The Tian Sheng No 8 was carrying 30,000 mt of bagged cement from Rizhao, PRC, to Chittagong and/or Mongla, Bangladesh, when it deviated to Haikou, PRC. The cargo was discharged and eventually sold at Haikou pursuant to an order of the Haikou Maritime Court. The cargo owners (the respondents) applied for a writ in rem, claiming losses of over USD 2 million.

The Admiralty Court issued the respondents' in rem writ. The writ identified the Tian Sheng No 8 as the ship. Before the respondents served the writ on the ship, International Resources Inc (the appellant) purchased the Tian Sheng No 8 and renamed it the Resource 1. The Tian Sheng No 8 was arrested in Hong Kong and the appellant put up a bail bond of USD 1.01 million to obtain its release.

The appellant applied to set aside the warrant of arrest and return the bail bond to it for cancellation. The trial Court dismissed the application and decided it could exercise in rem jurisdiction over the ship. The appellant appealed. The appellant submitted that the Court had no jurisdiction to issue the warrant of arrest in the first place. The respondent submitted that the appellant's application was out of time.

The Tian Sheng No 8 was registered in Panama and the Panamanian registry identified Tiansheng Shipping Inc as its owner. The respondent alleged 'uncertainty concerning ownership' and produced evidence suggesting that Hainan Tiansheng Ocean Shipping Co Ltd was the owner of the Tian Sheng No 8. It was, however, clear that the ship was registered, and that Hainan Tiansheng Ocean Shipping Co Ltd was not its registered owner at the material time.

The appellant urged the Court to follow The Evpo Agnic [1988] 2 Lloyd's Rep 411 (CMI2225), an English Court of Appeal decision that concerned the true construction of s 21(4) of the Supreme Court Act 1981 (UK), which was in pari materia with s 12B(4) of the High Court Ordinance (Cap 4). Lord Donaldson MR observed in The Evpo Agnic that the Arrest Convention 1952 regarded ownership and registered ownership as one and the same (at 414-415). The respondent advanced two arguments. The first was that the English Court of Appeal did not mean what it said when it said that. The second was that if the Court meant that, then it was wrong in so holding.

For the first argument, the respondent relied on a passage delivered by Lord Bingham CJ in Haji-Ioannou v Frangos [1999] 2 Lloyd's Rep 337, 353 (CMI777):

As a result of this choice of language, it has now for a long time been accepted law that ownership of a ship for the purposes of the Arrest Convention 1952 and for the purposes of the Admiralty jurisdiction of the High Court means legal ownership, except in those provisions where the word is qualified by the adjective 'beneficial': see The I Congreso del Partido [1977] 1 Lloyd's Rep 536, 562 (col 2); [1978] 1 QB 500, 541, and The Evpo Agnic [1983] 2 Lloyd’s Rep 411, 414–415. In the latter case Lord Donaldson MR observed that the Arrest Convention 1952 clearly looked to ownership and registered ownership as one and the same. Even if the legal property in the shares of a one-ship company is held by A and the equitable property by B, he said that that distinction does not affect the ownership of the ship or the shares in the ship.

For the second argument, the respondent submitted that if the English Court of Appeal held that 'owner' meant 'registered owner', this conclusion would open the way for 'true shipowners' to evade the operation of s 12B(4) by registering their ships in the names of nominees.

Held: Appeal allowed.

The Court ordered the warrant of arrest to be set aside and the bail bond to be returned to the appellant for cancellation, and exercised its discretion in the appellant's favour in granting an extension of time.

The Court followed the reasoning of The Evpo Agnic. In relation to a registered ship, the 'owner' under s 12B(4)(b) of the High Court Ordinance meant 'registered owner'. The English Court of Appeal interpreted the 'owner' of a registered ship as a 'registered owner' and did not rewrite the statute. Lord Donaldson MR had given full reasons leading to its conclusion. His reasoning should not be dismissed and brushed aside, notwithstanding that The Ohm Mariana [1993] 2 SLR 698, 709-710 (CMI1382), a Singapore Court of Appeal decision, did not follow The Evpo Agnic. The Court also did not treat Lord Bingham's passage in Haji-Ioannou v Frangos as support for the respondent's first argument. It interpreted 'owner' in s 21(4)(b) as meaning legal owner (as opposed to beneficial owner), and that, where the ship was registered, the registered owner was the legal owner.

The respondent could not show that the claimed evasion was resorted to in practice. If the time were ever to come when such evasion posed a real problem, it would be for maritime nations to react collectively by a fresh treaty and individually by domestic legislation.