I COMMERCIAL OVERVIEW OF THE SHIPPING INDUSTRY
From a commercial perspective, Singapore is an extremely important shipping centre, with connections to more than 600 ports in over 120 countries.2 The Singapore Registry of Ships currently has over 4,600 registered vessels and ranks among the top-five largest registries in the world.3 According to the Maritime and Port Authority of Singapore (MPA), Singapore has become the ‘largest and most important bunkering port in the world’.4 Most recent available figures for Singapore’s seaborne cargo put the volume at 575,846,000 tonnes,5 with container throughput at a notable 30,922,000 TEUs.6
II GENERAL OVERVIEW OF THE LEGISLATIVE FRAMEWORK
Singapore has incorporated the following IMO marine conventions into its legislative framework:
a the 1974 International Convention for the Safety of Life at Sea (SOLAS Convention), the 1978 SOLAS Protocol (SOLAS PROT) and the 1988 SOLAS Protocol (SOLAS PROT (HSSC)), and the 1996 SOLAS Agreement (SOLAS AGR);
b the 1966 Load Lines Convention (the Load Lines Convention) and the 1988 Protocol (LLPROT);
c the 1972 Convention on the International Regulations for Preventing Collisions at Sea (the Colreg Convention);
d the 1969 International Convention on Tonnage Measurement of Ships (the Tonnage Convention);
e the 1972 International Convention for Safe Containers (the CSC Convention);
f the 1978 International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (the STCW Convention);
g the 1976 Operating Agreement on the International Maritime Satellite Organisation (INMARSAT OA);
h the 1976 Convention on the International Maritime Satellite Organisation (INMARSAT/IMSO Convention);
i the 1965 Convention on Facilitation of International Maritime Traffic (the FAL Convention);
j the 1973 International Convention for the Prevention of Pollution from Ships (MARPOL Convention) (Annex I to Annex V) and the 1997 MARPOL Protocol to the International Convention for the Prevention of Pollution from Ships (Annex VI) (MARPOL PROT);
k the 1976 and 1992 Protocols to the International Convention on Civil Liability for Oil Pollution Damage (CLC PROT);
l the 1992 Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (Fund PROT);
m the 1976 Convention on the Limitation of Liability for Maritime Claims (the LLMC Convention);
n the 1988 Cospas-Sarsat Programme Agreement (COS-SAR);
o the 2001 International Convention on the Control of Harmful Anti-Fouling Systems on Ships (the Anti-Fouling Convention);
p the 1979 International Convention on Maritime Search and Rescue (the SAR Convention);
q the 1988 Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (the SUA Convention) and the 1998 SUA Protocol (SUA PROT);
r the 1990 International Convention on Oil Pollution Preparedness, Response and Co-operation (the OPRC Convention) and the 2000 Protocol on Preparedness, Response and Co-operation to Pollution Incidents by Hazardous and Noxious Substances (HNS-OPRC);
s the 2001 International Convention on Civil Liability for Bunker Oil Pollution Damage (the Bunkers Convention); and
t the 2006 Maritime Labour Convention (MLC).
Singapore’s international obligations set out in these IMO conventions are administered by the MPA through six key Singapore statutes and regulations made thereunder:
a the Maritime and Port Authority of Singapore Act, which regulates the functions, duties, and powers of the MPA, the employment of seamen, port regulation, and licensing, etc.;
b the Merchant Shipping Act, which covers the registration of ships, manning and crew matters, and safety issues;
c the Prevention of Pollution of the Sea Act, which empowers the MPA to take preventive measures against pollution;
d the Merchant Shipping (Civil Liability and Compensation for Oil Pollution) Act, which addresses liability for oil pollution;
e the Merchant Shipping (Civil Liability and Compensation for Bunker Oil Production) Act, which considers liability for bunker oil pollution; and
f the Merchant Shipping (Maritime Labour Convention) Act 2014 (Act 6 of 2014), which safeguards the well-being and working conditions of seafarers onboard ships.7
III FORUM AND JURISDICTION
The Supreme Court of Singapore consists of the High Court and the apex court, which is the Court of Appeal. The legal system in Singapore has its roots in the English common law system, so English case law is viewed as having persuasive authority in the Singapore courts, although the right of appeal to the Privy Council was abolished in 1994. Likewise, case law from other Commonwealth jurisdictions, in particular Hong Kong, Australia, New Zealand and Canada, are regularly cited and viewed favourably as authorities in the Singapore courts.
The High Court exercises original jurisdiction in respect of criminal matters that are of particular gravity, as defined by statute law, and tries civil matters where the subject matter in question is in excess of S$250,000 in monetary value. All admiralty matters must be commenced in the High Court, which alone exercises admiralty jurisdiction by statute.
High Court trials and certain interlocutory applications are normally heard before a single judge (while other interlocutory applications are heard by an assistant registrar) and experts may be appointed to assist the court in various subject matters. Cases involving specialist areas of law are generally assigned to list/docket judges with experience in commercial matters. Disputes relating to shipbuilding, shipping and insurance as well as tort claims are examples of areas that are heard by Supreme Court justices with experience within that commercial field. Proceedings of a maritime nature are assigned to the Admiralty bench.
The Singapore courts take an active role in case management, particularly through regular pretrial conferences, to advance litigation proceedings to resolution, whether by trial or mediated resolutions in as cost-effective a manner as possible. Currently, civil actions that are commenced in the High Court typically take 12 to 15 months from the commencement of the suit to completion of the trial.
As part of the plan to position Singapore as the leading dispute-resolution hub in Asia, on 5 January 2015 the Singapore International Commercial Court (SICC) was constituted, following a series of legislative amendments. The judges of the SICC are the existing Supreme Court justices and a panel of 11 international judges with a mixed common law and civil law background. The SICC is a division of the High Court and it is primarily designed to hear and try international commercial disputes.
The SICC has jurisdiction to hear claims or actions that (1) are international and commercial;8 (2) the parties have expressly submitted to the jurisdiction of the SICC by a written jurisdiction agreement; and (3) the parties to the action do not seek any relief in the form of a prerogative order. It is possible for the High Court to transfer cases to the SICC, of its own motion, if the claim satisfies the criteria and the parties have submitted to the jurisdiction of the Singapore courts.
Civil trials and certain interlocutory applications in Singapore are conducted in open court, although parties may apply for an order to seal the court documents or case file in order to keep the proceedings confidential. Decisions by a single judge of the High Court may be appealed to the Singapore Court of Appeal, subject to any written agreement between the parties to limit the right of appeal. SICC judgments are recognised as a national court judgment (Supreme Court of Singapore) and any enforcement is dependent on the recognition of foreign judgments in the relevant jurisdiction. Other key features include the possibility for parties to choose to apply alternative rules of evidence and to be represented by foreign lawyers in offshore cases, as defined in the SICC Practice Directions.9
ii ADR in the Singapore courts, arbitration and mediation
The Singapore courts have incorporated ADR options into the judicial process with the aim of creating a holistic judicial system that provides litigants access to both modes of resolving disputes, that is the ADR process and the trial process. The state courts of Singapore (which comprise the magistrate’s courts and the district courts), in particular, actively encourage and endorse the early use of the ADR process in civil claims. The state courts try civil matters where the subject matter in question does not exceed S$250,000 in monetary value. With effect from May 2012, the state courts implemented a ‘presumption of ADR’ for civil matters – that is, all civil disputes in the state courts are automatically referred to the most appropriate type of ADR, unless any party opts out of ADR. There may be subsequent costs implications for a party who opts out of ADR for unsatisfactory reasons.
The four ADR options currently available for civil claims (including non-in rem maritime claims) in the state courts are: (1) mediation at the State Courts Centre for Dispute Resolution (SCCDR); (2) Neutral Evaluation at the SCCDR; (3) mediation at the Singapore Mediation Centre (SMC); and (4) arbitration through the Singapore Law Society Arbitration Scheme (LSAS). Mediation at the SCCDR is the most commonly used ADR option in the state courts and is generally regarded as the default ADR option, followed by neutral evaluation. Both processes are fully confidential (that is, the matters discussed at ADR will not be disclosed to the trial judge if the matter proceeds to trial) and non-binding (unless parties opt for a binding evaluation or reach a binding settlement following the ADR process). If the ADR process is successful, particularly at an early stage, it can result in substantial savings in time and costs for parties.
