The "Evmar"

• Jurisdiction: Singapore
• Judgment Date: 20 April 1989
• Date: 20 April 1989
• Docket Number: Admiralty In Rem No 59 of 1988
• Court: High Court (Singapore)

The “Evmar”

[1989] SGHC 40

Chao Hick Tin JC

Admiralty In Rem No 59 of 1988

High Court

Admiralty and Shipping–Admiralty jurisdiction and arrest–Action in rem–Negotiations on provision of security to avoid arrest of vessel–Offer to provide letter of undertaking “under protest”–Vessel arrested and continued despite offer of security in terms demanded by claimant–Whether claimant liable for wrongful arrest–Admiralty and Shipping–Admiralty jurisdiction and arrest–Action in rem–Practice and procedure–Whether warrant of arrest should be set aside for non-disclosure of material facts in affidavit–Whether existence of arbitration clause and pending negotiations material facts to be disclosed–Whether duty of disclosure extends to deposing to having means to satisfy arbitration award–Order 70 r 4 The Rules of the Supreme Court 1970–Admiralty and Shipping–Admiralty jurisdiction and arrest–Action in rem–Stay of action proceedings–Order for unconditional stay of proceedings–Whether court could vary order granting unconditional stay–Section 4 (3) Arbitration (Foreign Awards) Act (Cap 10A, 1985 Rev Ed)–Arbitration–Stay of court proceedings–Court's discretion under Arbitration (Foreign Awards) Act (Cap 10A, 1985 Rev Ed)–Power of court to impose conditions or terms–Section 4 (3) Arbitration (Foreign Awards) Act (Cap 10A, 1985 Rev Ed)

The plaintiffs' cargoes, which were shipped on board the defendants' ship, The Evmar (“the vessel”), were allegedly damaged in the course of carriage. The plaintiffs issued a writ in rem claiming damages and the vessel was arrested.

Prior to the arrest of the vessel, solicitors for both parties were locked in intense negotiations for the defendants to put up security in lieu of arrest. However, the negotiations failed as the plaintiffs did not accept the defendants' reservations as to the furnishing of security and the plaintiffs arrested the vessel.

The defendants subsequently agreed to furnish the letter of undertaking under protest, and without prejudice to their rights. The defendants then applied for an order, inter alia, to set aside the warrant of arrest. The deputy registrar made various orders,inter alia: (a) for the warrant of arrest to be set aside; (b) that the vessel be released from the arrest; (c) a stay of all proceedings on the ground that the bill of lading had an arbitration clause; (d) that the plaintiffs pay the defendants damages for wrongful arrest and detention of the vessel; and (e) for costs to be taxed and paid by the plaintiffs to the defendants.

The defendants appealed.

Held, allowing the appeal in part:

(1) The mere presence of an arbitration clause in the bill of lading did not preclude the plaintiffs from commencing an action in rem against the vessel. The only prerequisite to the court's jurisdiction to issue a warrant of arrest was that a writ must have been filed in an action in rem. There was no material non-disclosure even though the affidavit leading to the warrant did not disclose the existence of an arbitration clause in the bill of lading: at [10] and [13].

(2) Likewise, there was no material non-disclosure by the plaintiffs' failure to depose whether the defendants had the means to satisfy an arbitration award. While it was open to the defendants to apply for a stay (in respect of which they had reserved their rights), this had not yet occurred at the time when the affidavit was sworn. The defendants could, notwithstanding their reservation, have allowed this action to proceed. Therefore, at this stage, there was no need for the plaintiffs to refer to the question of whether the defendants had the means to satisfy an arbitration award: at [14].

(3) The fact of pending negotiations did not have to be disclosed in the affidavit sworn to lead the warrant of arrest. There was nothing in O 70 r 4 of The Rules of the Supreme Court 1970 which required such disclosure. The plaintiffs were entitled to security and unless an agreement was reached as to alternative security, the plaintiffs were at liberty to proceed. The fact of negotiation was quite immaterial: at [16].

