Legal Case Analysis

Name of Case:
IM Skaugen SE and another ​v​ MAN Diesel & Turbo SE and another

When and where:

18 April 2016, Singapore High Court

Summary:
The plaintiff of the case is the Skaugen Group consisting of Skaugen Norway Skaugen
Singapore. The Skaugen Group is a business that provides marine transportation
services in oil and gas industry. The defendants are MAN Germany, who manufactures
marine diesel engines and MAN Norway who gives sale support to MAN Germany.

In July 2000, Skaugen Norway entered into four shipbuilding contracts with Chinese
Shipbuilders. They also discussed with many marine diesel engine manufacturers to
supply them with engines for the four ships. The manufacturers that they settled for was
MAN Germany and MAN Norway.

Also in July 2000, MAN German and/or MAN Norway provided Skaugen Norway with a
project planning manual copy, or PPM1, which stated that the fuel consumption of the
MAN Engine under ISO2 conditions at a load of 85% was 180 g/kWh

In August 2000, Skaugen Norway made four novation agreements with a company
called Samaras Limited. In September 2000, Skaugen Norway agreed for MAN Engines
to be installed in the four vessels from the agreement.

On September 2000, the Chinese Shipbuilders entered into four sales contracts with
MAN Germany for the provision of the four MAN Engines. The sales contracts stated
“the technical specification and the scope of supply as per technical agreement signed on
August 24 2000”. There was also an attached technical specification dated 23 August
2000 that stated that the fuel consumption level under ISO Standards at a load level of
85% was 180 g/kWh.

1
Project Planning Manual
2
International Organisation for Standardization
MAN Germany and MAN Norway delivered to the Chinese shipbuilders a document on
the 24 November called FSI3. This document stated that the fuel consumption at a load
of 100% under ISO conditions with attached pumps and a tolerance of +3% was 193.64
g/kWh. The document was then sent to Skaugen Norway by the Chinese Shipbuilders.

Later on Skaugen Norway instructed the Chinese shipbuilders to install two more MAN
engines. On June 2001, the Chinese Shipbuilders entered into two sales contracts with
MAN Germany for the provision of two MAN Engines.

All six MAN Engines were made and delivered in 2001 and 2002. Before the delivery,
the engines were put through a factory acceptance tests, FAT4, which were conducted in
MAN Germany’s factory. The six engines were tested in May, August and November
2001 and February, May and June 2002. At the end of each FAT a performance data
report would be made. Representatives of MAN Germany conducted the FATs. MAN
Norway had representatives present at five of the FATs, the Chinese shipbuilders were
present at the very first FAT and Skaugen representatives were present for three tests.

The results of the FATs shows that the rate of fuel consumption of the MAN engines was
below the values stated in the PPM and FSI. MAN Germany was eventually fined 8.2
million euros in March 2013 for this.

MAN Germany then wrote to Skaugen Norway on 31 January 2012 about the possibility
that the fuel consumption values displayed and recorded during the handover was
externally tampered with. On 22 June 2012, MAN Germany wrote to Skaugen Norway
once again with confirmation that the values had been adjusted.

The parties attempted to settle but negotiations never pulled through. Now, it is a court
case.

The plaintiffs claims that the MAN engines had done an act of tort as they had provided
services different from the PPM, FSI and FATs. They also have provided particulars of
alleged negligence and fraud.

The defendants argues that the case shouldn’t be settled in Singapore, as it has nothing
to do with the country. The plaintiffs however argue that the torts had occured in
Singapore to a certain extent and Singapore has also suffered some degree of damage.

3
Kraftstoffsystem Fuel System
4
Factory Acceptance Test
Due to the arguments made by the plaintiffs and the defendants, six main issues and
arguments have risen.

1.) What is the test for the assumption of long-arm jurisdiction by the Singapore
High Court in light of the establishment of the SICC?

2.) Do the plaintiffs have the requisite ​locus standi​?

3.) What is the applicable law?

4.) Do the plaintiffs have a good arguable case that their claim satisfies one or more
of the limbs of O 11?

5.) Would the SICC have jurisdiction for the purposes of applying ​Spiliada​?

6.) Is Singapore the ​forum conveniens​?

Our group will be addressing the facts of these issues and analysing the final judgement
of each of these issues.

Issue:
1.) What is the test for the assumption of long-arm jurisdiction by the Singapore
High Court in light of the establishment of the SICC?

Facts:
Facts of the case:
The claimant of the case is the Skaugen Group consisting of Skaugen Norway Skaugen
Singapore. The Skaugen Group is a business that provides marine transportation
services in oil and gas industry.

