The "Ivanovo"

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 15 February 2000
• Neutral Citation: [2000] SGHC 22
• Docket Number: Admiralty In Rem No 334 of 1999
• Date: 15 February 2000
• Year: 2000
• Published date: 19 September 2003
• Plaintiff Counsel: C Arul and Ooi Oon Tat (C Arul & Partners)
• Citation: [2000] SGHC 22
• Defendant Counsel: Oon Thian Seng and Juliana Yap (Joseph Tan Jude Benny)
• Court: High Court (Singapore)
• Subject Matter: Whether High Court has jurisdiction over vessel under s 4(4) of High Court (Admiralty Jurisdiction) Act (Cap 123),Whether vessel's arrest ultra vires,Whether such evidence rebuttable,Admiralty jurisdiction and arrest,Whether certificate offers prima facie evidence of ownership,Certificate of registration of vessel,Admiralty and Shipping,Identity of vessel's beneficial owners,Ownership of vessels

: This was an application to set aside a writ issued under the High Court (Admiralty Jurisdiction) Act (Cap 123) (`the Act`) and to release the vessel Ivanovo arrested on 26 May 1999 under a warrant of arrest issued pursuant to the writ.

The writ was issued on the application of the plaintiffs. They were the charterers of the Ivanovo and were seeking damages for breach of charterparty.

There were two charterparties. Both charterparties named the shipowners as Azov Shipping Co of Mariupol, Ukraine (`Azov`).

The application to set aside the writ and to release the vessel was made on 15 July 1999 by the State of the Ukraine which intervened on the ground that it was the legal and beneficial owner of the Ivanovo and that Azov was only operating the vessel under a leasing contract.

It contended that the High Court of Singapore has no jurisdiction over the vessel under s 4(4) of the Act. Section 4(4) reads:

In a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of the action arose, the owner or charterer of, or in possession or in control of, the ship, the admiralty jurisdiction of the High Court may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against -

(a) that ship, if at the time when the action is brought it is beneficially owned as respects all the shares therein by that person; or

(b) any other ship which, at the time when the action is brought, is beneficially owned as aforesaid.

Beneficial ownership was not defined in the Act. That was done by the Court of Appeal in The Pangkalan Susu/Permina 3001 [1975-1977] SLR 252 , where Wee Chong Jin CJ wrote at p 254:

The question is what do the words `beneficially owned as respects all the shares therein` mean in the context of the Act. These words are not defined in the Act. Apart from authority, we would construe them to refer only to such ownership of a ship as is vested in a person who has the right to sell, dispose of or alienate all the shares in that ship. Our construction would clearly cover the case of a ship owned by a person who, whether he is the legal owner or not, is in any case the equitable owner of all the shares therein. It would not, in our opinion, cover the case of a ship which is in the full possession and control of a person who is not also the equitable owner of all the shares therein. In our opinion, it would be a misuse of language to equate full possession and control of a ship with beneficial ownership as respects all the shares in a ship. The word `ownership` connotes title, legal or equitable whereas the expression `possession and control`, however full and complete, is not related to title. Although a person with only full possession and control of a ship such as a demise charterer, has the beneficial use of her, in our opinion he does not have the beneficial ownership as respects all the shares in the ship and the ship is not `beneficially owned as respects all the shares therein` by him within the meaning of s 4(4). [Emphasis is added.]

It was common ground that the plaintiffs` action came within s 4(4) if Azov was the owner of the Ivanovo, but was ultra vires if the interveners were the owners.

At the commencement of the action, the plaintiffs relied on the vessel`s classification certificate in which the shipowner was stated to be Azov. Subsequently they also relied on the vessel`s ship`s certificate. This certificate issued by the General State Ships Registrar Inspection of Ukraine on 11 September 1998 also named Azov as the owner of the Ivanovo, but it also declared that:

According to the Code of Merchant Shipping of Ukraine this certificate is to be considered as the final and complete evidence of the right of property of Ukraine on the ship "Ivanovo".

Azov and the interveners produced evidence in support of the interveners` claim of ownership. An affidavit was filed by Mr Oon Thian Seng, counsel for the interveners on 15 July which exhibited a statement of Professor I Zamoyski, a member of the Academic Councils of the Institute of Economic and Legal Problems of the Academy of Sciences of Ukraine, the Kiev National University and the Ukrainian Juridicial Academy, and an advocate licensed by the Ministry of Justice of Ukraine. Although the statement was not sworn or affirmed and was not admissible in evidence, it gave notice of the grounds in support of the application. This was subsequently rectified when the professor filed an affidavit in which he confirmed the contents of the statement.

Professor Zamoyski referred to a lease contract N D1843 dated 2 June 1993 between the State Property Fund of the Ukraine as lessor and Azov as lessee, the Ivanovo`s ship`s certificate dated 11 September 1998 issued by the Harbour Master of Mariupol.

He deposed that:

3 The "IVANOVO" is listed among the list of vessels annexed to the Lease Contract The lessor is the Ukrainian State acting through the State Property Fund and the lessee is the Lessee`s Organisation of Azov Shipping Company. In the days immediately following the grant of the lease the Lessee`s Organisation of Azov Shipping Company established "Leasehold Enterprise Azov Shipping Company" to operate the vessels. The lease is for 10 years running to 2nd June 2003 and the rental payments due to the State are stipulated in the Lease Contract. Article 23 of "The Law on Lease of State and Community Assets", adopted by the Supreme Rada of Ukraine on 10th April 1992 stipulates that the passing of assets into lease does not interrupt the ownership of the lessor. In this case that is to say that the asset remains the property of the State.

4 Clause 1.1 of the Lease Agreement provides that the assets are passed to the lessee`s possession for him to use for a fixed period and in return for the rent stipulated. Therefore the Ownership of the Shipping Company`s vessels is with the State of Ukraine. This is reflected in Clause 4.1 of the Lease Contract which, refecting the Law on Lease of State and Community Assets, also provides that the passing of the possession of the assets does not interrupt the Ownership of the State. Clause 4.2 of the Lease Agreement provides that the lessee is entitled to possess and use the leased assets to conduct economic activity.

5 As I have mentioned, immediately following the execution of the Lease Contract the Lessee`s Organisation of Azov Shipping Company established Leasehold Enterprise Azov Shipping Company. A Leasehold Enterprise is a juridical person in Ukrainian Law. According to Article 4.3 of the Statute the assets leased by the State Property Fund are State Owned. This can be contrasted with Article 4.4 which provides that the ownership of income generated from the leased assets or property obtained by the Leasehold Enterprise are its own property.

and concluded that

11 Taking into account the Lease Contract, the Statute, the Ship`s Certificate and the provisions of Ukrainian Law to which I have referred I do not believe there is any sensible room for doubt that the M/T "IVANOVO" is owned by the State of Ukraine. Leasehold Enterprise Azov Shipping Company is simply the lessee of the vessel as is made clear by the Lease Contract. Indeed the Ship`s Certificate states that it is "final and complete evidence" of the Right of Property of the Ukrainian State and it is correct to do so.

The contract between the State Property Fund of the Ukraine and Azov provided, inter alia:

4. The Right of Property

4.1 After the State Property being transmitted to the lessee, the State remains to be the owner of this property.

4.2 The lessee uses with the property during the lease term.

4.3 The lessee has the right for production made on the basis of the leased property, another property acquired by the lessee for the account...