Kawasaki Kisen Kaisha Ltd (the plaintiff) chartered the Able Lieutenant, which was apparently owned by Able Shipping (the defendant). The defendant was named as owner in the charterparty and registered as owner at the port of registry (Port Klang, Malaysia). The plaintiff claimed damages arising out of the defendant’s breach of the charterparty, which eventuated in the arrest of the Able Lieutenant.

Pan Ocean claimed to be the beneficial owner of the Able Lieutenant and entered a conditional appearance. The resolution of this dispute required a consideration of the International Convention for the Unification of Certain Rules relating to Arrest of Sea-Going Ships 1952 (the Arrest Convention 1952). The provisions of the Arrest Convention 1952 relevant to the present application are arts 3.1 and 3.2.

Article 3.1 provides: ‘[s]ubject to the provisions of para. (4) of this article and of article 10, a claimant may arrest either the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship, even though the ship arrested be ready to sail; but no ship, other than the particular ship in respect of which the claim arose, may be arrested in respect of any of the maritime claims enumerated in article 1, (o), (p) or (q)’.

Article 3.2 provides: ‘[s]hips shall be deemed to be in the same ownership when all the shares therein are owned by the same person or persons’.

There are more than 70 States, including the United Kingdom, who are parties to the Arrest Convention 1952, which sets out the law for the arrest of sea-going ships. The UK gave partial effect to the Arrest Convention 1952 by way of the Administration of Justice Act 1956, which was in turn given effect in the domestic legislation of both Malaysia and Singapore.

The readiness of the courts in using the Arrest Convention 1952 to interpret the UK Act was evident in a long line of shipping cases to construe the wording of the UK statute: The Eschersheim [1976] 2 Lloyd’s Rep 1; The Banco [1971] 1 Lloyd’s Rep 49; The Kommunar (No 2) [1997] 1 Lloyd’s Rep 8; The Evpo Agnic [1988] 2 Lloyd’s Rep 411 (CMI2225); and I Congresso Del Partido [1977] 1 Lloyd’s Rep 536. The interpretation extended not just to the Arrest Convention 1952, but also its travaux préparatoires.

The plaintiff applied to set aside Pan Ocean’s application for leave to enter a conditional appearance and also for the cessation of Pan Ocean as a party to the proceedings, alleging a sham. The defendant and Pan Ocean tried to construe sham as fraud to raise the standard of proof to that of beyond reasonable doubt. There was also a contention on the purported transfer of beneficial ownership, which itself was a triable issue, requiring a proper trial.

Held: The Court dismissed Pan Ocean’s application. It held that there was no sufficient and proper security given for the plaintiff’s claim in the action and thus did not release the Able Lieutenant. Pan Ocean also lacked capacity to apply to the court to set aside the writ. The real defendant was Able Shipping. The issue was not the meaning given to ‘beneficial ownership’ in the UK Act, but when or under what circumstances the plaintiff had to prove beneficial ownership, to enable it to properly institute an admiralty in rem action against the defendant shipowner.