Documentos de Académico
Documentos de Profesional
Documentos de Cultura
NOTE:
1) Does the Claim invoke Admiralty Jurisdiction? Covered under s3 HC (Admiralty Jurisdiction) Act. Not all
claims are in rem. There can be in personam claims e.g. ktual claims.
2) The Claimant wishes to get security before judgment. Look at Procedure provisions in s4 HC (AJ) Act
governing how to issue writ / arrest vessel. Difficulties of arrest.
3) The shipowner whose ship has been arrested, needs to negotiate security for release
4) If the ship is arrested and sold off, what order of priorities do the competing claims on it follow. So some get
earlier bite of the cherry, some don’t.
5) Eng decisions highly persuasive in sg but not binding on local court sthough tendency is to follow UK
decisions unless compelling reasons not to do so
- Section 3(1)
- Not all maritime claims give rise to in rem jurisdiction, only those falling within s3(1).
- Creature of statute
- s3(1) is exhaustive. Hence if claim doesn’t fall within, cannot proceed in rem, and it’s a mere in personam
claim against defendant (not against ship).
- Note the importance of in rem jurisdiction. Historically, excepting the Mareva, this was the only way to get
security before judgment. The quantum of security over a ship is in millions of $.
- Note:
– all claims in rem will be in personam
– ie if claims are within 3.1 they will be in personam
– but you can have in personam claims tt do not give rise to in rem cases
The "Kusu Island"; Mv "Brani Island", Owners Of Cargo Laden On Board V Mv "Kusu Island",
Owners Of (Hc, S’pore)
- Facts:
- This appeal involved the circumstances under which the name of a defendant in an admiralty in rem action
may be corrected under O 20 r 5(3) of the Rules of the Supreme Court 1970 and of the circumstances
under which an admiralty writ in rem may be renewed under O 6 r 7(2). The appellants were the
receivers and owners of certain bales of cotton sheets shipped under two bills of lading in the respondents`
vessel known as Brani Island. The appellants found some damage to the goods giving rise to a claim of
about $110,000. When negotiations for an amicable settlement failed the appellants commenced an
admiralty in rem action for damages against the owners of the ship or vessel Brani Island. The writ was
issued ten days before the expiry of the one-year limitation period which fell on 26 October 1980. On 21
April 1981, the appellants under O 20 r 1(1) amended the writ by deleting the name of the respondents and
substituting therefor the words `The owners of the ships or vessels Brani Island, Senang Island, Kusu
Island`.Leave was granted by the assistant registrar to renew the writ for a period of 12 months from 16
October 1981. On 24 October 1981, the writ after the usual deletions of the names of Brani Island and
Senang Island, was served on Kusu Island. On 2 November 1981, the respondents entered a conditional
appearance. The respondents applied for: (1) an order that the amendment on 21 April 1981 be struck out
and service on the Kusu Island be set aside; and (2) an order that the order of court dated 23 October 1981
renewing the writ for a period of 12 months and the service thereof be set aside. The registrar granted the
respondents` application and the appellants appealed to the judge-in-chambers.
- Held , allowing the appeal in respect of prayer (1):
(3).An action in rem was not an action against the res itself but was merely a procedural device to obtain
jurisdiction over the owner of the res . In a writ in rem, the defendant was not described simply as `the ship X`
but as `The owners of the ship X`.
Principles in Cases
- The wide ambit of s3(1)(h) “any claim arising out of any agreement relating to the carriage of goods in a
ship or to the use or hire of a ship”
Can there be a hybrid writ giving rise to some claims in rem and some in personam? NO.
- Default procedures under the RSC (now the ROC), in the case of an action in rem are different
from those applicable to an action in personam.
- Further if an action in rem continues as such there may be interveners who would not be concerned
in the action in personam. A combined writ would therefore cause confusion and difficulties to all
the parties and the court.
- Therefore the practice is disallowed and the writ set aside
1. Maritime Liens
- not synonym for maritime claims
- five categories – closed chapter
- if donot come wthin, then cannot be maritime lien
– Claims arising from salvage
– Claims arising from collision
– Claims arising from Master / crew wages
– Claims arising from Master’s disbursements
– Claims arising from bottomry (arcade)
- Note necessaries is not a maritime lien
Under Singapore Law, “Maritime Lien” is a term of art. This means that it has to be one of the above 5
claims, failing which it is not a maritime lien
- Irrelevant whether owner has in personam liability. Law receives claim even if ship owner has no such
liability. Successful Claimant gets priority.
- Lien attaches to ship, survives any change in ownership.
- - Independent of in personam liability so long as a cause of action had arisen.
2. Statutory Liens
- whether
o claim falls within Section 3(1) of the Singapore High Court (Admiralty) Jurisdiction Act (Cap 123)
(Similar to section 20(2) of the UK Supreme Court Act 1981)
o Whether have fulfilled reqts of s4(4) at time of lien issued
- because lien does not arise when claim accrues
- in rem writ must be validly issued against vessel
- MOA Disputes
- Memorandum of agreement
- disputes e.g. as to sale and purchase of ship. Disputes very common.
- Concern sale of ships. Sometimes dispute arises between condition of vessel at time of sale and at time
of delivery.
- Condition of vessel may deteriorate between date of MOA and date of delivery. Invariably, many
disputes over this issue have arisen.
- Courts have held that MOA dispute only allows a claim for possession (owner taking back possession
of vessel) not a right to arrest.
- Not subj matter of in rem proceedings because 3.1 only dispties f ownershipand possession, not
descriptn of vessels under sale and purchase agreement
- Container Hire
- Unjust treatment?
- Lease containers usu, not bought
- Container operators cannot operate without containers – courts till mid 80s issued arrest warrants to
allow container leasing comp to arrest vessels but:
1. Security
Arrest procedure allows security to be obtained irrespective of what happens to the shipowner
defendant ie pre judgement
Arrest procedure allows security to be obtained irrespective to what happens to the shipowner
defendant
o Only prereq is valid issuance of writ
o The mmt claim comes within s3 and properly issud under s4.4 – claim attaches to vessel
and entitled to arrest vessel fas of right
- Until the development of the mareva, in rem claims were the only exception to the rule that fruits
cannot be reaped before judgment – otherwise, can only seize assets once judgment has been obtained.
- Mareva – litigants can obt security even though x come within in rem security because denning
held tt unfair for litigant to wait for outcome of litigation tt cld take many yrs
- Fear tt litigant will dissipate assets
2. Jurisdiction
Claimant does not have to establish the usual grounds of founding jurisdiction.
P does not have to establish the usual grounds of founding jurisdiction under O10/O11.
- doesn’t matter that D is regt is some strange city; has no assets in Singapore.
Presence of ship in jurisdiction sufficient. Note however the port limits issue
Note also that while jurisdiction may be present, claim may still be stayed due to forum non
conveniens etc.
Claimant does not have to establish the usual grounds of founding jurisdiction
- This means that DF need not be domiciled in Singapore and COA needn’t have arisen in
Singapore.
- Can even issue protective writ before the vessel arrives in Singapore.
- May have nth to do with sg
3. Priority
– Admiralty claims have priority over ordinary claimants. If winding up is commenced after writ in
rem filed, claimant is in the position of a secured creditor.
– In other words ->
Contrast mareva:
o If preserve assets of def in mareva injn and assets frozen and eventually prevail in judgmeent, have
no priority – frozen assets if for all parties to share, if unsecured creditor, then secured creditor will
take in priority ot you
o Thi sis the main diff bet mareva and in rem action
Serving vessel once it comes into port is governed by Carriage of Goods by Sea Ordinance subject to the
Hague Rules. If writ expires, time bar would set in. If you have reasonable opportunity to serve the ship,
difficult to give grounds for renewal or writ.
Every extra vessel you include in your writ, increases the opportunity to miss the ship.
∴ must appoint competent ship watch as you would be able to know 72 hrs before ship calls.
Eg: Cargo claim against A, vessel owned by X, in rem against A if X in personam. X has other vessels, B
and C. Issues writ against A, B and C. Time bar would set in immediately upon issuance of writ. Cannot
add vessel D, E and F also owned by X if time bar had already set in (although you only just found out that
X also owned D, E and F).
