This was an application by Donghwa Leasing Co Ltd (the intervener), to set aside the writ of summons dated 8 December 1997, and to dismiss the claims brought by Dongnama Shipping Co (the plaintiff) against the vessel the Halla Liberty, on the basis that the Court had no jurisdiction.

On 6 December 1996, Halla Merchant Marine Co Ltd (Halla), a Korean-registered company, entered into a memorandum of agreement for the purchase of the Halla Liberty from Kinabalu Shipping Ltd (Kinabalu) for the sum of USD 18,885,000, thereafter becoming registered as the owner in the Korean ship register on 19 February 1997. However, before Halla paid the purchase price on 21 January 1997, it entered into a lease agreement with the intervener as lessor and itself as lessee. Upon execution of this agreement, the intervener paid the price for the vessel in two instalments. This lease agreement, together with a revised lease agreement of 19 March 1997, played a significant role in the argument in this case.

On 9 January 1997, Halla entered into a time charter for 24 months whereby it chartered the Nordbeach from Nordbeach Shipping Co Ltd (Nordbeach). On 30 December 1996 and 9 January 1997, respectively, Halla, as owner and charterer, chartered to the plaintiff under a time charter the Halla Liberty and the Nordbeach for 12 months, with up to one month more or less at the plaintiff's option. By a slot charter agreement dated 1 February 1997 entered into between the plaintiff and Halla, Halla agreed to pay charter hire to the plaintiff for the slot charter. A total of seven ships had been used pursuant to this agreement. Halla failed to pay any slot charter hire for October, November and December 1997. Consequently, the plaintiff brought a claim for unpaid monthly charter hire due under the agreement for those months in the total sum of USD 2,610,720 and damages. On 8 December 1997, the intervener took out what was known in Korea as a kun mortgage, a form of mortgage which under Korean law was permitted to be taken out by a person already the owner of the subject property, and thereafter registered itself as mortgagee on the Korean ship register. On 10 December 1997, Halla gave notice to the plaintiff of the termination of the slot charter agreement on the ground of Halla's insolvency, and on 11 December 1997, the plaintiff accepted Halla's repudiation.

The writ in rem commencing this action was issued on 8 December 1997. The Halla Liberty was arrested in Hong Kong on 9 December 1997. On 10 January 1998, an order was made permitting the intervener to intervene in the arrest action, and on 14 January 1998, an order was made for the appraisement and sale of the vessel. The Court sold the Halla Liberty on 25 February 1998, and the proceeds of the sale of approximately USD 12.5 million was paid into Court, where the fund remains pending determination of in excess of some 30 actions in rem which had been brought against the vessel, together with the determination of priorities as between competing claimants.

Arbitration proceedings were commenced in Korea by the plaintiff against Halla, which provoked Halla's application to stay this action on the grounds of the arbitration agreement. On 24 July 1998, this Court handed down judgment granting a stay of the present proceedings favouring the Korean arbitration. Such arbitration duly took place, and on 5 December 1998, the arbitrators in Seoul published their award in favour of the plaintiff in the sum of USD 3,397,004, together with interest.

On 18 December 1998, the plaintiff was given leave by the Court to amend the writ in this action to plead an additional cause of action upon such arbitral award. The plaintiff's new claims were as following: first, a claim based upon the Seoul arbitration award in the principal sum of USD 3,397,004, together with interest and costs; and second, the claim for unpaid charter hire, for October, November and December 1997, in the amount of USD 2,610,720, together with a claim for an additional USD 786,284 representing the loss of future charter hire (calculated up to 3 February 1998), in each instance together with interest and costs. Whether the claim is put on the basis of the arbitral award or in terms of damages, the pleading itemises the claim in each case for each of the seven individual vessels.

Held: The intervener's application is dismissed.

The intervener takes two main points.

The first one is that it is impermissible for the plaintiff to plead claims with regard to seven ships within one writ, as had been done in this case, and that the requirements of Hong Kong's admiralty jurisdiction necessitated a separate writ in rem for its claims in respect of each of the seven ships under the slot charter.

