Singapore's evolving admiralty jurisprudence

ENGLISH decisions on shipping and admiralty law are highly persuasive in Singapore, but they are not binding on the local courts. However, the courts tend to follow UK decisions unless there is a compelling reason not to do so.

Over the last twenty years, there have been several occasions where the local courts have found it necessary to depart from established UK principles and in doing so have provided their own contribution to the continuing evolution of admiralty law. What is significant is that, on some occasions, the departures initiated by the Singapore courts have been adopted and followed by other jurisdictions, including the UK.

Sistership arrest

The single decision which put Singapore courts on the map of maritime law is The Permina 108. Decided in 1977, 25 years after the 1952 Arrest Convention, the decision defined, somewhat generously at that time, the scope of the sistership arrest rule. It now covers ships beneficially owned by the charterer of a vessel in connection with which the claim arose. There was no requirement of common ownership for both the offending and sisterships. In the process, it departed from a dictum of Lord Diplock in a UK House of Lords decision, The Eschersheim, which required both the offending ship as well as the arrested one to be beneficially owned by the same party. The Permina 108 decision received endorsement in a number of Commonwealth countries, including Hong Kong (The Sextum)[1982] and New Zealand (The Fua Kavengo) [1987], as well as the UK (The Span Terza) [1982], where the endorsement was both judicial and legislative.

Identity of the in rem defendant

More fundamental perhaps than sistership arrest is the question of who is the defendant in an in rem action. This deceptively simple question has been the subject of a long line of inconsistent UK decisions extending back to the 19th century and has far-reaching conceptual and practical consequences.

It is well-established that the admiralty action in rem is an action against the res, usually a ship, but judges and lawyers grappled with the question of whether it is in fact the inanimate object or its owner that is actually the defendant to the action. Three Singapore Court of Appeal decisions, where the issue arose in different contexts identified the shipowner as the defendant and not the ship. These were The Kusu Island [1989], The Fierbinti [1994], and The Capricorn [1999]. In 1987, the UK House of Lords reached the same decision in the case of The Indian Grace.

Post-judgement arrest

The Daien Maru 18 [1995] went counter to the UK decision of The Alletta [1975]. It permitted an arrest to be made after a judgement in rem had been obtained, when security for the claim was not obtained earlier. The high court distinguished the UK decisions which prohibited arrest after judgement on the basis that bail was provided in those instances and hence replaced the res. This was a logical extension of the concept of an action in rem, since it is an action against the res. A judgement of such action should also be enforceable against the res by a remedy unique to the action, namely the procedure of arrest.

One claim, one arrest

The one-claim, one-ship rule is often the bane of arresting parties who find that their claim is worth more than any one of the ships belonging to the defendants. In The Damavond [1993], the Singapore Court of Appeal permitted an amendment to remove a particular claim from an existing writ, which encompassed various claims. This was then inserted into a second writ and formed the basis of another arrest, so long as that other claim could stand as a separate course of action and so long as security had not been obtained in the first arrest. This decision is particularly useful against a defendant who either fails to pay on more than one occasion under an agreement, or who fails to pay under different agreements. In this case he can expect to face more than one arrest.

P&I club letters of undertaking

In The Arcadia Spirit [1998] the Singapore court held that it had the jurisdiction to compel a claimant to accept a letter of undertaking from a reputable P&I club of sound financial standing. In doing so, it departed from UK decisions, such as The Saudi Star [1993] (unreported), which held that such letters of undertaking were purely private arrangements with which the court would not interfere.

Wrongful arrest

The test for wrongful arrest of a vessel dates back 150 years to the Privy Council decision of The Evangelismos [1858]. To succeed in a claim for wrongful arrest, the owners must demonstrate that there is either bad faith or gross negligence, which implies malice.

Subsequent to The Evangelismos, several UK decision have applied the test 'without reasonable or probable cause' so as to infer malice interchangeably with the test of gross negligence.

