In 2008, HSH Nordbank refinanced a loan owed by Lambert Navigation Ltd, a Marshall Islands corporation (the defendant), in respect of the construction of the Cape Lambert. The loan agreement was governed by German law and was subject to the jurisdiction of the courts of Hamburg. As security, the defendant entered into a first preferred mortgage over the vessel. The mortgage was governed by Marshall Islands law. The vessel was flagged and operated under the laws of the Marshall Islands. In 2019, HSH Nordbank assigned its rights and obligations under the loan and mortgage to Promontoria Maritime Holding Designated Activity Co (Promontoria), an Irish company. Promontoria then changed its name to Nassau Maritime Holdings Designated Activity Co (the plaintiff). The plaintiff, as mortgagee, filed a writ in rem on 28 March 2020 against the vessel for breach of the loan agreement and mortgage and requested the issuance of an arrest warrant, which was executed against the vessel in Labuan waters on 30 March 2020. The defendant filed an appearance on 1 April 2020.

The defendant submitted that the admiralty jurisdiction of the High Court of Malaya was wrongly and/or improperly invoked by the plaintiff and applied for the service of the writ in rem and arrest warrant to be set aside, arguing that the admiralty jurisdiction of the High Court is only invoked when the writ in rem or arrest warrant is served on the vessel, and that the admiralty jurisdiction can only be invoked within the High Court's territorial jurisdiction. Here, the territorial waters of the Federal Territory of Labuan fell within the local jurisdiction of the High Court of Sabah and Sarawak and not the High Court of Malaya, and pursuant to s 25(1) of the Courts of Judicature Act 1964 (CJA) the powers of the respective High Courts may only be enforced within their local jurisdiction.

The plaintiff submitted that the admiralty action in rem was correctly brought in the High Court of Malaya at Kuala Lumpur by virtue of s 24(b) of the CJA, read together with s 23 of the CJA and s 20(1)(a) of the Senior Courts Act 1981 (UK) (SCA), and that the service of the writ in rem and execution of the arrest warrant by the Sheriff to enforce the plaintiff's claim in rem on the vessel at Labuan by this Court was proper as there is no concept or requirement for 'invocation of admiralty jurisdiction' prescribed under s 23 of the CJA or the SCA in order for the High Court of Malaya to hear and determine the dispute on the merits in an admiralty action in rem.

Held: Judgment for the plaintiff.

The jurisdiction of this Court in respect of an admiralty action stems from s 24(b) of the CJA, which provides that the civil jurisdiction of the Court shall include the same jurisdiction and authority in relation to matters of admiralty as the High Court of Justice in England under the SCA. Section 20 of the SCA, among other things, provides that the admiralty jurisdiction of the Court shall include the jurisdiction to hear and determine any of the questions mentioned in s 20(2), which includes any claim in respect of a mortgage of or charge on a ship or any share therein (see s 20(2)(c) of the SCA). The mode of exercise of the admiralty jurisdiction is prescribed in s 21 of the SCA. Where the claim is in respect of a mortgage of a ship, the particular mode of exercise of the admiralty jurisdiction is prescribed by s 21(2), which states that where the claim is mentioned in s 20(2)(c) (a mortgage claim) an action in rem may be brought in the High Court against the ship or property in connection with which the claim or question arises. Here, the plaintiff's action in rem can be brought against the vessel without considering who the owner of the vessel is at the time the writ in rem is issued, or who would be liable when the cause of action arose. The claim is thus considered to be a truly in rem claim. As this claim involves a foreign vessel and the mortgage is governed by Marshall Islands law, it is also important to note the provisions of s 20(7) of the SCA, which provides that s 20 shall apply in relation to all ships of whatever flag, and in relation to mortgages created under foreign law. This removes any objection to jurisdiction based on the foreign connections specified in it. The upshot is that this Court is competent to hear and determine the dispute in relation to the mortgage claim in this action.

