In Foreland Singapore Pte. Ltd. & Anor v IG Asia Pte. Ltd. [2024] SGHC 179, the Court considered a claim for notional profits earned by the two plaintiffs (collectively, “Foreland“) on certain closing nickel contract-for-differences (CFD) trades (“FCTs“) done on 8 March 2022 following an extraordinary surge in nickel prices, which the defendant (“IGA“) had automatically put through to its central risk management entity (“IGM“) in London. All trades from IG entities were aggregated by IGM and any exposure above a certain internal risk limit was hedged through IGM’s hedging brokers on the London Market Exchange (“LME“). In this case, the LME first suspended and then reversed all trades done on 8 March 2022 (“Suspension and Reversal“) with the result that IGM’s hedges could not be executed. As result, the FCTs were reversed and Foreland’s requests for payment of the notional profits were denied.
The relationship between Foreland and IGA was governed by, among other documents, the Margin Trading Customer Agreement (“MTCA“). Notably, Term 23 of the MTCA dealt with Force Majeure Events, including “the suspension or closure of any market”.
Foreland claimed against IGA for the notional profits from the FCTs. The Court dismissed Foreland’s claim, holding that IGA was not obliged to pay these notional profits to Foreland and that although IGA was not entitled to reverse the FCTs, Foreland suffered no loss arising from this. In reaching its decision, the Court made, among others, the following key findings:
(a) The consequences of the Suspension and Reversal could be visited on Foreland despite Foreland dealing with IGA on an over-the-counter (OTC) basis.
(b) The Suspension and Reversal qualified as a Force Majeure Event under Term 23(1) of the MTCA.
(c) Despite this, IGA was not entitled by the Suspension and Reversal to reverse the FCTs.
(d) However, Foreland suffered no loss from the reversal of the FCTs. Term 23(2) of the MTCA served to extinguish IGA’s payment obligations to Foreland, and Foreland’s entitlement to any notional profits from the FCTs had thus been extinguished before the reversals. As such, the Court dismissed Foreland’s substantive claim against IGA but awarded each of the plaintiffs S$1,000 in nominal damages.
IGA was successfully represented by Harish Kumar, Marissa Zhao and Kiran Makwana from the Commercial Litigation Practice.
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