ENEMALTA PLC v Standard Club Asia

[Shipping v. Chin Tai Steel],example.com link title]- ICL Shipping v. Chin Tai Steel (onlinedmc.co.uk), in which a P&I Club provided a letter of undertaking to cargo interests in Singapore to obtain the release of a vessel arrested there. That letter of undertaking also included a non-exclusive English jurisdiction agreement. At the relevant time, the UK was a state party to the 1976 Convention but Singapore was not. The vessel’s owner established a limitation fund in England in accordance with the 1976 Convention and applied for the release of the letter of undertaking, pursuant to Article 13.2 of the 1976 Convention. Such application was dismissed.

The Court held that the purpose of Aricle 13.2 was to protect a shipowner, who had established a limitation fund in respect of a claim in any state that was a state party to the 1976 Convention, from enforcement of that claim against any other property or security that was subject to the jurisdiction of the same or another state party. Where the owner was entitled to establish the limitation fund in England, the effect of article 13.2 was that security located in Singapore did not fall within that article because Singapore was not at that time a state party to the 1976 Convention, with the result that the security would not be, or could not be, released.

Turning to the instant dispute, the LOU was negotiated and provided before any attempt at arrest had been made. The Incident did not take place in the port or in the territorial waters of any nation but occurred in international waters. Physically, the LOU was located in Malta, which is not a state party to the 1976 Convention, to the extent that physical location is relevant as in the “ICL Vikraman” case. Since England, by agreement between the parties, was given exclusive jurisdiction in relation to it, it is probable that English law would treat the LOU as being located in England. England had ceased to be a state party to the 1976 Convention on its adoption of the 1996 Protocol to the Convention and, in consequence, the Singapore court had no jurisdiction to order its release, if that is what ultimately happened, because the LOU was not a security that was within the jurisdiction of a state party to the 1976 Convention, Singapore not having adopted the 1996 Protocol. Hence, the Club’s application failed, and High Court retained exclusive jurisdiction over all disputes between the parties to the LOU.

Comment

1. In light of this judgment, the exclusive jurisdiction agreement, as a matter of English law, would give the Court the jurisdiction to deal with all disputes between the parties concerning the LOU. The question whether any order of the Singapore court had the effect of releasing the LOU would be a matter to be determined in the English Court according to English law.

2. As a matter of English law, in circumstances where a limitation fund would be established in a state party to the 1976 Convention, a security given not in any state party to that Convention and exclusively subject to English law, would not be subject to release under Article 13.2 of the Convention. To decide whether an LOU had been issued in a state party to the 1976 Convention, the English court would consider such factors as the location of the security and whether it was given to obtain the release of a vessel or other property attached within the jurisdiction of any state party to that Convention,