The "Chem Orchid"

• Jurisdiction: Singapore
• Judge: Tan Teck Ping Karen AR
• Judgment Date: 06 January 2014
• Neutral Citation: [2014] SGHCR 1
• Plaintiff Counsel: Philip Tay (Rajah & Tann LLP),Ms Yoga Sharmini and Ms Subshini Narayanasamy (Haridass Ho & Partners),Ms Tan Hui Tsing (Gurbani & Co)
• Docket Number: ADM Suit No 184 of 2011(SUM No 999 of 2012), ADM Suit No 197 of 2011(SUM No 1009 of 2012), ADM Suit No 198 of 2011(SUM No 1002 of 2012) and ADM Suit No 201 of 2011(SUM No 1005 of 2012)
• Date: 2014
• Hearing Date: 02 August 2013,06 August 2013,23 September 2013,27 August 2013,11 July 2012,11 October 2011,20 December 2013,12 July 2012,03 July 2012,02 July 2012,17 September 2013,04 July 2012,05 July 2012,09 July 2012,07 August 2013
• Subject Matter: Striking Out,Admiralty and Shipping,Setting Aside
• Published date: 15 January 2014
• Citation: [2014] SGHCR 1
• Defendant Counsel: Ms Vivian Ang and Mr Paul Tan (Allen & Gledhill LLP)
• Court: High Court (Singapore)
• Year: 2014

Tan Teck Ping Karen AR: THE FACTS

Han Kook Capital Co. Ltd (“HKC”) was at all material times the registered owners of “CHEM ORCHID” (the “Vessel”) until she was sold in Singapore pursuant to a Court Order.

By a Vessel Lease Contract (“Lease Agreement”) entered into between HKC and Sejin Maritime Co. Ltd (“Sejin”), HKC leased the Vessel to Sejin for a total of 108 months. The Lease Agreement is governed by Korean law. It is not disputed that the Lease Agreement is akin to a charter by demise.

In December 2010, HK AMC Co. Ltd (“HKA”) was formed to deal with the bad debts of HKC. The credit under the Lease Agreement was transferred to HKA, but the ownership of the Vessel remained at all times with HKC.

Notice of Credit Transfer from HKC to HKA was given by HKC to Sejin on 24 December 2010. By an Asset Transfer Agreement dated 27 December 2010, the lease credit of the Lease Agreement was transferred from HKC to HKA.

On 4 April 2011, HKA issued a letter titled “Lease contract termination notice”. HKC’s position is that this letter effectively terminated the Lease Agreement. The plaintiffs in the various writs dispute this.

ADM 184/2011 (“ADM 184”) is an action commenced by Winplus Corporation Co. Ltd (“Winplus”) against only “[the] Demise Charterer of the Ship or Vessel “CHEM ORCHID””. The indorsement of claim found in the ADM 184 writ states that Winplus’ claim is for “interest…alternatively damages, interest and costs in respect of the supply of bunkers (180 CST), 5 drum Rimula 30, 5 drum Argina T40 and 5 drum Turbo T68 to the vessel “CHEM ORCHID” for her operation and maintenance on or about 13 June 2011 at Dumai Port, Indonesia at the request of the Defendant, their servants or agents for which the Defendant failed to pay the price of the bunkers under the Plaintiff’s invoice dated 13 June 2011; and for interest…alternatively damages, interest and costs in respect of the supply of bunkers (380 CST and MGO) to the vessel “CHEM ORCHID” for her operation and maintenance on or about 30 June 2011 at the Port of Singapore at the request of the Defendant, their servants or agents for which the Defendant failed to pay the price of the bunkers under the Plaintiff’s invoice dated 5 July 2011”.The writ was filed on 28 July 2011 and the Vessel arrested on 28 July 2011.

ADM197/2011 (“ADM 197”) is an action commenced by Frumentarius Ltd (“Frumentarius”) against “[the] Owners and/or Demise Charterers of the Ship or Vessel “CHEM ORCHID””. The indorsement of claim found in the ADM 197 writ states that Frumentarius’ claim “is for damages for breach of contract and/or duty and/or negligence in and about the carriage of cargo of palm oil/products from Belawan, Indonesia to Taman, Russia in or about 4th June 2011 under a charterparty dated 13th May 2011, together with interest and costs.” The writ was filed on 8 August 2011.

ADM 198/2011 (“ADM 198”) is an action commenced by KRC Efko-Kaskad LLC (“KRC”) against “[the] Owners and/or Demise Charterers of the Ship or Vessel “CHEM ORCHID””. The indorsement of claim found in the writ states that KRC “as owners of the cargo lately laden onboard the Defendants’ ship or vessel “CHEM ORCHID” and/or as lawful holders of the bills of lading nos. BLW/TAM-01 dated 4th June 2011, BLW/TAM-02 dated 2nd June 2011 and BLW/TAM-03 dated 3rd June 2011 whereunder the above cargoes were shipped, claim damages from the Defendants for loss, damage, delay, costs, expenses arising in connection with the Defendants’ carriage of the cargo under the aforesaid bills of lading from Belawan, Indonesia to Taman, Russia in or about 4th June 2011, sustained by reason of the Defendants’, their servants and/or agents negligence and/or breach of duty and/or breach of contract thereof, together with interests and costs.” It appears that KRC had sub-chartered the Vessel from Frumentarius who in turn had chartered it from Sejin. The writ was filed on 8 August 2011.

