The plaintiff, a UAE bunker supplier, arrested the Global Falcon in Malaysia as security for its claim for unpaid bunkers (HSFO) amounting to USD 1,301,345.39. The defendant shipowners contended that they did not know the plaintiff, never requested bunkers to be supplied to the vessel, and had no contractual relationship with the plaintiff. They further argued that the HSFO supplied was not bunkers for the use and operation of the vessel, but rather cargo purchased by the vessel's charterers, Ashraf Al Sharif Refined Oil Trading LLC, to sell to their buyers, Synergy Petroleum FZE.

The owners sought to set aside the warrant of arrest on the ground that the Court had no admiralty jurisdiction, and asked the Court to summarily determine whether the admiralty jurisdiction could be exercised on a claim under ss 20(2)(m) and (n) of the Senior Courts Act 1981 (UK) (the Act), applicable by virtue of s 24(b) of the Courts of Judicature Act 1964, where:

a) the HFSO supplied was for and on behalf of the charterers;

b) the HSFO was loaded into the cargo tanks as cargo; and

c) the vessel was not suited to use HFSO as bunkers.

Held: Judgment for the defendant owners. The plaintiff has wrongly invoked the admiralty jurisdiction of the High Court. Accordingly, the plaintiff's writ in wem and warrant of arrest must be set aside and the vessel released immediately. The owners are free to file an application to determine if damages ought to be ordered against the plaintiff for the wrongful exercise of the admiralty jurisdiction.

There is no dispute that 2,699.740 mt HSFO was supplied by the plaintiff to the owners' vessel on 15 July 2023 at the Port of Khorfakkan, UAE. According to the plaintiff, it dealt with HAAPCO, an agent of the defendant owners. The plaintiff issued a sales confirmation order addressed to 'Owners and/or Masters and/or Charterers and/or Managers and/or Operators and/or MV GLOBAL FALCON IMO: 9399167' to confirm the bunker supply contract. The plaintiff arranged for its physical bunker suppliers to carry out the supply of the HSFO to the vessel.

Following non-payment by the defendant owners, the plaintiff brought this admiralty action in rem on a claim for 'goods or materials supplied to a ship for her operation or maintenance' under s 20(2)(m) of the Act, and a claim for 'the construction, repair or equipment of a ship or in respect of dock charges or dues' under s 20(2)(n) of the Act, and obtained a warrant of arrest against the vessel by way of an interim remedy under s 11(1)(c) of the Arbitration Act 2005 to secure its claim to be determined in the intended London arbitration.

For the plaintiff to invoke the admiralty jurisdiction of this Court, the plaintiff must bring its claim under one of the limbs of the subject matter jurisdiction of ss 20(2)(a)-(s) of the Act and also, in this instance, comply with s 21(4) of the Act in respect of 'the relevant person'.

The defendants' counsel referred to The River Rima [1998] 2 Lloyd's Law Rep 93 (CMI692) and Port of Geelong Authority v The ship 'Bass Reefer' (1992) 109 ALR 505 (CMI703). Although the facts and issues are not the same as in this case, they are useful illustrations of the approach that ought to be taken when considering the admiralty jurisdiction of this Court under s 20(2)(m) of the Act.

In The River Rima, the House of Lords had to consider whether a claim for conversion of containers leased to the shipowners, and a further claim for damages for breach of an obligation to maintain the containers in good condition and repair, came within s 20(2)(m) of the Act as a 'claim in respect of goods or materials supplied to a ship for her operation and maintenance'. The House of Lords found as a matter of fact that when the owners' agent took delivery of any container from the plaintiff's depot, the plaintiff did not know on which ship that container, after being stuffed with cargo somewhere on land, would ultimately be carried.

In determining the jurisdictional issue for a claim under s 20(2)(m), the House of Lords opined that the question can be divided into two points: first, whether each container was supplied to a ship; and secondly, if so, whether it was supplied to it for its operation. Lord Brandon, writing for the majority, held that proceedings in rem could only be brought against a particular ship in respect of which the claim arose. In other words, it was an essential ingredient of such a claim that it should relate to necessaries supplied to a particular ship, the identity of which had either been specified in the contract of supply or at least notified to the supplier by the time the necessaries came to be delivered under that contract. On the facts, Lord Brandon held that the series of contracts made between the plaintiff and the owners for the hire of individual containers were contracts which contained no reference to any particular ship for the use of which the goods or materials were required, leaving the shipowners to decide later for themselves. Such contracts were not contracts for 'supply of goods or materials to a ship' but instead contracts for 'supply to the shipowner'. Accordingly, the House of Lords held that the plaintiff's claims did not come within s 20(2)(m) of the Act, and fell outside the admiralty jurisdiction of the High Court.

In The Bass Reefer, the Federal Court of Australia had to consider whether the provision of a berthing facility to the owner/charterer of a ship was a supply to the ship for 'its operation'. Foster J held that the question whether the services were 'supplied to a ship' must be analysed when services were supplied and the question determined then, as a question of fact. Thus, investigation could not be foreclosed by the fact that there was a formal contract of supply which made no reference to the particular vessel.

