Singapore High Court Strikes Out Claims Based on Alleged Oral Agreement in Port Joint Venture

In Ever Strategy Consultants Ltd v PSA International Pte Ltd and others [2026] SGHC 76, the Singapore High Court struck out claims brought by a minority interest-holder in a port infrastructure joint venture, finding that an alleged oral collateral agreement, which was said to protect the claimant’s indirect 10% interest in the project company from dilution without consent, was factually unsustainable. The decision carries significant implications for participants in joint ventures including those in the energy and offshore sectors, where multi-layered holding structures and informal agreements are commonplace, particularly at the early stages of project development.

Facts

The dispute arose from the development of a container terminal. In 2006, the first defendant, PSA International Pte. Ltd. (“PSA International”), agreed to jointly develop the terminal with a local partner through a joint venture company, with interests held through a layered offshore structure involving entities in Singapore, British Virgin Islands (“BVI”) and Panama. The seventh defendant, PSA Panama International Terminal S.A. (“PPITSA”), was incorporated in Panama in 2007 as the project company.

The claimant, Ever Strategy Consultants Limited (“Ever Strategy”), a BVI-incorporated investment holding company, acquired an indirect 10% interest in PPITSA, held through shareholdings in the third and ninth defendants, PSA Panama Ptd. Ltd. (“PSA Panama”) and Balboa Hospitality Services Ltd. (“Balboa”) respectively, neither of which Ever Strategy controlled. Ever Strategy’s interest in PSA Panama was held by the second defendant, PSA Americas Pte. Ltd. (“PSA Americas”) as Ever Strategy’s nominee, and was governed by a written consultancy agreement dated 10 June 2011 (the “Consultancy Agreement”), which provided that Ever Strategy would have no voting rights, no management or decision-making rights, and unless expressly agreed in writing, no entitlement to any further allotment of shares.

When discussions turned to the second phase of the project from 2012 onwards, Ever Strategy did not contribute to the additional capital required to maintain its indirect interest. Two successive dilution events followed. In December 2015, an increase in authorised share capital and allotment of additional shares resulted in the reduction of Ever Strategy’s total indirect interest from 10% to approximately 3.94% (the “First Dilution”). In November 2017, a restructuring of PPITSA’s share capital further reduced Ever Strategy’s indirect interest to approximately 2.29%.

Ever Strategy’s claims rested on an alleged oral collateral agreement (the “Collateral Agreement”) said to have been reached in the second half of March 2011 between Ever Strategy, PSA International and Mr Guillermo Liberman, the eleventh defendant. The alleged Collateral Agreement was said to provide that, in consideration of Ever Strategy agreeing to hold its 10% interest in PPITSA through PSA Panama and Balboa, Ever Strategy’s prior consent would be required for any change in the shareholding structure.

On this basis, Ever Strategy brought claims for breach of the Collateral Agreement, inducement of breach, breach of fiduciary duty, dishonest assistance and conspiracy by unlawful means. The defendants’ application to strike out Ever Strategy’s claims were dismissed by the Assistant Registrar.

The High Court’s Decision

Chua Lee Ming J allowed the defendant’s appeals against the Assistant Registrar’s refusal to strike out the claims, and struck out all of Ever Strategy’s claims.

In arriving in its determination in the appeal, the High Court considered the following issues:

1. Was Ever Strategy’s claim that the Collateral Agreement existed factually sustainable?
2. Were Ever Strategy’s claims, based on the First Dilution, time-barred?
3. Were Ever Strategy’s claims against all the defendants for conspiracy to injure factually and legally sustainable?

The Collateral Agreement was factually unsustainable

The court agreed with the defendants that Ever Strategy’s claim that the Collateral Agreement existed was “factually unsustainable”, and that “the contemporaneous objective documentary evidence overwhelmingly proved that the Collateral Agreement was a fiction”. Several strands of evidence supported this conclusion.

First, the Consultancy Agreement, which Ever Strategy had signed, contained provisions that were “clearly inconsistent” with the Collateral Agreement. In particular, the Consultancy Agreement provided that PSA Americas had absolute operational and management control of PSA Panama, that Ever Strategy had no voting or decision-making rights, and that Ever Strategy’s sole right was to receive dividends. These conditions meant that PSA Americas could procure the dilution of Ever Strategy’s interest without Ever Strategy’s consent. The court found that the fact that Ever Strategy agreed to the conditions in the Consultancy Agreement was “clear proof that the Collateral Agreement could not have existed”.

