Singapore: key arrest developments

By Kendall Tan & Max Lim

Posted: 6th May 2016 09:55

Singapore, owing to its strategic geographical location, continues to be a key venue for the arrest of ships. In this write-up, we chart Singapore’s forging of its own jurisprudence in the ever-important area of ship arrest laws.
 
The Singapore High Court’s admiralty jurisdiction is set out in the High Court (Admiralty Jurisdiction) Act (“HCAJA”) which in substance is identical to the equivalent provisions found in English legislation. English court decisions continue to be persuasive in Singapore. However, it is no longer safe to assume in any given case that the English legal position mirrors Singapore law, particularly where arrest practice and procedure are concerned. The ‘rules of engagement’ for ship arrest in Singapore have evolved, in some respects substantially, as compared to English procedure. A line of landmark decisions by the Singapore courts over the past 15 years or so, underscore these differences, and the perils of not heeding them.
 
The Rainbow Spring: 2002-2003
 
In The Rainbow Spring, the High Court and Court of Appeal affirmed that under Singapore law, the claimant when applying for an arrest warrant is under a duty to give full and frank disclosure of all material facts, that is, all facts relevant to the making of the decision whether or not to issue the arrest warrant. A failure to abide by this duty could result in the arrest being set aside.
 
The Rainbow Spring decisions were regarded to be ground-breaking at the time as they clearly emphasised that the English position, namely that the claimant has the right to have a warrant of arrest issued upon the claimant’s compliance with fairly standard pro forma criteria, did not apply in Singapore.
 
The practical ramifications were felt immediately in the aftermath of The Rainbow Spring. Up till 2002, an affidavit filed in support of an arrest application was in practice a concise document, typically consisting of no more than 2-3 pages of narrative text. The norm in recent times is at least 12-15 pages of text, with (potentially) several hundred pages of exhibited documents depending on the complexity of the matter.
 
The Vasiliy Golovnin: 2008
 
The requirement of full and frank disclosure came into sharp focus again in The Vasiliy Golovnin. There, the plaintiffs’ arrest affidavit ran into over 400 pages but was nevertheless criticised by the Court as inadequate disclosure, underscoring that what matters is the ‘quality’, not so much the ‘quantity’, of the information and documents that goes into the arrest affidavit.
 
The plaintiffs were bill of lading holders who claimed against the defendant for discharging cargo at a port other than that specified by the plaintiffs. The plaintiffs arrested the carrying vessel at Lomé, but that arrest was discharged as the Lomé court found that the defendant was entitled to discharge at Lomé. The plaintiffs did not appeal the decision.
 
Instead, about a month later, the plaintiffs decided that they would have another go, by arresting a sister ship, the eponymous Vasiliy Golovnin, at Singapore. This proved to be a very bad call for the plaintiffs. Their claim was struck out and the arrest set aside. The Court of Appeal held that the underlying claim was devoid of merit. The arrest was also set aside for material non-disclosure - the text of the arrest affidavit did not mention that the plaintiffs had arrested in Lomé, still less, that the Lomé arrest had been discharged. The Court of Appeal observed that the duty of disclosure covers plausible defences so that unless the document is presented to the eyes and/or ears of the judge, it is not disclosed.
 
Worse still for the plaintiffs, the Singapore arrest was found to be wrongful, in that it was brought so unwarrantably or with so little foundation as to amount to malice or gross negligence. The plaintiffs were ordered to pay damages to the defendants as a result.
 
The Bunga Melati 5: 2012
 
The next major piece of admiralty litigation was The Bunga Melati 5. The plaintiff bunker suppliers served the in rem writ on the vessel in Singapore, but did not arrest her. The steps they took in Singapore nevertheless drew a concerted challenge from the defendant-shipowner who applied to strike out the action. This was litigated at three levels and all the way up to the Court of Appeal.
 
