Admiralty, Shipping and Aviation Law
| Author | TOH Kian Sing SC LLB (Hons) (National University of Singapore), BCL (Oxford); Advocate and Solicitor (Singapore). CHAN Leng Sun LLB (Malaya), LLM (Cambridge); Advocate and Solicitor (Malaya), Advocate and Solicitor (Singapore), Solicitor (England and Wales). Jack TEO Cheng Chuah LLB, LLM (National University of Singapore), PGDipTHE (National Institute of Education, Nanyang Technological University), Advocate and Solicitor (Singapore) Associate Professor, Nanyang Business School, Nanyang Technological University. |
| Citation | (2006) 7 SAL Ann Rev 39 |
| Date | 01 December 2006 |
| Published date | 01 December 2006 |
2.1 2006 was a relatively quiet year in so far as decisions on admiralty law were concerned. There were only four decisions handed down by the courts, in each of which issues of admiralty law were only raised peripherally.
2.2 It is now settled law after the Court of Appeal decision of Swift-Fortune Ltd v Magnifica Marine SA[2007] 1 SLR 629 (‘Swift-Fortune’) that s 12(7) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (‘IAA’) does not vest the Singapore courts with any statutory power to grant Mareva injunctions in aid of foreign arbitration. This decision puts to rest the dichotomy of views expressed by Judith Prakash J and Belinda Ang Saw Ean J respectively in the first instance decisions of Swift-Fortune Ltd v Magnifica Marine SA[2006] 2 SLR 323 and Front Carriers Ltd v Atlantic & Orient Shipping Corp[2006] 3 SLR 854 (‘Front Carriers’) as to whether such a power exists. The significance of these decisions is dealt with elsewhere in this issue of the Annual Review.
2.3 Within the compass of admiralty law, these decisions are unanimous on one point. They confirm that s 7(1)(a) of the IAA contemplates that where the mandatory stay of an action is ordered pursuant to s 6 of the IAA, the security furnished to avert an arrest or to procure a release on the arrested vessel itself may be retained in satisfaction of any award that may be made in the arbitration proceedings, irrespective of whether the arbitration is taking place in Singapore or some other jurisdiction (see Swift-Fortune Ltd v Magnifica Marine SA[2006] 2 SLR 323, on appeal, Swift-Fortune (supra para 2.2) and Front Carriers (supra para 2.2)). Thus, such a statutory power can be exercised in aid of a foreign arbitration to ensure that there is security against which the potential award can be enforced. (For completeness, it should be pointed out that s 7(1)(b) of the IAA empowers the court to order that alternative security be furnished for the satisfaction of the arbitration award.) The explanation for the apparent inconsistency between the absence
of any power to grant a Mareva injunction in aid of foreign arbitration under s 12(7) of the IAA and the power under s 7(1) is that the latter power stemmed from the legislative implementation of a specific recommendation of the Law Reform Committee”s Report titled, Report of the Sub-Committee on Review of Arbitration Laws (see paras 46 and 48). The Committee opined that a provision allowing ships to be arrested under the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) would not give rise to extraordinary hardship to shipowners as such arrests were relatively widespread. That may be so but apart from legislative history, it is respectively submitted that there appears not to be any policy justification for this distinction. Although the principles and requirements pertaining to the reliefs of Mareva injunction and arrest are indisputably different, there is, in functional terms, considerable similarity between the two types of relief in so far as they are a means to ensure or enhance the possibility that there are assets belonging to the respondents against which the arbitration award may be satisfied.
2.4 The Court of Appeal in Swift-Fortune (at [57]) considered the situation where the power under s 12(7) of the IAA might be exercised to be distinct from those situations under ss 6 and 7. Interestingly, it reasoned that the enactment of s 7 rendered it unlikely that Parliament intended s 12(7) to apply to foreign arbitration for if s 12(7) had such a wide effect, there would not have been the need for s 7 to begin with. With respect, such a reasoning appears to overlook the fact that s 7 of the IAA is traceable to s 26 of the UK Civil Judgment and Jurisdiction Act 1982 (c 27) (see The Sunwind[1998] 3 SLR 954 at [7]—[9]). The enactment of s 7 is not owed to or explicable by a restrictive reading of s 12(7). Its legislative and conceptual roots (the latter taking into account the different requirements of arrest and Mareva injunction) are different.
2.5 One important dictum on s 7 emerges from the Front Carriers decision (supra para 2.2). Ang J observed (at [28]) that s 7 reflects a distinction between the choice of forum for determination of the merits of the dispute and the right to security under the High Court (Admiralty Jurisdiction) Act. The latter can still be invoked notwithstanding the presence of an arbitration agreement. Section 7 ‘effectively does away with the Rena K test’ (at [28]). The Rena K[1979] QB 377 restricts the court”s power to order retention of security or the provision of alternative security to circumstances where it is shown that the eventual arbitration award is unlikely to be satisfied by the shipowner because of its parlous financial condition. In that event, the claimant is entitled to thereafter lift the stay on the action in rem and the security so retained or alternative security so furnished can be used
to satisfy the judgment in rem. The Rena K principle was in its time an innovative way out of the difficulty that bedevilled the English courts which were constrained by the principle that admiralty jurisdiction should not be exercised (by way of an arrest) for the purposes of obtaining of security for an arbitration award. It is not without difficulties, though (see Toh Kian Sing, Admiralty Law & Practice (Butterworths, 1998) at pp 498—499). Its usefulness effectively ended when s 26 of the UK Civil Judgment and Jurisdiction Act 1982 was introduced. To the extent that s 7 of the IAA is based on s 26 of the UK Act, it is, with respect, clearly right to rule that the former provision does away with the criterion in The Rena K.
2.6 The Vasiliy Golovnin [2006] SGHC 188, a decision of Tan Lee Meng J, arose out of an appeal against the decision of the assistant registrar to refuse leave to admit a further affidavit on the law of Togo.
2.7 The background to this decision may be summarised as follows. The plaintiffs, two banks (‘the Banks’), that financed a cargo of rice loaded onto the Chelyabinsk, arrested the Vasiliy Golovnin, a sister vessel of the Chelyabinsk, in Singapore for alleged breach of the contract of carriage contained in or evidenced by the bills of lading, of which the plaintiffs alleged they were the holders. Both the Vasiliy Golovnin and the Chelyabinsk were at the material time owned by Far Eastern Shipping Company PLC (‘FESCO’). The bills of lading named Lome in Togo as the port of discharge.
2.8 FESCO had chartered the Chelyabinsk to Sea Transport Contractors Ltd...
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