More recently, the Supreme Court of Singapore too has adopted a more pro-ADR approach. The Supreme Court Practice Directions were amended in January 2014 to introduce a process for parties to consider using ADR at the earliest possible stage of the proceedings. As with civil proceedings and ADR in the state courts, potential adverse costs orders can be made against any party that unreasonably refuses to engage in ADR. A party that wishes to attempt mediation or any other means of ADR (e.g., neutral evaluation, expert determination, conciliation) in proceedings before the High Court or Court of Appeal should file and serve an ADR offer on the other party. If within 14 days thereafter, the other party does not serve a response to ADR offer, it would be deemed unwilling to attempt ADR without providing any reasons, and may be subject to adverse costs orders in the proceedings.
Originally established in 2004 under the umbrella of the Singapore International Arbitration Centre (SIAC), the Singapore Chamber of Maritime Arbitration (SCMA) was reconstituted and became separate from the SIAC in May 2009 in order to meet the growing needs of the maritime community, which preferred a model similar to the London Maritime Arbitrators Association where the arbitration body does not manage the arbitration process. The SCMA provides a framework for maritime arbitration; the SIAC, on the other hand, is a non-sector-specific arbitration organisation that was established in 1991.
Following the latest amendments to the SCMA Rules in October 2015, the SCMA small claims procedure now extends to cover disputes where the aggregate amount in dispute (claim and counterclaim) excluding interest and costs does not exceed US$150,000 (up from US$75,000 previously). Alternatively, parties can either adopt the small claims procedure regardless of the amount in dispute or exclude the application of this procedure, by agreement. Under the small claims procedure, a sole arbitrator is appointed to conduct the arbitration and the recent amendments have introduced a cap on the arbitrator’s fees (US$5,000 or, where there is a counterclaim, US$8,000) and recoverable legal costs (US$7,000 or, where there is a counterclaim, US$10,000 in total for each party’s lawyers). Timelines for the service of case statements are abridged to 14 days. Parties can expect the award to be issued within 21 days of either the date of the tribunal’s receipt of all parties’ statements of case or, if there is an oral hearing (which is not usually the case), the close of the oral hearing.10
In November 2013, the SCMA launched the SCMA Expedited Arbitral Determination of Collision Claims (SEADOCC) to provide a fair, timely and cost-effective means of determining liability for a collision through mediation in circumstances where it has not been possible or appropriate to reach such an apportionment of liability using other means of dispute resolution.11 The purpose of arbitration under the SEADOCC procedure is to provide a binding decision on liability for a collision between two or more ships by a single arbitrator. The procedure is governed by the SEADOCC Terms,12 which include directions on early termination and parties’ submissions.
The SIAC’s primary rules of arbitration are the SIAC Rules, but parties can also choose to adopt the UNCITRAL Arbitration Rules for the conduct of arbitration at the SIAC. While the UNCITRAL Rules are generally designed for ad hoc forms of arbitration, parties can still elect for institutional administration of the arbitration by the SIAC. These are both consensual regimes that respect the principle of party autonomy.
In July 2010, the SIAC introduced an expedited procedure that any party to a SIAC arbitration desiring an expeditious arbitral process can apply for. Disputes may be referred to arbitration under the expedited procedure in any of the following instances: (1) if the amount in dispute (aggregate of the claim and any counterclaim and any defence of set-off) does not exceed the equivalent of S$5 million, (2) if all parties consent or (3) in cases of exceptional urgency.13 Parties can also agree beforehand to adopt this procedure, regardless of the amount in dispute, by incorporating the SIAC Expedited Procedure Model Clause in their contract. An arbitral award under the expedited procedure must be issued within six months from the date when the tribunal is constituted, although the Registrar of SIAC can extend the time in exceptional circumstances. Further, the chairman of SIAC retains the discretion not to apply the expedited procedure if the dispute is not suitable to be resolved in six months or where the procedure is generally not appropriate for the particular dispute.14
A further element introduced in the 2010 SIAC Rules was the appointment of an emergency arbitrator in situations where a party is in need of interim emergency relief before a tribunal is constituted. The types of emergency relief typically sought include preservation orders, freezing orders, orders permitting access to inspect property, Mareva injunctions and general injunctive relief. Cases in which applications for emergency relief are filed relate to disputes in a broad range of sectors including shipping, international trade and general commercial agreements. While emergency awards or orders have been passed in as little as two days, it generally takes about eight to 10 days on average for the emergency arbitrator to render its award after hearing parties’ submissions. Following amendments made to the Singapore International Arbitration Act (IAA) in 2012, awards issued by emergency arbitrators in arbitrations seated in and outside of Singapore are enforceable under Singapore law.15
As of 2013, Singapore has been added as a named arbitral forum to the BIMCO Standard Dispute Resolution Clause, besides London and New York, to reflect the global spread of maritime arbitration venues. Within the new SCMA BIMCO Arbitration Clause, disputes would be resolved under the IAA, and conducted in accordance with the SCMA Rules in force at the time the arbitration proceedings are commenced, offering parties the choice of applying Singapore or English law as the governing law of the contract.
Mediation is used in tandem with court proceedings in that the court can suggest that parties refer disputes to the Singapore Mediation Centre (SMC). Mediation is voluntary, and would only be adopted by the consent of all parties involved.
The SMC offers mediation schemes such as the commercial mediation scheme, which is particularly suitable for large complex commercial disputes, as well as the med–arb scheme, which is a hybrid dispute resolution process that brings together the elements of both mediation and arbitration, and is overseen by the SMC in collaboration with the SIAC. The mediation services offered by SMC, whose panel of mediators largely comprises local mediators, generally focus on domestic disputes.
Since November 2014, mediation has also been available under the auspices of the Singapore International Mediation Centre (SIMC). SIMC administers mediation under the SIAC–SIMC Arb–Med–Arb (AMA) Protocol (where disputes have been submitted to the SIAC for resolution under the Singapore Arb-Med-Arb Clause or other similar clause or where parties have agreed that the AMA Protocol shall apply) or the SIMC Mediation Rules (i.e., in cases where the AMA Protocol does not apply). Under the AMA Protocol between SIAC and SIMC, settlement agreements may be recorded as consent awards. SIMC has an international panel of mediators as well as an international panel of experts from various industry sectors who can assist the mediator in complex commercial disputes involving technical questions. While the mediation services offered by SIMC focus largely on international commercial disputes, parties are free to choose whether they prefer to mediate at SMC or SIMC. For ad hoc mediations not administered by the SIMC in accordance with the SIMC Rules, SIMC can serve as an appointing authority for mediators or experts, subject to parties’ agreement and for a prescribed fee.
iii Enforcement of foreign judgments and arbitral awards
Foreign court judgments of a Commonwealth origin readily find enforcement in Singapore, under the statutory regime of the Reciprocal Enforcement of Commonwealth Judgments Act (RECJA). This prescribes a registration method to a judgment from a gazetted Commonwealth jurisdiction whereby the applicant for registration applies ex parte to the High Court to obtain, first, leave to register the foreign judgment. The notice of registration of the foreign judgment is then served on the judgment debtor. The judgment debtor is given the opportunity to contest the registration of the foreign judgment, failing which that judgment can be entered as a judgment of the Singapore High Court. Under the RECJA, a time limit of 12 months from the date of the foreign judgment applies, within which that judgment may be registered under the RECJA, or such longer period as may be allowed by the High Court on application. In a similar vein, the Reciprocal Enforcement of Foreign Judgments Act (REFJA) allows the enforcement of a superior court judgment of any gazetted non-Commonwealth foreign country (which currently only comprises the Hong Kong Special Administrative Region of the People’s Republic of China).
The REFJA prescribes a six-year limitation period within which the enforcement application must be brought. Both the RECJA and REFJA permit challenges to the registration of foreign judgments on narrow, specific grounds that are spelt out by statute.
Judgments from other countries that are not gazetted under either the RECJA or the REFJA may be enforced under common law. This requires an action upon the foreign judgment (i.e., the foreign judgment creditor commences a suit in a Singapore court, suing upon the original cause of action, and using the foreign judgment as evidence of the defendant’s in personam liability on the claim). Typically, a summary judgment application is possible on a common law enforcement action.
