Journal Name: Lloyd's Maritime and Commercial Law Quarterly

Abstract:

The Privy Council in the recent decision of East Asia Company Ltd v PT Satria Tirtatama Energindo held that the indoor management rule did not allow a third party to circumvent the normal rules of agency. East Asia confirms that the burden of proof is on the third party to show that it had acted reasonably (and not just rationally) in relying on any representations made in corporate documents or by individuals in the company. As no agreement has been established yet, it is not about setting aside an existing agreement but asserting that one existed in the first place. The Privy Council rejected a contrary view of Lord Neuberger NPJ in the Hong Kong Court of Final Appeal in Thanakharn Kasikorn Thai Chamkat v Akai Holdings Ltd that only required the representee to not be irrational or dishonest in order to invoke the operation of apparent authority.