Admiralty, Shipping and Aviation Law
| Citation | (2015) 16 SAL Ann Rev 62 |
| Published date | 01 December 2015 |
| Date | 01 December 2015 |
| Author | TOH Kian Sing SC LLB (Hons) (National University of Singapore), BCL (Oxford); Advocate and Solicitor (Singapore). CHAN Leng Sun SC LLB (Malaya), LLM (Cambridge); Advocate and Solicitor (Malaya), Advocate and Solicitor (Singapore), Solicitor (England and Wales). Jack TEO Cheng Chuah LLB (Hons) (National University of Singapore), LLM (National University of Singapore), PGDip THE (National Institute of Education, Nanyang Technological University); Advocate and Solicitor (Singapore); Associate Professor (Retired), Nanyang Business School, Nanyang Technological University; Adjunct Lecturer, Department of Strategy and Policy, NUS Business School, National University of Singapore. |
2.1 The Singapore High Court and Court of Appeal handed down a total of four judgments on admiralty law in 2015.
The STX Mumbai [2015] 5 SLR 1
2.2 The Court of Appeal's decision in The STX Mumbai[2015] 5 SLR 1 (‘The STX Mumbai (CA)’) arose out of the plaintiff's appeal against Belinda Ang J's decision in The STX Mumbai[2014] 3 SLR 1116 (‘The STX Mumbai (HC)’) to strike out the claim on the grounds of legal unsustainability, to set aside the arrest and, further, for an inquiry into damages for wrongful arrest: The STX Mumbai (CA) at [23] and [26]. This part of the chapter only covers the admiralty law aspects of the Court of Appeal's decision.
2.3 The plaintiff bunker supplier had arrested the vessel, the STX Mumbai, to obtain security for its claim arising from a claim for an unpaid invoice for the supply of bunkers. The plaintiff alleged that an entity, STX Corporation, had entered into a bunker supply contract as agent for the defendant, the registered owner of the STX Mumbai. At the appeal, the defendant maintained that Ang J had been correct to strike out the plaintiff's claim notwithstanding the fact that it had taken the plaintiff's claim on agency at its highest, ie, that STX Corporation had acted as the defendant's agent in relation to the bunkers stemmed to the STX Mumbai, and that the defendant was also the person liable in personam for the price of those bunkers: The STX Mumbai (CA) at [8].
2.4 The plaintiff supplied the bunkers to the STX Mumbai on 18 May 2013: The STX Mumbai (CA) at [10]. Even though payment for the bunkers was due on 16 June 2013, the plaintiff issued the writ of summons and arrested the STX Mumbai on 14 June 2013, ie, two days earlier: The STX Mumbai (CA) at [18]. The plaintiff argued that the insolvency of STX Pan Ocean Pte Ltd (‘STX Pan Ocean’) and the financial difficulties of the STX group of companies (of which STX Corporation, STX Pan Ocean and the defendant were all a part) (‘STX Group of Companies’) had led the plaintiff to believe that the defendant would not be able to pay for the price of the bunkers, and was therefore in repudiatory breach of the bunker supply agreement: The STX Mumbai (CA) at [16] and [17].
2.5 In essence, the plaintiff claimed at the hearing below that the defendant's repudiatory breach could be established on two alternate grounds:
(a) first, that the defendant, having failed to make immediate repayment for the price of the bunkers following the plaintiff's letter of demand dated 13 June 2013, had renounced the bunker supply agreement; and
(b) alternatively, that it would have, in any event, been impossible for the defendant to make payment given the financial difficulties afflicting the STX Group of Companies: The STX Mumbai (CA) at [18].
2.6 On appeal, the plaintiff's arguments focused on the latter argument described above, ie, that it was impossible for the defendant to make payment for the bunkers stemmed: The STX Mumbai (CA) at [28]. The Court of Appeal proceeded to consider four issues, namely:
(a) Whether or not the plaintiff could rely on the doctrine of anticipatory breach notwithstanding that the bunker supply agreement was an executed contract.
(b) If so, whether or not the plaintiff's claim was still legally unsustainable, given that it was premised on the insolvency of STX Pan Ocean, ie, whether or not insolvency can never amount to an anticipatory breach.
(c) If the plaintiff succeeded in overturning Ang J's decision to strike out the claim, whether or not the arrest should nonetheless be set aside on the ground of material non-disclosure.
(d) Whether or not Ang J's finding of wrongful arrest, and her Honour's order for an inquiry into damages, should also be set aside: The STX Mumbai (CA) at [39].
As this section concerns the admiralty law aspects of The STX Mumbai (CA), the Court of Appeal's consideration of the first and second issues will be reviewed in ch 12.
