding agreement to grant a right of first refusal from arising." — Per Steven Chong JA, Para 29

The case also matters because it demonstrates how a court may infer inducement of breach where a parent company’s executives are the real decision-makers behind a subsidiary’s conduct. The judgment does not collapse corporate separateness as a matter of principle, but it does show that corporate structure will not protect a party if the evidence proves knowledge and intentional interference. That is a significant warning for groups operating through multiple related entities in project procurement and subcontracting. (Paras 37, 39, 41, 44)

"we find that Tozzi succeeds in establishing that BAB induced BAOHL’s breach of Tozzi’s right of first refusal." — Per Steven Chong JA, Para 44

More broadly, the case is a reminder that courts will look closely at the commercial reality, the documentary trail, and the credibility of witnesses when deciding whether a binding agreement was formed in a fast-moving project environment. For practitioners, the lesson is that if a party intends a right to be non-binding or conditional, that intention must be expressed with precision and consistency across the relevant documents. (Paras 6, 28, 29)

Cases Referred To

Source Documents

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

This article analyses [2017] SGHCI 8 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.