Reed Smith Client Alerts

The recent Singapore High Court decision of The Eurohope confirms the position under Singapore law that a vessel cannot be arrested in Singapore in aid of foreign court proceedings, but it can be arrested for the purposes of obtaining security in aid of international arbitrations.

The position in Singapore differs from the position in England and Wales, where a vessel can be arrested and retained as security for both foreign court proceedings and international arbitrations.

Authors: Jody Wood Natalia A. Debowska Nikisha Mirpuri Bernard Yee, Resource Law LLC

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