By ss 21(2) and 21(3) of the SCA, an action in rem can be brought against the vessel without considering who the owner of the vessel is at the time the writ in rem is issued, or who would be liable in personam when the cause of action arose. These are proprietary rights that attach to the relevant vessel from the moment of their creation. Hence, these claims are truly in rem because they arise and are enforced irrespective of ownership or personal liability criteria, unlike claims under s 21(4) of the SCA. The significance of this is that this Court can exercise its in rem jurisdiction against the vessel pursuant to ss 21(2) and (3) of the SCA. Since the plaintiff's action relates to claims or questions under s 20(2)(c) (a mortgage claim), an action in rem may be brought in the High Court against the vessel or property in connection with which the claim or question arises. Despite the vessel not being within the territorial waters or local jurisdiction of the High Court of Malaya, it is proper for the High Court to issue an admiralty writ in rem against the vessel.

The above position gives meaning to the expression 'action in rem may be brought in the High Court' found in s 21 of the SCA, and specifically s 21(3), which relates to the instant case. The expression naturally means 'an in rem action may be instituted or commenced in the High Court'. This relates to the initiation of the action only where the effect of the issue of the writ is to crystallise the claim on the ship from the time of issue. This must be so as a plaintiff puts itself in the position of a secured creditor by commencing an action in rem against a ship, even if the writ in rem has not been served or the ship has not been arrested: see Re Aro Co Ltd [1980] 1 All ER 1067 (EWCA). Similarly, when a writ in rem is filed and issued against a vessel, the plaintiff can proceed with an in rem action against the vessel even if there is a change of ownership after issuance of a writ in rem or warrant of arrest but before service or execution thereof on the vessel. As a result, a sale of a ship after issue of the writ does not defeat the claim: see The Monica S [1967] 2 Lloyd's Rep 113. Thus the claim on the ship is crystallised upon service of writ in rem on the vessel.

The reliance of the defendant on s 23 read together with s 3 of the CJA to support its contention that the High Court of Malaya has no 'local jurisdiction' to try civil proceedings where the vessel is arrested by the Sheriff in the waters of Labuan Federal Territory is incorrect, as the four factors/criteria/jurisdictional facts required to come within the 'local jurisdiction' of either of the High Court of Malaya or the High Court of Sabah and Sarawak under s 23 (a)-(d) and 3 of the CJA are not applicable in the admiralty in rem action in the present case. Neither the High Court of Malaya nor the High Court of Sabah and Sarawak has any 'local jurisdiction' over this matter. In the circumstances of this case:

a) The cause of action for the defendant's breach of the mortgage or loan agreement did not arise in Malaysia;

b) The res/vessel against which this admiralty action in rem commenced against is flagged and operated under the laws of the Marshall Islands;

c) The defendant does not reside or have its place of business in Malaysia but in the Marshall Islands; and

d) The facts on which this admiralty in rem proceedings are based did not exist or occur in Malaysia.

Another relevant point to note is that at the time of the plaintiff's filing and issuance of the writ in rem against the vessel on 28 March 2020, the vessel was not yet in Malaysian territorial waters - it was not yet in the Labuan Federal Territory within the meaning of the 'local jurisdiction' of the High Court of Sabah and Sarawak.

Since the plaintiff's action relates to claims or questions under s 20(2)(c) of the SCA (a mortgage claim) read together with s 24(b) of the CJA, an action in rem may be brought in any of the High Courts in Malaysia against the vessel without satisfying any of the local jurisdictional facts of s 23 of the CJA, notwithstanding the fact that the vessel involved is foreign as provided under s 20(7) of the SCA. The four jurisdictional facts required to come within the 'local jurisdiction' of either the High Court of Malaya or the High Court of Sabah and Sarawak under s 23(1)(a)-(d) and 3 of the CJA are not applicable to an admiralty in rem action in the present case.

