Citation(2019) 31 SAcLJ 72
Published date01 December 2019
Publication year2019
Date01 December 2019
I. Introduction

1 An arrested ship can be sold either by way of a private treaty or by an appraisement and sale via public auction. In both England and Singapore, the latter option is almost always chosen because an appraisement and sale via public tender is a reliable method of fetching the highest possible price of the ship for the benefit of all claimants.1 In fact, in Singapore, the duo decisions of The Turtle Bay2 and The Sea Urchin3 have emphasised that “powerful special features or special circumstances” have to be identified before a court is prepared to make an order for a private sale.4 Therefore, it is extremely uncommon for a ship to be sold via a private sale.

2 The appraisement and sale via a public auction is the likely mode of sale for an arrested ship in Singapore. The Sheriff of Singapore (“the Sheriff”) plays an active role in ensuring that the procedural steps for the appraisement and sale of a ship are properly taken.5 Such steps include, inter alia, the appraisement of the ship, the lodging of advertisements, the invitation of bids, as well as the acceptance of bids

from the public.6 The entire sale process is administered by the Sheriff and the courts and takes the form of a public auction where bids have to be manually submitted in a sealed envelope to the Sheriff's office located in the courts.7 Successful bidders will receive written notifications prompting them to make full payment and to take delivery of the ship.

3 Interestingly, unlike the public auction in Singapore, the Chinese courts have embarked on a revolutionary process of auctioning seized properties on a consumer-to-consumer (“C2C”) website called Taobao. C2C websites like Taobao are not operated by the courts but by third parties. They facilitate C2C trade by providing a platform for small businesses, entities and individual entrepreneurs to peddle items, chattels or properties via an “online store”. In this regard, the Guangzhou Maritime Court has made headlines in early 2017 by selling a Singapore registered ship, “Varada Blessing”, on Taobao.8 According to news sources, the Guangzhou Maritime Court is a vendor registered on Taobao and it placed “Varada Blessing” on sale following an admiralty dispute. The listing on Taobao drew 33,000 viewers online and received 19 offers from six bidders. “Varada Blessing” was eventually sold for S$16.7m.

4 The use of Taobao as a platform for judicial sales has gained much traction in China, resulting in a specialised Taobao website being created for the judicial sales managed by the Chinese courts.9 The Chinese courts' reliance on the Taobao platform has been overwhelming, with more than 120 courts in Guangdong having registered to sell seized properties online.10 The main steps involved in an online judicial sale in China are arguably similar to an “offline” sale in Singapore. In both situations, the ship to be sold is advertised, bids are accepted, the bids are reviewed and matched against one another, and the highest bidder wins. Unless any bid reaches the reserve price,

the ship is barred from being sold11 and the auction process is repeated. Notwithstanding the above, there are two cursory differences. First, the online judicial sale in China is virtually paperless as the sale takes place on the Internet via an online platform. Unlike the Singapore procedure, no written bids or deposits are physically submitted to the courts. Second, the sale procedure is administered by and operated on a third-party platform which appears to fall outside of the jurisdictional ambit of the Chinese courts. Presumably, the sale procedure is completely automated as the program controlling the online platform would assess the bids submitted. In Singapore, the entire procedure is managed by the Sheriff and the courts, and is not in any way outsourced to third parties.

5 With the advent of the digital age and C2C websites like Taobao, a question beckons as to whether Singapore should capitalise on the mass appeal of Taobao and move its judicial sale procedure onto Taobao. It is submitted that a couple of advantages would be apparent. First, the move to a paperless online system would allow the Sheriff and the courts to capitalise on technology to conduct judicial sales in a more expedient and efficient manner. A good example of how the courts have embraced technology is the launch of e-Litigation. E-Litigation is the Singapore judiciary's integrated electronic litigation system which went online on 2 January 2013. It leverages on content management systems and dynamic electronic court forms to offer users a single access point for the commencement and active management of case files throughout the litigation process. This online system streamlines the litigation process, thereby helping to improve judicial efficiency and access to justice.12 Such efficiency could be mirrored upon the judicial sale of arrested ships if the sale procedure transcends to a C2C website like Ta oba o.

