Admiralty and Shipping Law

Published date01 December 2000
Date01 December 2000
AuthorKENNETH MICHAEL TAN WEE KHENG, SC LLB (NUS), Advocate & Solicitor (Singapore) TOH KIAN SING LLB (NUS), BCL(Oxon), Advocate & Solicitor (Singapore)
Citation(2000) 1 SAL Ann Rev 1
Beneficial ownership

Of the 3 most recent decisions touching on this point, the most important is undoubtedly The Sangwon[2000] 1 SLR 321. It raises the question of how to determine beneficial ownership of vessels owned by communist states which by virtue of socialist political ideology, may not have any notion of private ownership of assets.

The facts of the case fall within a narrow compass. The “Sangwon” was arrested for a claim which arose in connection with loss of a cargo carried on board the “Dong Myong” on the basis that the “Sangwon” like the “Dong Myong” was owned by the People”s Republic of Korea and so was a vessel against which admiralty jurisdiction could be invoked under s 4(4)(b) of the Singapore High Court (Admiralty Jurisdiction) Act (Cap 123, 1985 Ed).

The arrest of the “Sangwon” was set aside by the Court of Appeal, which found as a fact that the beneficial owners of the “Sangwon” were an entity called Yuson Shipping Co Ltd which was a separate and distinct legal entity from Korea Dongmyong Shipping Co, who were the beneficial owners of the “Dong Myong”.

In arriving at such a conclusion, the Court of Appeal had to evaluate the affidavit evidence on the law of North Korea as provided by the experts of both parties. The evidence of the respondents” i.e. plaintiffs” expert was rejected because it was inconsistent with the provisions of the Constitution of North Korea.

The decision is noteworthy in two respects. First, the decision effectively turned on the quality and credibility of evidence of foreign law put before the court. Secondly, it demonstrates that an appellate court, deciding a question of foreign law which is a factual issue, is in no worse a position than the court below, even if the issue arises in the context of an interlocutory application. The decision has somewhat mitigated the vulnerability of ships owned by entities in communist states to an arrest, at least in Singapore.

The issue of state owned vessels resurfaced in the decision of The Ivanovo (Admiralty in Rem 334/1999, unreported judgment dated 15.2.2000). Here, the State of Ukraine intervened to claim as beneficial owners of the vessel, “Ivanovo”, which according to the ship”s certificate, was owned by Azov Shipping. The certificate somewhat ambiguously also indicated that the vessel was the property of the State of Ukraine.

Not unlike The Sangwon, the decision turned on the nature and credibility of the evidence adduced to prove (or refute) beneficial ownership. The defendants and intervenors referred to terms in what was akin to a time charter (described as a lease agreement) as well as provisions of Ukrainian law according to which assets leased by the State would nevertheless be owned by the State. Accordingly, they were able by the evidence adduced, to avoid the contrary result reached in the slightly earlier case of The Kapitan Temkin[1998] 3 SLR 254 which also concerned a Ukraine flagged vessel that was held to be owned by the Black Sea Shipping Co, a State-run corporate entity, as opposed to the State itself.

The plaintiffs, by contrast, adduced inconclusive evidence on Ukraine law, relying instead on the ship”s certificate of registration as conclusive evidence of ownership being vested in Azov Shipping. The overwhelming importance the plaintiffs sought to attach to the certificate of ownership was not accepted by the court, which is not surprising, as a long line of Singapore decisions starting with The Opal 3[1992] 2 SLR 585 to The Kapitan Temkin[1998] 3 SLR 254 has made it clear that the certificate of registration only offers prima facie but not conclusive evidence of beneficial ownership.

Yet another example of beneficial ownership of the vessel being the bone of contention is the decision of The Kay, ex Vladimir Chivilikhin[2001] 1 SLR 756. The contest in The Kay was for the balance of the proceeds of sale lying in court between two parties who each claimed to be the beneficial owner of the vessel. The court ruled in favour of party F, a creditor to whom party V (which later became insolvent) had transferred the vessel in satisfaction of a loan and in whose name, and to V”s knowledge, the vessel was provisionally registered. Furthermore, F had contracted with shipyards and insurers in respect of repairs and insurance for the vessel. More importantly, V had admitted in court documents filed in related Korean proceedings that the vessel had been transferred to F, which fact was re-affirmed in the liquidation proceedings of V. Such evidence was the sort that would warrant summary judgment being given. V could not come up with any evidence in response except a mere allegation that the transfer document was forged.