In Singapore, the phrase 'without reasonable or probable cause' has also found favour in two local decisions, The Evmar [1989] and The Ohm Mariana [1992]. In 1999, the Court of Appeal in Singapore in The Kiku Pacific settled the test once and for all. It held that, while the use of the term 'reasonable and probable cause' is well-established in actions for malicious prosecution, not involving vessels, they would be uncomfortable with the import of such a term into admiralty law as part of the test for wrongful arrest of a vessel. The Court of Appeal ruled that the test of wrongful arrest of a vessel should be the test laid down in The Evangelismos - bad faith or gross negligence, implying malice.

The cases involving wrongful arrest are rather rare. However, in 1999 there were two attempts to obtain damages for wrongful arrest. One succeeded, in The Trade Resolve, where the judge relied on the test of no reasonable or probable cause and found that the arrest was wrongful. However, in my view, even if the judge had applied the test of gross negligence, he would have reached some conclusion on the facts of The Trade Resolve.

In that case, the sheriff authorised the plaintiffs' solicitors to serve the writ and arrest the vessel within port limits. The vessel was outside port limits but the plaintiffs maintained that it was nevertheless within territorial waters. Despite being aware that the vessel was in fact outside port limits, the plaintiffs proceeded to arrest the vessel, which the court found to be "....a contemptuous act in deliberate and flagrant disregard of the limited authority granted to them."

The Trade Resolve is also significant in one other respect - vessels can only be arrested if they are within port limits. It is irrelevant whether the vessel is within territorial waters as long as it is outside port limits.

Beneficial ownership for state-owned vessels

In s spate of actions that arose from the demise of nationalised state-owned shipping lines in the former Soviet bloc, the high court of Singapore in The Kapitan Temkin [1998] departed from a number of UK decisions, including The Nazym Khikmet [1996], and held that the beneficial owner of a vessel was not that state, but rather that state-owning shipping line concerned. The court was not constrained by Ukrainian law, and in the process, was able to sidestep many of the troublesome aspects of foreign law that characterised the UK decisions. There is now a chink in the armour of immunity from arrest which these former Soviet shipping lines were gradually building up on the strength of the UK decisions.

Possessory lien

Possessory liens are usually asserted by shipyards which have not paid for repairs to vessels. This is a self-help remedy long recognised by the courts. Shipyards exercising possessory liens are entitled to detain the vessel without having to arrest it. On occasions, parties exercising possessory liens may need to arrest the vessel in order to obtain the assistance of the court to sell the vessel, as a right to exercise possessory liens does not carry the right to sell the vessel.

The arrest of vessels by parties exercising possessory lien has created some uncertainty as to whether, in arresting the vessl, the party exercising the possessory lien is deemed to have lost possession of the vessel and consequently its lien. After some uncertainty, the position is now clear, both in the UK and in Singapore, that in arresting the vessel, the possessory lienee retains its lien over the vessel - The Dwina 1 [1996].

As possessory liens are recognised as self-help remedies, the courts in England have consistently held that they would not intefere to assess the value of the lien in the absence of fraud - Gebruder Naf v Ploton [1980] and Segbedzi v Giah [1989]. This English principle was tested in Singapore in The Solitaire.

The shipyard asserted a possessory lien against the vessel in the sum of S$300m. The shipowner applied to court to reduce the security demand and invited the court to depart from established English principles. The judge at first instance refused to do so and allowed the shipyard to retain its lien for the full amount of its security demands since there was no evidence of fraud on the part of the shipyard. In the Court of Appeal, the lien was reduced to S$125m. Unfortunately, there are no written grounds for the decision but it is clear that, in doing so, the Court of Appeal departed from English principles to assess the value of the possessory lien despite the absence of fraud on the part of the shipyard.

Shipping and admiralty law will continue to be an active practice in Singapore. The shipping bar in Singapore is also growing to cope with the increasing volume of maritime work. It is clear that Singapore courts will, when the need and occasion requires, be robust in departing from UK decisions to evolve their own jurisprudence.