6 Second, the sale of ships on a C2C website like Taobao may appeal to a potentially larger group of buyers, thus allowing ships to be sold expeditiously and at better prices. For example, Taobao is one of the largest online commercial platforms in Asia with an outreach of millions of users. A listing on Taobao is therefore likely to be viewed by a myriad number of potential buyers. In this regard, the sale of “Varada Blessing” drew 33,000 viewers online and received 19 offers from six bidders which led to the ship to be sold for S$16.7m. The move towards a third-party commercial platform may benefit the claimants of an in rem

action as a ship would be advertised to a large pool of buyers, thus possibly attracting a more favourable price.13

7 Notwithstanding the above, it is the author's humble view that the Singapore courts are unlikely to transplant its judicial sale procedure onto Taobao for the following broad reasons. First, the courts' control and administration over the sale would be reduced because the sale is managed by an external party and there are no interlocutory proceedings to advance the sale process. Second, the Chinese sale on Taobao does not appear to have uniform rules governing the sale thereby bringing out a level of uncertainty for potential buyers. Third, the bids and appraised values on Taobao are not kept a secret, thereby opening the bids and sale prices to manipulation. Fourth, a sale on Taobao may not ensure that the highest sale price is realised because advertisements on Taobao do not target prospective ship buyers. Fifth, ships sold through a Singapore judicial sale are not sold below market value and there is no guarantee that a sale on Taobao would yield a better price as compared to a traditional judicial sale. In explaining the above reasons, this article will first describe two aspects of a Singapore judicial sale and set out several differences between a Singapore judicial sale and a Chinese sale on Taobao. The article will then elaborate on the above reasons as to why the Singapore courts are unlikely to move their judicial sale procedure onto Taobao. Further, the article will also briefly discuss why the Singapore courts are unlikely to do away with the traditional judicial sale process and create their own online platform to manage the judicial sale of ships.14

II. Description of Singapore judicial sale and Chinese sale on Taobao

8 Before this article delves into the reasons why the Singapore judicial sale will not be transplanted onto Taobao, it is important to describe and compare the differences between a Singapore judicial sale and the Chinese sale on Taobao. In doing so, this article shall first set out and explain two aspects of a Singapore judicial sale, namely:

(a) A judicial sale is fully administered and controlled by the courts and such a sale bestows upon the purchaser a clean ship with no encumbrances.

(b) The ship's appraisement value and the bids lodged in the sale are kept secret and not disclosed by the courts.

The article will then describe the Chinese judicial sale process on Taobao and highlight the differences between the Chinese and Singapore processes. It is submitted that the above attributes would shed light on why a court-administered sale is more desirable as compared to a sale on Taobao.

A. Aspects of Singapore judicial sale – Control, administration and clean title

9 The foremost aspect of the Singapore judicial sale is that the entire process is fully administered and controlled by the courts. In this regard, the High Court Admiralty Jurisdiction Act15 (“HCAJA”) allows the courts to invoke admiralty jurisdiction against the ship to be sold, whilst the Rules of Court16 (“ROC”) provide the courts with the power to sell ships pendente lite.17 Elements of the courts' control and administration are also evident in the in rem proceedings. In order for any significant step to take place in the sale process, a summons has to be filed and an appropriate court order obtained.18 For example, the appraisement and sale of a ship can only take place after an applicant obtains an order directing for such an appraisement and sale. Further, a ship may only be sold below her appraised value if an order directing for such a sale is obtained.19 The courts' control and administration also extend to the choice of appraisers to be appointed for the appraisement of the ship. Parties who make an application to appraise and sell ships have to appoint an appraiser from a list of appraisers approved by the courts.20 Further, the courts' control can also be seen from the fact that a ship can only be sold if admiralty jurisdiction has been invoked against her and that she is under the arrest and custody of the Sheriff.21

10 Why must the court have control over the judicial sale? The answer is simply because the court has to ensure that a judicial sale of a

ship is effected in such a way as to protect all claimants.22 In the local case of The...

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