The "Navios Koyo"

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 27 October 2021
• Neutral Citation: [2021] SGCA 99
• Court: Court of Appeal (Singapore)
• Hearing Date: 13 October 2021
• Docket Number: Civil Appeal No 19 of 2021
• Plaintiff Counsel: Bazul Ashhab bin Abdul Kader, Prakaash s/o Paniar Silvam, Tan Yu Hang and Levin Lin Lok Yan (Oon & Bazul LLP)
• Defendant Counsel: Cai Jianye Edwin and Dawn Tan Si Jie (AsiaLegal LLC)
• Subject Matter: Arbitration,Stays,Conditional Stays,When conditions imposed,Admiralty and Shipping,Bills of lading
• Published date: 29 October 2021

Steven Chong JCA (delivering the grounds of decision of the court): Introduction

Consistent with the principle of party autonomy, where parties have contractually agreed that their disputes are to be decided by arbitration, it is axiomatic that all disputes arising out of that particular contract are to be determined by the arbitration. In essence, this appeal sought to challenge the conventional wisdom of this proposition.

The appellant commenced an admiralty action against the respondent in respect of claims under several bills of lading. On the face of the bills of lading, the terms of a relevant charterparty including an arbitration clause were incorporated. However, the appellant, for reasons best known to itself, failed to take steps to ascertain the full details of the incorporated terms. By the time the appellant asked the respondent for a copy of the incorporated charterparty, it was the very night before a time bar accrued to bar claims under the bills of lading.

Predictably, the respondent applied for and successfully obtained an unconditional stay of the proceedings under s 6(1) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) in favour of arbitration. The core issue in this appeal was whether the stay should be granted unconditionally or be made conditional upon a waiver of the time bar defence. This gave rise to an interesting issue as to whether a court in staying court proceedings in favour of arbitration can impose conditions such that substantive issues which would otherwise be decided in the arbitration can effectively be excluded from the arbitration in the exercise of the court’s discretion to impose “such terms and conditions as it may think fit”.

We heard and dismissed the appeal on 13 October 2021 with brief grounds. We were not satisfied that such a condition should be imposed. The appellant had failed to protect its own commercial interests, and could not expect the Court to insulate it from the consequences of its own actions or inaction. More fundamentally, the Court would be exceedingly slow to carve-out substantive defences, such as a defence of time bar, from the jurisdiction of the arbitral tribunal. This was all the more so given that it was not in contention that this dispute ought properly to have proceeded to arbitration from the very outset. It was thus not open to the appellant to seek the court’s assistance to exclude defences or issues which the arbitral tribunal was entitled to determine, given the terms of the bills of lading.

In our detailed grounds below, we have set out the applicable test for the imposition of conditions with impact on substantive issues which ought properly to be adjudicated by the arbitral tribunal. In addition, there was also some uncertainty as to whether the quantum of a potentially time-barred claim in the arbitration can legitimately be relied upon as a proxy to determine the extent of “undue hardship” in assessing whether a waiver of a time bar defence should be imposed as a condition for the stay. As we have explained below, the quantum of any potentially time-barred claim is irrelevant in the exercise of the court’s discretion in staying court proceedings which were commenced in breach of an arbitration agreement.

The Relevant Facts Factual Background

On 25 July 2019, the appellant entered into a Memorandum of Understanding (“MOU”) with Amrose Singapore Pte Ltd (“Amrose”) for the financing of Amrose’s purchase of New Zealand pine logs. Under this MOU, the appellant would procure its financier, the Bank of Baroda, to issue letters of credit to Amrose’s supplier, TPT Forests Limited (“TPT Forests”), for shipments of New Zealand pine logs from New Zealand to India on board the MV Taikoo Brilliance. In return, Amrose would repay the appellant with interest. The MOU included the following terms which were relevant to the present proceedings:

IRRESPECTIVE OF AMROSE’s EARLIER ARRANGEMENT WITH THE SHIPPING CO & AMROSE’S SUPPLIER, AMROSE SHALL ENSURE & HEREBY GUARANTEES TO [the appellant] THAT NO DELIVERY OF ANY CARGO RELATED TO [the appellant’s] DOCUMENTS [DIRECT PAYMENT &/OR ESTABLISHED L/Cs’] (PARTIAL OR FULL) WILL BE MADE TO ANYBODY (BUYERS OR ON AMROSE ACCOUNT) @ DISPORT – WITHOUT THEY FIRST PAYING [the appellant] IN FULL AS PER THIS MOU TERMS [sic]

[Emphasis added in bold, original emphasis omitted]