- Usual expenses
– Sheriff’s attendance – usu 150 to 200 per hr
– Sheriff’s commission – comm is 500 plus 0.10 per ton of net registered tonnage of arrested vessel
per mth
– Guard charges plus launch hire to fery guard to and fr arrest vessel – 150 to 200 per day depending
on locality of arrested vessel
– Fees for court papers (incl warrant of arrest and release) – abt 600
° 1) Maritime lien – salvage, collision etc – arise irrespective of in personam liability of ship owner. It arise by
operation of the law the momt expenses are incurred
ML is independent of personal liability and can be enforced against owner so long as claimant
is not time barred
Eg salvage – maritime lien attaches to vessel irrespective of in pesonam liab
Eg wages of crew – does not matter who employed the crew; mmt services provided to vessel,
lien will attach to vessel -
Arises fr the day the claim arises
Does not matter whether writ issued
A ML, is a closed chapter…5 historical types of MLs, but 3 more common – salvage,
collisions, wages. Arise by operation of law. In different jurisdictions, MLs more extensive.
° 2) It does not matter if vessel is then sold – whatever the chain of ownership
Lien attaches to vessel by operation of law the mmt claim arises
° Contrast:
A SL is a creature of statute. It does not arise by operation of law. For Claimant to be SLienee,
ingredients of statute (s.4(4) HC(AJ)A) to be satisfied.
SL must have nexus with the owner
Requirements Under Section 4(4) Of The High Court (Admiralty Jurisdiction) Act – EXAMS!!!
° Governs SL
° No application for ML
° This relates to next pt on problems with ship arrest
- 2. Claim must be in connection with a ship – the offending ship (note sandrina and river)
– appears simple, but unfortunately the claim might be in connection with the shipowner
instead. E.g. unique situation for container hire (see above River Rima)
- 3. Person liable must be the owner or charterer or in possession or control of the vessel:
- 4. Vessel beneficially owned by person liable in personam at the time action is brought ie when writ is
issued.
- In most maritime claims there will be gap between time when cause of action arose and time writ issued –
this gap can be 6 days/ 6 mths etc
- During this lapse many things can happen to ship – sold, fire, etc
- When bring action in sg by issuers of writ, this vessel must now be benef owned by person liable in
personam
- hence can also go for any of the sister ships owned by the person liable.
- note s4(4)(b) (i) and (ii) “all the shares”.
- Ie 2 time frames – when action arose – person liable in personam must be owner etc..
- If owner at time of action arose and writ issued, but if not owner at time cause of action arose but eg
charterer (not the shipowner in certain cases) – must be benef owner when writ is issued. But if he although
remains charterer and as result cannot invoke in rem juris against vessel, but if owns own vessel – a sister
vessel, claimant can arrest the sister vessel because it is benef owned by person who is liable in personam
- There may be 2 sitn
– A) change in ownership at time writ issued
– B) if the party liable happened to own their own vessel, this reqt wld be met because the
vessel wld be benef owned by party liable when writ is issued
Note :- Usually ships are not owned by the operators, they are usually on charter.
- Another Illustration:
o NOL chartered HAWK which had loaded its cargo in Singapore and discharged its cargo in
California. However, the cargo was damaged. Instituted claims for damage of cargo.
o Cargo claims fall under s3(1)(g)
o Claim arose in connection with a ship (claim arose because HAWK’s cargo was damaged – in
connection with HAWK, the ship)
o NOL was at the time the cause of action rose, the charterer of HAWK.
o However, as NOL was only the charterer, HAWK cannot be arrested as the last condition required
in s4 (4) is not fulfilled. However, s4 (4) (b) allows the claimant to arrest any other ship which is
beneficially owned by NOL. ∴ if NOL owns VULTURE, the claimant can arrest VULTURE in
respect of this claim.
Note 4**
- In light of amendments fo s4.4 HCAJA in april 2004, admiralty juris may be invoked against offending ships
tt are at time action brought, demised chartered by person who wld be liable in personam at time cause of
action arose
- But notwithstanding amendments, arresting parties not allowed to invole adm juis against any other ship
other than offending shp even though this ship may have beendemised chartered to demise cahrterer at time
action brought – compare s4.4(i) and (ii)
5. Burden of Proof
- NB: do not confuse merits with jurisdiction (s4 (4) of the Act governs jurisdiction). Court will not concern
itself with whether a person will succeed on the merits.
- Juris to issue in rem writ – this is balance of probabilities – the aventicum 1978
Exceptions
- Only very rarely is one able to bring a claim when not all the conditions are fulfilled.
- Sometimes trial may be ordered if the affidavit evidence is too voluminous.
- Usually only when there is a ‘fraudulent element’ then will courts order issues under s4(4) to be tried.
- Examples:
Insurance Company collapsed, vessels insured by company appeared to be sold. Brought claims despite
change of ownership of vessels.
Allegation of fraud. Can order trial within trial to determine if transfer was a sham.
- • Trial Ordered If Fraudulent Element Present
– The Saudi Prince [1982] 2 Lloyd’s Rep 255
– The Saudi Al-Jubail (Unreported Admiralty In Rem No 399 Of 19834)
Miscellaneous
- ? Statutory lien does not survive change of ownership ? It is created when writ is issued and not when it is
served.
Note: peculiar difference in admiralty from other areas of law, time between writ issued and
served is irrelevant.
In admiralty it could take weeks or even months after the writ is issued before it can be served,
depending on whether ship had called port in Singapore.
- Example 1:
Writ issued on 1/1/2002. At the time writ issued, vessel still owned by party liable in personam.
Lien is attached to the ship. New buyer who had failed to do due diligence, buys vessel on
1/3/2002. Vessel is arrested on 1/6/2002 when it called at port. Law recognises existence of lien as
long as all the ingredients of s 4(4) satisfied when writ was issued.
To prevent such incidence, do a writ search on all jurisdictions where in rem writs are frequently
invoked.
- Example 2:
- Collision with ship. Claim arises against charterer in personam. Owner of ship not liable at that
point. If issue writ against owner will be set aside. But you can issue writ against all of charterer’s
ships.
- Example 3:
- Claim arises on 1 Jan against A. A sells a ship X to B on 1 Mar. Issue writ against X on 3 Mar.
Writ will be set aside.
- 1) • Change Of Ownership
– where claims fall within s3.1 of the act and does not confer a maritime lien, valid change of
ownership prior to issue of the writ - extinguishes right to proceed in rem
– Because reqt tt person is liable in personam at time writ issued no longer satisfied since vessel has
changed ownership
– Where the claim falls within section 4(4) of the Act and does not confer a ML, the right to proceed
in rem is extinguished if there is a valid and bona fide change of ownership prior to the issue of the
writ – The Fierbinti (1994)
– Note examine accts – see whether new owners employing same crew, whether wages paid, see
whether real purchase price transferred – a lot of fraud in this area. Need to see whther really
VALID change of ownership (cross examination!!!)
- Illustration
- Vessel A owned by X
- Cause of Action arises on 1 Jan. Defendant gets wind of it on 3 Jan. Sells vessel on 4 Jan. P who is
slow to act issues writ against that vessel on 5 Jan.
- Since vessel sold before issue of writ, claimant loses rights in that vessel, cannot arrest.
- Cases
- ->It does not matter when writ was served – time frame is when writ was ISSUED.
- So cannot arrest vessel under sister ship provision on the basis that the Co.s are related. Must
have common ownership of ships.
- Problem of vessels owned by related Co.s only applies if corporate structure set in place before COA
accrues.
o If 1-ship Co.s only set up after COA accrues, the law will regard these transfers as shams
because objective of transfers to hide assets, not bona fide attempt to put corporate
structure in place – The Aventicum; The Saudi Prince
o Will examine whether sold to third aprty to riase finances/ related party etc
o Typically lifting of corporate veil only if there’s fraud.
- Transfers are however examined critically, Timing of transfer would determine if you can or cannot life
the corporate veil.
- Can’t cross arrest if the vessel belongs to a different company related or owned by the 1st.
- If the one-ship companies only created after cause of action has accrued, transfer can be challenged as being
sham
– The aventicum [1978] 1 lloyd’s rep 1845
– The Saudi prince [1982] 2 lloyd’s rep 255
The Skaw Prince [1994] 3 Slr 379 (Also Above, On Beneficial Ownership)
- It is well known that businessmen engaged in shipping set-ups utilise one-ship companies to imit liability.
The court will not lift the corporate veil unless circumstances are exceptional.
