DSA Consultancy (FZC) v The Eurohope
DSA Consultancy (FZC) v The “Eurohope”
Singapore High Court; Chua Lee Ming J;  SGHC 218
Niru & Co LLC for DSA Consultancy (FZC), Plaintiffs
Rajah & Tann Singapore LLP for the owners of the “Eurohope”, Defendants
ADMIRALTY JURISDICTION: ARREST TO OBTAIN SECURITY IN AID OF FOREIGN COURT PROCEEDINGS
The Singapore High Court has unequivocally confirmed that the High Court’s admiralty jurisdiction under the High Court (Admiralty Jurisdiction) Act cannot, at present, be invoked by an action in rem for the sole purpose of obtaining security in aid of foreign court proceedings. The Court has taken the view that legislative intervention would be required to allow vessels to be arrested for such a purpose.
This judgment also appears to suggest that if the law is not completely settled and there is arguably a basis for invoking the Court’s admiralty jurisdiction, the Plaintiff who obtains a warrant of arrest on such basis may not be considered to have proceeded with an arrest in bad faith.
This note has been contributed by Leong Lu Yuan, LLB (Hons) NUS, Advocate & Solicitor (Singapore).
The Plaintiffs chartered the vessel “Eurohope” (“the Vessel”) from the Defendants pursuant to a charterparty governed by English law and containing an exclusive jurisdiction clause in favour of the High Court of London for all claims over US$100,000.
Soon after the charterparty was entered into, the Defendants purported to terminate the Charterparty. The Plaintiffs commenced an admiralty action in the High Court of London for wrongful termination of the charterparty (“the London Proceedings”).
The Plaintiffs subsequently issued an in rem writ in Singapore, and arrested the Vessel. The application for the warrant of arrest expressly stated that the arrest was to obtain security in aid of the London Proceedings, and that once security was obtained, the Plaintiffs intended to apply to stay the Singapore action with security in place, pending the determination of the London Proceedings.
Security was furnished and the Vessel released from arrest. The Plaintiffs applied to stay the Singapore proceedings and for the security to remain in force pending the final determination of the London Proceedings. The Defendants applied, amongst other matters, to have the writ and/or warrant of arrest struck out and/or set aside, and for damages for wrongful arrest or wrongful continuation of arrest.
The Plaintiffs’ application was granted and the Defendants’ application dismissed by the Assistant Registrar hearing both applications. The Defendants appealed against both decisions.
The Defendants’ appeals were allowed. The writ of summons was struck out and the warrant of arrest set aside. The security already provided was cancelled. But the Court refused to grant damages for wrongful arrest or wrongful continuation of arrest.
1. The issue to be determined was whether it was an abuse of process to commence an action in rem for the sole purpose of arresting a vessel in order to obtain security in aid of foreign legal proceedings.
2. It had previously been held in The “ICL Mahendra Raja”  2 SLR(R) 922 that the court’s jurisdiction to arrest a ship in an action in rem should not be exercised for the purpose of providing security for an arbitration award* or judgment elsewhere.
3. The Plaintiffs sought to rely on the case of Avin International Bunkers Supply SA v The Owners of the Ship or Vessel “United Endurance”, arguing that the Court there disagreed with the court in The “ICL Raja Mahendra”.
3.1. In that case, an action was commenced in Piraeus by the Plaintiffs, Avin, against the owners of the “United Endurance” and a temporary order for her arrest was obtained. While the owners had initially provided a bank guarantee to secure the release of the vessel in Piraeus, the bank guarantee was later discharged by order of the Piraeus court.
3.2. Pending determination of the claims in Piraeus, Avin learned that the vessel had been put up for sale. Avin commenced an in rem action in Singapore and arrested the vessel. Security was provided by way of a bank guarantee.
3.3. Avin applied to stay the Singapore action in favour of the Greek proceedings, but the owners applied to dismiss Avin’s action, set aside the warrant of arrest and discharge the guarantee. At the Assistant Registrar level, the stay was granted, but it was also ordered that the security furnished by the owners be discharged.
3.4. Avin appealed against the order for discharge of the security. The High Court allowed the appeal and the bank guarantee furnished as security was maintained as security for the proceedings in Greece.
4. As no grounds of decision were issued in The “United Endurance”, the Court here took the view that it offered limited guidance and declined to follow it.
5. The Court agreed with the position in The “ICL Mahendra Raja”, and took the view that the power of arrest in an action in rem should not be exercised in aid of foreign legal proceedings, in light of the purpose of an arrest in such an action – namely, to provide security in respect of the action in rem in the Singapore courts.
6. An action in rem is a mode of exercise of the admiralty jurisdiction conferred on the High Court to adjudicate upon the claims set out in Section 3(1)(a) to (r) of the High Court (Admiralty Jurisdiction Act). Here, the stated purpose of the arrest was to obtain security in aid of foreign legal proceedings and not to have the claim heard and determined by the Singapore courts.
7. This conclusion was supported by the following:-
7.1. One of the forms of security that could be provided in an action in rem was a bond in Form 168 of the Rules of Court, which only covers a judgment in the action or a sum payable by virtue of a settlement of the action.
7.2. Specific legislative provision (by way of amendment to the International Arbitration Act) had to be made to allow vessels to be arrested in Singapore for the purpose of obtaining security in aid of foreign arbitration proceedings. No corresponding provision existed in relation to foreign court proceedings.
8. The Court took the view that legislative intervention would be required to give the court powers to order that property arrested in an action in rem in Singapore be retained as security for the satisfaction of a judgment given in legal proceedings in a foreign court.
9. However, the Court declined to award damages for wrongful arrest.
9.1. In order to obtain such damages, the Defendants had to show that there was bad faith or malicious negligence on the part on the plaintiff in bringing the action, rejecting any security offered for release of the vessel, or continuing the arrest. (The Kiku Pacific  2 SLR(R) 91, The Evmar  SLR 474)
9.2. It was argued that the Plaintiff pursued the arrest for the purpose of obtaining security in aid of foreign court proceedings, in blatant disregard of Singapore law.
9.3. However, the court took the view that the law was not so settled that the Plaintiffs could be said to have proceeded with the arrest of the Vessel in bad faith, and it was “not unreasonable” for the Plaintiffs to rely on the decision in the “United Endurance”.
9.4. While the Defendants also sought to argue that there was wrongful continuance of the arrest as the Plaintiffs failed to act expeditiously in providing the security quantum and/or in responding to the wording of the undertaking to be provided as security, and such delay was an attempt to extract favourable terms in the London Proceedings, the Court decided on the facts that the Plaintiff did not deal with security negotiations in such a dilatory manner as to amount to bad faith.
- At the time The “ICL Raja Mahendra” was decided, the International Arbitration Act had not been amended to allow arrest for the purpose of obtaining security for foreign arbitrations.