Emilia Shipping Inc v State Enterprise for Pulp and Paper Industries

• Jurisdiction: Singapore
• Judge: Chan Sek Keong J
• Judgment Date: 01 March 1991
• Neutral Citation: [1991] SGHC 36
• Date: 01 March 1991
• Subject Matter: Abuse of process,Whether shipowner had right to enforce claim for freight,Freights and liens,Bases of jurisdiction,Right of shipowner to on-carry cargo to another port,s 4(8) High Court (Admiralty Jurisdiction) Act (Cap 123),Whether court had power to order sale of movable property which was subject matter of plaintiffs' claim,Admiralty and Shipping,Bills of lading,Cargo within the jurisdiction,O 29 r 4 Rules of the Supreme Court 1970,Action in personam,Order for sale of cargo to enforce shipowner's claim for freight,Order for sale of cargo,s 16 Supreme Court of Judicature Act (Cap 322),Admiralty jurisdiction and arrest,Conditional appearance
• Docket Number: Admiralty in Personam No 653 of 1990
• Published date: 09 February 2004
• Defendant Counsel: Sin Lye Kuen (Drew & Napier)
• Court: High Court (Singapore)
• Plaintiff Counsel: Ajaib Haridass (Haridass Ho & Partners)

The defendants, who are an Iraqi state organization with no place of business in Singapore, have applied to set aside this action and also two ex parte orders of court, inter alia, on the ground that the High Court has no jurisdiction in the matter.

The plaintiffs are the owners of the vessel `Ocean Jade`. The vessel was by a charterparty dated 17 May 1990 let out to Meridian Shipping Inc (Meridian), a US corporation, for a single charter from the US Gulf to the Red Sea and the Persian Gulf. Among the goods loaded on the vessel was a cargo of bleached and unbleached wood pulp (the cargo) for which a prepaid bill of lading was issued by Meridian to the order of the Rafidain Bank, Baghdad, as the consignee and the defendants as the notifying party. Meridian ran into financial difficulties and repudiated the charterparty on 6 July 1990 after failing to pay one instalment of charter-hire. Meridian is now under Chapter 11 protection.

The plaintiffs terminated the charterparty on 9 July 1990 and took over the running of the vessel which was then at Suez en route to the Persian Gulf. She discharged cargo at Aqaba, Abu Dhabi, Bahrain and Damman. After the discharge at Damman, she was about to proceed to Um Qaser/Basrah to discharge the cargo when Iraq invaded Kuwait on 2 August 1990. On the same day, the Security Council of the United Nations passed a resolution (No 660) condemning the invasion and calling upon Iraq to withdraw from Kuwait immediately and unconditionally. On 7 August 1990, the Security Council reaffirmed Resolution 660 and voted to impose economic sanctions against Iraq. The relevant portions of the Security Council`s resolution (No 661), for the purpose of this action, are as follows:

3 decides that all states shall prevent:

...

c the sale or supply by their nationals or from their territories or using their flag vessels of any commodities or products, including weapons or any other military equipment, whether or not originating in their territories but not including supplies intended strictly for medical purposes and, in humanitarian circumstances, foodstuffs, to any person or body in Iraq or Kuwait or to any person or body for the purposes of any business carried on in or operated from Iraq or Kuwait, and any activities by their nationals or in their territories which promote or are calculated to promote such sale, or supply or use of such commodities or products;

4 decides that all states shall not make available to the government of Iraq or to any commercial, industrial or public utility undertaking in Iraq or Kuwait, any funds or any other financial or economic resources and shall prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to that government or to any such undertaking any such funds or resources and from remitting any other funds to persons or bodies within Iraq or Kuwait, except payments exclusively for strictly medical or humanitarian purposes, and, in humanitarian circumstances, foodstuffs;

5 calls upon all states, including non-members of the United Nations, to act strictly in accordance with the provisions of this resolution notwithstanding any contract entered into or licence granted before the date of this resolution.

On the same day, the United States also imposed a naval blockade of Iraqi ports in order to implement the Security Council resolution.

On 9 August 1990, the plaintiffs` English solicitors telexed the defendants and the Rafidain Bank that because of the situation in the Gulf which might expose the vessel and the cargo to damage or seizure or hostile action, and also that it would be illegal for the plaintiffs to take the cargo to its destination, the vessel would not proceed to Um Qaser or Basrah but to another safe and convenient port. On 13 August 1990, the defendants telexed their reply that the cargo should be discharged at Aqaba to the new named beneficiary. On 14 August 1990, the solicitors replied that the plaintiffs could not agree because it was illegal and might risk confiscation of the vessel and the cargo plus criminal proceedings against the plaintiffs and the crew. On 16 August 1990, the defendants replied and suggested the cargo be discharged, if possible at Aqaba, or at Tunis or in Libya. The defendants repeated their requests many times on the days following but on 20 August 1990, the plaintiffs` solicitors again rejected these requests. On 28 August 1990, the solicitors informed the defendants that the cargo had been discharged in Singapore.