The defendants are MAN Germany, who manufactures marine diesel engines and and
MAN Norway who gives sale support to MAN Germany.

In July 2000, Skaugen Norway entered into four shipbuilding contracts with Chinese
Shipbuilders. They also discussed with many marine diesel engine manufacturers for
their engines. These manufacturers includes MAN Germany and MAN Norway.

Also in July 2000, MAN German and/or MAN Norway provided Skaugen Norway with a
project planning manual copy, or PPM, which stated that the fuel consumption of the
MAN Engine under ISO conditions at a load of 85% was 180 g/kWh

In August 2000, Skaugen Norway made four novation agreements with a company
called Samaras Limited. In September 2000, Skaugen Norway agreed for MAN Engine
to be installed in the four vessels from the agreement.

On 26 September 2000, the Chinese Shipbuilders entered into four sales contracts with
MAN Germany for the provision of the four MAN Engines. The sales contracts stated
that “the technical specification and the scope of supply as per technical agreement
signed on August 24 2000”. There was also an attached technical specification dated 23
August 2000 that stated that the fuel consumption level under ISO Standards at a load
level of 85% was 180 g/kWh.

MAN Germany and MAN Norway delivered to the Chinese shipbuilders a document on
the 24 November called FSI. This document stated that the fuel consumption at a load
of 100% under ISO conditions with attached pumps and a tolerance of +3% was 193.64
g/kWh. The document was then sent to Skaugen Norway by the Chinese Shipbuilders.

Later on Skaugen Norway instructed the Chinese shipmakers to install two more MAN
engines. On 20 June 2001, the Chinese Chipmakers entered into two sales contracts
with MAN Germany for the provision of two MAN Engines.

All six MAN Engines were made and delivered in 2001 and 2002. Before the delivery,
the engines were put through a factory acceptance tests, FATs, which were conducted in
MAN Germany’s factory. The six engines were tested in May, August and November
2001, February, May and June 2002. At the end of each FAT a performance data report
would be made. Representatives of MAN Germany conducted the FATs. MAN Norway
had representatives present at five of the FATs, the Chinese shipbuilders were present at
the very first FAT and Skaugen representatives were present for three tests.

The results of the FATs show that the rate of fuel consumption of the MAN engines was
below the values stated in the PPM and FSI. MAN Germany was eventually fined 8.2
million euros in March 2013 for this.

MAN Germany then wrote to Skaugen Norway on 31 January 2012 about the possibility
that the fuel consumption values displayed and recorded during the handover was
externally tampered with. On 22 June 2012, MAN Germany wrote to Skaugen Norway
once again with confirmation that the values had been adjusted.

The parties attempted to settle but negotiations never pulled through. Now, it is a court
case.

The plaintiffs claims that the MAN engines had done an act of tort as they had provided
services different from the PPM, FSI and FATs. They also have provided particulars of
alleged negligence and fraud.

The defendants argues that the case shouldn’t be settled in Singapore, as it has nothing
to do with the country. The plaintiffs however argue that the torts had occurred in
Singapore to a certain extent and Singapore has also suffered some degree of damage.

The plaintiffs and defendants disagreed on where the location of the tort has happened.
They also ponder whether the claim is founded on a cause of action arising in Singapore,
and if Singapore is the applicable ​lex loci delicti​. The parties however agreed as to the
test to be applied, but the plaintiffs submitted that the case should be settle in Germany
with German law and the defendants submitted that the case should be settled in
Singapore with Singapore law.

There is difficulty pinpointing the exact location that hort has risen, and therefore it is
hard to tell what the proper ​lex loci delicti​ is.
Outcome:
What is the applicable law?
- It has been proven that the FATs took place in Germany and the results of the FAT,
PPM and FSI were authored in Germany. All of these results show misrepresentation
and tort. Therefore, Germany is the ​lex loci delicti​.

Is Singapore the Forum Conveniens?

- The plaintiffs have failed to show that Singapore is clearly the ​forum conveniens​ and
the judge refuses to take into account the defendant’s alternative submission for
Norway. Germany would ​a fortiori ​be more appropriate than Singapore because I of the
home advantage principle.

Supreme Court Decision:

- Germany is the​ lex loci delicti
- Singapore is not the​ forum conveniens

Your opinion:
What is the applicable law?
- I disagree the Germany should be the lex loci delicit as most of the documents have
been made in Germany itself. A third party should be the one assessing.
- I disagree.