This was an appeal from the Assistant Registrar’s decision to strike out the plaintiff’s case - see Equatorial Marine Fuel Management Services Pte Ltd v The Bunga Melati 5 (CMI 208).

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 six-month contract to MAL.

Bunkers were supplied to MISC’s vessels, and MISC paid the invoices issued by MAL totaling 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 a principal when it contracted with Equatorial, and had instead been acting as MISC's buying agent or broker, such that there was a contract directly 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 it 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 s 4(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:

1. the claim must fall within one of the limbs in s 3(1)(d)-(q) of the Act, which is equivalent to arts 1.1.a-1.1.n of the Arrest Convention 1952;
2. the claim must arise in connection with the offending ship (s 4(4)(a) of the Act);
3. 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
4. the relevant person was, at the time the action was 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 proceedings, MISC applied: (a) for a declaration that Equatorial was not entitled to invoke the admiralty in rem jurisdiction of the Court against the Bunga Melati 5, or alternatively; (b) that Equatorial's claim should otherwise be struck out as an abuse of process.

The Assistant Registrar granted the relief sought by MISC and struck out Equatorial’s case. Equatorial appealed to the High Court.

By the time the appeal was heard, a number of matters were either common or not in dispute, namely that:

• the plaintiff’s claim for unpaid bunkers fell squarely with s 3(1)(l) of the Act (aspect i above, step i below);
• the defendant was the beneficial owner of the Bunga Melati 5 when the action was brought (aspect iii above, step iv below);
• when the alleged cause of action arose the defendant was the owner or charterer or person in possession or control of that other ship or those ships (aspect iv above, step v below).

Held: A distinction should be drawn between:

(a) the Court exercising its jurisdiction to prevent an abuse of its process and striking out a matter under O 18 r 19 of the Rules of Court (ROC) (on the basis that the plaintiff's claim was certain to fail or obviously unsustainable and was thereby frivolous, vexatious, or lacking in bona fides so as to otherwise be an abuse of process); and

(b) the Court setting aside a writ under O 12 r 7 of the ROC because the court had no jurisdiction.

The court should resort to O 12 r 7 (setting aside) if it could limit its inquiry to purely jurisdictional matters of fact or law, but if (as in the present case) it was required to delve into non-jurisdictional matters of fact or law (ie the merits of the dispute), then O 18 r 19 (striking out) was the correct means of proceeding.

Striking out

Equatorial's case that there was a contractual relationship between Equatorial and MISC (through the agency of MAL) for the sale of the bunkers was plainly unsustainable and ought not to be allowed to a full trial, it would therefore be struck out under O 18 r 19 of the ROC. Similarly, the plaintiff's claim in unjust enrichment had to be struck out under O 18 r 19 of the ROC as being completely unsustainable. The decision of the AR to strike out the plaintiff’s case would therefore be upheld, and the plaintiff's appeal would be dismissed.

Setting aside

As to MISC’s alternative application to set aside Equatorial’s writ in rem under O12 r 17 of the ROC, the Court held that it was for the plaintiff (Equatorial) to establish jurisdiction under the Act.

The plaintiff does so by demonstrating that its claim falls within s 4(4) of the Act. Under s 4(4), the plaintiff must:

1. Show it has a claim under s 3(1)(d) to (q);
2. Show that the claim arises in connection with a ship;
3. Identify the person who would be liable on the claim in an action in personam (ie the relevant person)
4. Show that the relevant person was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship; and
5. Show that the relevant person was, at the time when the action was brought, either:

(a) the beneficial owner of the offending ship as respects all the share in it or the charterer of that ship under a demise charter; or

(b) the beneficial owner of the sister ship as respects all the shares in it.

Where the Court's jurisdiction in rem depended on the establishment of a factual precondition or state of affairs, such as in relation to steps i, ii, iv and v above, the plaintiff had to establish such jurisdictional facts on a balance of probabilities. Where the Court's jurisdiction in rem depended on the proper characterisation of the plaintiff's claim and/or the construction of the words in the relevant statutory provision, since questions of law could not be 'proved' in any meaningful sense, the plaintiff only had to show a good arguable case that its claim was of the type or nature required by the relevant statutory provision.

Step iii above (ie the identity of the relevant person) was not a jurisdictional matter. It neither concerned the proving of a jurisdictional fact, nor did it concern a question of law. As Willmer J in the St Elefterio said 'The words used ... are "the person who would be liable" not "the person who is liable" and it seems to me, bearing in mind the purpose of the Act, that the natural construction of those quite simple words is that they mean the person who would be liable on the assumption that the action succeeds.' In effect, on Willmer J’s approach, the words 'the person who would be liable' created a statutory assumption of the relevant person's (hypothetical) liability for the purposes of step (iii) of s 4(4) of the Act. The construction adopted by Willmer J is broadly consistent with the Arrest Convention 1952. As Berlingieri on Arrest of Ships 4th ed states (at para 52.294): 'In the context of the Arrest Convention "claim" is not used in the sense of an established right ... . It follows that ... the court should not determine the merits of the claim or establish whether or not the claim exists'. In the extra-judicial words of James Allsop J of the Federal Court of Australia in a 2007 paper in relation to the notion of the 'relevant person' for the purposes of the Australian Admiralty Act 1988, 'jurisdiction does not rest upon the assertions being made good, but being made'. As such, whether on the express words of the legislation, or as a matter of the logic and purpose underpinning them, it was not necessary or appropriate at the jurisdictional stage to embark upon an inquiry into the merits of the claim. To identify the 'relevant person', the Court assumes the success of the plaintiff's action as pleaded and ask who would be liable on it. For the purposes of identifying the 'relevant person' in s 4(4) of the Act (or its UK and Australian equivalents), it was to be assumed that the plaintiff's action would succeed as against the defendant, regardless of the defendant's possible defences, even if the defence amounted to an assertion that someone else ought to have been sued.

Returning to the facts of the present case, Equatorial's writ in rem could not be set aside for lack of admiralty jurisdiction in rem under O 12 r 7 of the ROC on the basis of the defendant’s argument that it was not the 'relevant person', because any challenge by the defendant to the identify of the 'relevant person' in s 4(4)(b) of the Act was not a jurisdictional matter to be dealt with under O 12 r 7 of the ROC, but was properly a dispute pertaining to the defendant's liability on the merits of the claim, and was therefore to be dealt with at trial or, if the plaintiff's case was hopeless (as in the present case) under O 18 r 19 of the ROC (or the Court's inherent jurisdiction). Only in such a striking out application under O 18 r 19 of the ROC would it be appropriate to investigate whether the plaintiff had an 'arguable case' on the merits.

There was no merits requirement within the Act that had to be satisfied before a plaintiff could invoke the Court’s admiralty jurisdiction in rem, and the Court of Appeal's decision in the Vasiliy Golovnin [2008] 4 SLR(R) 994 did not introduce a separate jurisdictional merits requirement independent of the provisions of the Act. Belinda Ang J explained that the Vasiliy Golovnin was concerned with a striking out action under O 18 r 19 of the ROC or the inherent jurisdiction of the Court and/or discharging a warrant of arrest for material non-disclosure, and therefore did not affect the position that setting aside a writ in rem for lack of jurisdiction under O 12 r 7 of the ROC was to be governed solely by compliance with the Act, under which there was no enquiry into the merits of the plaintiff's claim.