There is affidavit evidence in these proceedings that the government of Panama issued a directive on 9 August 1990 implementing the Security Council resolution No 661. It would appear that the plaintiffs` decision to reject the defendants many requests was based primarily on this directive as the vessel was then flying the Panamanian flag. There is also affidavit evidence before me that the plaintiffs` decision to discharge the cargo in Singapore was made as a result of advice given by their English solicitors, after they had made inquiries in 14 countries, viz India, Pakistan, Singapore, Bangladesh, United Arab Emirates, Egypt, Cyprus, Greece, Thailand, South Africa, Malta, Mozambique, Tanzania and Sudan, on the facilities in these countries with respect to the discharge, storage and protection of the cargo and also the applicable laws relating to bills of lading, liens and the storage and sale of cargo. The plaintiffs were advised that `only Singapore offered reliable and secure discharge and storage facilities at a reasonable cost, free of exchange control, and a legal environment which would fairly and independently enforce both parties` rights within a reasonable time.` The vessel was accordingly ordered to Singapore where it discharged the cargo on 20 August 1990. It has since been stored in a PSA warehouse for which storage charges are running at about $50,000 a month.

On 27 August 1990, the plaintiffs commenced an Admiralty Action in Rem No 442/90 against the owners of the cargo. The claim was for freight, back freight and expenses incurred in connection therewith. The claim for freight was made even though the bill of lading was expressed to be prepaid on the ground that the bill was issued even before the cargo was loaded which, the plaintiffs have alleged, Meridian had no power to do. The other claims were made under the terms of the bill of lading and for storage charges but do not require any decision in this application. These claims are disputed.

On 29 August 1990, the cargo was arrested. On 5 October 1990, the plaintiffs obtained judgment in default for US$1,258,409.73. On 8 October 1990, and 15 October 1990, the Sheriff advertised the sale of the cargo. On 23 October 1990, the defendants objected to the sale of the cargo. On 25 October 1990, the Sheriff advised that there were 11 bids for the cargo and the two highest bids were $5,456,000 and $5,400,000. The defendants continued to object to the sale but refused to provide security. On 13 November 1990, the defendants applied to court to set aside the order of arrest on the ground that the High Court had no admiralty in rem jurisdiction in respect of claims for freight against cargo. Judgment has been reserved on this application. [The judgment of Karthigesu J has been delivered. See The Ocean Jade at p 385.]

To provide for any adverse eventuality, the plaintiffs obtained leave to commence the present action on 13 November 1990 and to serve the writ out of the jurisdiction. The defendants` solicitors did not respond to the plaintiffs` solicitors` request to accept service. On 16 November 1990, the plaintiffs applied ex parte and on 17 November 1990 obtained, inter alia, an order to sell the cargo to the bidder for $5,456,000. On 20 November 1990, the defendants entered conditional appearance and applied to court to stay the ex parte order of 17 November 1990. The application was granted on 27 November 1990, pending the present application of the defendants made on 22 November 1990 to set aside the action and the orders of court of 13 November 1990 and 17 November 1990. There is also before me an application by the plaintiffs to set aside the stay of execution.

Jurisdiction

The primary ground of the defendants` application to set aside the present action is that the High Court has no jurisdiction in the matter. The argument is based on s 4(8) of the High Court (Admiralty Jurisdiction) Act (Cap 123). Section 4 of (Cap 123) provides as follows:

(1) Subject to s 5, the admiralty jurisdiction of the Court may in all cases be invoked by an action in personam.

(2) The admiralty jurisdiction of the Court may in the cases mentioned in s 3(1)(a) to (c) and (r) be invoked by an action in rem against the ship or property in question.

(3) In any case in which there is a maritime lien or other charge on any ship, aircraft or other property for the amount claimed, the admiralty jurisdiction of the Court may be invoked by an action in rem against that ship, aircraft or property.

(4) In the case of any such claim as is mentioned in s 3(1)(d) to (q), being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of the action arose, the owner or charterer of, or in possession or in control of, the ship, the admiralty jurisdiction of the Court may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against -

(a) that ship, if at the time when the action is brought it is beneficially owned as respects all the shares therein by that person; or

(b) any other ship which, at the time when the action is brought, is beneficially owned as aforesaid.

(5) In the case of a claim in the nature of towage or pilotage in respect of an aircraft, the admiralty...