The ‘Chem Orchid’1

The appeals in this case centred on whether the person liable in personam was the demise charterer of the ship at the point of arrest (“the relevant time”). This question was a necessary jurisdictional fact for the invocation of the court’s admiralty jurisdiction.2

The “Chem Orchid” was leased by Han Kook Capital (“the shipowner”) to Sejin Maritime (“Sejin”) on a demise charter. Due to certain unpaid debts owed by Sejin to the four respondents in the present proceedings (collectively, “the creditors”), the vessel was arrested in Singapore. The creditors filed separate in rem writs on the basis that Sejin, the party who would be liable on their claims in an in personam action, was at the relevant time the demise charterer of the vessel.

The assistant registrar allowed the shipowner’s application to set aside the warrants of arrest obtained by the creditors against the ship, a decision that was overturned by the High Court. The present appeals were brought by the shipowner against the High Court decision.

The shipowner contended that the Singapore courts had no in rem jurisdiction over the ship since termination of the demise charterparty was expressly communicated to Sejin before the arrests were executed. An alternative argument of “constructive redelivery” was raised by the shipowner’s counsel, but was held to be not acceptable under Singapore law as it would result in significant injustice to third parties, who would have no way of knowing whether the demise charterparty had come to an end.3

The primary issue in the appeals was how could a disputed jurisdictional fact (whether Sejin was still the demise charterer of the vessel at the relevant time), which also involved the application of foreign law (South Korean law pursuant to the lease agreement), be proved conclusively on the balance of probabilities at the interlocutory stage?

In coming to its decision, the Court of Appeal mainly relied on The Jarguh Sawit and The Bunga Melati 2 in determining the question of jurisdiction at an interlocutory stage (procedural in nature) as opposed to at trial (substantive in nature). 

The court held that where it had to decide the point on jurisdiction at an interlocutory stage (by relying wholly on affidavit evidence), it could only make a finding on a non-conclusive prima facie basis. In such circumstances, the arresting party need only show that he has a good arguable case for the court to assume jurisdiction. 

At the point of the application to set aside, the question remained as to whether the lease agreement was validly terminated by the shipowner’s subsidiary under South Korean law. This issue needed to be resolved before admiralty jurisdiction could be determined by the court.

The Court of Appeal concurred with the High Court judge’s decision that the disputed jurisdictional fact could only be conclusively determined, on the balance of probabilities, after cross-examination of the parties’ factual witnesses or based on the expert witnesses testifying on the application of South Korean law at trial. 

The Court of Appeal accordingly dismissed the shipowner’s appeals and held that the jurisdictional issue was to be deferred and decided conclusively at trial.