Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener)

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 04 December 2015
• Neutral Citation: [2015] SGHC 311
• Plaintiff Counsel: Vivian Ang and Ho Pey Yann (Allen & Gledhill LLP)
• Docket Number: Originating Summons No 625 of 2015
• Date: 04 December 2015
• Hearing Date: 04 August 2015,05 August 2015,03 August 2015,31 July 2015
• Subject Matter: Court's power,Interlocutory order or direction,Arbitration,Evidence of property preservation
• Year: 2015
• Citation: [2015] SGHC 311
• Defendant Counsel: and Edgar Chin Ren Howe (Incisive Law LLC),Mahmood Gaznavi s/o Bashir Muhammad and Leow Zi Xiang (Mahmood Gaznavi & Partners),Tan Wee Kong and Poh Ying Ying Joanna (Legal Solutions LLC)
• Court: High Court (Singapore)
• Published date: 11 December 2015

Belinda Ang Saw Ean J: Introduction

This Originating Summons No 625 of 2015 (“OS 625”) concerned the court’s powers under s 12A of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the IAA”). The purpose of the sale application in OS 625 was to preserve the value of a cargo of 77,000 mt of Indonesian steam coal (“the Cargo”) as an interim measure in aid of arbitration between the relevant parties in Singapore under the auspices of the Singapore Chamber of Maritime Arbitration Rules.

The situation at the time of the application was as follows. For the plaintiff, Five Ocean Corporation (“FOC”), the time had come to make the sale application which was fully supported by Corrina Maritime Inc (“CMI”), the owner of the vessel Corinna. For FOC, there was concern that its alleged contractual lien would be worthless as security seeing that the total amount of the unpaid freight together with detention and other expenses accruing and due from the defendant, Cingler Ship Pte Ltd (“Cingler”) could exceed the value of the Cargo presently on board the Corinna. For FOC and CMI, the condition of the Cargo was a source of concern. There were reports of visible signs of heating damage. OS 625 was also taken out at a time when it was thought necessary to preserve the safety of the Corinna and her crew. The Cargo, vessel and crew had been kept in international waters off the last nominated discharge port for months because of the on-going dispute between the parties concerned and earlier delays by Cingler in the nomination of a legitimate discharge port. Discharge of the Cargo in the last nominated discharge port was not a viable prospect in the absence of local legal entitlement to exercise a lien over the Cargo in India. An Indian law expert, Mr Amitava Majumdar, opined that CMI and/or FOC as the time charterer of the Corinna would lose their lien rights if the Corrina proceeded to an Indian port for discharge of the Cargo. Furthermore, even if after discharge, CMI and/or FOC continued to legally have a right of lien, it would be impractical to maintain their right of lien due to commercial and physical constraints at the Indian port. Hence, the lien was exercised over the Cargo outside the territorial waters off the last nominated port, Paradip on 16 June 2015.¹

Against that background, the interveners, PT Commodities & Energy Resources (“CER”), wanted an adjournment of the hearing of OS 625 to, inter alia, allow it time to negotiate the sale of the Cargo to one “Adani group of companies”, and to demonstrate sincerity, Mr Bazul Ashhab who represented Adani Global (an interested buyer of the Cargo) appeared at the hearing on 3 August 2015 to support CER’s application for an adjournment that was strenuously opposed by the other interested parties in court citing months of delay on the part of CER and the urgency of the application as the main reasons.

It was apparent to me that there were a number of very substantial obstacles in the way of resolving the issue of the contractual lien in the near future. Up to the time fixed for hearing, the court was not told and, presumably, there had not been any offers of any specific amount in relation to the unpaid freight, detention and other expenses that were accruing. At no time did CER present the relevant bill of lading to CMI, for delivery of the Cargo. Neither did CER resort to O 29 r 6 of the Rules of Court (Cap 322 R 5, 2014 Rev Ed) (“2014 ROC”) to obtain release of the Cargo that was subject to a contractual lien exercised by CMI for the benefit of FOC. CER’s ability to freely sell the Cargo at that point in time was doubtful seeing that there was a worldwide freezing order granted by the High Court of England and Wales on 3 July 2014 over CER’s assets in an unrelated dispute which it had with another entity named Akamas Navigation Limited and a vessel called the Aeolian Glory. In light of the English Court’s freezing order, a corresponding injunction was granted by Andrew Ang J on 6 July 2015 over CER’s assets in Singapore. The upshot of all these considerations is that the adjournments sought by CER on two separate occasions were not granted and the sale application proceeded to hearing.

Although OS 625 was made ex parte, the hearing before me proceeded inter partes. Cingler did not oppose FOC’s application. The owner of Corinna, CMI, also supported FOC’s sale application. CMI confirmed in affidavit that it would comply with any order made by this court so as to facilitate the court’s directions even though it was a non-party.² This cooperation is obvious since it would be in CMI’s business interest to free the vessel of the Cargo so that it could be deployed again. In addition, crew members whose employment contracts had expired would have to be taken off the vessel and repatriated.