Where enforcement of foreign arbitral awards is concerned, the centrepiece avenue under Singapore law is that of the New York Convention, to which Singapore is a signatory. The approach of the Singapore courts and, uniformly, the Commonwealth jurisdictions that are party to the New York Convention, is to be pro-enforcement when asked to enforce foreign arbitral awards under the Convention.16 The pro-enforcement purpose of the Convention is underscored by the exclusive and exhaustive grounds, under Section 31 of the IAA, by which enforcement of a Convention award may be refused.17 Consistent with the legislative objective, the Singapore court has endorsed and applied a mechanistic approach to the process of enforcing foreign awards under the Convention insofar as the first stage of enforcement, which pertains to the initial grant of leave to enforce, is concerned. At this first stage, the enforcement process does not require judicial investigation by the Court in the jurisdiction where enforcement is sought and the party seeking leave to enforce the award must merely comply with the formalistic procedural requirements under Order 69A of the Rules of Court.18 The applicant must nevertheless give full and frank disclosure of the relevant facts, including the existence of any pending applications for setting aside the award or leave to appeal on a question of law, as the application for leave to enforce is made on an ex parte basis.19 At the second stage of the two-stage process of enforcement, which is invoked when a party against whom an award is made resists enforcement on the grounds set out in the IAA, that party must prove the grounds it relies upon on a balance of probabilities.
IV SHIPPING CONTRACTS
Singapore has long been a leading centre for ship repair and shipbuilding. Singapore corporations Keppel Corp and Sembcorp Marine are among the world’s top offshore rig builders.
A shipbuilding contract is regarded both as a contract for sale and purchase as well as a contract for the supply of workmanship and materials. There are a number of commonly used standard-form shipbuilding contracts, including SAJ (Shipbuilders’ Association of Japan), AWES (Association of West European Shipbuilders) and BIMCO’s Newbuildcon.
Shipbuilding disputes usually involve issues of whether the ship complies with the description and contractual specifications.20 The conditions and implied warranties under the Sale of Goods Act 1979 apply if the shipbuilding contract is governed by Singapore law (e.g., there is an implied condition that the ship will correspond with the description and be reasonably fit for its intended purpose).
The parties may contract for title to pass gradually upon the progress of the construction or at certain stages or milestones. Generally, in the absence of any provisions to the contrary, the risk will pass with the title.
Typically, payment of the purchase price is made in instalments before delivery and, in return, a performance guarantee or refund guarantee will be furnished by the yard under the shipbuilding contract. Provided that the guarantee is an on-demand guarantee, the buyer would be entitled to call on the guarantee immediately without having to establish liability of the seller, provided that other conditions that entitle the buyer to call on the guarantee are satisfied. In Master Marine AS v. Labroy Offshore Ltd and others,21 the yard failed to deliver a rig by the agreed delivery date. The buyer rescinded the contract and called on the refund guarantees furnished by the seller’s banks. The yard applied ex parte for an injunction preventing the banks from paying out the monies or Master Marine receiving the same. The Singapore Court of Appeal held that on the true construction of the refund guarantees, the guarantees were on-demand guarantees, and having satisified that the conditions for payment under the guarantees the buyer was entitled to payment under the refund guarantees.
The Singapore courts have not had the opportunity to consider, in any reported decision thus far, the presumption applied by the English Court of Appeal in Marubeni Hong Kong and South China Ltd v. Mongolian Government22 (Marubeni ) that in construing a guarantee given outside the context of a banking instrument or by a non-financial institution, the absence of language appropriate to a performance bond or something having similar legal effect creates a strong presumption against the parties’ intention to create a performance bond or on-demand guarantee (the Marubeni presumption). While the Singapore High Court in China Taiping Insurance (Singapore) Pte Ltd (formerly known as China Insurance Co (Singapore) Pte Ltd) v. Teoh Cheng Leong 23 (China Taiping) briefly referred to Marubeni as support for the general principles on the construction of guarantees and on-demand guarantees or performance bonds, on the facts of that case, the Singapore court did not have to consider the application of the Marubeni presumption. It, therefore, remains to be seen whether the Marubeni presumption will gain judicial support locally, bearing in mind that the English court’s decision is persuasive authority in the Singapore courts.
Under Singapore law, there are two separate and distinct exceptions to a guarantor’s obligations to pay promptly upon a demand being made by the beneficiary within the terms of the guarantee, irrespective of any dispute between the account party and the beneficiary – that is, fraud and unconscionability.24 The fraud exception is meant to safeguard the account party from a dishonest call being made upon the guarantee by the beneficiary.25 The unconscionability exception, on the other hand, was developed as it was recognised that in certain circumstances, even where the account party cannot show that the beneficiary had been fraudulent in calling on the bond, it would nevertheless be unfair for the beneficiary to realise its security pending resolution of the substantive dispute.26 Therefore, under Singapore law, where a beneficiary acts fraudulently or unconscionably when calling on an on-demand guarantee or performance bond, the court can grant injunctive relief to restrain a call on or payment out under such a guarantee or performance bond.
It is, however, now possible under Singapore law for parties to incorporate a carefully worded clause in their contract to restrict the grounds on which an obligor may object to a beneficiary’s call on a performance bond. The Singapore Court of Appeal recently considered the issue of whether parties could contractually restrict the right of the obligor under a performance bond to apply for an injunction (which is an equitable remedy) to restrain the beneficiary from calling on the bond.27 Under the subject clause in the main contract in CKR Contract Services, the obligor was not entitled to restrain the beneficiary from calling on the performance bond on any ground, except in the case of fraud.28 The obligor applied for an injunction, on the ground of unconscionability, to restrain payment from being made to the beneficiary. The Court of Appeal ruled that the clause merely sought to limit the obligor’s right to an equitable remedy, and was not an ouster of the jurisdiction of the court or void and unenforceable for being contrary to public policy, and therefore dismissed the obligor’s appeal against the decision of the judge at first instance refusing to grant the injunction (albeit on slightly different grounds). The Court of Appeal nevertheless stressed that it may still be open to the obligor to rely on the usual doctrines or principles at common law or the relevant provisions under the Unfair Contract Terms Act to argue that such a clause in unenforceable (since these issues did not arise or were not raised in CKR Contract Services).29
To allocate the risks of delays in completion, it is also usual for shipbuilding contracts to provide for liquidated damages in the event of delay. Such liquidated damages provisions are enforceable, provided that the agreed level of compensation is a genuine pre-estimate of loss. Otherwise, the provision will be treated as a penalty clause and will be struck out.
The failure by the yard to construct or complete the ship in accordance with the terms of the contract may entitle the buyer to claim damages from the yard, which is the usual remedy. Specific performance may be ordered where the buyer can prove that damages will not be an adequate remedy.
ii Contracts of carriage
Singapore is a state party to the Hague-Visby Rules, which were enacted into domestic legislation by the Singapore Carriage of Goods by Sea Act (1998 edition), without variation.
These Rules apply by force of law to shipments of goods under a bill of lading where the port of shipment is a port in Singapore or where the requirements of Article X of the Rules otherwise apply. Under the Singapore Carriage of Goods by Sea Act (COGSA), the Rules can be contractually applied to the carriage of goods by sea under a sea waybill or straight (non-negotiable) bill of lading. The Hamburg Rules do not apply. Singapore has not acceded to or ratified the the Rotterdam Rules. Cabotage is not applicable in Singapore. The CMR Convention has not been ratified in Singapore and the liability of carriers of goods by road is governed by common law principles.
Importantly, in terms of legislation, Singapore has enacted by statute its Bills of Lading Act, which is in pari materia with the UK COGSA 1992. Under the Singapore Bills of Lading Act, title to sue and transfer of liabilities can be effected by mere endorsement of a negotiable bill of lading, without the requirement under the old English Bills of Lading Act 1855 that linked transfer of title to sue to transfer of property in the cargo.
Where contracts of carriage subject to the Hague-Visby Rules are concerned, the carrier’s limitation of liability for any loss of or damage to or in connection with the cargo is statutorily defined as S$1,563.65 per package or unit, or S$4.69 per kilogram of gross weight of the goods lost or damaged, whichever is higher. The time bar for cargo claims under the Hague-Visby Rules is one year from the date of delivery or from the date when the goods should have been delivered.
In respect of contracts of carriage of goods by sea, the relevant liens applicable are: (1) the shipowner’s lien on cargo, which is a possessory lien that can arise at common law in respect of freight, or in a bailee of necessity context,30 or under contract for amounts payable to the shipowner under the contract of carriage; (2) the shipowner’s lien on sub-freight or sub-hire, which is a contractual lien under a contract of carriage validly incorporating a charterparty lien clause; and (3) liens on the ship exercisable by an action in rem following arrest of the vessel. This is the claimant’s statutory right of action against the ship if the claim is listed as falling within the subject matter of Admiralty jurisdiction in the High Court (Admiralty Jurisdiction) Act.
