DSA Consultancy (FZC) v. The “Eurohope” [2017] SGHC 218 (The Eurohope)
1. In The Eurohope, the plaintiff charterers, DSA Consultancy (FZC) (the Charterers) chartered the vessel The Eurohope from the defendant disponent owners (the Owners) under a charterparty governed by English law containing an exclusive jurisdiction clause in favour of the High Court of London.
2. The Owners sought to terminate the charterparty and the Charterers commenced an action in the High Court of London for wrongful termination. Shortly after, the Charterers issued a writ in rem in Singapore and arrested the vessel. The vessel was arrested for the sole purpose of obtaining security in aid of the London action, and the Charterer had no intention of proceeding with the Singapore action.
3. The Owners provided security in the form of a letter of undertaking, and the vessel was released.
4. The Charterers applied for an order to stay the Singapore action and for the security furnished to remain in place pending the final determination of the London proceedings.
5. In turn, the Owners applied for:
a. the writ and/or warrant of arrest to be struck out and/or set aside;
b. damages for wrongful arrest; or, in the alternative
c. moderation of the security amount.
6. The Owners’ application was dismissed by the assistant registrar and the Charterers’ application was allowed. The Owners then appealed to the Singapore High Court.
7. The Singapore High Court (Court) allowed the appeal and held that the Court’s admiralty jurisdiction cannot be invoked by an action in rem for the sole purpose of obtaining security in aid of foreign court proceedings.
8. The Court struck out the writ, set aside the arrest and ordered the return of the letter of undertaking to the Owners for cancellation. The Court, however, refused the Owners’ application for damages for wrongful arrest, noting that the position under Singapore law as regards vessel arrest for security in support of foreign court proceedings was not settled, and that it could not be shown that there was bad faith or malice on the part of the Charterers in commencing the Singapore action.1
The legal position in Singapore following The Eurohope
9. The Eurohope has made it clear that the Singapore High Court’s admiralty jurisdiction cannot be invoked for the purposes of obtaining security in aid of foreign court proceedings because no such power has been provided in the High Court (Admiralty Jurisdiction) Act.
10. This is to be contrasted with arresting a vessel to obtain security in aid of an arbitration. Both the Arbitration Act (which applies to domestic arbitrations) and the International Arbitration Act (which applies to international arbitrations) contain specific provisions which permit a court to order that a property under arrest be retained as security for any award made on the arbitration. Section 7 of the Arbitration Act, which is identical to section 7 of the International Arbitration Act, states as follows:
Where a court stays proceedings [in favour of arbitration] … the court may, if in those proceedings property has been arrested or bail or other security has been given to prevent or obtain release from arrest, order that –
the property arrested be retained as security for the satisfaction of any award made on the arbitration; or
the stay be conditional on the provision of equivalent security for the satisfaction of any such award.
The position in England and Wales
11. The position in England and Wales as regards vessel arrest and its retention as security in foreign court proceedings is derived from statute; under section 26(1) of the Civil Jurisdiction and Judgments Act 1982, the court has the power to permit the arrest of a vessel and allow it to be retained for the satisfaction of a judgment in foreign legal proceedings. This power differs from the position under Singapore common law as set out in The Eurohope.
12. The position in England and Wales is, however, the same as in Singapore in respect of the courts’ statutory power in respect of arbitration proceedings in another jurisdiction: under section 11 of the Arbitration Act 1996, the court has the express power to permit the arrest of a vessel and allow it to be retained for the satisfaction of an award in arbitration proceedings.
Damages for wrongful arrest
13. In The Eurohope, even though the writ was struck out and the warrant of arrest set aside, the Court declined to order damages for wrongful arrest against the Charterers. The Court found that there was no bad faith or malicious negligence on the part of the Charterers in commencing the Singapore action. This was primarily because the Charterers had referred to an earlier unreported decision of High Court which appeared to permit a vessel to be arrested solely for the purposes of obtaining security in aid of foreign court proceedings and hence there appeared to be some uncertainty in the law on this issue.
Conclusion
The decision in The Eurohope makes it clear that, in Singapore, a vessel cannot be arrested solely for the purposes of obtaining security in aid of foreign court proceedings. This is to be contrasted with the Court’s power to order property under arrest be retained as security in aid of arbitration.
Given that the decision of The Eurohope has clarified the position, it is more likely in the future that damages for wrongful arrest might be ordered against a party who arrests a vessel purely for the purposes of obtaining security in support of foreign court proceedings.
Reed Smith LLP is licensed to operate as a foreign law practice in Singapore as Reed Smith Pte Ltd, which has a formal law alliance with Resource Law LLC. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.
- [2017] SGHC 218, Singapore High Court, Chua Lee Ming J, 31 August 2017, at par 35.
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