This was an allision between the ship Le Li and a trestle bridge in Palembang, Indonesia. The shipowner, COSCO Shipping Specialized Carriers Co Ltd (COSCO), commenced an action to limit its liability arising out of the incident.

The shipowner named the owner of the bridge, PT OKI Pulp & Paper Mills (OKI), and the head charterer of the ship, COSCO Shipping Specialized Carriers (Europe) BV (COSCO Europe), as the first and second defendants respectively.

Service was only effected on COSCO Europe (ie the second defendant) via its Singapore solicitors. Dissatisfied, OKI applied for declarations that: (a) the Singapore courts had no jurisdiction to hear the action; and (b) COSCO Europe was not a proper defendant in the action and should be removed.

Held: Application dismissed.

A shipowner's right to limit its liability in respect of certain maritime claims is well-established, from its historical roots in English legislation to its current form as encapsulated in the LLMC 1976 as amended by the 1996 Protocol (the LLMC 1996). The LLMC 1996, with the exceptions of art 2.1.d and 2.1.e, has the force of law in Singapore pursuant to s 136(1) of the Merchant Shipping Act 1995 (the Act).

A limitation action is sui generis. It is different from other actions where a court determines a party's liability under defined, pleaded causes of action. In a limitation action, a court does not decide whether a shipowner is liable in respect of any claims that may arise against the shipowner following the occurrence of a maritime casualty. The issue of the shipowner's liability, if any, is (unless such liability is admitted) a question to be decided in separate liability proceedings in the proper forum, which can take the form of arbitration or court proceedings (in Singapore or elsewhere).

As recognised in The Happy Fellow [1997] 1 Lloyd's Rep 130, 134, a limitation action is 'a special proceeding to which all potential claimants are made parties', in which a shipowner enforces its right 'to have all claims scaled down to their proportionate share of a limited fund'.

Thus, a limitation action is not a simple action between one claimant and one defendant, but an action between the claimant shipowner (as the limiting party) and all limitation defendants (ie all parties with claims or potential claims against the shipowner). Consistent with its nature and considering where liability proceedings may be brought or prosecuted, any limitation decree granted by the court in a limitation action in favour of a shipowner is, generally speaking, 'good against the world' (see Saipem SpA v Dredging VO2 BV (The Volvox Hollandia) [1988] 2 Lloyd's Rep 361, 370 (CMI2407)).

However, it may not be possible for a shipowner seeking to limit its liability to know the identities (or even the existence) of all the parties with potential claims against it, let alone be able to name and serve the limitation proceedings on all of them. This is especially since the limitation action may be commenced even when no liability proceedings have been launched against the shipowner in any forum, and even where the shipowner does not know precisely who has claims against it, but apprehends that claims may arise following a maritime incident. This is why, under O 33 r 36(2) of the Rules of Court 2021 (the ROC), a shipowner only needs to make one of the persons with claims against it in respect of the casualty a defendant to the limitation action (although others may be made defendants also). Only one such defendant must be expressly named in the originating claim, while all others may be described generally (O 33 r 36(3)). The originating claim only needs to be served on one named defendant, and need not be served on any others (O 33 r 36(4)).

OKI argued that COSCO Europe, as an overseas defendant, had not been validly served, and this meant that the Court lacked jurisdiction to hear the matter. However, a defendant based overseas can be served in Singapore under O 7 r 2(1)(d) of the ROC in a 'manner agreed with the person or entity to be served', which can include effecting service via the defendant's solicitors in Singapore. COSCO Europe was validly served with the originating claim in Singapore through the service effected on its Singapore solicitors. That is sufficient to clothe the Court with jurisdiction.

In any event, COSCO Europe submitted to the jurisdiction of the Court by, among others, authorising its Singapore solicitors to accept service on its behalf, and by its solicitors' unqualified confirmation that they were authorised to accept service on COSCO Europe’s behalf.

OKI further argues that COSCO Europe is not a 'proper' defendant to the limitation action because its claims against COSCO Shipping are not genuine. Removing COSCO Europe as a defendant would mean that the Court would, as a consequence of that removal, have no jurisdiction.

All that is required is that the claimant must name as defendant one of the persons 'with claims against the claimant in respect of the casualty to which the action relates'. If these words do entail any review, it is not of the merits of the claim, but of its nature. At a minimum, a Court would need to be satisfied that the defendant's claim against the claimant is one which is even subject to limitation of liability at all, ie a claim falling within the categories of claims enumerated in art 2 of the LLMC 1996. To take an extreme example, a claim for defamation will not be regarded as a 'claim' under O 33 r 36(2), however meritorious it may be, simply because it is not a claim that falls within art 2 of the LLMC 1996. To take a less extreme example, a claim for wreck removal (which is a limitable claim under art 2.1.d of the LLMC 1996) does not have the force of law in Singapore by virtue of s 136(1) of the Act. It is arguable that such a claim would also not fall within the ambit of 'claims' in O 33 r 36(2) of the ROC because it is not a claim subject to limitation of liability under Singapore law. The question is therefore more one of characterisation of the claim as opposed to a review (however cursory) of its merits.

When should this review take place? There is no mechanism by which a court can or should, at the time the originating claim is filed, assess if the claim of a named defendant in the limitation action is fanciful or illusory. It is untenable to require a court in a limitation action, on the basis of affidavit evidence and in the context of a jurisdictional challenge by one named defendant, to decide whether a particular claim of another named defendant against the claimant shipowner is fanciful or illusory. In a limitation action, the court is not concerned with the liability of the shipowner. The court is only concerned with whether the shipowner seeking to limit its liability has met the requirements of the LLMC 1996 and O 33 of the ROC for a limitation decree to be granted. It would also be unprincipled to hold that with regard to the named defendants in a limitation action, a court is required (at the commencement of the limitation action) to conduct some form of review of the legitimacy of their claim(s) against the shipowner, but not in respect of claims by the generically described defendants in the limitation action whose identities or existence may not even be known to the shipowner when the limitation action is commenced.

A court nonetheless retains an inherent discretionary power to strike out proceedings which amount to an abuse of its process. However, given the 'special' nature of a limitation action, it is not for the court at the commencement of a limitation action, or even in the context of a jurisdictional challenge within the limitation action, to effectively strike out one limitation action defendant's claim against a shipowner (the determination of which is for a different forum) at the behest of another limitation defendant. The Court's inherent power does not extend that far.

This is not a plain and obvious case of an abuse of process by COSCO in its commencement and prosecution of this limitation action. OKI itself does not contend that it is. On an examination of the relevant circumstances, including the fact of the arbitration proceedings currently afoot between the two COSCO entities, COSCO Europe's claims against COSCO cannot be said to be fanciful or illusory such as to render this action an abuse of process. There is accordingly no basis for OKI’s complaint that COSCO Europe is not a 'proper' defendant and should be removed from the limitation action.