Second, Balboa’s Memorandum and Articles of Association contained nothing to protect Ever Strategy’s 5% indirect interest from dilution, and Ever Strategy did not enter into any shareholders’ agreement to protect itself.

Third, and “most tellingly”, the extensive correspondence between the parties from 2014 to 2017, in which the questions of dilution of Ever Strategy’s indirect 10% shareholding and whether Ever Strategy was prepared to inject funds to maintain its 10% shareholding were raised repeatedly, did not contain any reference to the Collateral Agreement or to any assertion that Ever Strategy’s 10% shareholding could not be changed without its consent or that it was not obliged to inject any further funds to maintain its 10% shareholding. The court further found that the complaints raised by Ever Strategy’s representative throughout this period were not that Ever Strategy’s indirect shareholding was being or had been diluted without its consent. Instead, the representative’s complaints were that the costs for the second phase were high, that Ever Strategy’s representative was not getting enough information on the second phase, that the second phase was a separate and distinct project, and that there was no capital call notice relating to the reduction of Ever Strategy’s shareholding. These complaints were “inconsistent with the Collateral Agreement” because, had such an agreement existed, Ever Strategy’s representative would simply have asserted that whatever PSA Panama or Balboa wanted to do, Ever Strategy’s indirect 10% shareholding in PPITSA could not be diluted without its consent.

Fourth, the parties entered into an Amended and Restated Shareholders’ Agreement, which provided that if one shareholder failed to meet a funding requirement, the other could convert a bridging loan into equity, potentially diluting the non-funding shareholder. The court found this to be inconsistent with the Collateral Agreement, and that “it would not have made any commercial sense” for PSA Panama and Balboa to agree to the Collateral Agreement.

Claims based on the First Dilution were time-barred

The court further held that even if the Collateral Agreement existed, the claims based on the First Dilution were time-barred. The action was commenced in January 2024, more than six years after the First Dilution in December 2015. Ever Strategy argued that the breach of the Collateral Agreement was “continuing”, but the court found that the alleged term requiring Ever Strategy’s consent imposed “an obligation to do a definite act, ie, seek Ever Strategy’s prior consent before making any change to the Shareholding Structure”; the term did not impose any continuing obligation. The court also rejected the attempt to imply such a continuing obligation, finding that the high threshold for implication of terms was not met.

Conspiracy claims struck out

The court also struck out the conspiracy claims brought by Every Strategy - finding that the claims failed to disclose a reasonable cause of action as the pleadings were defective. In particular, Ever Strategy failed to plead how the alleged conspirators combined together to take some form of concerted action in pursuit of a common object or design. The pleadings covered a wide range of factual matters as well as Ever Strategy’s claims for breach and/or continuous breach of the Collateral Agreement, inducement of breach and/or continuous breach, breach of trust and fiduciary duties, and dishonest assistance. According to the court, “[i]t was impossible to make out from Ever Strategy’s pleadings what its case was as to how the combination was formed”.

Comments

This decision demonstrates that where a party relies on an undocumented understanding, but subsequently signs written agreements that are inconsistent with it, the court will treat the contemporaneous documents as overwhelming evidence of the true position. In this case, Ever Strategy’s predicament was compounded by the fact that it held its interest indirectly through two intermediate vehicles, neither of which it controlled.

In the energy sector, joint venture arrangements frequently evolve through stages, from initial memoranda of understanding to definitive agreements. It is not uncommon for commercial understandings to be reached verbally at early stages before being documented. It is also common for joint venture participants to hold their interests through nominee arrangements or intermediate special purpose vehicles controlled by the operator or majority partner. Parties should ensure that any agreed anti-dilution protections, consent rights or pre-emption rights are documented not merely at the project company level, but also at the level of any intermediate holding vehicle through which the interest is held.

Further, in oil and gas joint ventures, dilution or funding events may occur during capital-intensive phases, and the aggrieved party may not fully appreciate the impact until years later. The court’s rejection of the “continuing breach” argument confirms that the limitation clock starts when the act of dilution occurs, and not when its consequences continue to be felt. The aggrieved party must act promptly upon learning of any dilutive event, instead of assuming that their claims remain alive indefinitely.