On 5 August 2015, I allowed FOC’s application to sell the Cargo and made the following orders: The net proceeds of the sale of the Cargo are to be paid into court pending further order from the arbitral tribunal. Cingler and CER are to provide FOC’s solicitors with any documents in their possession, custody or control which may be required to facilitate the sale of the Cargo. The sale of the Cargo and any other steps taken in connection therewith and in and about the preservation, maintenance, sale and/or disposal of the Cargo shall be effected without prejudice to all existing claims, liens (including but not limited to FOC’s lien over the Cargo), charges, encumbrances and rights over or to the Cargo (collectively referred to as “All Claims”), all of which rights are expressly reserved, and the net proceeds shall stand in the place of the Cargo, with All Claims being transferred to the net proceeds.

CER has appealed against my Order of 5 August 2015. I now set out the reasons for my decision.

The charterparty chain

The charterparty chain was as follows: The plaintiff, FOC, time chartered the Corinna from her owner, CMI under a time charterparty dated 19 March 2015 (“the March time charter”). The March time charter on a New York Produce Exchange 1946 time charterparty form (the NYPE 46 form) with additional rider clauses was “for [a] one time charter trip of about 25/30 days without guarantee via Indonesia to East Coast [sic] India and via Singapore for bunkers with bulk coal”³. Clause 60 stated that the parties agreed to use and issue only the CONGENBILL 1994 bill of lading form during the currency of the March time charter. FOC voyage chartered the Corinna to the defendant, Cingler, on 19 March 2015 on a Gencon 1994 form with additional rider clauses (“the head voyage charterparty”). Clause 8 is the lien clause (see [10] below). The head voyage charterparty provided for disputes to be referred to arbitration in Singapore, with English law to apply. Cingler voyage chartered the Corinna to the intervener, CER. No copy of this sub-charter was produced in court.

The head voyage charterparty

Under the head voyage charterparty of 19 March 2015, the Cargo was to be loaded in Indonesia for discharge in India. Cingler was to declare, at its option, before the vessel passed Singapore, the discharge port from the list of named ports on the east coast of India: Haldia, Paradip, Vizag, Gangvaram, Dharma, Ennore and Kakinada.

As stated, the head voyage charterparty contained an arbitration clause that stipulated the seat of arbitration of any dispute to be in Singapore, with English law to apply. Clause 8 is the lien clause (hereinafter referred to as “the Lien Clause”) and it reads as follows:⁴

The owners shall have a lien over the cargo and on all sub-freights payable in respect of the cargo for freight, deadfreight demurrage claims for damages and for all other amounts due under this Charter Party including costs of recovering the same.

Although the head voyage charterparty was not signed, Mr James Baek (“Mr Baek”), the Assistant Manager of FOC, confirmed in his affidavit that the charterparty represented the terms of the agreement that was entered into between FOC and Cingler. For the purposes of OS 625, Cingler did not contradict Mr Baek on this point.

Both the March time charter and the head voyage charterparty provided for English law as the governing law.

Cingler’s sub-voyage charter with CER

It was not disputed that Cingler entered into a sub-voyage charter with CER and that the sub-voyage charterparty was not produced in court. Counsel for Cingler, Mr Joseph Tan (“Mr Tan”), confirmed that the sub-voyage charterparty adopted the Gencon 1994 Form. Mr Syed Zia Ur Rehman (“Mr Rehman”), Chief Executive Officer of CER, exhibited in his affidavit a draft fixture note for the hire of the Corinna. The contracting parties in the draft fixture note were identified as CER and International Maritime & Trading Pte Ltd (“IMT”), a company which seemed to be related to Cingler. The draft fixture note also provided for English law to be the governing law. In these circumstances, the parties were content to proceed on the basis that English law governed and applied to the question of whether FOC possessed a contractual right of lien over the Cargo. This threshold issue was the only issue raised by CER in the dispute before me.

Gencon 1994 bill of lading form dated 7 April 2015 and notice of lien for unpaid freight etc

On or about 24 March 2015, the Corinna arrived at the Indonesian port of Samarinda, East Kalimantan to load the Cargo. Loading of the Cargo commenced on 28 March 2015 and was completed on 7 April 2015. A set of Gencon 1994 form bill of lading was issued on 7 April 2015 and released to CER on 8 April 2015 (“the Bill of Lading”). The Bill of Lading named CER as the shipper and Adani Enterprises Ltd (“Adani Enterprises”), an Indian company, as the Notify Party. The Bill of Lading was consigned “To Order” and was signed by the load port agent, PT Bahari Eka Nusantara (“the Agent”) as agent “for and on behalf of the...