Pursuant to the MOU, the appellant procured the Bank of Baroda to issue letters of credit to TPT Forests. It was not in dispute that a total cargo of 36,934,231 JAS CBM of New Zealand pine logs (the “Cargo”) was loaded on board the Taikoo Brilliance. The carriage of this cargo was made pursuant to four bills of lading (collectively, the “Bills of Lading”). It was also not in contention that following the Bank of Baroda’s issuance of letters of credit to TPT Forests, TPT Forests endorsed the Bills of Lading to the order of the Bank of Baroda. The Bank of Baroda in turn endorsed the Bills of Lading to the order of the appellant. The appellant received the Bills of Lading from the Bank of Baroda on or about 12 September 2019. The salient portions of the Bills of Lading were threefold: First, on the face of each of the Bills of Lading, there was a clear statement that “Freight [was] payable as per CHARTER PARTY dated 03/07/2019” (emphasis original); Second, on the reverse side of the Bills of Lading, the very first clause under the heading “Conditions of Carriage” read “All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause are herewith incorporated” (emphasis added); and Third, in the upper left-hand corner of the reverse of the Bills of Lading, there was a specific addition as follows:

BILL OF LADING

TO BE USED WITH CHARTER-PARTIES

CODE NAME: ‘CONGENBILL’

EDITION 1994

On 15 September 2019, the Taikoo Brilliance entered Kandla Port, India, and commenced discharge of the Cargo. It was not disputed that the discharge of the cargo was completed, at the latest, by 23 September 2019. The Taikoo Brilliance departed from Kandla Port that day.

The Admiralty Actions

On 18 August 2020, the appellant commenced HC/ADM 206/2020, HC/ADM 207/2020, and HC/ADM 208/2020 (collectively, the “Admiralty Actions”) against the respondent. In particular, the appellant alleged that it had not been informed about the discharge of the Cargo from the Taikoo Brilliance despite having been identified as the notify party under the Bills of Lading. The appellant also argued that the respondent, as the carrier and/or the party in physical possession of the Cargo, had failed to only deliver the Cargo as demanded, upon presentation of the Bills of Lading, and/or to the order of the appellant. In short, the appellant objected to the Cargo, which was its security for the loans extended to Amrose, having been discharged, allegedly without its knowledge.

We noted that the appellant had split up its claim under the different bills of lading in order to obtain maximum security for its claim. The individual bills of lading corresponded to the Admiralty Actions as follows: Bill of lading CHVWTABR190501 in HC/ADM 206/2020; Bill of lading CHVWTABR190503 in HC/ADM 207/2020; and Bills of lading CHVWTABR190502 and CHVWTABR190504 in HC/ADM 208/2020. Barring the numbering of the Bills of Lading and the quantities of cargo stated thereon, the facts of each of the Admiralty Actions were entirely similar.

Following the commencement of the Admiralty Actions on 18 August 2020, the appellant sought and procured an order for the arrest of the Navios Koyo, another vessel owned by the respondent but unconnected with the events set out above. Subsequent to the arrest of the Navios Koyo on 18 September, the following developments occurred: On 18 September 2020 (Friday), the Protection and Indemnity Insurance Club (the “P&I Club”) for the Taikoo Brilliance, The North of England P&I Association Limited, wrote to the appellant’s solicitors acknowledging that the Navios Koyo had been arrested in relation to the Admiralty Actions and seeking the details and documents supporting those actions. On 19 September 2020 (Saturday), the appellant’s solicitors replied, enclosing the Writ and Warrant of Arrest. The supporting affidavit was also provided. The appellant’s solicitors sought the provision of security in the sum of approximately US$5,264,000. On 23 September 2020 (Wednesday) at 6.36pm, solicitors for the time charterer of the Taikoo Brilliance, The China Navigation Co (“China Navigation”) wrote to the appellant’s solicitors, seeking confirmation on the sum of security sought for the release of the Navios Koyo. This email stated that:

[…]

We are taking instructions on the provision of security and will respond shortly. That said, please note that the charterparty which the material bills of lading refer to contain a reference to arbitration in London. Please confirm that, upon provision of satisfactory security, your clients will release the vessel and discontinue the proceedings in Singapore.

Our client’s rights are reserved.

The same day at 7.13pm, the appellant’s solicitors replied as follows:

[…]

We are presently taking instructions on the matters raised in your email and would be grateful if you could send across a copy of the charterparty you have referred to.

[…]

On 24 September 2020 (Thursday) at 9.08am, China Navigation’s solicitors replied, as follows:

[…]

As requested, we attach the charterparty dated 3 July 2019 together with the proforma charterparty referred to in it. Please note clause 60 of the rider clauses provides for London arbitration.

We also attach a draft LOU which will be provided by The Standard Club UK Ltd. Further to your suggestion on jurisdiction, please note that it provides for ‘a competent court or arbitration tribunal’ and provides for the full sum that has been demanded as...