Malaysia followed the admiralty jurisdiction model of the SCA in respect of our Courts' exercise of admiralty jurisdiction by adopting it into our own national law through s 24(b) of the CJA. Another country that did so was Brunei. On the other hand, there are countries that have maintained the Administration of Justice Act 1956 (UK) model of admiralty jurisdiction provisions in their national laws, such as Singapore and New Zealand. The omission of the concept of 'invocation of jurisdiction' in s 21 of the SCA results, with reference to the bringing of actions in rem and in personam, in there being only two critical points of time: 'when the action is brought' and 'when the cause of action arose'. There is thus no requirement for the admiralty jurisdiction of the High Court to be invoked by an action in rem against the ship or property under ss 23 or 24 of the CJA, read together with ss 20-24 of the SCA.

The defendant referred to the decisions in Romline SA Shipping Co v Owners of Cargo Lately Laden on Board the Ship or Vessel 'Fierbinti' [1994] 3 SLR 864 and Wei Hsing Food (S) Pte Ltd v The Owners or Demise Charterers of the Ship or Vessel 'The Neptune' [2005] 3 CLJ 654; [2005] 5 MLJ 702 to support its submission that the admiralty jurisdiction of the High Court is invoked when the writ in rem is issued or filed. As 'invocation of jurisdiction' is not present in s 21 of the SCA, these cases are distinguished and not followed.

The cases of The Fordeco Nos 12 and 17 v Shanghai Hai Xing Shipping [2000] 1 CLJ 605; [2000] 1 MLJ 449 (Federal Court) (CMI512) and The Indian Endurance (No 2) Republic of India v India Steamship Co Ltd [1997] 4 All ER 380 (House of Lords) were also referred to by the defendant to support its proposition that the Admiralty Court's jurisdiction was invoked only when the writ in rem and arrest warrant was served on a vessel.

In The Fordeco, the question was whether the admiralty jurisdiction of the High Court of Malaya and Sabah and Sarawak can be validly invoked when the plaintiff had issued and served a writ in rem and arrest warrant against two vessels owned by a defendant in respect of the same claim. Although the Federal Court found that the jurisdiction is invoked when the writ is served and the warrant of arrest executed on one of the named ships, this is applicable for the limited situation provided in s 21(8) of the SCA where a plaintiff is limited to serving the writ on any one of the defendant's ships when the writ names more than one ship or two or more writs each name a different ship, which is the statutory embodiment of the 'one claim, one ship' principle. The language of 'invocation of jurisdiction' was used without applying the statutory effect of the SCA. This case is distinguished from the present case where the issue is whether the Court has jurisdiction to hear this case pursuant to ss 23 and 3 of the CJA.

As for The Indian Endurance case (also known as The Indian Grace), the House of Lords considered whether an action in rem could proceed where a foreign judgment in personam had been obtained against the owners of the vessel on the same cause of action by virtue of s 34 of the Civil Jurisdiction and Judgments Act 1982 (UK). This decision is limited to the interpretation of s 34 of the Civil Jurisdiction and Judgments Act 1982 (UK), where the Court had to consider whether the action in rem issued by the plaintiffs was an action 'between the same parties, or their privies' within the meaning of s 34. The Indian Grace is to be distinguished from the present case where the predominant issue is whether local jurisdiction of the High Court as provided by ss 23 and 3 of the CJA is applicable for the Court to have jurisdiction over this matter.

The writ in rem and arrest warrant, although issued out of the High Court of Malaya, were served and executed in the waters of Labuan. Despite not being served and executed within the territorial jurisdiction of the High Court of Malaya, that service and execution is proper, as by virtue of s 7(2) of the CJA, all writs, summonses, warrants, orders, rules, notices and other processes whatsoever, whether civil or criminal, issued or made by or by the authority of the Court respecting any cause or matter within its jurisdiction, shall have full force and effect and may be served or executed anywhere within Malaysia. The word 'jurisdiction' in s 7(2) of the CJA refers to the jurisdiction of the Federal Court, Court of Appeal and the two High Courts, and not the 'local jurisdiction' as defined in s 3 of the CJA. The plaintiff's claim is a cause or matter within the admiralty jurisdiction of this Court. Further, art 121(3) of the Federal Constitution provides that any process of the Courts may be executed or enforced in any part of the Federation.