-  SGCA 43
- Court of Appeal
- Sembcorp Marine v PPL Holdings Pte Ltd et al.
JOINT VENTURE AGREEMENT - BETWEEN TWO SINGAPOREAN COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET APPLICABLE DOMESTIC LAW (SINGAPOREAN LAW)
INTERPRETATION OF JOINT VENTURE AGREEMENT - REFERENCE TO ARTICLE 4.3 UNIDROIT PRINCIPLES
"Company A and company B were initially joint venture partners, each owning 50 per cent of a JVC. Three per cent of company B’s shares were owned by its subsidiary, company B1. The terms of the JVA, and the JVC’s articles of association stipulated that company A and company B were entitled to appoint three directors each in the JVC as they both held 50 per cent of the shares in the JVC. Subsequently, company A increased its stake to 85 per cent by purchasing 35 per cent from company B under a supplemental agreement. Thereafter, Company A proceeded to appoint another three directors on the board of the JVC, bringing the total number of Company A-appointed directors to six. Thereafter, company B sold its remaining 15 per cent shares to a third party. The JVC’s six company A-appointed directors proceeded to pass certain resolutions which had the effect of reducing company B’s board influence and executive control in the JVC.
Among other issues, Company A argued that the JVA and JVC’s articles of association contained an implied term which has the effect of disapplying certain clauses relating to board representation and control once the 50:50 joint venture proportion changed.
The court discussed various principles, including that of interpretation of contracts. In doing so, the court discussed the contextual approach, and the admissibility of extrinsic evidence in the adoption of this approach. In the discussion on the admissibility of extrinsic evidence, reference was made to Article 4.3 of the UNIDROIT Principles."
(cf. S. Y. Koh in "Perspectives in Practice of the UNIDROIT Principles 2016", IBA Publication 2019, p. 207)