In a much welcomed restatement of the law which must now be considered as authoritative, the Court of Appeal outlined the steps and applicable standard of proof for a plaintiff to invoke admiralty jurisdiction in Singapore:-
 
1. Prove, on the balance of probabilities, that the jurisdictional facts it is relying on under s 3(1)(d) to 3(1)(q) HCAJA exist; and show an arguable case that its claim is of the type/nature required by the relevant statutory provision;
 
2. Prove, on the balance of probabilities, that the claim arises in connection with a ship ;
 
3. Identify, without having to show in argument, the person who would be liable on the claim in an action in personam (“the relevant person”);
 
4. Prove on the balance of probabilities, that the relevant person was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship; and
 
5.Prove on the balance of probabilities, that the relevant person was, at the time when the action was brought: (i) the beneficial owner of the offending ship as respects all the shares in it or the charterer of that ship under a demise charter; or (ii) the beneficial owner of the sister ship as respects all the shares in it.
 
The STX Mumbai: 2015
 
The past year witnessed a pair of high-profile admiralty decisions handed down by the Singapore courts.
 
In The STX Mumbai, the Court of Appeal reversed the High Court’s decision to set aside the arrest, strike out the entire claim and to award wrongful arrest damages. Notably, the Court of Appeal declined to decide whether the arrest was wrongful and stated that this was a matter to be reserved to the trial judge; one could not simply reason that because the in rem claim was not struck out the arrest was necessarily not wrongful.
 
The Xin Chang Shu: 2015
 
The Xin Chang Shuis particularly noteworthy because of the context in which it arose, namely the collapse of the OW Bunkers group. The plaintiff supplied bunkers to the defendant’s vessel, Xin Chang Shu. There was no contractual nexus between the plaintiff and defendant; instead, the defendant contracted with OW China, who in turn contracted with OW Singapore, and it was OW Singapore that contracted with the plaintiff. Given the insolvency of the intermediate OW entities, the plaintiff (somewhat mischievously) sought to recover the price of the bunkers directly from the defendant-shipowner. It sought to do so by basing its claim on the contract it had with OW Singapore and alleging that OW Singapore had acted as the defendant’s “agent” and therefore bound the defendant to this contract. However, the “case” which the plaintiff had contrived was roundly criticised by the High Court as wholly misconceived and a complete legal non-starter. The entire claim was struck out and the arrest set aside. The Court also found that the plaintiff had brought the arrest with so little basis as to amount to malice. Wrongful arrest damages were accordingly ordered against the plaintiff.
 
Concluding observations
 
The Singapore courts have shown in the past decade not just a prolificacy in admiralty arrest decisions, but also an unmistakable assertiveness in forging case law principles of their own.
 
A new balance between providing the remedy of arrest to deserving maritime claimants and the desire to shield shipowners from harassment from oppressive or cavalier claims is being (re-)calibrated. This, no doubt, seeks to weigh up the competing concerns and interests of arresting parties and shipowners by imposing on the former a strict duty of disclosure on pain that the arrest may be set aside if such a duty is not complied with, but not penalising the arresting party with wrongful arrest damages unless a very clear case of malice or gross negligence is demonstrated.
 
Kendall Tan is a Partner of the Shipping & International Trade Practice Group at Rajah & Tann Singapore LLP. His practice straddles dry and wet shipping, regionally. He advises main-line operators and underwriters extensively on specialised carriage for containerised cargoes, ‘DG’ incidents, and chemical tanker shipping. Kendall covers the full spectrum of P&I, defence cover, cargo insurance, and hull and machinery disputes. For casualty work, he features in mooring, berthing, and shipboard accidents, collisions, fires, capsize, incidents, sinkings, and limitation actions. He contributes to academia, lecturing on shipping and admiralty law as a university adjunct faculty.
 
Max Lim is a Senior Associate in the firm’s Shipping & International Trade Practice Group.
 
Contact Details
 
Kendall Tan / Max Lim
D +65 6232 0634/ 0698
F +65 6428 2073 / 2080
E kendall.tan@rajahtan.com/ max.lim@rajahtann.com

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