- Some special circumstances where the corporate veil may be lifted:
1. Fraud, façade or sham.
2. Whether the companies are set up at a convenience or otherwise used to conceal another
individual or entity.
3. Whether there was any under-capitalisation of the subsidiary.
- Since the corporate structure of the Skaw Group was already firmly in place before the P’s claim arose, the
creation of C and F were perfectly legitimate.
- Corporate veil should only be lifted where deliberate fraud had been perpetrated.
- Principle:
o Recognition of one-ship companies set up to minimise liabilities, courts will not lift the
corporate veil unless the circumstances are exceptional. \
o Case lays down the definition of beneficial ownership.
- Facts:
o Plaintiffs had a claim against C and tried to arrest the Skaw Prince owned by F on the pretext
that C and F were 100% beneficially owned by Skaw Shipping who were liable to them since
they owned C.
o Defendants applied to set aside arrest.
- Held (Amarjeet JC)
o When arresting a ship, the plf had to satisfy both the in personam test and the in rem test. For
the in personam test, they had to show a good arguable case. To satisfy the in rem test,
they had to show that the ship in rem action at the time the proceedings were commenced was
beneficially owned by the personam in respect of all shares in it.
o Beneficial ownership meant that such ownership of a ship is vested in a person who has the
right to sell, dispose of or alienate all the shares in that ship.
o Well-known that businesses engaged in shipping set up one-ship companies to limit liabilities
and this devise has been recognised by the courts as a legitimate one. Courts will not life
corporate veil unless the circumstances are exceptional.
o Since the corporate structure of the Skaw Group was already firmly in place before the plf’s
claim arose, the creation of C and F were perfectly legitimate.
o Corporate veil should only be lifted where deliberate fraud had been perpetrated.
- 3) • Bareboat Charterparty
- stat amendments in sg
- hiring of vessel – arrangement in which hirer hires the vessel so it is at his disposal – may be string of
charters
- Also known as demised charterer/ demise charterparty.
- A specific type of charterparty. Owner only supplies ship. Charterparty obtains crew and everything
else himself. Ie the vessel is chartered without crew provided
– No crew. Engage ur own fuel, crew, etc
– At end of charterperiod, return this to owner fair wear and tear excepted
– During that period all liab falls on bareboat charterer
– Note that when dealing with ship, usu x know tt dealing with bareboat because bill of lading
signed by owner usu – so u think tt contracting with owner but may in fact be contracting with
bareboat
– Does not depend on disclosure of interest so long as as matter of fact, he is bareboat charterer,
then is in the one liable
- In Singapore, beneficial title means title/property, 100% control of the boat does not give rise to 1% of
title. Hence previously you can’t arrest an errant ship on a demise charter.
- Different position in UK and Malaysia, refer to s21(4)(i) UK Supreme Court Rules.
- OLD POSITION in Pangkalan has been superceded by amendment to HC (AJ) Act.
- a) Claimant can arrest one ship only in respect of each cause of action
**The Banco [1971] 1 Lloyd’s Rep 49, Applied In The Damavand 1993
- Principle:
o May only arrest 1 ship for security for 1 cause of action.
o Only after judgment is entered can you arrest the required number of ships to satisfy the amount
of claim.
- Facts:
o Df’s vessel collided with a jetty in River Thames causing extensive damage.
o P issued writ in rem against df and arrested his entire fleet of vessels (7 ships).
o Whether the P had right to arrest all 7 ships.
- Held (Lord Denning MR)
o The jurisdiction may be invoked against either the offending ship or any other ship in the same
ownership, but not more than one.
o If the defendant enters an appearance, the action in rem proceeds just as an action in personam.
Only after judgment is entered against the defendant, can there be execution against any of his
property within the jurisdiction, be it his other ships or any other goods.
Additional Information:
- The practice emerging with the introduction of sister ship arrest is that the naming of the offending and sister
ships in one writ was approved of in The Banco.
- This practice is based on convenience, as a plaintiff cannot foretell which of the offending or sister ships
will be coming within jurisdiction. By naming all the ships that he can potentially proceed against, he is able
to serve the writ on the particular ship as well as execute the warrant of arrest against her, as soon as he
learns that one of the named ships would sail in.
- The plaintiff does not have to proceed against the first ship that comes within jurisdiction but may wait for a
more valuable one amongst those named on his writ to arrive thereafter. Having invoked admiralty
jurisdiction against one ship, he cannot go against any other of the ships named in the writ and should strike
them out of the writ.
- Territorial waters ≠ port limits. Only port limits demarcated on charts – limits within which MPA regulations
will have application. Used to be practice that a ship could be outside port limits but within territorial
waters.
- Subsequently, directive issued that warrant of arrest can only be served within port limits.
- A lot of dispute as to demarcation bet Malaysia and sg – only clear ivision is in military charts
- Sheriff recently decided tt x want to arrest vessels outside port limits but within territorial limits of sg
- Practice Directions published to prevent arrest outside port limits; cannot arrest vessel outside port
limits even if within territorial waters. The reason for this is that territorial limits are ambiguous.
- Registrar (acting as Sheriff)’s discretion was challenged in the Trade Resolve, but it was confirmed that they
had the discretion to set the practice direction to limit jurisdiction to port limits.
The Evmar [1989] 2 Mlj 460 applying THE RENA K [1978] 1 Lloyd’s Rep 545
- When contract is subjected to foreign arbitration clause, the arresting party can arrest ship only if they can
prove that the ship owner’s financial situation is so precarious that arrest is necessary.
- Facts:
- Case significant in terms of the effect of arbitration clauses and the notion of malice.The plaintiffs were
the owners of a cargo of corn (the cargo) which were shipped on board the Evmar (the ship) which was
owned by the defendants. The cargo was allegedly damaged while in the course of carriage aboard the ship.
A writ in rem claiming for damages was issued and the ship was arrested pursuant to a High Court warrant
issued on the same day. Prior to the arrest, the plaintiffs had asked agents of the defendants to furnish
a guarantee from P&I Club. The defendants agreed to furnish security for the plaintiffs` claim subject
to certain reservations. These reservations were not accepted by the plaintiffs who proceeded to arrest
the ship. On 14 March 1988, the defendants informed the plaintiffs that in order to mitigate their own
losses, they would agree to the plaintiffs` demands for security, and a letter of undertaking was accordingly
faxed to the defendants` solicitors. The plaintiffs however refused to release the ship but asked the
defendants to file a bail bond to obtain the release of the ship. Subsequently, on the same day, the defendants
applied by summons-in-chambers for an order, inter alia, setting aside the warrant of arrest. The application,
which was heard by the deputy registrar on 15 March 1988, set aside the warrant of arrest, released the ship
from arrest, stayed all proceedings on the ground that the bill of lading had an arbitration clause, ordered the
plaintiffs to pay the defendants damages for the wrongful arrest and detention of the ship, and ordered costs
to be taxed and paid by the plaintiffs to the defendants. The plaintiffs appealed to the High Court against all
these points except the staying of proceedings.
- The defendants claimed that the warrant should be set aside as the affidavit sworn to lead it did not
disclose material facts, namely the presence of an arbitration clause on the bill of lading for the cargo,
and that the parties were negotiating for a letter of undertaking in lieu of arrest. It was also claimed
that the affidavit should have deposed to the fact that the defendants lacked the means to satisfy any
arbitration award, but failed to do so. The plaintiffs claimed that notwithstanding the deputy registrar
ordering an unconditional stay of the proceedings, the High Court should impose a term that the stay
was conditional upon the arrest being maintained or the letter of undertaking being retained as
alternative security to satisfy any arbitration award that might be given against the defendant.
- Held, allowing the appeal in part:
- (1).The mere fact that there was an arbitration clause in a bill of lading did not preclude a plaintiff
from instituting an action in rem against a ship. The only prerequisite to the court`s jurisdiction to
issue a warrant of arrest was that the writ had to have been filed in an action in rem.
- (2).On the basis of case authority, there was no material non-disclosure in the present case by the mere fact
that the affidavit to lead the warrant of arrest did not disclose that there was an arbitration clause on the bill
of lading.
- (3).While it was open to the defendants to apply for a stay of proceedings, that had not yet occurred at the
time the plaintiffs` affidavit was sworn. The question whether the defendants were able to unable to satisfy
an arbitration award did not arise at this stage and there was therefore no material non-disclosure by the
plaintiffs.