(4) It was not open to the court to impose a term that the stay of proceedings in Singapore was conditional upon the arrest being maintained or the letter of undertaking being retained as alternative security to satisfy any possible arbitration award against the defendants. A plain reading of s 4 (3) of the Arbitration (Foreign Awards) Act (Cap 10A, 1985 Rev Ed) showed that the power of the court to impose conditions and terms had to be imposed at the time when the order was made staying the proceedings. The deputy registrar had given an outright order to stay without imposing any condition and the plaintiffs had not appealed against that order. It was thus not open to this court, as an appellate court, to vary that order granting an unconditional stay when that order was no longer under appeal: at [19].

(5) Under The Rena K principle, where a plaintiff showed that an arbitration award in his favour was unlikely to be satisfied by the defendant, the security available in the action in remcould be ordered to stand or alternative security could be ordered in substitution thereof. For The Rena K principle to apply, there must be evidence to show that if the plaintiffs should obtain an award in respect of the full amount of the claim, the defendants might well be unable to satisfy it. However, no such evidence had been placed before the court. On the contrary, there was evidence that the P & I Clubs were prepared to stand by and indemnify the defendants against the claim made by the plaintiffs. There was thus no basis for applying The Rena K principle. As such, the vessel would be released from arrest and the letter of undertaking given to the plaintiffs as alternative security returned: at [23] and [24].

(6) The fact that the defendants had agreed to furnish the letter of undertaking “under protest” did not give the plaintiffs a reasonable cause not to release the vessel. In that context, the expression meant no more than that the defendants were reserving their rights, which they were entitled to do. Since the defendants had agreed to furnish security to the plaintiffs in terms which the latter had asked for, the plaintiffs had no further reasons not to release the vessel. The plaintiffs' refusal to accept the letter of undertaking amounted to at least malicious negligence. The arrest had been continued unnecessarily and the plaintiffs were therefore liable for damages for the continued detention of the vessel: at [29].

Astro Vencedor Compania Naviera SA of Panama v Mabanaft GMBH [1971] 2 QB 588 (refd)

Evangelismos, The (1858) 12 Moo PCC 352; 14 ER 945 (refd)

Golden Trader, The [1975] QB 348; [1974] 1 Lloyd's Rep 378 (refd)

Jalamatsya, The [1987] 2 Lloyd's Rep 164 (refd)

Margaret Jane, The (1869) LR 2 A & E 345 (refd)

R v Kensington Income Tax Commissioners,Ex parte de Polignac [1917] 1 KB 486 (refd)

Rena K, The [1979] QB 377; [1978] 1 Lloyd's Rep 545 (refd)

Strathnaver, The (1875) 1 App Cas 58 (refd)

Tuyuti, The [1984] QB 838; [1984] 2 Lloyd's Rep 51 (folld)

Vasso, The [1984] QB 477; [1984] 1 Lloyd's Rep 235 (distd)

Arbitration (Foreign Awards) Act (Cap 10A, 1985Rev Ed)s 4 (3) (consd)

Rules of the Supreme Court1970, TheO 70r 4 (consd)

Arbitration Act 1950 (c 27) (UK)ss 1 (1),4 (1)

Arbitration Act 1975 (c 3) (UK)ss 1, 1 (1)

Civil Jurisdiction and Judgments Act1982 (c 27) (UK)s 26

Augustin Liew (Godwin & Co) for the appellants/plaintiffs

Steven Chong (Drew & Napier) for the respondents/defendants.

Judgment reserved.

Chao Hick Tin JC

1 The plaintiffs were the owners of 7,398mt of US No 2 or Better Yellow Corn (“the said cargoes”) which were shipped on board the vesselEvmar from Tacoma, Washington, USA to Singapore under a bill of lading numbered TAC/SING-1 and dated 13 February 1988. The plaintiffs alleged that the said cargoes were damaged in the course of carriage. The present writ in rem claiming for damages was issued on 12 March 1988 and the vessel Evmar was arrested pursuant to warrant issued by the High Court on the same day. At the time the warrant was issued, the said cargoes were still being unloaded at the wharf in Singapore.

2 Prior to the arrest, Godwin & Co, the solicitors for the plaintiffs, faxed (on 11 March 1988 at 5.55pm) a letter dated 11 March 1988 to the local representatives of...