Q&A: ship arrest in Singapore

Ship arrest

Which international convention regarding the arrest of ships is in force in your jurisdiction?

None. However, the Singapore statute in this respect, namely the High Court (Admiralty Jurisdiction) Act, reproduced the Administration of Justice Act 1956 of the United Kingdom, which was passed to implement the International Convention Relating to the Arrest of Seagoing Ships 1952 and the International Convention on Certain Rules Concerning Civil Jurisdiction in Matters of Collision 1952. The 1956 act was re-enacted in the United Kingdom by the Supreme Court Act 1981, which was in turn followed in Singapore with the addition of certain words to section 4(4) of the Singapore statute.

In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? Can a bareboat (demise) chartered vessel be arrested for a claim against the bareboat charterer? Can a time-chartered vessel be arrested for a claim against a time-charterer?

A writ in rem endorsed with a claim of the type within the admiralty jurisdiction of the High Court may be served, and a vessel can be arrested in one of the circumstances prescribed by section 3(1) of the High Court (Admiralty Jurisdiction) Act.

The above may be performed only against the particular ship in connection with which the claim arose in the case of:

• possession or ownership of a ship;
• employment and earnings of a ship, in the case of co-owners;
• mortgage or charge on a ship; or
• the forfeiture or condemnation of a ship as ‘prize’.

The above may be performed against the particular ship, or against a sister ship, in the case of:

• damage caused or received by a ship;
• loss of life or injury occurring in the course of the navigation or management of a ship;
• loss of or damage to goods carried in a ship;
• agreement for the carriage of goods, or hire of a ship;
• salvage services;
• towage;
• pilotage;
• goods or materials supplied for the ship’s operation or maintenance;
• construction or repair of a ship, or dock charges;
• master and crew wages;
• master’s or agent’s disbursements on account of a ship;
• general average act; or
• a claim arising out of bottomry.

The Admiralty jurisdiction is also created by special statute to implement conventions for:

• a claim in respect of a liability under the oil pollution legislation; or
• limitation of liability.

The vessel’s flag or law governing the claim makes no difference to the claimant’s entitlement to invoke the admiralty jurisdiction of the court, so long as the claim is of the prescribed type and the criteria applicable to the mode of exercise of such jurisdiction are fulfilled.

The ascertainment of beneficial ownership of a vessel is a matter of Singapore law as it relates to the admiralty jurisdiction of the Singapore courts. However, the court would have regard to the governing (foreign) law, to the extent that it is applicable from the ‘conflict of laws’ viewpoint, for instance, in relation to a foreign ship’s mortgage. The requisite formality for the creation of the maritime mortgage in accordance with the vessel’s flag, the nature of the right created by the mortgage in favour of the creditor or mortgagee and the extent of that right will be determined by the law of the (foreign) country.

The epithet ‘associated’ or ‘affiliated’ is usually employed only in relation to the shipowning entities in a group. For vessels, the juridical word is ‘sister’ or ‘sister ship’, that is, another ship in the same ownership as the particular ship. Section 4(4) deals with the beneficial ownership aspect that must be satisfied for a successful invocation of admiralty jurisdiction. The weight of authorities (originating from a Singapore decision and subsequently considered by the Hong Kong and English courts) suggests that a vessel owned by the charterer of the particular ship is also open to arrest by the owners of the particular ship. Although it was not stated in such terms in the decisions, the upshot is that such a vessel can to that extent be considered a sister ship, whereas the relationship between these vessels is nowhere near the natural meaning of the expression ‘sister ship’.

A ship owned by a wholly-owned subsidiary company is not beneficially owned by the defendant holding company and thus is not amenable to an in rem action under section 4(4). Nor does the right to arrest extend to a ship owned by a sister company of the company owning the particular ship.

A bareboat (demise) chartered vessel may be arrested for a claim against the bareboat charterer, for example in circumstances where:

• the bareboat charterer was the bareboat charterer of the vessel in connection with the claim at the time when the claim arose and was the liable party; and
• that vessel remained under bareboat charter to him or her when the writ is issued.