- (4).The matters that had to be stated in an affidavit leading the warrant of arrest were prescribed on O 70 r 4
of the Rules of the Supreme Court. Nothing there required that matters relating to pending negotiations for
security should be stated in the affidavit. The fact of negotiation between the parties was therefore
immaterial.
- (5).The plain reading of s 4(3) of the Arbitration (Foreign Awards) Act showed that the power of the
court to impose conditions had to be imposed at the time the order was made staying the proceedings.
The deputy registrar gave an outright order to stay without imposing any conditions. And since the
plaintiffs had withdrawn their appeal against the order, it was not open to the High Court, as an
appellate court, to vary the order granting an unconditional stay when the order was no longer under
appeal.
- (6).The question here was whether the court, following the principle laid down in The Rena K [1978] 1
Lloyd`s Rep 545, should order that the ship be kept under arrest or the letter of undertaking be retained to
meet whatever award that might be made against the defendants.
- (7).This principle, however, could only apply if there was evidence to show that if the plaintiffs should
obtain an award in respect of the full amount of their claim, the defendants might well be unable to
satisfy. No evidence of this was produced. On the contrary, there was evidence that the P&I Clubs
were prepared to stand by and indemnify the defendants against the claim made by the plaintiffs.
Accordingly, the ship should be released from arrest and the letter of undertaking given to the
plaintiffs as an alternative security should be returned.
- (8).While the ship should be released, the warrant of arrest should not be set aside since there was nothing
wrong in the issue of it or its execution.
- (9).Whether there were any damages due eventually to the defendants on account of the arrest would
have to await the outcome of the substantive claim that was being referred to arbitration. It was
within the power of an arbitrator to award damages for wrongful arrest. To succeed in such a claim,
the defendants would have to show there was mala fides or malicious negligence on the part of the
plaintiffs.
- (10).The only issue then was whether the fact that the defendants agreed to furnish the letter of undertaking
`under protest` gave the plaintiffs a reasonable cause not to release the ship. The expression `under protect`
meant no more than that the defendants were reserving their rights, which they were entitled to do.
- (11).Since alternative security had been furnished to the plaintiffs in terms which they had asked for,
the plaintiffs had no further reasons not to release the ship. The test to be applied to determine
whether there was wrongful continuance of an arrest was the same as that applicable to wrongful
arrest, ie mala fides or crassa negligentia implying malice.
- (12).The plaintiffs` refusal on 14 March 1988 to accept the letter of undertaking amounted to at least
malicious negligence. The plaintiffs were therefore liable for damages for the continued detention of
the ship from 14 to 15 March 1988.
- (13).The assessment of the quantum of damages for the wrongful continuance of arrest had to be left to the
arbitrator to whom the claim was being referred.
- (14).The appeal as regards the second order to set aside the warrant of arrest was allowed. Order 3 (releasing
the ship from arrest) would remain. So would orders 1 and 4 (allowing the time for service of defendants`
application to set aside the arrest to be abridged and staying the plaintiffs` proceedings) (in respects of which
the plaintiffs withdrew their appeal). Order 5 (ordering the plaintiffs to pay the defendants damages which
were to be assessed by the registrar) would be modified to leave the arbitrator to assess damages for the
wrongful arrest of the ship from 14 to 15 March 1988.
- (15).There were two main applications in the summons taken out by the defendants - to have the warrant of
arrest set aside and to obtain a stay of proceedings. The defendants had failed on the first application but
succeeded in the second. The arguments before the deputy registrar centred more on the first point than the
second. Before the High Court, there was hardly any argument regarding the second point. Having regard to
all the circumstances, the plaintiffs had to bear only one-third of the costs of the defendants for the hearings
before the deputy registrar and before the High Court.
Hyosung (Hk) Ltd V The Owners Of The Vessel Or Ship ‘Hilal’ [2001] 1 Slr 387
- Facts:
- The plaintiffs commenced the action against the defendants for breach of duty in contract and tort in respect
of 9,000 metric tons of urea from a shipment of 28,000 metric tons on board the defendants` vessel. The
plaintiffs claimed under a bill of lading dated 24 February 1997. The plaintiffs arrested the defendants`
vessel the `Hilal I` on 14 October 2000. The action was brought under s 4(4)(a) of the High Court
(Admiralty Jurisdiction) Act (Cap 123) in respect of a claim falling under ss 3(1)(g) and (h) of the Act. The
defendants applied to stay the action in favour of arbitration in London pursuant to an express
arbitration clause. By the same summons-in-chambers the defendants also prayed that the `Hilal I` be
released and the arrest set aside. The assistant registrar granted an order for the stay of proceedings
but made no order on the defendants` application for the release of the vessel, the effect of which,
effectively, was to refuse the application. The plaintiffs appealed against the order for stay of
proceedings and the defendants appealed against the refusal to order a release of the vessel.
- Held , dismissing the plaintiffs` appeal and allowing the defendants` appeal:
- (1).The error that appeared in the charterparty was typographical in nature. Hence, there was only one
charterparty in which the arbitration clause was adequately set out and applied by reason of the express
wording of s 6 of the International Arbitration Act (Cap 143A) (see [para ] 9).
- (2).The order for a stay of proceedings is a different matter from the order retaining the vessel under
arrest. It does not follow that the vessel must be released upon a stay order being given. Neither does it
follow that the vessel must remain under arrest. The plaintiffs` claim had no connection with this
forum. The only factor in the plaintiffs` favour was, first, the fact that the arrest was lawfully made and
secondly, that the court was generally loathe to interfere with the discretion of the court below in such cases.
The arguments presented before the appellate court were fuller than in the court below. As such, the
application was considered afresh. There was no reason for the arrest to continue in this case (see [para ] 14-
16).
- interpretation of s7: swift fortune: held tt court will not grant mareva injn in adi of foreing
arbitration – pending
- another case: Belinda Ang J – yes.
- But for in rem proceedings, law is clear and settled, can arrest vessel in aid of foregn arbitration (swift
fortune makes position clear)
The Bazias 3 [1993] 1 Lloyd’s Rep 101 (Uk Position: English Ca)
- discretion to release a vessel same as in normal Admiralty proceedings, i.e. the vessel would be
released upon the provision of sufficient security and Rena K principles did not apply.
Possessory Lien
o asserted by shipyards who have not been paid for repairs. Self help remedy
o entitled to detain the vessel; They are still holding onto the ship, entitled to do so without having to arrest the
vessel.
o But shipyards sometimes need to arrest the ship in order to get court order to sell vessel.
o Does the arrest of vessel mean that possession is deemed lost, and therefore the lien is lost? NO
- • Types Of Security
– Letter of undertaking or guarantee from an insurer
Letter of Undertaking from an Insurer – 2 main types of insurers:
(a) H&M Insurer (Haul and Machinery)
- Underwriters for collisions and salvage
- Where the insurance concerns the haul and machinery of the vessel.
(b) P&I Clubs (Protection and Indemity) – Usually letters of undertaking for arrest are from
P&I Clubs.
- Covers 3rd Party liabilities. – cargo claims./ charterparty disputes
- Covered by specialist insurer cost PandI clubs
- Owners seeking indemnity from insurers.
- Internationally recognised clubs: UK (mainly), Scandinavia, Japan (prominent in
Asia).
- China P&I clubs gaining popularity but not yet internationally recognised.
– Bank guarantee
– Usually guarantees sought from local banks for the purposes of enforceability.
– However, contractual relationship ∴ if clients are willing to accept a guarantee from an
overseas bank, it is entirely up to them.
– Ensure that the guarantee can be readily enforced.
– Bail bond – security to court
– Rules of Court (O 70 r 15)
- • Wording Of Security
- Security for the release of a ship arrested is usually a matter of agreement between the parties with the
exception of bail bonds.
- Has to be enforceable within jurisdiction otherwise security is not good security.
– P&I Clubs’ letter of undertaking
- P&I Clubs are members of re-insurance pool, as a group, they are very solvent.
– World-wide recognition in the maritime industry.
– English Courts held that however solvent a club may be an arresting party is not compelled to
accept P&I undertaking.
– Singapore departed from that stand in The Arcadia Spirit.
– Bank guarantee
– Bail bonds
Semco Salvage & Marine Pte Ltd V Owners Of And Other Persons Interested In The Ship Or Vessel Mv
‘Benja Bhum’ [1994] 1 Slr 88
Principle:
· The arresting party could insist on what terms the letter of undertaking should contain as long as they had
made a lawful arrest.
