These proceedings arise from two injunctions requiring a voyage charterer, Clearlake Shipping Pte Ltd (Clearlake), and a sub-voyage charterer, Petróleo Brasileiro SA (Petrobras), 'forthwith' to provide bail or other security to secure the release of the Miracle Hope from arrest in Singapore. Petrobras had required a cargo of crude oil on board the Miracle Hope to be delivered without production of bills of lading in November 2019. A bank, Natixis, which had paid for the cargo under a letter of credit but had not received it, arrested the vessel in Singapore, claiming damages of around USD 76 million. That arrest led to these proceedings seeking injunctive relief. This Court has jurisdiction in this matter because of the choice of jurisdiction clause in both charterparties. Following the grant of the injunctions Clearlake and Petrobras sought to comply with them. However, they have failed to reach agreement with Natixis as to the terms of the bank guarantee required to secure the vessel's release. The vessel therefore remains under arrest in Singapore.

Held: A bank guarantee shall not be provided in the form required by Natixis. The Court shall, however, order payment in to the Singapore Court of the sum demanded as security, some USD 76 million, within 8 working days. The Court shall further order the payment of defence funds of USD 83,333 to the head owners within 4 working days.

The use of the word 'forthwith' in the injunctions indicates that the action required to be taken must be taken, at the least, with some urgency. That is not surprising since the purpose of the obligation to furnish security is to prevent loss caused by the detention of a vessel under arrest. The word 'forthwith' in the present context envisages that security will be provided in the shortest practicable time.

As to '[b]ail or other security as may be required ... to secure the release of the vessel', Trafigura Maritime Logistics Pte Ltd (Trafigura) argues that the phrase 'as may be required' means that Clearlake must do whatever it takes to secure the release of the vessel. In other words, whatever Natixis requires must be provided. By contrast, Clearlake argues that the phrase 'as may be required' refers to the security which is required by the Court of the forum of the arrest to permit release. This is said to reflect art 5 of the Arrest Convention 1952 which provides for the Court in whose jurisdiction the vessel has been arrested to determine 'sufficient bail or other security'.

There appear to be at least three possible meanings of the phrase 'as may be required'. First, it may mean as may be required by the arresting party to secure the release of the vessel from arrest. Second, it may mean as may be required by the Court of the place of arrest to secure the release of the vessel from arrest. Third, it may mean as may be required by the Court which the parties have agreed has jurisdiction to determine disputes arising under the charterparty.

As to the first suggested meaning, in most cases there will obviously be discussions with the arresting party as to what security is acceptable and so long as its demands are not unreasonable it is to be expected that security acceptable to the arresting party would be provided. In cases like this, guarantees from first class banks will usually be offered and accepted. P&I club letters would not be usual because those who request cargo to be delivered otherwise than against production of bills of lading are likely to be cargo interests, not shipowners who are members of a P&I club. But if the arresting party’s demands as to the form of the guarantee are unreasonable is the charterer obliged to provide security which complies with those demands? On the one hand it can be said that, as between the owner and the charterer, it is the latter who should take the risk of unreasonable behaviour by the arresting party because it is the charterer’s request that delivery be made otherwise than against the presentation of a bill of lading that has given rise to the problem. But on the other hand it can be said that clear words are required to oblige the charterer to comply with an unreasonable demand and there are no such clear words.

As to the second suggested meaning, disputes between the arresting party and the charterer as to the security required for the vessel's release would ordinarily be resolved by the Court of the place of the arrest. That is because the Court of the place of arrest is the Court which has authorised the arrest and only it has the power to release the vessel from that arrest. Where there is a dispute as to the reasonableness of the security offered to secure the release of the vessel from arrest the vessel will only be released if the Court of the place of arrest considers the security sufficient. Article 5 of the Arrest Convention 1952 reflects this. The Court would consider whether the security offered provided the claimant in rem with adequate security for its claim.

As to the third suggested meaning, in circumstances where the owner and charterer have agreed to this Court having jurisdiction to determine disputes relating to the indemnity, such jurisdiction would surely include a dispute as to the adequacy of the security required by the undertaking. Exercising that jurisdiction, this Court holds that the meaning which the parties, as reasonable persons, would have understood the phrase 'as may be required' to bear, is 'as may be required' by the Court of the place of arrest. That appears to be the meaning which best reflects the context in which the phrase is found and the purpose of providing security. What the Court of the place of arrest requires in any particular case is a question of fact for this Court to determine as between owner and charterer.

In normal circumstances an Admiralty Court, faced with an application to release a valuable vessel from arrest, would determine whether the security offered was such as to allow the release of the vessel from arrest without delay. In such circumstances there would usually be no need for the Court upon which the owner and charterer have conferred jurisdiction to determine disputes between them to find as a fact what security would be judged adequate by the Court of the place of arrest to allow the release of the vessel from arrest. For that would in practice be determined by the Court of the place of arrest. But these are not normal circumstances. There is a worldwide COVID-19 pandemic which has disrupted normal life, including the justice system. As a result the Court in Singapore is not able to hear the application to determine the adequacy of the security offered until 18 May 2020.

Should this Court find as a fact whether the security which has been offered to secure the release of the vessel matches that which would be required by the Court of the place of arrest? That is what this Court would have to do, and would have jurisdiction to do, if, unusually, there was no appropriate application before the Court of the place of arrest. Those are not the circumstances of this case. There is an appropriate application in Singapore but the result will not be known for almost a month. In those circumstances it is said that comity requires this Court to decline to answer that question. There is sense in that approach, for otherwise awkward situations might result. Security considered appropriate by this Court may not be considered appropriate by the Court of the place of arrest, in which case the vessel would not be released. That seems unlikely to have been intended by the parties. Conversely, if security offered by the charterer were considered inadequate by this Court but met with the approval of the Court of the place of arrest it would be odd if the charterer had to provide more than the Court of the place of arrest required to enable the vessel to be released.

However, this is a dispute between the owner and charterer. The charterer owes an obligation to the owner to provide security which will secure the release of a valuable vessel from arrest. The owner wishes to enforce that obligation and mitigate the losses it is suffering by reason of its inability to trade the vessel. There is therefore a powerful reason for this Court, in circumstances where the Court of arrest, for understandable reasons, is unable to determine the application for release until 18 May 2020, to exercise the jurisdiction the parties have conferred on it to resolve disputes between owner and charterer.