Although unlike the decisions discussed earlier, this decision does not involve an ownership dispute in the context of s 4(4) of the High Court (Admiralty Jurisdiction) Act, the primary evidence considered by the court remains similar to cases on s 4(4) with regard to registration and transfer

documents. In addition, the court also looked at evidence adduced in foreign proceedings which must surely strike a cautions note with shipowners who expect to have ownership disputes fought in various jurisdictions. Consistency in the position taken in different jurisdictions may be all important.

Stay on account of jurisdiction clauses

The decisions of The Jian He[2000] 1 SLR 8 and The Hung Vuong-2[2000] 1 SLR 737 (HC), Civil Appeal 135/1999, unreported judgment dated 11.5.2000 (CA) are factually very similar. They both involve claims for misdelivery of cargo either without production of bills of lading or against production of forged bills of lading. Attempts were then made by carriers to stay the proceedings commenced in Singapore in favour of another forum (China in the case of The Jian He and Vietnam in the case of The Hung Vuong-2) by virtue of an exclusive jurisdiction agreement contained in the bill of lading. In both decisions, the stay application was refused.

Central to the outcome in both cases is the fact that the fact of delivery without bills of lading was either not disputed or could clearly be established on the evidence. In the circumstances, the Court of Appeal in The Jian He and (upholding the decision of Amarjeet Singh JC) in The Hung Vuong-2 held that there was no dispute to be referred to the agreed foreign jurisdiction for adjudication. A mere unsubstantiated denial of the entitlement of the plaintiffs to sue would not suffice. The defendant must be able to raise a genuine dispute to the claim. Otherwise, with the fact of misdelivery not disputed or capable of being disputed, there was no useful purpose in bringing the matter to the agreed forum. The stay application was motivated by purely tactical considerations, which the courts frown upon.

The Singapore Court of Appeal in The Jian He also enunciated a number of important principles relating to jurisdiction agreements. The first relates to the question of construction of the exclusive jurisdiction clause, which is governed by the proper law of the contract and if that is not proved, by Singapore law as lex fori. As a matter of construction, the clause continues to apply even if the loss took place after the discharge of the cargo and cannot be avoided by having the cause of action framed in tort (rather than contract). So long as the claim in tort has a sufficiently close connection with the underlying contract of carriage, the jurisdiction clause is applicable.

Another issue which the court considered is the weight to be accorded to an accrued time bar in a stay application. Even if the action had become time barred in the agreed forum, a plaintiff can expect little sympathy from the courts unless he can explain his omission to preserve time in the agreed forum by. say. issuing a protective writ. If not, his prejudice is self-induced. The Singapore position is similar to the English position on

this issue. The plaintiffs in this case made a feeble attempt (without even affidavit evidence) to explain the omission by referring to the defendants” various requests for documents as ruses to delay matters until the time bar had lapsed. Although this persuaded the judge below, the Court of Appeal was unimpressed. Neither did the argument, that the stay application could have been initiated before the time bar had accrued, sway the court. Solicitors for the defendants do not come under any duty to warn their opponents of approaching time bars. On the related issue of whether there was inordinate delay before the stay application was issued, it was held that even where inordinate delay was shown, it did not follow that the stay application must be refused, unless the defendants” conduct evinced an intention to waive the jurisdiction agreement. Acceptance of service of process, while amounting to submission to jurisdiction, does not evince an intention to waive the jurisdiction clause.

The Hung Vuong-2 similarly concerned delivery of cargo without production of bills of lading, which could hardly be disputed (though the carriers did attempt to argue otherwise) because of a cargo receipt signed by both the master and the end receiver (who was not the bill of lading holder). The defendants attempted to stay the Singapore proceedings in favour of Vietnamese courts, relying on a jurisdiction clause which required all disputes to be referred to courts of the carriers” place of business, which was Vietnam.

After comparing and evaluating the experts” evidence on Vietnamese law which, with respect, Amarjeet Singh JC erroneously characterised as a question of law, his Honour and the Court of Appeal preferred the evidence of the plaintiffs” expert. An issue of Vietnamese law which arose was whether the plaintiffs, being holders of bills of lading which were endorsed in blank by the shipper, could sue on the bills of lading. For this purpose, both parties adduced expert evidence on Vietnamese law...

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