Facts:
· Arrest for remuneration for salvage services and fees however parties were prepared to refer to claim to
arbitration.
· Plf wanted undertaking from P&I Club to include arbitral award and final judgment of a court but df wanted
the undertaking to cover only a final award of an arbitration.
· Df applied to seek order of ct to release vessel from arrest.
· The plaintiffs commenced this action in rem against the vessel Benja Bhum (`the vessel`) claiming
remuneration for salvage services and/or salvage fees and expenses incurred in the salvage of the vessel on
or about 25 January 1993. While the negotiations were in progress, the plaintiffs agreed to allow the
defendants to furnish security in the form of a letter of undertaking issued by the Swedish Club instead of a
guarantee by a bank. However, the two solicitors were not able to agree on a material part of the
undertaking. The plaintiffs wanted the undertaking to cover not only any arbitration award but also any final
judgment of a court or tribunal of competent jurisdiction. The defendants wanted the undertaking to cover
only a final award of an arbitration `commenced in London by reason of an agreement for private
submission to arbitration contained in or evidenced by Haridass Ho & Partners` fax dated 9 February 1993
`.As the defendants were not prepared to furnish the undertaking in terms required by the plaintiffs`
solicitors, the plaintiffs refused to release the vessel from arrest. Hence, this application for the release of
their vessel Benja Bhum from arrest and also for damages was made by the defendants under O 70 r 12(4)
of the Rules of the Supreme Court 1990. The assistant registrar dismissed the application. The defendants
appealed.
Held:
· (1).Though the parties had agreed in principle to refer the plaintiffs` claim to arbitration, the terms of the
agreement had yet to be agreed at that time. In effect, there was really no binding agreement.
· (2).The plaintiffs had already arrested the vessel and had a security for their claim. They were therefore
entitled in the circumstances to insist that the letter of undertaking should contain terms which would give
them adequate protection or security in replacement of the res they had arrested. The terms required by
them were wholly reasonable in the circumstances.
· (3).In addition, the words suggested by the defendants were plainly wrong. There was, at that time, no
agreement for private submission to arbitration `contained in or evidenced by Haridass Ho & Partners` fax
dated 9 February 1993`. The agreement for private submission to arbitration, if at all there was to be one,
would be contained in a document yet to be agreed upon and certainly not in `Haridass Ho & Partners` fax
dated 9 February 1993`. Therefore, the defendants` suggested text was wholly inappropriate and wrong and
was rightly rejected by the plaintiffs.
Notes
· Since the plf had already arrested the vessel and had security for their claim they were entitled in the
circumstances to insist that the letter of undertaking should contain terms which would give them adequate
protection or security in replacement of the res they had arrested.
· Since the terms required by the pfl were wholly reasonable, appeal to release vessel was dismissed
Owners Of Cargo Lately Laden On Board The Ship Or Vessel ‘Piya Bhum’ [1994] 1 Slr 564
Principle:
· Bail Bond put up by a foreign-based P&I club with no assets in the jurisdiction is unacceptable.
Facts:
- The plaintiffs commenced an admiralty in rem action against the defendants for damages in respect of loss
or damage to their cargo. The plaintiffs` solicitors attempted to negotiate security with the defendants
insurers, the P and I Club. They were, however, unable to agree upon the wording of the letter of
undertaking. The P and I Club then executed a bail bond and filed it unilaterally. The plaintiffs
applied for the bail bond to be declared invalid on the ground of lack of financial sufficiency of the
surety within the jurisdiction. The summons was dismissed by the registrar. The plaintiffs appealed. (Whole
case about who can/cannot post a bail bond)
Held: allowing the appeal:
- The essential feature of a bail bond is that the plaintiff who has obtained a judgment or settlement
which has been filed in court may proceed to levy execution, and need not bring a separate action
against the sureties for the judgment sum. Without this feature, the bail bond fails in its purpose.
Since a judgment of the court has no extra territorial force in that it cannot be enforced in a foreign country
by direct execution, a bail bond by a person without assets within the court`s jurisdiction would be worthless
from the plaintiffs` point of view. The bail in this case was given by a Swedish corporate entity which had
no assets within the jurisdiction. The bail bond was, accordingly, worthless and the plaintiffs were justified
in rejecting it.
- Comment: If it was a P&I Letter of Undertaking – would not be rejected!
- • Quantum Of Security
- litigant in arrest sitn is entitled to request security to cover its best arguable case
– Entitled to security on best arguable case however, only if supported by documentation.
– Basis/ Factual evidnce to support this claim
- Eg: best arguable case is $100k, cannot claim for $1 mil. Also cannot claim for $100k if documents
state that you only have a claim for $50k. Therefore the quantum for security ∴ should be measured at
$50k.
Continental Grain Co V Owners Of The Ship Or Vessel ‘Evpo Agsa’ [1992] 2 Slr 487
Facts:
- The plaintiffs arrested the vessel, alleging negligence and inducing breach of contract, there being no
privity of contract between the plaintiffs and the defendant owners. The defendants provided security
in the amount of $1,505,333.95. They then applied (a) to set aside the writ of summons and the
warrant of arrest on the basis that there was no jurisdiction for the claim as the alleged claim did not
fall within the ambit of the High Court (Admiralty Jurisdiction) Act (Cap 123); and (b) to moderate
the amount of the security. The registrar who took up the application was asked to decide only the
security issue. He ordered security in the amount of $1 and ordered costs against the plaintiffs. The
plaintiffs appealed to a judge-in-chambers.
Held , allowing the appeal:
- (1).When a court considers an application confined to the question of security for costs, it must assume that
there is a valid cause of action. It must then determine the amount of the claim, and, in addition, allow
costs and interest. The amount of the claim is not a matter of discretion of the court but of entitlement.
The amount of security should cover the plaintiff`s reasonably arguable best case.
- (2).Affidavits lack the facility and flexibility in assisting the court in making satisfactory findings of fact
when there is a dispute. In the absence of cross-examination by opposing counsel, the court is placed in
great difficulty in evaluating conflicting affidavit evidence.
- (3).Counsel and their clerks should not become witnesses in cases where they are retained and this applies
equally to counsel making affidavits where the facts are in dispute.
- (4).The defendants` case was presented on the basis of affidavits made by their counsel on their behalf.
In his affidavits he made conclusions of facts, arguments, comments, inferences, statements of law,
gave expert opinion, relied on hearsay evidence, self-serving documents etc. The defendants had an
agent, foreign lawyers and surveyors in Singapore, and there was no explanation why none of them
made an affidavit. Further, the affidavits mingled admissible matters with inadmissible matters. No
court could accept the contents of those affidavits as conclusive and decide in the defendants` favour.
- (5).The plaintiffs appeared to have a bona fide claim and did not act oppressively. They were entitled to
security for the amount of the claim with interest and costs.
- Judgment (Selvam J):
When a court considers an application confined to the question for security for costs, it must
assume that there is a valid course of action. It must then determine the amount of claim including
costs and interest.
The amount of claim is not a matter if discretion of the court but an entitlement, it should over the
plf’s reasonably arguable best case.
- 1. Against Arrest
– more a risk management sitn in practice (not examinable)
Illustration:
o Solicitor lodged caveat against arrest as claimant had refused to accept security. Anticipated
that their best arguable case is worth $1 mil, lodged caveat for $1 mil. However, unknown to
the lawyer, there are other parties who want to arrest the ship. Since the caveator is personally
liable for all the claims after the lodging of the caveat, solicitor is liable for all the claims after
lodging caveat. Caveat should be filed by clients and not by solicitors.
- 2. Against Release
Caveat against release and payment (O. 70, r. 13)
13. —(1) A person who desires to prevent the release of any property under arrest in an action in rem and the
payment out of Court of any money in Court representing the proceeds of sale of that property must file in the
Registry a Request 4 in Form 166, and on the filing of the Request 4 a caveat against the issue of a release with
respect to that property and the payment out of Court of that money shall be entered in the caveat book.
(2) Where the release of any property under arrest is delayed by the entry of a caveat under this Rule, any person
having an interest in that property may apply to the Court by summons for an order requiring the person who
procured the entry of the caveat to pay to the applicant damages in respect of the loss suffered by the applicant by
reason of the delay, and the Court, unless it is satisfied that the person procuring the entry of the caveat had a
good and sufficient reason for doing so, may make an order accordingly.