Insofar that where the liable party is the time charterer who was the time charterer of the vessel in connection with the claim at the time the claim arose, and at the time of issuing of the writ he or she remained the time charterer of that vessel, no arrest of the offending ship is permitted.

Does your country recognise the concept of maritime liens and, if so, what claims give rise to maritime liens?

Yes, Singapore recognises the concept of maritime liens. Under Singapore law, the following claims give rise to maritime liens against a vessel:

• wages claims of master and crew and claims of the master for disbursements incurred for the vessel;
• salvage claims; and
• collision claims.

What is the test for wrongful arrest?

Where a ship is arrested when she ought not to have been, the question of whether the owner is entitled to recover the loss suffered would depend on whether the arresting party is guilty of bad faith or gross negligence, which implies malice.

The ultimate failure of the claim per se is not the test and would not entitle the shipowner to damages for wrongful arrest. Likewise, damages are not recoverable in respect of a mere error of judgement in arresting the vessel where there was no bad faith. 

On the other hand, if at the conclusion of the trial it is apparent that the sum demanded by way of security for the release from arrest exceeds by a substantial margin the sum recovered then the plaintiffs will be ordered to pay the cost of providing that part of the security that the court regards as being unreasonably excessive.

Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?

Section 4(4) of the High Court (Admiralty Jurisdiction) Act governs the outcome of the answer to this. The bunker supplier could have a right of arresting the particular ship if, and only if, the charterer, as ‘the relevant person’ liable in personam and as ‘the relevant person’ in the second limb of the test, is a bareboat or demise charterer at the time when the action in rem is brought. Thus, this test would not be satisfied if the bareboat charter had already come to an end when the writ in rem was issued at the request of the bunker supplier. Any challenge by a defendant shipowner to the bunker supplier’s reliance on the identity of the defendant shipowner as ‘the relevant person’ is not a jurisdictional matter to be dealt with at the interlocutory stage but is properly a dispute on the merits of the bunker supplier’s claim unless it is determined to be ‘hopeless’.

Since it is not uncommon in a shipping group to have the same entity operating ships both owned as well as chartered by it, it is possible to postulate this scenario on the authorities from Singapore, Hong Kong and the UK: the bunker supplier may arrest a ship owned by or chartered by demise to the charterer at the time the writ in rem is issued.

Will the arresting party have to provide security and in what form and amount?

The arresting party does not have to provide security in the sense of (reciprocally) securing its ability, to the advantage of the shipowner, to pay damages occasioned by, for example, what subsequently turns out to be a wrongful arrest or the ultimate failure of the claim.

How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?

The usual practice of the court is only to order release, unless successfully negotiated by the parties, upon the provision of sufficient security to cover the amount of the claim calculated on the basis of the claimants’ best arguable case. The amount of the security (eg, for a cargo claim) comprises the sound arrived value of the goods with interest (for two to three years at 5.33 per cent per annum of the claimed amount) and costs (S$150,000) added.

The security amount does not exceed the value of the ship. This amount can be reviewed subsequently by the court upon application. The claimants may be ordered to pay the additional costs incurred by the shipowner in putting up the security if the amount is determined to be excessive.

The security is by way of a bank guarantee or an acceptable P&I club’s letter of undertaking.

What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of attorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?

The Singapore Rules of Court require every solicitor representing any party in any cause or matter to obtain from such party or his duly authorised agent a warrant to act for such party, either generally or in the said cause or matter (eg, arrest application). The warrant to act need not be provided to the court unless the solicitor’s authority to act is disputed. No power of attorney is required.

The arrest application is made by filing a summons-in-chambers and affidavits, which will also exhibit documents in support of the application for the arrest of the ship. Documents can be exhibited in copy form and originals are not required. Any translations should be made by qualified translators and their qualifications with the accompanying certificates produced. Where available, court interpreters may be engaged but other qualified translators may also be used. The documents need not be notarised, legalised or authenticated (as to the notary) and may be filed electronically. 