2.7 As the sole premise of the court below to set aside the arrest was the striking out of the claim (see The STX Mumbai (HC) at [2], which the Court of Appeal overturned), the Court of Appeal held that the arrest would be upheld unless the defendant could show, as an independent ground for setting aside the arrest, that the plaintiff had failed to make full and frank disclosure of all material facts in the application for arrest: The STX Mumbai (CA) at [91]. In that regard, the defendant alleged that while the plaintiff had sought to rely on STX Corporation's failure to pay for bunkers stemmed to four other vessels, the plaintiff had failed to disclose at the arrest application that three of those vessels were, in fact, not owned by the defendant: The STX Mumbai (CA) at [92].
2.8 The Court of Appeal gave short shrift to the defendant's allegation. In so doing, the Court of Appeal considered that the arrest affidavit clearly demonstrated the plaintiff's belief that all the vessels to which it had supplied bunkers through STX Corporation were part of the STX Group of Companies, and that the latter's financial difficulties formed the basis for the plaintiff's belief that payment for the bunkers stemmed to STX Mumbai would not be forthcoming: The STX Mumbai (CA) at [92]. In any event, the Court of Appeal considered that the arrest affidavit had, in fact, disclosed that the defendant was indeed not the registered owner of the other three vessels: The STX Mumbai (CA) at [93] and [94].
2.9 The fourth issue which the Court of Appeal considered was whether or not damages for wrongful arrest could be excluded by the mere fact that the in rem claim had not been struck out: The STX Mumbai (CA) at [95]. The Court of Appeal rejected the plaintiff's contention that the mere fact that the in rem claim had not been struck out meant that it ‘followed as a matter of course’ that the arrest was not wrongful: The STX Mumbai (CA) at [95]. The Court of Appeal was of the view that evidence could emerge at trial which could point towards a finding that the arrest of the vessel had been ‘so unwarrantably brought, or brought with so little colour, or so little foundation, as to imply malice or gross negligence’: The STX Mumbai (CA) at [95].
2.10 This is the familiar test for wrongful arrest as set out in The Evangelismos(1858) 12 Moo PC 352; 14 ER 945 (‘The Evangelismos’), as reinterpreted by the Court of Appeal in The Vasiliy Golovnin[2008] 4 SLR(R) 994 (‘The Vasiliy Golovnin’) at [137]. The same test for wrongful arrest was affirmed and applied by Steven Chong J in The Xin Chang Shu[2016] 1 SLR 1096, which is reviewed below.
2.11 The High Court's decision in The Chem Orchid[2015] 2 SLR 1020 (‘The Chem Orchid’) arose out of the purported termination of a bareboat charterparty. In particular, the decision considers the question of whether or not, as a matter of Singapore law, physical redelivery of the vessel is required to bring a bareboat charter to an end, giving rise to the question of who would be the person liable in personam under s 4(4)(b)(i) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (‘the Act’) if the writ is issued prior to physical redelivery under a bareboat charterparty. Section 4(4)(b)(i) of the Act provides:
(4) In the case of any such claim as is mentioned in section 3(1)(d) to (q), where —
(a) the claim arises in connection with a ship; and
(b) the person who would be liable on the claim in an action in personam (referred to in this subsection as the relevant person) was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship,
an action in rem may (whether or not the claim gives rise to a maritime lien on that ship) be brought in the High Court against —
(i) that ship, if at the time when the action is brought the relevant person is either the beneficial owner of that ship as respects all the shares in it or the charterer of that ship under a charter by demise[.]
2.12 As with The STX Mumbai (CA), this part of the chapter will consider only the admiralty law aspects of The Chem Orchid.
2.13 The defendant, Han Kook Capital Co Ltd (‘HKC’), the registered owner of the Chem Orchid, agreed to bareboat charter the Chem Orchid to Sejin Maritime Co Ltd (‘Sejin’) for a period of 108 months: The Chem Orchid at [7]. The bareboat charterparty, which was entered into on 1 February 2010, provided that in the event of any disagreement as to its interpretation, Korean law would apply. In December 2010, the defendant established a company, HK AMC Co Ltd (‘HKA’), to recover bad debts owed to the defendant. The defendant and HKA subsequently executed an asset transfer agreement (‘ATA’), pursuant to which the defendant agreed to sell credits (including but not limited to the credits under the bareboat charterparty) which it had obtained in the course of its business to HKA, at a fair price: The Chem Orchid at [10]. Pursuant to a notice of credit transfer (‘NCT’), HKC informed Sejin of its arrangement with HKA: The Chem Orchid at [12].
2.14 Sejin subsequently failed to make hire payment under the bareboat charter for six consecutive months, which led HKA (and not HKC) to give Sejin notice of early termination of the bareboat charter on account of HKA's concerns about Sejin's ability to perform its obligations under the bareboat charterparty (‘Early Termination Notice’): The Chem Orchid at [14]. Pursuant to the terms of the Early Termination Notice, HKC demanded, inter alia, that Sejin make immediate payment of the outstanding sums under the bareboat charterparty, failing which HKA would ‘retrieve’ the Chem Orchid: The Chem Orchid at [15].
2.15 Even though HKC took the view that the Early Termination Notice had terminated the bareboat charterparty, Sejin failed to physically redeliver the Chem Orchid to HKC and/or to HKA, and continued...
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