Used to prevent release of property under arrest (usually used against constructive arrest), and payment out
of court any money in court representing the proceeds of sale of that property.
Used for multiple claims. Caveat against 2nd arrest, some parties would carry out 2nd arrest to accelerate
proceedings or eat into funds, interested parties may apply for caveat to prevent such an act. [by caveating
against the release of the vessel, u cannot arrest again!]
It must be lodged while the Warrant of Arrest is still in force.
Caveat must be sufficient time to give party time to either withdraw caveat upon payment or to take over
arrest if necessary.
Note: the court can make the caveator pay damages to the plaintiff who have suffered losses due to delay –
i.e. the caveat was procured without good and sufficient reason.
Wrongful Arrest
° Traditionally, in England, to succeed in claim, must show PF acted in bad faith or with gross negligence
amounting to malice but over the years, these have been used interchangeably with standards used in civil
claims – The Evangelismos (1981)
° In local case, The Evmar, Court equated bad faith with ‘without reasonable and probable cause’.
Arrest effected even though security offered. So after arrest, Shipowner decided to furnish security in
desired form under protest. PF, however, rejected letter of undertaking.
Warrant of arrest eventually set aside on grounds of non-disclosure
Court held that from the day when security offered in exact amount and wording as demanded, PFs no
longer had any reason to detain the vessel. Continued arrest was thus malicious.
° The Trade Resolve – would also be a case of bad faith because PF went ahead to arrest knowing it was
outside port limits.
° Position clarified in The Kiku Pacific – no room to import concept of reasonable or probable cause. Must
have bad faith or gross negligence amounting to malice. But old cases even when decided under this
standard would have produced the same result.
° Eg: Vessel deprived of used for 1 month, ruled in favour of defendant; ship owner was found to be not liable
for any damages. Can ship owner then apply for damages? No.
° Conditions to be satisfied for Wrongful Arrest – would be determined by the conduct of the parties at the
time of the arrest:
- Application of test of ‘Without Reasonable Or Probable Cause’ subseq to evangelismos – to infer malice
interchangeably with test of gross neg
- Without reasonable or probable cause’ test adopted in The Evmar and The Ohm Mariana (but latest: this is
the wrong test.)
Principle
· Suggests that malice can be inferred by without reasonable or probable cause.
Facts:
· Cargo(corn) was allegedly damaged while in the course of carriage.
· Df initially provided security with reservations but plf refused to accept security.
· Amts kept changing, sol queried amts
· When letter of ndetaking offered, litigant rfused to accept -
o When df again provided security based on the terms laid out by the plf but ‘under protest’, plf
rejected the security again and refused to release ship.
Held (Chao Hick Tin JC)
· Justified release of vessel and finding of wrongful arrest on the fact that that was ‘malicious negligence’
when plf refused to accept letter of undertaking.
· However, suggestion that plf had no reasonable cause not to release the ship when df agreed to furnish letter
of undertaking ‘under protest’ as the expression ‘under protest’ meant no more than that dft were reserving
their rights which they were entitled to.
· Therefore suggests that the test of ‘no reasonable cause’ could lead to ‘malicious negligence’.
· In this case, fr mmt tt security offered albeit under protest, claiamtn has no more reasonable cause to cont
arrest for continuation period
· Court condemened plaintiff and damages ordered
Facts:
· The plaintiffs arrested the vessel in September 1985, asserting a claim for agents` disbursements. The
defendants denied owing any moneys to the plaintiffs for the period from October 1984 to February
1985. They also claimed damages for wrongful arrest of the vessel.
Held , at first instance, dismissing the plaintiffs` claim and allowing the defendants` counterclaim:
· (9).In cases of mala fides or crassa negligentia a court of admiralty may award damages for wrongful
arrest. The cause of action for wrongful arrest in admiralty law is akin to the tort of abuse of legal process in
general and wrongful seizure of goods or wrongful arrest of person in particular. Arrest per se will not be
the basis of liability.
· (10).Should the res be arrested under a bona fide mistake of fact or law, the law will not punish the claimant
as an award of costs is a sufficient penalty to discourage unfounded litigation. Where the owner of the res
can show malice, proof of actual damage is not necessary to sustain a claim for arrest in a court of
admiralty. However, unless special damages can be proved, only nominal damages will be awarded.
· (11).In the instant case the admiralty jurisdiction in rem was invoked when the plaintiffs had no rights. This
was because they made a mistake of law. There was negligence but not gross negligence. However, there
was malice. The malice was manifested in the manner in which the plaintiffs created the management
agreement. They must have realized that as part or beneficial owners in the joint venture, they could not
lawfully assert a claim in rem for disbursements and give them retrospective operation. In order to invoke
the admiralty jurisdiction and effect the arrest, the claims had to be disguised as agents` claims for
disbursements. The first four pages of the management agreement were fabricated, clearly with the
malicious intention to punish the defendants by the use of the arrest. Accordingly, the plaintiffs were liable
in damages to the defendants for wrongful arrest.
· CA overturned Selvam JC’s position and held that arrest was not wrongful even though plf did not
satisfy the conditions under s4(4) of the Act.
Held (Judith Prakash J), dismissing the plaintiff`s appeal and allowing the defendant`s cross-appeal:
· (3).When an ex parte application is made for the arrest of the vessel, the affidavit leading the warrant of
arrest must disclose all material facts known to the deponent in relation to the arrest. The deponent of the
affidavit must disclose those facts that are relevant to the making of the decision whether or not a warrant of
arrest should be issued that is, a fact which should properly be taken into consideration by the court when
weighing all the circumstances of the case though the disclosure of the fact might not have the effect of
leading to a different decision being made (see [para ] 44).
· (4).The plaintiffs should have disclosed all the circumstances in which the orders had been placed. They
should have informed the court that the orders were originally made by New Acmes purporting to act as
agents for the defendants and why they believed this representation even though the Portnet search
subsequently undertaken showed another entity as the tug`s general agent. It was also material, since the
claim was for fuel supplied to a vessel for its operation, that at least 80% of the same had gone into another
vessel rather than the tug (see [para ] 46). Since these facts were not disclosed, the warrant of arrest itself
could have been set aside on this ground (see [para ] 47).
· (5).The plaintiffs` non-disclosure of material facts was intentional and malicious. Even if Mr Lui from New
Acmes had made a representation to them that he was acting as agent for the defendants, the plaintiffs had
acted recklessly in attempting to arrest the ship without any further investigation as to whether the
defendants were in fact the persons who were contractually liable to them. There was information before
them (ie the Portnet search) that that representation could have been false and they should either have
carried out further investigations or at the least have disclosed the information to the court so that a proper
assessment of the correctness of their claim could be made. Instead, they deliberately chose to leave out all
information which would have caused doubt as to whether the defendants were the persons who would be
liable in an action in personam (see [para ] 50). Thus, the defendants were entitled to damages for wrongful
arrest (see [para ] 51).
· Court at the trial made finding of fact that the arresting party knew that the ship owner was not in
contractual relationship with them ∴ no in personam liability ∴ did not fulfil first requirement of s4(4) of
the Act.
· Plf had acted recklessly in attempting to arrest the ship without any further investigation as to whether the
df were in fact the persons who were contractually liable to them.
· By not disclosing that they had supplied marine gas oil to the tanks of the barge and not directly to the tug,
they had failed to include material facts in their affidavit leading to the conclusion that their act was
intentional and malicious.
Application to the court by motion and court may give judgment for the claim.
The ct may set aside or vary any judgment entered in pursuance of this rule.
Differences from normal civil claims?
(a) Application is by Motion
(b) Must convince on the merits that the plaintiff has a good claim. [given the ‘in rem’ consequences]
2. Documentation:
Generally require:
(a) proper service of writ by virtue of Ord 10 r1;
(b) affidavit proving due service or writ;
(c) affidavit verifying the facts on which the action is based;
(d) copy of statement of claim; and
(e) affidavit stating no defence/defence to counterclaim served (if applicable).
Facts:
· Mortgagees obtained an order of court to declare the validity of their mortgage thus giving them liberty to
enter final judgment for their claim with the consent of the df ship owners.
· Inter Maritime intervened and claimed an interest for having disbursed several expenses to the vessel and
applied to set aside order of court or alternatively for a declaration that the order shall not be binding on
them.