It is unlikely that an arrest order will be given by the court based merely on an undertaking to comply with all the formalities as soon as practicable. Depending on the complexity of the matter, it takes about one to two days or more to prepare the papers for an arrest application.

Who is responsible for the maintenance of the vessel while under arrest?

Such responsibility lies with the claimants (plaintiffs) at whose instance the ship is arrested, through their solicitors, who at the time of applying for the warrant of arrest must undertake to indemnify the Sheriff in respect of the costs and disbursements in effecting and maintaining the arrest.

Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?

The Singapore statute conferring Admiralty jurisdiction on the Singapore High Court has not included in its provisions the power of the court to order retention of security obtained by arrest of a vessel in admiralty proceedings in Singapore to secure satisfaction of the judgment of some other court in another forum.

However, the Singapore court may find these English judicial observations particularly persuasive:

It seems to me that, by the maritime law of the world, the power of arrest should be, and is, available to a creditor – exercising it in good faith in respect of a maritime claim – wherever the ship is found – even though the merits of the dispute have to be decided by a Court in another country or by an arbitration in another country – and, I would add (contrary to The Golden Trader . . . ), even though the arbitration is mandatory.

The Lisboa [1980] 2 Lloyd’s Rep. 546 per Lord Denning, MR, at pp 549-550.

[It] would not, I think, normally be wrong to allow a plaintiff to keep the benefit of security obtained by commencing proceedings here, while at the same time granting a stay of proceedings in this country to enable the action to proceed in the appropriate forum.

The Spiliada [1987] 1 Lloyd’s Rep. 1 per Lord Goff at p15.

In the case of an arbitral award, the effect of the International Arbitration Act, sections 6 and 7, is that where the court has ordered a stay of the (admiralty) proceedings, it may order the vessel (the property) retained as security for the satisfaction of any award made by the tribunal.

Consideration of whether it is ‘possible to [. . .] pursue proceedings on the merits elsewhere’ would also depend on the judicial approach of the particular forum ‘elsewhere’. For there must be reciprocity of jurisprudence and if that forum is, for instance, English, it is highly likely that the Singapore court would adopt the approach like that in the International Arbitration Act, mutatis mutandis.

Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?

One of the functions of the court is to assist creditors by its procedure to obtain satisfaction of their just claims. Except for ship arrest, there is a general proposition that the procedure of common law jurisdictions is less well equipped than many of the continental counterparts to provide security.

A plaintiff in pending proceedings in the Singapore jurisdiction may, upon satisfying certain conditions, seek a Mareva injunction in respect of the defendants’ assets within the jurisdiction to prevent them from removing their assets from the jurisdiction. A Mareva injunction, which has been called ‘an injunction by way of foreign attachment’, results in the substitution of security (eg, a bank guarantee) for an asset.

The plaintiffs in appropriate cases may also apply for an injunction restraining the defendants from dealing with the asset in a manner calculated to defeat or render nugatory a judgment or court order which on the evidence appears irresistible.

Are orders for delivery up or preservation of evidence or property available?

On an application by a party to the proceedings under Order 29 rr 2 and 3 of the Rules of Court, the court may make an order for the interim detention, custody or preservation of the subject property and for the obtaining of full information or evidence in the proceedings. The court also has jurisdiction, for the purpose of preserving the subject matter of the proceedings or of documents relating thereto, to grant an Anton Piller order, which in essence is a mandatory injunction requiring the defendant to permit the plaintiff to enter the defendant’s premises to inspect and remove materials into safe custody.

Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?

No procedure in rem is available to arrest bunkers in the same manner as the arrest of ships and aircraft. The only possible way is by the process of execution upon obtaining a judgment against the owner of the bunkers as with any other type of property within the jurisdiction. A Mareva injunction in respect of bunkers is possible if the prerequisites are satisfied, though such cases are quite rare, unlike, for example, proceeds of insurance on a vessel sunk after a casualty or other form of substantial assets with the bank.