The shipper has a duty to properly identify and to pack the goods shipped. Pursuant to Article III(5) of the Hague-Visby Rules, the shipper is deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity and weight, as furnished by it, and the shipper must indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in the particulars. The shipper has a strict liability at common law for shipment of dangerous goods without notice to the carrier. This strict liability regime is extended by the indemnity regime of Article IV(6) of the Hague-Visby Rules, which imposes broad liability upon the shipper for all damages and expenses directly or indirectly arising out of or resulting from the shipment of any cargo that causes or threatens to cause loss of life, damage to the ship or other cargo, delay or expense to the carrier.
The Singapore courts have handed down decisions on principle in relation to the interpretation of the Hague-Visby Rules. Notable examples are the decision of the Court of Appeal in Sunlight Mercantile Pte Ltd v. Every Lucky Shipping Co Ltd on the carriage of deck cargo,31 where the Court of Appeal declined to follow the English court decision in The ‘Imvros’ 32 on the effectiveness of a contractual exclusion of the carrier’s liability for unseaworthiness; and the reasoning of the Singapore Court of Appeal in APL Co Pte Ltd v. Voss Peer 33 on the role of a straight consigned bill of lading and the carrier’s delivery obligations there under, which has been followed by the English Court of Appeal in The ‘Rafaela S’.34
iii Cargo claims
Pursuant to Section 2(1) of the Singapore Bills of Lading Act, a person who becomes the lawful holder of a bill of lading shall have transferred to and vested in him all rights of suit under the contract of carriage as if he had been a party to that contract. Section 5(2) of the Act defines a holder of a bill of lading as:
a a person with possession of the bill who, by virtue of being the person identified in the bill, is the consignee of the goods to which the bill relates;
b a person with possession of the bill as a result of the completion, by delivery of the bill, of any endorsement of the bill or, in the case of a bearer bill, of any other transfer of the bill; or
c a person with possession of the bill as a result of any transaction by virtue of which he would have become a holder falling within paragraph (a) or (b) had the transaction not been effected at a time when possession of the bill no longer gave a right (as against the carrier) to possession of the goods to which the bill relates.
Importantly, the Bills of Lading Act also provides for the transfer of liabilities under a bill of lading or any carriage document to which the Act applies. The Bills of Lading Act covers not just the transfer of rights or liabilities of bills of lading but also covers sea waybills and ship’s delivery orders. In Singapore, the transfer of bill of lading rights and liabilities is regulated by the Bills of Lading Act. This is essentially a re-enactment of the UK Carriage of Goods by Sea Act 1992. The Singapore courts take a stringent view to the principle of the bill of lading being a document of title. There is very little scope for the carrier to defend a misdelivery claim under Singapore law, as exemplified in decisions of the Singapore courts at the High Court and Court of Appeal levels.35 Examples in which misdelivery claims have been successfully defended usually centre around the claimant’s failure to prove title to sue.
There may be, however, rare instances where a bill of lading may not be considered a document of title or a contract of carriage. In the recent High Court decision of The ‘Star Quest’,36 the plaintiffs sold bunkers to buyers (two subsidiaries of OW Bunkers A/S), which were loaded onto several bunker barges owned or demise chartered by the defendants. The terminal at which the bunkers were loaded prepared and furnished various bills of lading naming the plaintiffs as shipper and made out to its order. By the time the plaintiffs invoiced the buyers for the price of the bunkers, the bunkers had already been supplied to other vessels and expended for consumption without production of the original bills of lading, which the plaintiffs still possessed. The buyers subsequently went insolvent and the plaintiffs, having not been paid for the bunkers, demanded delivery of the same from the defendants on the basis that they still held the bills of lading.
The plaintiffs then applied for summary judgment but failed in their application, with the High Court giving the defendants unconditional leave to defend the action. In arriving at this decision, the High Court held, among other things, that it was at least arguable that the bills of lading could not be relied upon as contractual documents, and that their express terms indicated that they did not operate as documents of title required for the delivery of the bunkers. The bills of lading stated that the bunkers were ‘bound for bunkers for ocean going vessels’. As no destination or range of destinations were specified, the High Court’s view was that the contract of carriage would be too uncertain to be enforceable. Further, notwithstanding that the bills of lading bore the common notation ‘one of which is accomplished, the others to stand void’, they specifically contemplated delivery of the bunkers to multiple oceangoing vessels, and it would have been unworkable to have expected delivery of each sub-parcel to be accomplished only against production of a single set of the bills of lading.
Apart from bringing a claim in contract, Singapore law, again as exemplified by recent decisions of the High Court, also recognises and applies common law principles of bailment and tortious duties of conversion to supplement a cargo claimant’s rights to claim. This can be crucial where, in a given case, the cargo claimant is unable to prove title to sue in contract under a bill of lading.37
Where incorporation of charter terms into bill of lading contracts is concerned, Singapore law generally follows English law principles on contractual incorporation of terms. General words of incorporation will suffice to incorporate terms linked to the carriage or delivery of the goods, provided that the incorporating document identifies, either expressly or implicitly, the charterparty to be incorporated. Specific words of incorporation are required to incorporate ‘collateral’ or ‘ancillary’ clauses, such as law and jurisdiction or arbitration clauses. As long as the law and jurisdiction (or arbitration) clause in the charterparty is validly incorporated in the bill of lading, it is binding upon a third-party lawful holder of the bill of lading. A demise clause providing that the parties to the contract evidenced by the bill of lading are the shipper and the shipowner is generally upheld and valid.
iv Limitation of liability
Singapore is party to the LLMC Convention 1976, which came into force on 1 May 2005 pursuant to Part VIII of the Merchant Shipping (Amendment) Act 2004. The Merchant Shipping Act of Singapore as amended in 2004 contains various provisions that either operate in tandem with or modify the provisions of the 1976 Convention. These provisions are found in Sections 136 to 142 of the Act.
Singapore is, however, not a party to the LLMC Protocol 1996 or the 2012 Amendments to the 1996 Protocol, and the increase in the limits of liability under the 1996 Protocol and the 2012 Amendments are therefore not applicable under Singapore law.
A ship, for the purpose of limitation, is any kind of vessel used in navigation by water and includes barges, hovercraft and ‘offshore industry mobile units’. The persons entitled to limit their liability are as per Article 1 of the LLMC Convention wording, which is unamended. These include:
b demise, time, voyage and slot-charterers;
c managers or operators of a seagoing ship;
e any person for whose act, neglect or default the parties listed above are responsible; and
f an insurer for claims subject to limitation can limit to the same extent as its assured.
The following claims are subject to limitation of liability:
a claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;
b claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
c claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations;
d claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship (but not if under contract with the person liable); and
e claims of a person other than the person liable in respect of measures taken in order to avert or minimise loss for which the person liable may limit his liability (but not if under contract with the person liable).
The claims are subject to limitation even if brought by way of recourse or indemnity under contract.
A person is not entitled to limit its liability if it is proven that the loss resulted from his or her personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.
The limits of liability for loss of life or personal injury are:
a 166,667 special drawing rights (SDRs) for ships below 300 tonnes; and
b 333,000 SDRs for ships not exceeding 500 tonnes.
For larger ships, the following amounts are used in addition to 333,000 SDRs:
a 501 to 3,000 tonnes: 500 SDRs per tonne;
b 3,001 to 30,000 tonnes: 333 SDRs per tonne;
c 30,001 to 70,000 tonnes: 250 SDRs per tonne; and
d 70,001 tonnes and above: 167 SDRs per tonne.
The limits of liability for any other claims are:
a 83,333 SDRs for ships below 300 tonnes; and
b 167,000 SDRs for ships not exceeding 500 tonnes.
For larger ships, the following amounts are used in addition to 167,000 SDRs:
a 501 to 30,000 tonnes: 167 SDRs per tonne;
b 30,001 to 70,000 tonnes: 125 SDRs per tonne; and
c 70,001 tonnes and above: 83 SDRs per tonne.