· Registrar held Inter Maritime had no locus standi in the proceedings since df had already consented to the
order.
NOTE:
· Intervenors do not have locus standi to raise issues not pertinent to the protection of his interest – The
Lord Strathocona.
· The requirement of an interest in the ship or the proceeds of sale may hinder a party who does not have such
an interest but is nonetheless adversely affected by the Arrest.
· BUT court has an inherent jurisdiction to allow such parties to intervene.
Sale pending litigation – courts will decide if the sale should be carried out. [Sale Pendente Lite]
- Eg: If vessel is worth $50 mil, and claim is worth $5 mil, unlikely will order vessel to be sold.
The funds and proceeds will be frozen until judgment entered.
Principle:
· Law confers the highest priority on port fees.
· Irony that the successful party did not secure a single cent from the judgment after accruing huge costs!
Facts:
· Due to alleged fraud, vessel was not sold pending litigation and was under arrest for 10 years
· By time came to trial, was in 80s
· Plaintiffs won but vessel rotting away
· Port dues came up to an approximate sum of $190,000. The vessel was finally 10 years later.
· Query whether port dues can be recovered from proceeds of sale of the vessel as party of the sheriff’s
expenses and in priority to all other items of the sheriff’s expenses.
Held , ordering payment out to PSA:
· (1).PSA cannot invoke the admiralty jurisdiction of the court to enforce a claim for port dues and had no
right to intervene in these proceedings. PSA should have persuaded the sheriff to apply to the court in his
name, by agreeing to indemnify the sheriff of all costs and expenses, to resolve the question.
· (2).The Act provides two means of recovery for port or other dues. Section 64 gives a power to distrain.
Subsections (1) and (2) give a power to arrest and sell respectively. Subsection (3) enables the PSA to detain
a vessel without arrest until all dues are paid by giving notice to the port master who will then not grant the
ship port clearance. In addition to the aforesaid, s 65 enables recovery to be made by civil proceedings.
· (3).There is no requirement for the PSA to first obtain judgment in civil proceedings before enforcing a
claim for port dues. The person who should be sued for the dues is the owner of the vessel.
· (4).The right of a port authority to detain and sell a ship for dues is a statutory possessory lien and stands in
priority to all other claims. The court can order the ship to be sold free of all these rights whilst transthem
with equivalent priority to the proceeds of sale in court. The port dues thus are a first charge on the proceeds
of sale of the ship.
· (5).The Singapore practice of the sheriff treating the PSA port dues and other dues as part of his expenses is
well founded and established since well before 1976. The PSA was thus entitled to be paid the port dues in
the sum of $196,560 as a paramount first priority payment out of the proceeds of sale of the Felicie.
Held (Karthigesu J):
· Right of a port authority to detain and sell a ship for dies is a statutory possessory lien and stands in priority
to all other claims. The court can order the ship to be sold free of all these rights while transferring them
with equivalent priority to the proceeds of sale in court. The port dues thus are a first charge on the
proceeds of sale of the ship. – for historical reasons. Privilege to continue.
· Singapore practice of the sheriff treating the PSA port dues as part of his expenses is well founded and
established. PSA was thus entitled to be paid the port dues as a paramount first priority payment out of
the proceeds of sale of the Felicie.
Comment
· Effect of The Felicie is that even if the MPA does not exercise its statutory right to distrain under s 29 MPA,
the port dues can nonetheless be recovered as Sheriff’s Expenses! – so the MPA will not be relegated to the
mere status of a statutory lienee.
· [E.g. of MPA not exercising its statutory rights to distrain – i.e. by bringing an in rem action !!!]
nonetheless, will be part of sheriff expenses.
The Hurst [1999] 1 SLR 237
Principle:
· Paramount claim from PSA remained even after its conversion to MPA.
Facts:
· Vessel was arrested on 14 March 1997, but Notification governing provision for port dues for MPA came
into effect only on 9 April 1997.
· Contention that MPA was not entitled to port dues because 1997 Notification did not impose port dues for
vessels arrested before it came into force.
· Argued tt felicie unfair but same judge held tt priority to continue
Held (Choo Han Teck JC):
· Before it was replaced by the 1997 Notification, PSA scale of port dues via the 1994 Notification applied to
any vessel in port, whether under arrest or otherwise. Therefore the 1994 Notification would continue to
apply to The Hurst and MPA entitled to port dues.
· Practice of treating port dues as part of sheriff’s expenses prevailed and MPA still has top priority to
proceeds of sale.
3. Plf’s costs of and Incidental to the arrest of the vessel and other costs which court may award in priority to
all other claims except sheriff’s expenses
Does not include all costs, only costs of and incidental to the actual arrest of the vessel (ie
disbursements etc…)
Pl’s substantive costs not covered!
Substantive costs follow the ranking of the claim. ***
Cannot split up the costs
4. Salvage claims – claims for costs, fees and expenses and damages
last salvage takes priority
own order for priority in this
the last salvage in time has highest priority because ifnot for last salvor there wld be no ship
within each claim, whichever existed earlier will get priority over the later one.(applies to other
categories as well)
7. Possessory claims in respect of unpaid repairs [Ship Repairers possessory Lien – comes into effect the
Moment the Ship enters the shipyard – i.e. into the effective possession of the yard. Exists until the yard
loses possession – The Tergeste.
- Typically relate to shipyards
- Logic – when shipyard repairs vessel, it wld have improved the vessel/chattel, therby enhancing its
value
- Therefore shld be given some measure of priority
- Essence: In order to exercise a possessory lien, the lienee (shipyard) has to be in actual or constructive
possession. If possession given up, priority lost and shipyard only becomes a SLienee.
- (While custody transferred to sheriff, possession remains with shipyard, thereby possessory lienee who
effects arrest cot to enjoy adv of possessory lien)
POST POSSESSION MARITIME LIENS:
8. Subsequent maritime liens – almost impossible for maritime liens after vessel is already subject to a
possessory claim.
Usually claiming for wages. Crew wages prior to vessel being sent to the shipyard rank in priority of
possessory claims but crew wages after ship in dry dock rank after possessory claims.
ML which accrued after the yard came into possession of the vessel for repairs. This will follow the
same order of priority in 4-6 (but practically, only ML which will arise is for wages).
9. Mortgagee
• Claim By Mortgagee
10. all other unsecured claims - Claim by other claimants having stat lien on vessel [Statutory Lienee] – such
stat lien will rank pari passu. Ie rights under s3.1
***Order Not Immutable but at discretion of court (though court rarely departs from it)
Principle:
· Order of priorities not immutable but subject to the requirements of justice.
· Court can depart from ranking – The Eastern Lotus
Case where order of priority between wages and collision – PF, in order to ensure that the vessel does
not incur too many claims, decided to go to Court for order to repatriate the crew. PF paid crew
wages and repatriation expenses and sought to be subrogated to crew’s rights. – then have wages
ranked as sheriff’s expenses
Subsequently, DM Lienee sought to have priority (collision).
Facts:
· Mortgagees had obtained an order of court for the payment of wages and disbursements of the master and
crew and monies for repatriation of master and crew. In exchange, the rights of master and crew were to be
subrogated to the mortgagee.
· Claims for collision arose after mortgagee had obtained order of court and made relevant payments.
· Whether mortgagee should be entitled to payment before damage claims arising from collision.
Held , dismissing the appeal:
· (1).In spite of the general order of priorities, a court, in the exercise of its admiralty jurisdiction, was
entitled to have regard to the equities in any particular case before it.
· (2).It was common ground that in general a claimant for damage caused by the ship had priority over
a claim for wages. However, in the present case, the judge was right in concluding that on the facts, it
would be an injustice if the respondent were deprived of the payment they made, acting on the order
of court of 17 March 1978.
