MISC Berhad (MISC) alleged that it had entered into a 6-month bunker fuel purchase contract with Market Asia Link Sdn Bhd (MAL), pursuant to which MAL agreed to supply bunkers to MISC’s vessels at a price of USD 475 per metric ton. This was evidenced by contractual documents demonstrating an open tender process, followed by the awarding of the fixed price 6-month contract to MAL.

Bunkers were supplied to MISC’s vessels, and MISC paid the invoices issued by MAL totalling more than USD 17 million. MAL eventually went insolvent.

By contrast, the plaintiff, Equatorial Marine Fuel Management Services Pte Ltd (Equatorial), alleged that MAL had not been acting as principal when it contracted with Equatorial and had instead been acting as MISC’s buying agent or broker, such that there was a contract between Equatorial and MISC (as opposed to there being a contract between Equatorial and the now insolvent MAL, and another between MAL and MISC).

An admiralty writ was served on one of MISC’s vessels, the Bunga Melati 5, although the Bunga Melati 5 was not part of the group of vessels which had received the bunkers in question. As a result, this case concerned a ‘sister ship action’ under s4(4) of the High Court (Admiralty Jurisdiction) Act (the Act). 

It was well established and not in dispute that to invoke the High Court’s admiralty jurisdiction against a sister ship, the following requirements had to be satisfied:

(i) the claim must fall within one of the limbs in s 3(1)(d) to (q) of the Act, which is broadly equivalent to arts 1.1.a-1.1.n of the Arrest Convention 1952;

(ii) the claim must arise in connection with the offending ship (s 4(4)(a) of the Act);

(iii) the person who would be liable on the claim in an action in personam (the relevant person) must have been when the cause of action arose, the owner or charterer of, or have been in possession or in control of, the ship (s 4(4)(b) of the Act, which is broadly similar to art 3 of the Arrest Convention 1952); and

(iv) the relevant person is, at the time the action is brought, the beneficial owner as respect all the shares in the sister ship (s 4(4)(b)(ii) of the Act, which is broadly similar to art 3 of the Arrest Convention 1952).

In the present Singapore proceedings, MISC applied: (a) for a declaration that the plaintiff was not entitled to invoke the admiralty in rem jurisdiction of the court against the defendant’s vessel Bunga Melati 5, or alternatively; (b) that the plaintiff’s claim should otherwise be struck out as an abuse of process.

Prior to the start of this action in Singapore, the plaintiff had commenced another set of proceedings in the US (in California), to obtain a Rule B attachment order which was executed against one of the defendant’s other vessels, the Bunga Kasturi Lima. The defendant subsequently filed a motion to vacate the Rule B attachment order, which was granted. The plaintiff eventually sought a voluntary dismissal of its substantive action in the US.

Held: The defendant’s application would be granted, and the plaintiff’s admiralty writ and statement of claim would be struck out.

Standard of proof: subject matter jurisdiction

As to section 3 of the Act (point (i) above), Assistant Registrar Teo Guan Siew found there was no need to reach a conclusion on the standard of proof required under s 3(1) of the Act, as this aspect was not challenged by the defendant in this case.

Nevertheless, the AR expressed the following obiter dicta views:

• The Singapore Court of Appeal in the Vasiliy Golovnin [2008] 4 SLR(R) 994 had decided that the burden on the plaintiff was one of showing a good arguable case that the cause of action falls within one of the categories of s 3(1) of the Act.

• There were, however, previous cases such as the Alexandrea [2002] 1 SLR( R) 812 and the Andres Bonifacio [1991] 1 SLR(R ) 523, which held that the onus on the plaintiff was to establish, on a balance of probabilities, that one of the limbs of s 3(1) applied.

• There was also a recent High Court decision, in the Eagle Prestige [2010] SGHC 93, in which it was held that ‘the proper standard of proof on jurisdiction is on a balance of probabilities'.

• One possible rationalization might lie in the subtle distinction between the existence of certain underlying facts or a particular state of affairs which go towards establishing the jurisdictional connection in one of the limbs of s 3(1) on the one hand, and the test of whether the legal precondition under one of the limbs of s 3(1) is satisfied on the other. The former needs to be proved on a balance of probabilities (following cases such as the Catur Samudra and the Eagle Prestige), while the latter must be established to the standard of a good arguable case (following the Court of Appeal decision in the Vasiliy Golovnin).

Section 4 of the Act: in personam link

The defendant argued that the plaintiff had invalidly invoked the admiralty jurisdiction of the High Court because it had failed to discharge its burden of establishing, on a balance of probabilities, that the defendant was the person liable in personam under s 4(4) of the Act. More specifically, the defendant contended that the plaintiff failed to show on a balance of probabilities that the defendant had contracted with the plaintiff, instead of MAL, for the supply of the bunkers in question.

The AR held that the defendant’s argument was misconceived.

Instead, he held that what needs to be proved on a balance of probabilities are the particular jurisdictional facts stipulated under s 4(4), such as the ownership of the offending ship and of the sister ship, as well as whether there was ‘possession or control’ of the offending ship at the material time. These factual questions were distinct from the issue of whether there was in personam liability, which was an issue pertaining to the merits of the claim.

The AR held that s 4(4), and in particular the phrase ‘the person who would be liable on the claim in an action in personam’, was primarily a provision about identifying the ships that may be arrested by reference to the person who would be liable in personam on the assumption that the action succeeds. It was not a provision that sought to impose a more stringent requirement of merits to be satisfied before the admiralty jurisdiction of the court can be invoked. 

What a plaintiff needs to show is an arguable case that the defendant is the person likely to be liable in personam, for otherwise the claim might be liable to be struck out under O 18 r 19 or pursuant to the inherent jurisdiction of the court.

