Marubeni International Petroleum (S) Pte Ltd v Projector SA

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 16 August 2004
• Neutral Citation: [2004] SGHC 179
• Docket Number: Suit No 1164 of 2003 (Summons in
• Date: 16 August 2004
• Published date: 19 August 2004
• Year: 2004
• Plaintiff Counsel: Werner Tsu (Drew and Napier LLC)
• Citation: [2004] SGHC 179
• Defendant Counsel: Govindarajalu Asokan and Kelvin Poon (Rodyk and Davidson)
• Court: High Court (Singapore)
• Subject Matter: Civil Procedure,Merits of substantive action yet to be finally decided at trial,Interim mandatory injunction granted to plaintiff to compel defendants to secure release of vessel -Defendant subsequently objecting to granting of injunction on grounds of existing triable issues to be determined at trial,Defendant seeking inquiry as to possible damages sustained by reason of interim mandatory injunction,Defendant seeking costs of application,Costs,Damages,Injunctions,Whether inquiry as to damages should be undertaken at this stage,Principles,Factors to consider when granting interim mandatory injunctions,Whether costs of application should be determined at this stage,Mandatory injunction

16 August 2004

Belinda Ang Saw Ean J:

1 The plaintiff is Marubeni International Petroleum (S) Pte Ltd. The writ of summons in this action was issued on 28 November 2003 to enforce the plaintiffs’ rights under two letters of indemnity dated 16 and 18 July 2003 respectively. On the same day, Tay Yong Kwang J granted ex parte an interim mandatory injunction against the defendant, Projector SA (“the interim order”). The interim order provided that the defendant, inter alia, secure the release from arrest of the vessel Dynamic Express by payment into court in South Korea of approximately US$2.6m in respect of gas oil shipped under bills of lading nos DMEXP-A and KAKR-001.

2 Mitsui OSK Lines Ltd (“Mitsui”), as disponent owner of Dynamic Express, time chartered the vessel to the plaintiff who in turn entered into a voyage sub-charter with the defendant on 3 July 2003 for the carriage of gas oil from Taiwan to South Korea. As the originals of bills of lading nos DMEXP-A, DMEXP-B and DMEXP-01 and KAKR-001 had not arrived at the discharge port, the defendant requested the plaintiff to deliver the gas oil to Petaco Petroleum Inc (“Petaco”) without production of the originals bills of lading. The plaintiff acceded to the defendant’s request in exchange for two letters of indemnity dated 16 and 18 July 2003 (“the LOI”). The gas oil was released to Petaco at the port of Pyongtaek, South Korea. The bank creditors of Petaco arrested the Dynamic Express in Daeson, South Korea, on 21 November 2003 for loss and damage suffered by reason of the delivery of gas oil to Petaco without production of the original copy of bills of lading nos DMEXP-A and KAKR-001.

3 The basis of the plaintiff’s application before Tay J, as it was before me, was that the defendant had not, contrary to the LOI, provided security to secure the release from arrest of the vessel Dynamic Express. The plaintiff wanted the defendant to furnish the necessary security to the registered owners of Dynamic Express so that the plaintiff itself need not provide it. The purpose of the LOI was to achieve this.

4 On 2 December 2003, the defendant filed an application to discharge the interim order. It denied being in breach of the LOI. Under cl 4 of the LOI, the defendant agreed to provide, but only on demand, bail or the security as might be required to prevent the arrest or detention or to secure the release of the vessel from arrest. Security or bail was furnished within a reasonable time of the plaintiff’s demand. Furthermore, there was no obligation to indemnify the plaintiff in respect of any loss, damage or expense caused by such arrest or detention, as the plaintiff had suffered no loss. There was no obligation under cl 5 of the LOI to produce and deliver the originals bills of lading until the defendant had them in their possession.

5 The plaintiff’s demand to post bail by way of a cash deposit was made on 27 November 2003. This demand was received on 28 November 2003, which was the same day the plaintiff applied and obtained ex parte the interim order. The defendant submitted that it was entitled to a reasonable time within which to comply with the demand and such a reasonable time would, at the earliest, expire on 1 December 2003. As early as 24 November 2003 the plaintiff’s solicitors, Drew & Napier LLC, were notified in a fax that the defendant would comply with its contractual obligations under the LOI. The plaintiff’s application for an interim injunction was thus unnecessary and decidedly premature.

6 The thrust of the defendant’s argument was that the other written communications from Drew & Napier LLC on behalf of the plaintiff calling the defendant to meet its LOI obligations did not constitute a demand of the kind envisaged by cl 4 of the LOI. For instance, the first fax dated 21 November 2003, which the defendant passed on to its London office on 24 November 2003, did not specify the form of security required to prevent an arrest of the vessel. Drew & Napier LLC sent two further faxes both dated 24 November 2003. The defendant was told that, under South Korean law and practice, a preferred guarantor would be a first class international bank with a presence in South Korea. The defendant duly worked towards furnishing this form of security with the assistance of its lawyers in South Korea and their counterparts representing the arresting party. This form of security was rejected on 27 November 2003. The defendant’s anticipation of an alternative proposal, that Mitsui provide security directly to the arresting party and that the defendant in turn counter-secure Mitsui, did not materialise. Instead, Mitsui’s lawyers asked the defendant to post cash bail. Counsel for the defendant, Mr Govindarajalu Asokan, submitted that the defendant’s efforts were in keeping with the promises made under the LOI. He argued that...