Limitation proceedings can be brought by a party seeking to establish its right to limit. A party can also rely on its right to limit as a form of defence for claims brought against it that are subject to limitation. It is not necessary to constitute a limitation fund until the court has determined whether a party has the right to limit its liability. A limitation fund can be constituted by way of a cash payment into court, or bank guarantee. The likelihood is that an International Group of P&I Clubs letter of undertaking will also be acceptable to a Singapore court for the purposes of Article 11(2) of the 1976 Convention, following practical instances where this has been done in Singapore, and the approach in the English Court of Appeal decision in Kairos Shipping Ltd v. Enka & Co LLC (The ‘Atlantik Confidence’ ).38
Where a shipowner has obtained a limitation decree in Singapore and a claimant commences an action in a foreign jurisdiction where higher limits of liability apply, without challenging the Singapore limitation decree or participating in the distribution of the limitation fund constituted under the Singapore limitation decree, the Singapore courts can grant an anti-suit injunction to restrain the claimant from proceeding with its action in the foreign jurisdiction on account of the claimant’s vexatious or oppressive conduct in effectively compelling the shipowner to set up another limitation fund when there is already an existing and properly constituted limitation fund in Singapore. The right to claim limitation in any particular forum is a right that belongs to the shipowner alone, and a claimant cannot pre-empt the shipowner’s choice of forum or dictate the limitation forum, even in circumstances where the appropriate forum on the adjudication of liability was elsewhere.39
On the other hand, where the Singapore courts are asked to stay proceedings commenced in Singapore on the grounds of forum non conveniens in actions to determine liability on collision claims, the Singapore courts take the view that the fact that the law in the alternative foreign forum may be less favourable to the plaintiff because lower limits of liability apply in that jurisdiction does not per se necessarily justify dismissing the stay application, if the claim bears greater jurisdictional connections to that foreign jurisdiction. The existence of different limitation regimes is not considered a personal or juridical advantage under the Spiliada 40 principles that the Singapore courts apply when considering a stay application.41
i Ship arrest
The Singapore courts have developed their own jurisprudence in relation to the law of ship arrest, which is now clearly divergent from English law. Singapore has not acceded to either the 1952 or 1999 Arrest Conventions. Neither is it a signatory to the International Convention on Salvage 1989 under which an expanded jurisdiction for arrest for salvage claims is now available to signatory countries, such as the United Kingdom.
The statutory provisions for ship arrest in Singapore are primarily set out in the High Court (Admiralty Jurisdiction) Act (HCAJA) and the Rules of Court, which flesh out the procedural aspects.
Section 3(1) of the HCAJA, which was modelled after the English Supreme Court Act 1981 equivalent provisions, provides an exhaustive list of claims for which a claimant may invoke admiralty jurisdiction of the High Court.
In a recent decision by the High Court, it was held that Section 3(1)(o) of the HCAJA, which allows for ‘any claim by a master, shipper, charterer or agent in respect of disbursements made on account of a ship’ to be brought, did not apply to bookkeeping and administrative fees incurred by a vessel’s managers or agents as such fees were incurred on behalf of the shipowner and not the ship. Neither did Section 3(1)(o) of the HCAJA apply to management fees, as the provision did not cover any remunerative elements, whether by way of commission or fee.42
Arrest can only be made against a ship that is owned by or demise chartered to a person who is liable for an in personam claim and who was, when the cause of action arose, the owner, charterer of or in possession or in control of, the same ship that gave rise to the claim.43 In proving ownership of a vessel for purposes of an arrest, ship registers serve as records upon which prima facie inferences of ownership can be made, but such inferences can be displaced by evidence that another party is the beneficial owner. In The ‘Min Rui’,44 another recent decision by the High Court, the plaintiffs arrested a vessel that they alleged belonged to the defendants at the time the admiralty writ was filed, as the defendants were named as the vessel’s registered owner under the Hong Kong Shipping Register. The defendants argued that they had sold the vessel to a bona fide purchaser for value before the writ was filed and were no longer the owners even though they were still named as such in the said Register. Examining the facts, the High Court found that the defendants were no longer the owners as the sale was genuine and title and risk in the vessel had passed a few days before the writ was filed. The defendants retained no beneficial interest in the vessel thereafter and pending deregistration from the Hong Kong Shipping Register, the defendants essentially held the Hong Kong registered title over the vessel on trust for the buyer. The writ and the arrest were thus both set aside.
Sister-ship arrest is possible in Singapore in circumstances where the in personam defendant owner of the ship that gave rise to the claim is also the beneficial owner of another vessel, so that such other vessel may be arrested for the claim.45 It is not possible to arrest ships in associated ownership in the same way that is permitted under, say, South African law. Maritime liens are recognised for limited categories of priority claims, such as claims for salvage, damage done by a ship (typically in collisions), crew wages, bottomry and master’s disbursements. Cargo may exceptionally be arrested for priority claims such as maritime liens.
Procedure, documents and costs
An admiralty action in rem is commenced by the court issuing a writ in rem. This needs to be endorsed with a statement of claim, or at least a statement of the nature of the claim. The court fee for issuing a writ is about S$500 to S$1,500 depending on the size of the claim. The validity of the writ is 12 months from the date on which it was issued. The court may, at its discretion, extend the validity if there was for instance no opportunity to serve it on the ship (because it has not called at Singapore).
The documents required to be filed in court on an application for a warrant of arrest include the writ of summons (in rem), warrant of arrest, request to issue a warrant of arrest, supporting affidavit of the arresting party, caveat searches confirming that there are no subsisting caveats against the arrest of the vessel, an undertaking to indemnify the Sheriff and a letter of authority or the particulars of the person effecting service of the warrant of arrest and writ. If all documents are in place a warrant of arrest order can be obtained within about half a day.
The arresting party has a duty to make full and frank disclosure to the court of all material facts in the supporting affidavit filed in its application for a warrant of arrest. In any given case, if circumstances are not clear as to, for instance, the in personam liability of the shipowner for the claim, or proof of ownership of the vessel to be proceeded against, the arresting party has to be careful to address and explain any such weaknesses in its case.
The Singapore Court of Appeal has clarified that although the Singapore courts will not consider the merits of a plaintiff’s claim in deciding whether the plaintiff has properly invoked admiralty jurisdiction, the plaintiff must satisfy the various steps and respective standards of proof for invoking admiralty jurisdiction in Singapore under Sections 3 and 4 of the HCAJA.46 In this respect, a plaintiff need not prove who ‘the person who would be liable on the claim in an action in personam’ is for the purposes of establishing admiralty jurisdiction (until and unless the defendant subsequently challenges the plaintiff’s action by applying to strike out the action under Order 18 rule 19 of the Rules of Court or the inherent jurisdiction of the court), but the plaintiff must identify in its supporting affidavit for a warrant of arrest, without having to show in argument, the person who would be liable on the claim in an action in personam. In the event a plaintiff’s invocation of admiralty jurisdiction or its arrest of the defendant’s vessel is subsequently challenged, the plaintiff would need to show, in addition to the requirements under Sections 3 and 4 of the HCAJA, a good arguable case on the merits of its claim.47
The duty to make full and frank disclosure is to disclose all material facts. The test of materiality for an arrest application is also the same as that required in other ex parte civil remedies. The mere disclosure of material facts without more or devoid of the proper context is in itself insufficient to constitute full and frank disclosure. Unless the document is presented to the judge, it has not been disclosed. The test of materiality is whether the fact is relevant to the making of the decision whether to issue the warrant of arrest, that is, a fact which should properly be taken into consideration when weighing all the circumstances of the case, though it need not have the effect of leading to a different decision being made. The arrest warrant is issued by the High Court on the application of the plaintiff. Civil liability will not arise should the arrest turn out to be unjustified and set aside later, unless it can be shown that the plaintiff acted with bad faith, or with gross negligence implying malice. A mistake in itself would not make an arrest wrongful, neither would a weak case for the plaintiff: actions for wrongful arrests are rare and seldom succeed. Practically speaking, a plaintiff will only face exposure for liabilities following an arrest if it can be shown that it had no reason to believe it had an arguable claim or that the ship was owned by the defendant, or was intent on abusing the court process. It should be noted, however, that a failure to make full and frank disclosure of all material facts is a ground for awarding damages for wrongful arrest if the non-disclosure was deliberate, calculated to mislead, or if it was caused by gross negligence or recklessness.48
In Singapore, a ship can only be arrested if it comes within the territorial waters as well as within the port limits of Singapore. The ship is arrested when the warrant of arrest is affixed for a short time on any mast of the ship or on the outside of any suitable part of the ship’s superstructure. After a vessel is arrested, it comes under the custody of the Sheriff of the Supreme Court of Singapore.