· ‘It is common ground that the owners of the vessel are insolvent. It is common ground that the general order
of priorities as developed by the authorities and settled admiralty practice are now well established. The
question is whether the order of priorities as so established are now immutable or whether a court, under its
inherent jurisdiction, depending on the facts, can alter the order of priorities in any particular case. It is
common ground that in general a claimant for damage caused by the ship has priority over a claim for
wages. The authority for this is the case of the Linda Flor ER 1150. The judgment of Dr Lushington reads
as follows:
· However, it appears from these two decisions that a court, in the exercise of its admiralty jurisdiction, is
entitled, in spite of the general order of priorities, to have regard to the equities in any particular case
before it. In the present case it is conceded that the owners of the vessel are insolvent. The crew were all
foreign and the sheriff could not carry out the commission for appraisement and sale without first
making arrangements for the crew to leave the vessel and for their repatriation. The claim of the
appellants for damage to an installation in Poland was not known to the sheriff, the mortgagees, the owners
of the vessel or the court when the court made the order of 17 March 1978. The respondents as mortgagees
were under no obligation to make funds available to the Sheriff to carry out the commission for
appraisement and sale. They made full disclosure of all the facts within their knowledge. They were entitled
to protect their property and did not make the payment as a volunteer but after consultation with the sheriff
and pursuant to an order of the court. The appellants, on the other hand, merely relied on the established
order of priorities and that they would be seriously prejudiced by the order of court. They have not indicated
in their affidavit when they suffered the damage to the installation in Poland. They merely denied that they
have been sluggish or deliberately lying low with a view to inducing someone else to expending money to
his detriment.
· We agree with the conclusion arrived at by TS Sinnathuray J that on the facts before him it would be an
injustice if the respondents are now deprived of the payment they made, acting on the order of court of 17
March 1978. In the result the appeal is dismissed with costs.’
· Appeal dismissed
· Held (TS Sinnathuray J):
· Court held unfair for priority to be enforced inflexibly because PF would not have gone to Court
for order to be allowed to pay the crew and be subrogated to crew’s claim if he’d known there
was a collision. As PF would be prejudiced if priority enforced in the usual way, order not
followed.
· In spite of the general order of priorities, a court in the exercise of its admiralty jurisdiction was
entitled to have regard to the equities in any particular case before it.
· It would been an injustice if the mortgagees were deprived of the payment they had made acting on the
order of court.
Comparing Arrest Remedy With Mareva Injunction - Substantive And Procedural => litigants try to bring
themselves wihtin in rem juris
- Jurisdiction
Arrest remedy is only available in in rem proceedings whereas an injunction is essentially an in
personam remedy.
To arrest a vessel, the claimant must satisfy the requirement under s4(4) of the HC (AJ) Act.
The HC (AJ) Act is available to arrest vessels for 3 broad claims:
a. Ownership, possession and mtge
b. ML – dealing with salvage, collisions, and wages, arising by operation of law and
attached to ship on date when claim arose; fater lien created, follows ship despite any
subseq change of ownership
c. SL – main grp of maritime claims classified as stat liens – include cargo claims,
charterparty disputes, repairs, supplies, agency expenses etc; only created when reqts
of s4.4 HCAJA satisfied
Change of ownership
Where the claim fall within section 3(1) of the Act and does not confer a ML, the right to proceed in rem is
extinguished if there is a valid and bona fide change of ownership prior to the issue of the writ
• The monica s [1967] 2 lloyd’s rep 113
• the fierbinti [1994] 3 slr 864
Bareboat charterparty
Under the Act, the person who would be liable in an action in personam must also be the beneficial owner of
the vessel at the time when the writ was issued
The Singapore CA in The Pangkslan Susu, held that “ownership” connotes legal or equitable title.
Possession or control of a vessel, however full and complete, is not beneficial ownership of the vessel.
Accordingly, the bareboat charterers of a vessel are not her beneficial owners. Thus claimant cannot arrest
vessel bareboat chartered out
° Availability
An arrest is given as of right so long as the claim falls within the admiralty jurisdiction of the HC of
Singapore. The only pre-requisite to the issue of a warrant of arrest is a valid issuance of the writ of
summons – The Evmar; The Vasso
Mareva Injunction is purely a discretionary remedy. A claimant is only entitled to an injunction if he
can satisfy the Court that there are grounds to believe that the Df will deliberately dissipate or remove
his assets to defeat the claim
The evmar [1989] 2 mlj 460
The vasso [1984] 1 lloyd’s rep 235
° Types of Arrest
For in rem proceedings, only the vessel can be arrested
For a mareva injunction, any asset belonging to the Df can be the subject matter of attachment, such as
bunkers, bank account, claim against an insurance policy
° Location of Assets
in order to arrest a vessel, the vessel must be within the jurisdiction of the HC of Singapore
A Mareva injunction can attach to any asset of the Df so long as the Df is amenable to the jurisdiction
of the court of Singapore.
Unlike an arrest, it is possible to obtain a worldwide injunction. (this is rarely given because of
enforcement difficulties)
° Ease of Application
To apply for a warrant of arrest, the application is made ex parte. So long as the claim prima facie falls
within the admiralty jurisdiction of the HC of Singapore, the warrant of arrest will be issued by the
Registrar
To apply for a mareva injunction, the application is more complicated. In the first place, it must be
heard by a HC judge. The obligation to provide full and frank disclosure of material facts is more
onerous for a mareva injunction than it is for an arrest
° Exposure to damages
For an arrest, damages are only payable if the claimant can prove that the arrest was malicious or
without reasonable or probable cause – The Evmar. This is a very difficult burden to discharge
For a mareva injunction, an undertaking to pay damages is mandatory before the grant of an injunction.
Any party who has suffered loss or incurred expense as a result of the injunction is entitled to claim on
the undertaking without having to prove malice. For an injunction, an undertaking to pay damages is
invariably ordered. Such an undertaking may be required to be fortified by way of a bank guarantee in
some circumstances.
For an arrest, such an undertaking is not required. The undertaking is merely to pay the sheriff’s
expenses
" The Plaintiff, as the owner of a cargo of 15,000 tons of rice shipped
onboard the Defendant's ship, NEPTUNE, &/or as the lawful holder of the B/L
No.1 dated 1st Jan 01, claim damages from the Defendant for loss of and
damage to the cargo during the voyage from Bangkok to Singapore in the
month of Jan 01 sustained by reason of the Defendant's breach of contract
and/or duty and/or negligence in and about the carriage thereof. "
Jurisdiction As long as requirements under s4(4) of Mareva Injunction may only be carried
the Act is satisfied, the claimant is able to out if (s16 SCJA):
arrest vessels for 3 broad categories of (a) party submits to the jurisdiction
claim: of the Singapore Courts;
(a) ownership, possession and (b) Is served in Singapore in
mortgage; accordance to Ord 10 ROC
(b) maritime liens; and (c) Is served outside Singapore in the
(c) Statutory liens. circumstances authorised by and
in the manner prescribed by Ord
Problems relating to arrest are found in 11 ROC.
Admiralty (1) + (2). They are namely:
(a) change of ownership;
(b) vessels owned by related
companies;
(c) bareboat charterparty;
(d) One ship, one arrest rule.
Types of Claims Types of in rem claims are exhaustively Mareva is available for all types of
listed in s3(1) of the Act. claims.
Types of Arrest Can only arrest a vessel. Can arrest any asset.
Location of Assets Vessel must be within the jurisdiction of Can attach to any asset in any part of
the High Court of Singapore (within Port the world as long as the df is
Limits) amenable to the jurisdiction of the
Court of Singapore.
3rd Party Rights As long s there is a valid writ, does not 3rd Party rights cannot be interfered
matter that the arrest will affect 3rd Party with; innocent 3rd parties can apply to
rights. court to discharge the injunction.
Ease of Application Application is made ex-parte. Made before a High Court judge.
Required to provide full and frank Requirement to provide full and frank
disclosure. disclosure. Obligation of disclosure is
more onerous for Mareva than for
arrest.
Exposure to Damages are only payable if the claimant Party who had suffered loss or
Damages can prove that arrest was due to bad faith incurred expense as a result of the
or gross negligence implying malice. injunction is entitled to claim on the
(No undertaking but can be liable for undertaking to pay damages (which is
wrongful arrest) mandatory for applicants applying for
(Only undertaking in Arrest is that to pay a Mareva injunction) without having
the Sheriff’s Expenses) to prove malice.
Nature of Relief Confer proprietary right of vessel, stand Does not confer any proprietary right
as secured creditor in winding up. over assets which are subject matter of
the injunction.
Because the Mareva operates in
personam – court is ordering the
defendant to stop dissipating his assets
– not ordering his ‘assets’!
Subject to Variation Final unless set aside on limited grounds Subject to variation or discharge at
/ Discharge .ie. lack of jurisdiction, abuse of process the instance of the df on considerations
etc. of commercial convenience.
- Conditions for Mareva injunction are
now stated in the Standard Orders for a
local Mareva and a Worldwide
Mareva.