The 'Ever Glory'
DMC Category Rating: Developed
This case note has been contributed by Ang & Partners, International Contributors to the website for Singapore
Evergreen, the owners of "Ever Glory" commenced a limitation action in Singapore in 1998 for the purpose of limiting their liability in respect of all potential claims arising out of the collision, in accordance with the International Convention relating to the Limitation of the Liability of Owners of Sea-going Ships, 1957 (the "1957 Convention"), which is given effect in Singapore by the Merchant Shipping Act (Cap. 179). Evergreen gave due notice to cargo claimants to participate in the limitation action. On 24 September 1999, the Singapore court granted Evergreen a decree of limitation and on 3 November 1999, the Singapore court declared that Evergreen’s liability was to be limited to S$2.4 million plus interest. On 4 November 1999, Evergreen paid the sum plus interest into court (for the court to administer and distribute rateably among claimants who proved their claims against "Ever Glory").
72 cargo claimants, who were aware of, but refused to participate in, the limitation action in Singapore, arrested "Ever Reach", a sister ship of "Ever Glory", in Belgium on the day that the Singapore court granted Evergreen a decree of limitation. Evergreen put up security of USD 18.3 million to secure her release. Belgium courts would apply a higher limit based on the Convention on Limitation of Liability for Maritime Claims, 1976 (the "1976 Convention"), namely about S$13.5 million. Evergreen failed to set aside the arrest before the first instance and the lower appellate court in Belgium and its appeal to the final appellate court in Belgium was pending. There is no doctrine of forum non conveniens (where an action is stayed in favour of another, more appropriate, forum) in Belgian law.
Evergreen brought an anti-suit injunction against the cargo claimants. It named 74 cargo claimants as Defendants, but proceeded only against 72. Of these, one was a UK company with a registered place of business in Singapore. The remaining Defendants were not based in Singapore, although a few owned shares in Singapore companies. The cargo claimants had no connection with Belgium other than the arrest of "Ever Reach". The operators of "Ever Glory" were based in Taiwan.
The Defendants had applied to set aside the Order for service of the Originating Summons (the process commencing the anti-suit injunction) out of the jurisdiction on them. The outcome of this application was dependent on the outcome of Evergreen’s application for an anti-suit injunction.
2. It was not part of the amenability test that consideration be given as to whether or not the injunction could be enforced. The court was not to be deterred from granting an injunction where it was appropriate in the circumstances of a particular case to do so. It should not contemplate that its order would be disobeyed. In this case, personal jurisdiction over the defendants was established through the service of the Originating Summons on them.
3. As a general but not invariable rule, the court may be willing to grant an anti-suit injunction if Singapore is shown to be the natural forum for the resolution of disputes between the parties. Evergreen had on the facts shown Singapore to be the natural forum for the determination of liability and quantum between the parties. The cargo claimants’ claims against Evergreen were for damages in tort. The tort was committed in Singapore and it was the law of Singapore that gave rise to a cause of action. Singapore law would determine the amount of damages that was recoverable under its general law. The cargo claimants would have to prove their claims so determined against the limitation fund.
4. An injunction would not be granted simply because Singapore was shown to be the natural forum. Whilst an injunction acted to restrain the cargo claimants, by doing so, it indirectly impinged upon the ability of the Belgium courts to act. Hence, the principle of comity became one to which careful regard had to be had.
5. The question for consideration was whether the conduct of the cargo claimants in continuing with the Belgian proceedings was vexatious or oppressive and was hence unconscionable. The constitution of a limitation fund in Singapore provided the necessary focal point for consideration of the issues at hand.
6. The vexatious or oppressive conduct of the cargo claimants lay in their unlawful challenge to Evergreen’s right to choose the limitation forum and the invasion or attack on its legal rights conferred by the limitation decree and limitation fund. The limitation decree which was a declaratory order was binding and conclusive, whether or not any consequential relief was given.
7. The right to claim limitation in any particular forum was a right that belonged to the shipowner alone and that choice was not to be pre-empted by a claimant. In other words, a claimant could dictate where the limitation fund was to be constituted. The effect and consequence of litigating in Belgium was a means to frustrate or subvert Evergeen’s choice of forum for pursuing a limitation action. It purported to dictate the limitation forum and that was wrong in law. It was hence oppressive, as Evergreen was compelled through the institution and continuation of foreign proceedings to set up another limitation fund in Belgium when there was already an existing and properly constituted limitation fund in Singapore. In addition, the Defendants’ election to have limitation determined under Belgian law sought to obviate the need to share rateably with others in the amount of Evergreen’s limited liability available for distribution in Singapore. That was obviously wrong not only as between Evergreen and the Defendants, but also as between the Defendants and other claimants to the limitation fund.
8. In Singapore, the decree of limitation conferred upon Evergreen a right to limit total liability. After the limitation fund was constituted, all claims arising out of the collision were to be brought against that fund. The cargo claimants’ right to recover full compensation from Evergeen was transformed into a right to payment of a proportionate amount of a limited fund. In short, Evergreen were given a personal right to limit liability and protection from proceedings in rem after the decree was granted and the limitation fund constituted. The Belgian proceedings would alter those rights and obligations if the Singapore decree was not recognized. To that extent, the effect and consequence of the Belgium proceedings infringed or undermined the protection granted to Evergreen by the Singapore court.
9. The protection of Evergreen’s legal rights and the court’s protection of its orders were within the purview of the Singapore court. The application for a restraining order was made in Singapore as Belgium had no concept of forum non conveniens. Singapore and not Belgium was clearly the appropriate forum for the determination of the dispute between the parties. In the circumstances, a grant of an injunction did not imply disrespect for comity. This was not one of those occasions where there was a countervailing comity argument to which the Claimants’ legal rights were to be subordinated.
10. In addition, the Court observed that: (a) the Defendants did not, when they had the opportunity to do so, oppose the limitation action; it would be wrong to deprive - through foreign proceedings - Evergreen’s legal rights conferred by the decree and limitation fund and at the same time allow the Defendants a second bite of the cherry in foreign proceedings; (b) limitation of liability was founded on public policy reasons; and (c) the 1957 Convention was not an unjust regime.
11. When one had regard to all the circumstances, the cargo claimants knew and intended that a separate limitation fund be created. They knew and intended that by pursuing the Belgian proceedings, pressure would be brought on Evergreen to accept 1976 limit and that would disadvantage Evergreen legally and commercially.
12. All these reasons added up to a case of oppression. Balancing all the factors, more injustice would be done to Evergreen if the cargo claimants were allowed to proceed in Belgium rather than would be done to the cargo claimants if they were restrained from proceeding in Belgium.
The cargo claimants’ application to set aside the service of the Originating Summons was accordingly dismissed, with no order as to costs. The judge also ordered the return of the security provided by Evergreen in Belgium.Comment
This judgment is further vindication of the jurisdictions which opt for the 1957 Convention over the 1976 Convention. Courts in both England and Singapore have moved away from the partiality towards the 1976 Convention manifested in Clark J's judgment in Caltex Singapore v BP Shipping Ltd  1 Lloyd's Rep 286. The 1957 Convention is not an unjust or uncivilised regime making the jurisdiction that applies it an unsuitable forum. It remains to be seen, however, in this case, how the Singapore judgment will affect the proceedings pending before the Belgian appellate court.
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