In conclusion, the AR’s interpretation of s 4(4) of the Act was that the provision was not about imposing a threshold test of merits which a plaintiff had to discharge before it was able to invoke the admiralty jurisdiction of the High Court. Section 4(4) was merely a provision concerned with the identification of the defendant as the owner, or the person in possession or control of the vessel, at the time the claim arose, on the assumption that he would be liable. This was so even in the case where there was a dispute as to whether the defendant was the proper party to sue. Any imposition of a burden on the plaintiff to show merits could not be justified based on s 4(4).

(Separate) requirement to show merits

The AR was of the view that following the COA’s decision in Vasiliy Golovnin there was a separate requirement of merits that a claimant had to satisfy. Some preliminary assessment of the merits of the case was required even at the jurisdictional stage, and the standard to which such merits were to be established was that of a good arguable case. This aspect of the AR’s decision was subsequently overruled by the High Court – see The Bunga Melati 5 (CMI 209).

Conclusion

The AR found that Equatorial had failed to establish its case on the merits to the standard of a good arguable case.

In particular, it failed to show a good arguable case that it had contracted with MISC for the supply of the bunkers in question. Further, the court held that Equatorial’s alternative claim for unjust enrichment also had no chance of success, because MISC had in good faith expended the bunkers for its vessels and paid MAL the full contractual price for them. Thus, the limiting principle of restitution in integrum as well as the defence of change of position were applicable in this case, such that Equatorial’s claim was doomed to fail.

Accordingly the admiralty jurisdiction of the court was not properly invoked. Alternatively, even if there was no independent requirement on the plaintiff to show merits, the result would be the same, because MISC had successfully shown that Equatorial’s claim was plainly unsustainable and frivolous, and ought therefore to be struck out pursuant to O 18 r 19 or the inherent jurisdiction of the court.

Obiter dicta comments on the ‘one claim one ship’ rule

The defendant contended that the plaintiff had invoked admiralty jurisdiction once in the US Rule B proceedings against one of the defendant’s vessels, the Bunga Kasturi Lima and having done so was precluded from invoking admiralty jurisdiction again in Singapore by service of the writ on the Bunga Melati 5, a sister ship of the Bunga Kasturi Lima. In support of this contention, reliance was placed on the ‘one claim one ship’ rule often attributed to the English court decision in The Banco [1973] P 137, in which the English Court of Appeal set aside the six sister ship arrests, holding that on a construction of s 3(4) of the UK Administration of Justice Act (which is in pari material to s 4(4) of the Act), the in rem jurisdiction of the court could only be invoked against either the offending ship or any other ship in the same ownership, but not against both ships.

The principle laid down in The Banco has been accepted as part of Singapore law (see The Brunei 602 [1983-1984] SLR(R) 306.

That said, the AR observed that the actual ruling in The Banco operated within a narrow compass, namely that there could be no multiple invocation of admiralty jurisdiction against more than one ship concurrently in the same jurisdiction for the same claim. The AR had regard to how in The Kommunar [1997] 1 Lloyd’s Rep 8 Colman J confined the applicability of s 21(8) of the UK Supreme Act to in rem proceedings or prior arrests in England only, and held that the earlier South African proceedings were not a bar to the proceedings before him.

This English approach was largely consistent with the approach of the Federal Court of Australia in The Konenkov [1997] 144 ALR 394. The Australian court considered art 3.3 of the Arrest Convention. Sheppard J commented that while something may be said for the view that s 20(3) of the Australian Admiralty Act 1988 should apply extra-territorially to achieve conformity with the effect of the Arrest Convention, the fact remained that Australia was not a party to the Arrest Convention. In the absence of express statutory provision, it was unlikely that the Australian Parliament intended s 20(3) to have extra-territorial effect. The Australian court therefore held that the scope of the prohibition in s 20(3) was limited to Australian in rem proceedings and arrests in Australia. 

AR Teo proceeded on the basis that the question of whether the ‘one ship one claim’ principle extended to foreign proceedings had not been settled by the Singapore court. Although AR Teo accepted that the English and Australian decisions were based on an interpretation of their specific statutory provisions, which had no equivalent in the Singapore statute, he also found that s 21(8) of the UK Act merely represented a codification of the principle in The Banco, which had already been accepted as good law by the Singapore courts.

Bearing in mind that the Court’s admiralty jurisdiction was derived from the Act, and the general principle that a statute should not be construed to have extra-territorial effect in the absence of express provision to the contrary, AR Teo was hesitant to extend the scope of the ‘one ship one claim’ rule (as accepted in The Brunei) beyond the context of multiple arrests or services of writs on ships in Singapore. Just as the Australian court was influenced by the fact that Australia was not a party to the Arrest Convention, Singapore was similarly not a party to the Arrest Convention.

Ultimately, AR Teo considered that the application of the ‘one claim one ship rule’ must depend on the facts and circumstances of each case. The important factors to consider should include whether the foreign proceedings were still pending and the potential adverse effects of lis alibi pendens, whether the claimant had already obtained security in the foreign proceedings and was seeking to obtain further security, and the reasons why the claimant was bringing a second in rem claim in Singapore.

In the present case, the proceedings in the US had already come to an end, and the plaintiff had not managed to obtain any security for its claim from the US proceedings. For these reasons, had it been necessary for his decision, AR Teo held that he would not have struck out the plaintiff’s action based on the ‘one claim one ship rule’. He would also have declined to declare that the plaintiff was not entitled to invoke the admiralty jurisdiction of the court against the defendant’s vessels on account of the ‘one claim one ship’ principle.