The intervener claims that the term 'a ship' as used in s 12A(2)(h) of the High Court Ordinance must be given the like meaning as that term when used within s12B(4), namely 'a ship', 'the ship', 'that ship'. Moreover, s 12B(8) draws a clear distinction between 'a ship' and 'any other ship', so that it would not be permissible to read 'a ship' as meaning 'ships' in that context either. The same is true of s 12B(4), so that 'that ship' (in (i)) must refer back to 'the ship' (in (b)) and 'a ship' (in (a)).

It follows from this, so the submission ran, that upon the face of the statute, it is not possible to ascribe plurality to the phrase 'the claim arises in connection with a ship', and thus, if a claim relates to two or more ships (such as here, where it relates to seven), such claims must be made the subject of separate actions, and cannot be combined within a single action.

What has happened in this case is that, in effect, the Halla Liberty has been arrested both as 'that ship' within s 12B(4)(i), and as 'any other ship' within s 12B(4)(ii).

A distinction is clearly drawn on the face of the statute between a claim in connection with 'that ship' and a claim in connection with 'any other ship', the latter attracting more restrictive criteria for arrest. At the time the action is brought, the ship the subject of the actual claim can be arrested if the 'relevant person' is either the beneficial owner or the demise charterer thereof, whereas in respect of 'any other ship' (often referred to as the 'sister ship' provision) such requirement is confined to beneficial ownership. Nevertheless, it is difficult to understand, in terms of the existence of primary jurisdiction, why the necessity to clarify the jurisdictional basis of each distinct claim underpinning the arrest of a particular vessel in the exercise of in rem jurisdiction should preclude joinder of the separate causes of action within one writ. The Court’s judgment is that, so long as the jurisdictional basis for the arrest is satisfied and clearly can be seen to be so, there is no point to consider that jurisdiction per se is negated by reason solely of the fact that but one writ has been issued and not seven.

Therefore, in the words of the statute 'that ship' does not mean 'those ships', but that nevertheless, if jurisdiction is otherwise made out pursuant to the statutory benchmark, the existence of such primary jurisdiction is not to be assailed solely by reason of the fact that the claim has not been expressed in terms of the issue and service of seven separate writs.

Another point raised by the intervener is whether 'charterer' within s 12B(4)(b) of the High Court Ordinance is limited to 'charterer by demise'?

The precise wording of s 12B(4)(b) requires that 'the person who would be liable on the claim in an action in personam ("the relevant person") was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship'.

The intervener submits that 'charterer' in this subsection is limited to mean a charterer by demise, and does not encompass other types of charterers, and that, therefore, the plaintiff cannot maintain its action in rem against the Halla Liberty because Halla (being the relevant person) was, at the time the cause of action arose, merely a slot charterer and not a charterer by the demise of the Halla Liberty.

The intervener invites the Court to adopt a construction consistent with the wording of the Arrest Convention 1952, and not to extend the word 'charterers' to 'non-owner-like charterers', that is, beyond the scope of the demise charterer. According to the intervener, to do this would be 'to go outside the regime of the Convention'. The Court finds it difficult to construe the unqualified term 'charterer' in s 12B(4) as limited to the charterer by demise.

The disinclination linguistically to qualify the word 'charterer' is further buttressed, if buttress is required, in light of the statutory amendment to s 12B(4)(b)(i), when the legislature added the words 'or the charterer of it under a charter by demise', whilst leaving unamended 'charterer' within s 12B(4)(b), and in this regard, the Court is unpersuaded by the intervener's suggestion that this amendment constitutes 'a strained form of words' and that the adoption of this rubric tended to support its primary argument. In this context, also, the wider construction of 'charterer' within s 12B(4)(b) is justified, given the differing temporal requirement within s 12B(4)(b)(i), namely that the relevant person should be the charterer 'when the cause of action arose', whereas the legislative qualification within s 12B(4)(b)(i) imposed by the amendment limiting the relevant person to 'charterer of [the ship] under a charterer by demise' governs the position 'when the action is brought'.

The intervener's proposal is declined. Not only is there a preponderance of authority against the point, but also, as a matter of primary statutory construction, the wording of the subsection is clear and renders unnecessary recourse to the Arrest Convention 1952.

The result is that the intervener fails to challenge the admiralty jurisdiction of this Court as exercised over the Halla Liberty.