ADM 201/2011 is an action by Mercuria Energy Trading SA (“Mercuria”) against “[the] Owners and/or Demise Charterers of the Ship or Vessel “CHEM ORCHID””. In the indorsement of claim, Mercuria claims “as holders freight prepaid shipped on board Tanker Bill of Lading DUM/HAV-01 dated Dumai Port of Indonesia, 11 June 2011 issued for and on behalf of the Master of the ship or vessel “CHEM ORCHID” of the Port of Jeju South Korea, and/or as owners and/or as persons entitled to possession of the 4815 metric ton of Palm Methyl Ester in bulk that is lately laden on the vessel “CHEM ORCHID” for shipment from the port of Dumai, Port of Indonesia to the Port of Huelva…”. The writ was filed on 8 August 2011.

HKC filed similar applications in these actions seeking inter alia an order that the writ, service thereof and all subsequent proceedings in the said actions be set aside on the basis that the admiralty in rem jurisdiction of the High Court under the High Court (Admiralty Jurisdiction) Act (“HCAJA”) was not properly or validly invoked against the Vessel.

In respect of ADM 198 and ADM 201, both KRC and Mercuria have raised an alternative claim against HKC on the ground that the Master of the Vessel had ostensible authority to bind HKC. HKC argues that this claim is so unsustainable that it should be struck out under O 18 r19 of the Rules of Court (“ROC”) and/or the inherent jurisdiction of the court.

THE LAW ON INVOKING THE ADMIRALTY JURISDICTION OF THE COURT

The law on invoking the admiralty jurisdiction of the court was set out by Belinda Ang Saw Ean J in The “Bunga Melati 5” [2001] 4 SLR 1017 (“Bunga Melati HC”) and subsequently by the Court of Appeal in [2012] 4 SLR 546 (“Bunga Melati CA”).

Section 4(4) of the HCAJA provides: (4) In the case of any such claim as is mentioned in section 3(1)(d) to (q), where – (a) the claim arises in connection with a ship; and (b) the person who would be liable on the claim in an action in personam (referred to in this subsection as the relevant person) was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship,

an action in rem may (whether or not the claim gives rise to a martitime lien on that ship) be brought in the High Court against – (i) that ship, if at the time when the action is brought the relevant person is either the beneficial owner of that ship as respects all the shares in it or the charterer of that ship under a charter by demise; or (ii) any other ship of which, at the time when the action is brought, the relevant person is the beneficial owner as respect all the shares in it.

The onus is on the plaintiff to establish jurisdiction and he does so by demonstrating that his claim falls within s4(4) of the HCAJA: per Belinda Ang J in Bunga Melati HC at [80].

As to the standard of proof that has to be satisfied by the plaintiff, the Court of Appeal in Bunga Melati CA referred to Belinda Ang J’s analysis of section 4(4) of the HCAJA and stated at [112]:

In summary, we re-state the various steps and respective standards of proof for a plaintiff to invoke the admiralty jurisdiction in Singapore. Under s 4(4) of the HCAJA, a plaintiff has to, when challenged: (a) prove, on the balance of probabilities, that the jurisdictional facts under the limb it is relying on in s3(1)(d) to (q) exist; and show an arguable case that its claim, is of the type or nature required by the relevant statutory provision (“step 1”); (b) prove, on the balance of probabilities, that the claim arises in connection with a ship (“step 2”); (c) identify, without having to show in argument, the person who would be liable on the claim in an action in personam (“step 3”); (d) prove on the balance of probabilities, that the relevant person was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship (“step 4”); and (e) prove on the balance of probabilities, that the relevant person was, at the time when the action was brought: (i) the beneficial owner of the offending ship as respect all the shares in it or the charterer of that ship under a demise charter; or (ii) the beneficial owner of the sister ship as respect all the shares in it (“step 5”).

For the purpose of step 3, Sejin, the demise charterer, has been identified as the person who would be liable on the claim in an action in personam (“the relevant person”). The dispute between parties is in respect of step 5 i.e. whether Sejin was the demise charterer at the time of the issue of the respective writs. The onus is on the plaintiffs in the various writs to prove this on a balance of probabilities.

SETTING ASIDE ON THE BASIS OF LACK OF ADMIRALTY JURISDCTION THE LAW APPLICABLE TO INTERPRETING SECTION 4(4) OF THE HCAJA

A preliminary point had been raised as to the law applicable to the interpretation of the HCAJA and the role of foreign law in the interpretation of the HCAJA.

The plaintiff’s counsel in ADM 201 took the position that whether there was a demise charterparty and whether the charter was terminated at the time the action was commenced is to be decided by Singapore law and not Korean law. He relied on Halcyon Isle [1980] 2 MLJ 217 and The “Andres Bonifacio” [1993] 3 SLR(R) 71.

It is not in dispute that the issue of whether Singapore has jurisdiction pursuant to s 4(4) of the HCAJA is governed by Singapore law. Therefore, the issue of whether the charterparty in this case is a demise charterparty is to be determined according to Singapore law. All the parties agree that the charter being considered in this case is a demise charterparty. Therefore, this issue is not in dispute.

The next question is whether the termination of the Lease Agreement is to be determined in accordance with the terms of the charterparty, i.e. the Lease Agreement. The Lease Agreement states that it is governed by Korean law. Therefore, Korean law should be applied in determining whether the Lease Agreement has...