An undertaking to indemnify the Sheriff of the Supreme Court for costs of maintenance of the vessel under arrest is required, which includes the cost of a guard service. In practice, an initial deposit of S$5,000 to S$10,000 is usually required on account of the costs of the Sheriff. In addition, a local law firm employed to prepare and file the arrest papers and carry out the arrest usually requires a cross-undertaking from the arresting client, or funds sufficient to secure the firm’s undertaking to the Sheriff. Since it will be responsible to the Sheriff, the practice is for the local law firm to ask for a payment on account of its fees and disbursements, including the Sheriff’s costs.
A plaintiff arresting party need not furnish any counter-security to the defendant shipowner when applying to arrest.
The defendant can, at a later stage of the court action, apply to the court to require the plaintiff to furnish security for the defendant’s costs, which is the same general rule applying as for all civil litigants. The court has discretion to require security for costs of the defendant if the plaintiff is ordinarily resident out of the jurisdiction, or is shown to be financially unsound so as to be unable to meet an adverse order of costs if ordered against it. Such security if ordered is for costs only and does not cover damage suffered in other forms, for which the plaintiff will not be required to provide counter-security.
In order to avoid an arrest or to release a vessel under arrest, a defendant can provide security for the underlying claim. This typically includes bail bonds (effectively a cash deposit with the court) and guarantees or letters of undertaking from a first-class bank or underwriter, such as an International Group P&I Club. Additionally, a defendant shipowner who apprehends an arrest of its vessel calling into Singapore can file a caveat against arrest via a local law firm with the High Court, provided that the shipowner or his or her solicitors provide an undertaking to enter an appearance in any action that may be brought against that vessel, and furnish satisfactory security in the action to the plaintiff within three days of being notified that such an action has been commenced.
ii Court orders for sale of a vessel
As a corollary to an arrest in an in rem action, the High Court has the power to order a judicial sale pendente lite of an arrested vessel, if the shipowner fails to furnish security in exchange for a release. The High Court would typically permit the plaintiff arresting party to apply for a judicial sale order should the shipowner fail or refuse to provide security within, say, three weeks of the arrest. A key justification for allowing a judicial sale pendente lite is that otherwise, the value of the res as security will diminish as expenses on the upkeep of the vessel under arrest are incurred, and the condition of the vessel will deteriorate.
From the time of arrest, the main steps (in chronological order) following a successful application for judicial sale order, culminating in an actual sale to a buyer, are broadly as follows:
a surveying and appraisal of the vessel;
b advertising the sale of the vessel;
c time for sealed bids to be made; and
d acceptance of the bid to completion of sale.
A judicial sale is typically carried out by closed tender or public auction by the Sheriff of the Supreme Court, who is commissioned in all cases to undertake the appraisal and judicial sale of the arrested ship. A key guiding principle is that the court will scrutinise judicial sale applications carefully to ensure due process to best realise the market value of the arrested ship to be judicially sold. This is why the High Court has ruled in recent cases that applications for direct private sale of the arrested ship will generally not be allowed in Singapore.
In The ‘Turtle Bay’,49 the mortgagee bank arrested two vessels and commenced in rem proceedings against the defendant shipowner, later obtaining default judgment. It filed applications seeking the court’s approval of a private direct sale of each vessel on terms of contract entered into with named purchasers for a specified price each. The prices were above, but not significantly higher than, the court valuation. The Court emphasised that it has to strike a balance between the two competing concerns in a judicial sale: that of accepting the highest bid price at a fairly conducted Sheriff’s sale on the one hand, and weighing that concern against the purpose to be achieved by a judicial sale, which is to benefit all persons interested in the res. Where a party seeks to enter into a private direct sale, there is a divergence in its own interest to obtain benefits for itself, and the interest of the Sheriff acting pursuant to a commission for appraisal and sale. As a result, the court has to be circumspect when dealing with such a sale application and has to carefully scrutinise each application. The court will not allow a direct sale unless there exist ‘powerful special features’ or ‘special circumstances’, and these were lacking on the facts of the case. In The ‘Sea Urchin’,50 a similar situation arose, though the named buyer tabled an offer price above the value of the vessel, and had agreed to allow the vessel to sail with its cargo, then on board for delivery to the sub-charterer of the vessel. The Court reaffirmed the position set out in The ‘Turtle Bay’, and held that the costs of discharging the cargo where a vessel is under arrest is not a relevant factor to allowing a direct sale. Furthermore, the alleged special circumstance as to the impossibility of landing the cargo in Singapore and that transshipping would be slow and costly are, in reality, typical consequences of an arrest of a cargo-laden vessel. As such, powerful special features or special circumstances justifying an order for a direct sale were lacking on the facts of this case as well.
In the distribution of sale proceeds following a judicial sale of the vessel, the Singapore Admiralty Court generally ranks the priority of claims as follows:
a port dues and Sheriff’s commission and expenses of arrest, appraisement and sale of the vessel;
b arresting party’s legal costs of arrest, appraisement and sale being costs of the producer of the fund;
c maritime lien claims (e.g., crew wages, collision and salvage claims, save for prior accruing possessory liens);
d possessory lien claims (i.e., shipyards in possession of a vessel after effecting repairs or conversion); and
e mortgagee claims.
All other maritime claims rank pari passu (for example, charterparty, cargo and necessaries claims).
Being a major port and flag state, Singapore is a white-list country. It is party to all major IMO conventions, including the ‘pillar conventions’, which include the Colregs, the STCW Convention and SOLAS.
In the Singapore Straits, there is a mandatory ship reporting system (STRAITREP) that has been adopted by the IMO. STRAITREP, together with the operation of a vessel traffic information system, enhances the navigational safety for ships in transit and facilitates the movements of vessels in the Singapore Straits.
In terms of security, the ISPS Code was introduced and adopted by amendments to SOLAS. It entered into force on 1 July 2004. The ISPS Code was implemented by using the wide powers of the MPA given under the Maritime and Port Authority Act and the Merchant Shipping Act to give effect to the provisions of any international conventions in relation to shipping to which Singapore is a party.
ii Port state control
The MPA is the government agency responsible for implementing all IMO conventions. The MPA was established by the Maritime and Port Authority of Singapore Act in 1996.
Singapore is a founding member of the Tokyo MoU, which is a regional port state control organisation consisting of 18 members in the Asia-Pacific region.
The MPA performs all regulatory and administrative functions in respect of merchant shipping, marine and port matters in Singapore including port state control inspections. The MPA is responsible for, inter alia, port state control to ensure that ships leaving the port meet the international safety, security and pollution prevention standards. Inspections are carried out by port state control and ships that do not meet the requisite international standards may be detained. Between January and March 2017, five ships were detained by the MPA for various deficiencies and non-conformities.51
The MPA has wide-ranging powers. The port master may board any ship in port and issue orders and directions to ships within the port and Singapore territorial waters. Port clearance may be refused for ships that do not comply with such directions.
iii Registration and classification
In recent years, the Singapore Ship Registry, which is an open registry, has introduced several tax benefits and, as a result, has attracted a large number of foreign shipowners. It is currently ranked fifth in the world in terms of registered tonnage, with more than 4,700 registered vessels, totalling in excess of 88 million gross tonnage.52
The Singapore Ship Registry is administered by the MPA. Nine internationally recognised classification societies are authorised to survey and issue tonnage, safety and pollution prevention certificates to Singapore-flagged ships.
The requirements and conditions for registration of ships are set out in Part II of the Merchant Shipping Act and the Merchant Shipping (Registration of Ships) Regulations 1996. The conditions for registration are relatively straightforward:
a Vessels that are older than 17 years of age will generally not be considered for registration; see Section 8 of the Merchant Shipping (Registration of Ships) Regulations 1996.
b The registered owner can be a Singapore citizen or permanent resident or a Singapore incorporated entity, which can be either locally or foreign owned.
c For any foreign-owned company (defined as a company incorporated in Singapore with more than 50 per cent of the equity owned by foreign interests), the company is required to have a minimum paid-up capital of S$50,000, and the vessel must also be self-propelled and have a gross tonnage of at least 1,600. The minimum paid-up capital and tonnage requirements may be waived at the discretion of the registry.
