In The Jeil Crystal,(1) the Singapore High Court considered whether a plaintiff can maintain a warrant of arrest based on an amended claim not originally pleaded at the time of arrest.
The plaintiff, a financial institution, provided trade finance to its customer for a cargo shipped on board the defendant's vessel.
The plaintiff subsequently obtained a warrant of arrest against the defendant's vessel for mis-delivery. The plaintiff claimed to be the lawful holder of the original bills of lading of the cargo and further claimed that the defendant had delivered the cargo without production of the original bills.
It came to light that the plaintiff no longer had possession of the original bills of lading when it obtained the warrant of arrest. The bills of lading were sent by the plaintiff to its customer, and, thereafter, switched by the defendant with a fresh set of bills of lading. According to the plaintiff, this switch was made without its knowledge or consent.
Upon discovering the true situation, the plaintiff amended its statement of claim to assert, in place of its mis-delivery claim, an amended claim for breach of contract and negligence.
The defendant applied to set aside the warrant of arrest as:
- the warrant of arrest had been wrongly issued based on a non-existent cause of action;
- the amendments to the statement of claim did not remedy the fact that the warrant should not have been issued at the time of arrest; and
- the plaintiff was not entitled to rely on the rule that the amendment of pleadings operates retrospectively to the original date that the pleading was filed (known as the "relation back rule").
The Court upheld the warrant of arrest on the plaintiff's amended claim even though it had not been originally pleaded when the plaintiff applied for the warrant of arrest.
First, the Court considered what it would have done had the true facts and the amended claim been presented to it at the application for the warrant of arrest. Importantly, the Court noted that both the original claim and the amended claim satisfied all the requirements for the valid invocation of the Court's admiralty jurisdiction. This was a key consideration that distinguished this case from the Hong Kong decision in Victory Star Shipping Company SA v The owners and all those interested in the ship "Amigo" and World Happy Shipping Limited (The Amigo).(2)
The defendant had relied on The Amigo for the proposition that an amended statement of claim cannot cure a defect that existed in the originally framed cause of action when the warrant of arrest was issued. The Court, however, examined The Amigo closely and found that, in that case, the warrant of arrest had been set aside because the original claims did not disclose any cause of action giving rise to an action in rem, and opined that the Hong Kong courts might have reached a different conclusion if the original claim had done so but had only been incorrectly pleaded factually.
Second, the Court rejected the defendant's technical objection that the amendment orders only applied to amend the statement of claim, and not the writ or the warrant of arrest. The Court's view was that the in rem writ, the statement of claim and warrant of arrest were intractably interlinked.
Third, the Court found that the amendment to the statement of claim cured the pleading defect in the writ – the application of the relation back rule in this context is such that the endorsement of claim in the writ is also treated as having been amended or cured.
Fourth, the Court considered that the plaintiff was not seeking, through its amendment, to introduce a new cause of action or facts that did not exist at the date of the writ. The facts constituting the amended claim already existed when the warrant of arrest was applied for.
Finally, the Court did not find any merit in the defendant's argument that upholding the warrant of arrest would set an unwelcome precedent to encourage imprudent or trivial applications for an arrest warrant. It was the Court's role to ensure that abuse of its process was not condoned, and, ultimately, that the power was exercised within the ambit of the factual matrix of the case before it.
The issue raised in The Jeil Crystal is yet to be conclusively determined. The Appellate Division has granted the defendant leave to file an appeal on the following issue:
In an application to set aside a warrant of arrest of a ship, can the warrant of arrest be upheld on the basis of an amended claim and/or cause of action which was not originally pleaded by the arresting party at the time of the application for and issue of the warrant of arrest?
The Appellate Division took the view that this issue touched on the law governing the powerful and invasive remedy of maritime arrests, and that there were various considerations at play (including the need to prevent an abuse of process). The Appellate Division deemed this a question of importance to be decided for the first time, and for which a decision of the higher tribunal would be to the public advantage.
The Appellate Division's ruling on this issue will prove interesting because, at its core, it will be answering the question as to whether a party can obtain a warrant of arrest on an arguably non-existent basis, and then subsequently substitute this ground to maintain the warrant of arrest.
For further information on this topic please contact Christian Teo or Esther Yong at Helmsman LLC by telephone (+65 6816 6660) or email ([email protected] or [email protected]). The Helmsman LLC website can be accessed at www.helmsmanlaw.com.