Foster J held that an expansive approach ought to be taken to the 'supply of goods and materials' or 'necessaries' to a ship. The making available to a ship of any facility that it needs may well amount to the supplying of a service. However, such a facility must be supplied to a ship in a reasonably direct sense, and not merely supplied to the owner or demise charterer for the ship. It must be supplied to the ship 'for its operation'. Both these requirements must influence, in any given situation, the decision as to whether a particular matter can properly be regarded as 'services'.

Foster J found that the defendant's vessel was engaged in a specialised service between the Ports of Geelong and Stanley in accordance with a strict timetable. Since the evidence established clearly that the acquisition of priority berthing rights was a highly useful, if not necessary, adjunct to this service, the berthing of a vessel at a quay in a port was an activity which supplied a facility to the vessel itself, and was thus a supply to the defendant ship for 'its operation'.

The facts in this case can be distinguished from those two cases. There is clearly no dispute that the supply of the HSFO was to the named vessel. Accordingly, the first jurisdictional question raised by the House of Lords in The River Rima posed no difficulty here. However, the question posed before this Court is whether the HSFO that was loaded on board the vessel was intended for the 'operation or maintenance' of the vessel.

This case is not unlike The Golden Petroleum [1993] SGHC 235, [1993] 3 SLR(R) 209. In The Golden Petroleum, the plaintiff commenced in rem proceedings and arrested the vessel on the basis that it had a claim in respect of goods or materials supplied to a ship for its operation or maintenance. The goods supplied to the vessel were bunker oil. However, the oil delivered to the vessel was not bunker oil for the vessel's own use or consumption, but was intended to be used for sale to other ships.

In dealing with the application by the defendant to strike out the in rem action on the ground that the claim fell outside the admiralty jurisdiction of the High Court, Rubin JC rejected the plaintiff's contention that the word 'operation' means anything done or procured to facilitate and ensure the profitable exploitation of the defendant's business with the ship as the vehicle. Rubin JC held:

32. Having regard to all the authorities referred to, I am of the view that the phrase 'operation of the ship' even if construed liberally, would necessarily entail an aspect of consumption or an element of internal activity, function, utility or exploitation of the goods supplied, within or by the ship. Lest it is misunderstood, I hasten to add that by internal function or activity, et seq, I am not attempting to restrict the meaning of the word 'operation' only to the ship's mechanical or motility aspects which enable her to move from port to port. I accept Mr Selvadurai's contention that no distinction can be drawn between necessaries for the ship and necessaries for the voyage and all things reasonably requisite for the particular adventure on which the ship is bound are comprised in this category. Nevertheless, the historical background referred to by Lord Brandon in The River Rima and the observations by Sir John Donaldson MR and Nourse LJ in the Court of Appeal, connote that the goods supplied to the ship must be linked to the working or running of that ship. In my opinion, bunker oil supplied to the ship for sale to other ships could not be conceived as good supplied for her operation. The phrase 'operation of the ship' should not be equated with the business activities of the shipowner and the section as enacted could not cover goods which are loaded onto the ship only to be loaded or disposed of soon thereafter by sale.

Having found that the contract in question was for the supply of bunker oil to the defendant shipowners as opposed to a contract for the supply of bunker oil to a ship, the Judge dismissed the plaintiff's appeal against the decision of the Assistant Registrar setting aside the writ of summons on the ground that the claim did not come within the admiralty jurisdiction of the Court.

Here, there is overwhelming documentary evidence that the 2,699.74 mt of HSFO loaded into the vessel's cargo tanks could not be intended for the operation or maintenance of the vessel. The vessel uses about 7 mt per day of VLSFO whilst its engine is running at full sea speed at an output of 90% MCR (maximum continuous rating). It would take more than one year for the vessel to consume the HSFO at normal sea speed, while not earning any freight. These facts overwhelmingly point to the inference that the HSFO could not possibly have been loaded into the vessel for its operation or maintenance. Indeed, the plaintiff was not able to demonstrate that the HSFO was in fact consumed or used by the vessel at all.

The fact that the sales confirmation and bunker delivery receipt referred to the HSFO as 'BUNKERS' does not take the plaintiff's case very far. This is because there is really no dispute that the HSFO can serve as bunkers. The pertinent question is whether the HSFO loaded into the cargo tanks of the vessel was intended to be used for its operation and maintenance. The plaintiff has not been able to demonstrate this. The vessel was not fitted with a scrubber to consume the HSFO as bunkers in compliance with MARPOL, supporting the contention that the HSFO was not intended for its consumption.

It is obvious from the undisputed facts that the HSFO carried on board the vessel in its cargo tanks does not fall under s 20(2)(m), and certainly not within s 20(2)(n) of the Act.

[See also MV Global Emerald v Meck Petroleum DMCC (CMI2498).]