The MPA also maintains the register of ship mortgages, which can be recorded as soon as the vessel has been entered into the registry.
iv Environmental regulation
Singapore is party to the following International Conventions relating to pollution:
a MARPOL (73/78) (Annex I to Annex VI);
b the CLC Convention;
c the Oil Pollution Fund Convention;
d the Bunker Convention; and
e the OPRC Convention.
These international conventions are given effect by domestic legislation:
a the Prevention of Pollution of the Sea Act gives effect to the International Convention for the Prevention of Pollution from Ships 1973 and the Protocol of 1978, as well as to other international agreements relating to the prevention, reduction and control of pollution of the sea and pollution from ships;
b the Merchant Shipping (Civil Liability and Compensation for Oil Pollution) Act gives effect to the CLC Convention and the Oil Pollution Fund Convention; and
c the Merchant Shipping (Civil Liability and Compensation for Bunker Oil Pollution) Act 2008 covers the liability of ships that cause bunker oil pollution in Singapore. This Act gives effect to the Bunker Convention.
The MPA coordinates operations for cleaning up spills, and monitors and enforces measures to prevent oil pollution in Singapore waters. Under the Prevention of Pollution of the Sea Act, the MPA is empowered to take preventive measures to prevent pollution, including denying entry or detaining ships.
The Singapore Straits is one of the busiest shipping routes in the world. As an illustration, between January and February 2014, three collisions occurred within Singapore waters that resulted in oil spills,53 in addition to another collision that resulted in an oil spill in January 2015.54 In August 2016, a Very Large Crude Carrier collided with a container ship, though no oil spill occurred.55
v Collisions, salvage and wrecks
Singapore is party to the Colregs, which are incorporated as a Schedule to the Merchant Shipping (Prevention of Collisions at Sea) Regulations. The legal regime for collisions is governed by the Maritime Conventions Act 1911 and the Merchant Shipping Act. The Maritime Conventions Act 1911 gives effect to the International Convention for the Unification of Certain Rules Relating to Collisions between Vessels 1910, to which Singapore had acceded. Section 8 of the Maritime Conventions Act 1911 provides a two-year time bar in relation to collision and salvage claims, though the limitation period may be extended by agreement between the parties, or pursuant to Section 8(3)(b) if there has been no reasonable opportunity to arrest an offending vessel within the limitation period, or at the court’s discretion under Section 8(3)(a).56
Salvage and wreck removal
Singapore is not a party to the Salvage Convention 1989. The legal regime governing salvage and wreck removal is set out in the Merchant Shipping Act and Maritime and Port Authority of Singapore Act.
The Maritime and Port Authority of Singapore has general supervision over all wrecks in Singapore.
Part IX of the Maritime and Port Authority of Singapore Act empowers the MPA to require owners of any vessel or object sunk, stranded or abandoned within the port of Singapore or approaches thereto to remove or destroy the whole or any part of such vessel or object. If the MPA’s directions are not complied with, it may take possession of the vessel or object, raise, remove or destroy the vessel or object, and recover its expenses from the proceeds of the sale of the vessel or object. If the proceeds of sale are insufficient to reimburse the MPA, the outstanding amount is a debt that may be recovered from the owners.
Part IX of the Merchant Shipping Act deals with wreck and salvage and provides that the MPA is empowered to appoint any person to be a receiver of a wreck. The appointed receiver has extensive powers to deal with any ship that is wrecked, stranded or in distress at any place on or near the coasts of Singapore or within Singapore territorial waters. The receiver of the wreck may take possession and raise, remove or destroy, and sell in such manner as it thinks fit, any ship so raised or removed and any other property recovered in the exercise of his powers.
Further salvage is payable for saving life and for any service rendered to any shipwrecked, stranded or in-distress vessel on or near the coasts of Singapore or in any tidal water within the limits of Singapore. If salvage is due in respect of services rendered in assisting any ship, or in saving life, cargo or apparel, the Act empowers the receiver of wreck to detain the ship, cargo or apparel until payment is made for salvage or process is issued for the arrest or detention of the property by the High Court. The receiver of wreck is also empowered to sell the detained property if payment is not made within 20 days after the amount is due or within 20 days after the decision of the High Court or the Court of Appeal, as the case may be.
vi Passengers’ rights
Singapore is not a signatory to the Athens Convention or any of its protocols.
The LLMC Convention provides the limitation regime for passenger claims. Article 7 of the LLMC Convention addresses claims for loss of life and personal injury to passengers. The limitation of liability of the owners is 46,666 SDRs multiplied by the number of passengers that the ship is authorised to carry according to the ship’s certificate, subject to a maximum limit of 25 million SDRs.
vii Seafarers’ rights
Singapore has ratified the MLC. With effect from 1 April 2014, the Merchant Shipping (Maritime Labour Convention) Act (the MLC Act) came into force, implementing Singapore’s obligations under the MLC. There are specific regulations in place dealing with matters relating to, inter alia, health and safety protection, repatriation, seafarer recruitment and placement services, seafarers’ employment agreement, crew list and discharge of seafarers, training and certification of cooks and catering staff, and wages.
The MLC Act generally applies to all Singapore-flagged ships. Any ship of 500 gross registered tonnage and above is also required to carry and maintain a maritime labour certificate and a declaration of maritime labour compliance.
Port state control extends to any ship in Singapore (not being a Singapore ship) engaged in commercial activities. Like most international conventions, certificates issued by the flag state administrations are accepted as prima facie evidence of a ship’s compliance with the requirements under the Convention. Similarly, under the MLC Act, port state inspections in Singapore will be limited to verifying that a valid maritime labour certificate and a valid declaration of maritime labour compliance are carried on board the ship. A detailed port state inspection will be carried out in, inter alia, the following situations: (1) when the maritime labour certificate and the declaration of maritime labour compliance are not produced or are falsely maintained; or (2) there are clear grounds for believing that the living conditions on board the ship do not conform to the requirements of the MLC Act or the Convention, or the working and living conditions of the ship constitute a clear hazard to the safety, health or security of the seafarers.
The MLC Act implements the Convention requirements for the shipowner to have in place financial security to meet any liabilities that may arise from, inter alia, repatriation of a seafarer, medical and other expenses incurred in connection with a seafarer’s injury or sickness, burial or cremation of a seafarer.57 While neither the Convention nor the implementing legislation has defined ‘financial security’ (in respect of repatriation, death or long-term disability) Singapore has indicated that an International Group P&I Club certificate of entry will be acceptable as evidence of financial security.
Ships that do not conform to the requirements of the Act or MLC may be detained, for example, when the conditions on board are ‘clearly hazardous’ to the safety, health or security of seafarers or if it constitutes a serious or repeated breach of the seafarers’ rights under the Act.
At the time of writing, there have been no known detentions in Singapore for non-conformity with the MLC. With the implementing legislation in place there is no doubt Singapore will enforce the provisions of the MLC through, inter alia, port state control and flag state control.
In recent years, Singapore has positioned itself as the jurisdiction and a forum of choice for resolution of maritime disputes, and cross-border disputes generally. The legislative and regulatory framework have evolved as a result, and steps have been taken toward greater recognition of foreign laws.
An example is the Foreign Limitation Periods Act 2012 (FLPA), which was brought into force from 1 June 2012. This has reformed the law on the application of foreign time bars in the context of Singapore court proceedings, as well as arbitral proceedings.58
In essence, by virtue of the FLPA, a Singapore court must apply foreign law on limitation periods (i.e., time bars), as opposed to Singapore law on limitation, where the Singapore court, in applying Singapore conflict rules, is required to apply the law of that foreign country in the determination of the substantive matter. In short, the application of foreign law on a limitation issue will be the corollary of the application of foreign law to the determination of the substantive matter. The FLPA heralds greater consistency in the Singapore courts’ approach to the application of foreign law so that foreign time bars (which are an important aspect in proceedings) are accorded due consideration and application where the substantive case is governed by foreign law.
In tandem with the overall growth in maritime activity and trade, Singapore is taking concrete steps towards positioning itself as a key hub for maritime and trade-related arbitrations. This is evident from statistical data showing a record of the number of disputes being arbitrated in Singapore. The SIAC arbitrated 271 new cases in 2015 from parties in 55 jurisdictions – 22 per cent up on the 222 new cases in 2014, and a record number of 343 new cases in 2016 from parties from 56 jurisdictions.59 Similarly, the SCMA arbitrated 37 new cases in 2015 – 48 per cent up on the 25 new cases in 201460, while a record number of 46 new cases were arbitrated in 2016, 96 per cent of which were international in nature.61 This trend is likely to continue as Singapore continues to grow in importance and in overall attractiveness to the maritime industry as a venue for arbitral dispute resolution and indeed, the resolution of broader commercial disputes by litigation, with the recent establishment of the SICC.
The legal framework has been enhanced to give the Singapore courts the power to grant interim remedies, specifically in support of international arbitrations. The High Court is empowered to order, where a ship or property is arrested in court proceedings in Singapore, that such arrested property be retained as security in answer to an award to be made in arbitration that is to be commenced or that is already under way in Singapore or elsewhere. Court proceedings can be stayed on the basis that provision of equivalent security is given in place of an arrested vessel for the satisfaction of any such award. With effect from January 2010, the High Court’s powers to order interim measures in aid of arbitration in Singapore, or foreign arbitration, were enhanced by statutory amendment to the Singapore International Arbitration Act (IAA). The amendments allow the High Court, particularly in cases of urgency, or where an arbitral tribunal has no power or is unable for the time being to act effectively, to make orders or give directions to any party for, inter alia, the preservation, interim custody or sale of property that is the subject matter of the dispute, preservation of evidence, and other interim injunctive relief.
In the foreseeable future, the industry expects that current governmental policy in promoting the Singapore Registry of Ships will continue. Incentives and initiatives such as the Maritime Sector Initiative scheme have been developed by the MPA. The scheme includes the withholding tax (WHT) exemption on interest payable on loans obtained from foreign lenders to finance the purchase or construction of ships. This allows automatic WHT exemption to qualifying payments (made on or after 1 June 2011) in respect of qualifying loans (entered into on or before 31 May 2016) with foreign lenders to finance the purchase or construction of Singapore-flagged and foreign-flagged vessels.
In February 2015, a Singapore War Risks Mutual (SWRM) was established. The SWRM is managed by Standard Club Asia and is a government-backed initiative that is also supported by the Singapore Shipping Association (SSA). Cover is available to SSA members, regardless of the flag of their vessels, as well as owners of ships registered in Singapore. This is the first national war risks insurer in Singapore and it is likely to further boost the Singapore marine insurance sector having its own dedicated war risk facility, managed by a team in the same time zone as the assured.
In addition, the Lloyd’s Asia platform in Singapore operates as a gateway to Asia Pacific for Lloyd’s, and has achieved significant growth since opening in 1999. The platform has 20 service companies with 24 syndicates and over 380 people – making it the largest hub outside of London – writing business locally and offshore from Singapore.
In terms of jurisprudence, Singapore case law in the maritime law context has continued to gain traction as a sound authority cited in other common law courts. Over the past 10 to 15 years, the decisions of the Singapore High Court and the Court of Appeal have regularly featured in the English law reports, such as the Lloyd’s Law Reports, on an array of legal issues that are of topical interest to the industry, such as principles relating to bills of lading, cargo misdelivery claims and the exercise of admiralty jurisdiction.
1 Scott Pilkington is a partner at HFW Singapore. Magdalene Chew is a partner and Lim Chuan is an associate at AsiaLegal LLC. HFW Singapore and AsiaLegal LLC are members of HFW AsiaLegal, a Formal Legal Alliance registered in Singapore.
3 Keynote address by Mr Andrew Tan, Chief Executive, Maritime and Port Authority of Singapore, at the Maritime Manpower Conference, 16 July 2015, 9.00am, Raffles City Convention Centre Singapore.
5 Year Book of Statistics Singapore 2016, Department of Statistics, Singapore at page 185.
6 Year Book of Statistics Singapore 2016, Department of Statistics, Singapore at page 185.
8 Rules of Court (Amendment No. 6), published on 26 December 2014, Order 110 Rule 1.
10 Rule 46 of the SCMA Rules, Third Edition (October 2015).
16 See Aloe Vera of America v. Asianic Food (S) Pte Ltd  3 SLR 174 at  to .
18 Ibid., at , and more recently endorsed in Denmark Skibstekniske Konsulenter A/S I Likvidation (formerly known as Knud E Hansen A/S) v. Ultrapolis 3000 Investments Ltd (formerly known as Ultrapolis 3000 Theme Park Investments Ltd)  3 SLR 661 and clarified in Galsworthy Ltd of the Republic of Liberia v. Glory Wealth Shipping Pte Ltd  1 SLR 727. Endorsed by the Supreme Court of Victoria in Altain Khuder LLC v. IMC Mining Inc & Anor  VSC 1 at .
19 AUF v. AUG  1 SLR 859.
20 E.g., Pacific Marine & Shipbuilding Pte Ltd v. Xin Ming Hua Pte Ltd  SGHC 102, where the issue in dispute was whether the propulsion units contracted for were defective.
21  3 SLR 125.
22  1 WLR 2497.
23  SGHC 2.
24 Arab Banking Corp (B.S.C) v. Boustead Singapore Ltd  SGCA 26 at .
25 Ibid., at .
26 Ibid., at .
27 CKR Contract Services Pte Ltd v. Asplenium Land Pte Ltd  3 SLR 1041 (‘CKR Contract Services’).
28 Ibid., at .
29 Ibid., at  to .
30 See Liu Wing Ngai v. Lui Kok Wai  3 SLR(R) 508, citing The ‘Winson’  AC 939, that where a bailor fails to take delivery of the bailed goods from a bailee, a bailment for reward can become a gratuitous bailment. Even then, the duty of care is still owed, although what is required to discharge it may be less onerous. From this relationship giving rise to a duty of care, a correlative right is vested in the gratuitous bailee to reimbursement of expenses incurred in taking measures to preserve the property.
31  1 SLR(R) 171.
32  1 Lloyd’s Rep 848.
33  2 SLR(R) 1119.
34  1 Lloyd’s Rep 113.
35 See Bandung Shipping Pte Ltd v. Keppel TatLee Bank Ltd  1 SLR(R) 295, BNP Paribas v. Bandung Shipping Pte Ltd  3 SLR(R) 611 and The ‘Jian He’  3 SLR(R) 432.
36  3 SLR 1280.
37 See The ‘Dolphina’  1 SLR 992 and Antariksa Logistics Pte Ltd v. McTrans Cargo (S) Pte Ltd  4 SLR 250.
38  EWCA Civ 217.
39 See Evergreen International SA v. Volkswagen Group Singapore Pte Ltd  2 SLR(R) 457, applying The Volvox Hollandia  2 Lloyd’s Rep 361.
40 Spiliada Maritime Corporation v. Cansulex Ltd  AC 460.
41 See The ‘Reecon Wolf’  2 SLR 289.
42 The ‘PWM Supply’ ex ‘Crest Supply 1’  4 SLR 407.
43 Section 4(4)(i) HCAJA.
44  5 SLR 667.
45 Section 4(4)(ii) HCAJA.
46 The ‘Bunga Melati 5’  4 SLR 546 at .
47 Ibid. at .
48 The ‘Xin Chang Shu’  1 SLR 1096.
49  4 SLR 615.
50  SGHC 24.
53 On 29 January 2014, the departing Hong Kong-flagged chemical tanker Lime Galaxy and the arriving China-flagged containership Fei He collided south of Jurong Island. On 30 January 2014, there was a collision between the Panama-flagged container ship NYK Themis and the barge AZ Fuzhou in Singapore’s East Keppel Fairway. On 11 February 2014, the departing Liberia-flagged containership Hammonia Thracium and the Panama-flagged chemical tanker Zoey collided in the Singapore Strait, off Sebarok Island.
54 On 2 January 2015 a Libyan-registered oil tanker Alyarmouk had collided with a Singapore-registered bulk carrier Sinar Kapuas in Singapore waters about 11 nautical miles north-east of Pedra Branca.
55 On 3 August 2016, a collision occurred between Dream II VLCC (Very Large Crude Carrier) and MSC Alexandra (container ship) in the Singapore Strait off Sebarok Island.
56 See The ‘Orinoco Star’  SGHCR 19 at  and .
57 Section 34 of the Merchant Shipping (Maritime Labour Convention) Act.
58 See Section 8A of FLPA.
60 The SCMA arbitrated 25 cases in 2014, more than quadrupling the amount of cases arbitrated in 2009.