UCO Bank v. Golden Shore Transportation

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Ang and Partners, International Correspondents to the Website for Singapore have reported that, on 23 October 2003, the Singapore Court of Appeal (Chao Hick Tin, JA and Teng Lee Meng, J) dismissed Golden Shore's appeal. They report that the Court of Appeal agreed with Woo J that, although clause 17 was an exclusive  jurisdiction clause, there was strong cause for not staying the Singapore action. The lack of an arguable defence demonstrating a genuine desire on the part of Golden Shore for a trial in India was decisive. Other factors like connection with Singapore, the governing law and location of evidence were given limited weight as these factors would be known to the parties at the time of contract. The Court of Appeal also agreed that the failure of UCO to protect time in India was a neutral factor.

DMC/SandT/03/34
UCO Bank v Golden Shore Transportation Pte Ltd; The "Asean Pioneer"
Singapore High Court: Woo Bih Li, J: 25 June 2003
Shook Lin & Bok, for UCO
Rajah & Tann, for Golden Shore
forum: whether bill of lading clause a jurisdiction clause: whether strong cause against stay: use of switched bills of lading: delivery without production of bills of lading: whether defence of consent or acquiescence
Summary
UCO issued letters of credit for payment of logs shipped from Malaysia to Kandla, India on board Golden Shore’s vessel "Asean Pioneer". UCO became holders of the bills of lading issued for the shipments. At the request of UCO’s customer, Golden Shore issued a new set of switched bills of lading without requiring the original bills to be exchanged. The buyers in India presented the switched bills and obtained delivery of the logs. UCO, as holders of the original bills, claimed damages from Golden Shore. Golden Shore applied to stay the action in Singapore on the basis of an exclusive jurisdiction clause in the bills of lading. The Singapore High Court dismissed Golden Shore’s application.

Facts
On the application of SOM, a Singapore company, the Singapore branch of UCO, an Indian bank, issued letters of credit in favour of various vendors of Sarawak Round logs. The logs were shipped on board Golden Shore’s vessel, the "Asean Pioneer" and UCO obtained the bills of lading, dated between 22 and 31 December 2000, made out to its order through the normal banking channel. At the request of SOM, Golden Shore issued a set of switched bills of lading for the same cargo without requiring the original bills to be exchanged for cancellation. In January 2001, the buyers in India obtained delivery of the logs against presentation of the switched bills of lading. SOM did not pay UCO. UCO did not demand or claim for the logs, however, until it was approached in June 2001 by the solicitors for Golden Shore, asking for the return of the original bills. UCO then reserved its rights against Golden Shore and subsequently sued Golden Shore in Singapore in December 2001.

Golden Shore applied to stay the Singapore action on the basis of clause 17 of the original bills of lading, and also on the ground that India was the more appropriate forum. The two main issues before the Court were:

(1) Whether clause 17 was an exclusive jurisdiction clause. The opening line of clause 17 read: "Any claims that may arise hereunder must be made at the port of delivery for determination and settlement at that port only." UCO’s counsel argued that "claims" meant written demands but not suits.

(2) If clause 17 were indeed an exclusive jurisdiction clause, whether there was strong cause not to stay the action.

Judgment
1. The judge held that clause 17 was an exclusive jurisdiction clause. The word "determination" made it clear that it was not just providing for the notification of claims. The judge declined to follow a Malaysian decision, the Sinar Mas, [1982] 1 MLJ 279, that had interpreted an identical sentence differently.

2. Although clause 17 was an exclusive jurisdiction clause in favour of India, there was strong cause why UCO should not be required to commence action in India. Furthermore, India was not the more appropriate forum. The reasons are set out below.

3. The parties were more closely connected with Singapore. Although UCO was an Indian bank, it was its Singapore branch that was involved in the transaction. Golden Shore and SOM were both Singapore companies.

4. The governing law under the original bills of lading was Singapore law.

5. While the judge could not conclude at this stage that Golden Shore had no defence, it seemed to the Court that Golden Shore was hanging onto a thin thread to weave its only potential defence, i.e. whether UCO had somehow consented to or acquiesced in the switched bills such that UCO would no longer be entitled to rely on or claim under the original bills. The evidence on this issue was primarily in Singapore.

6. Golden Shore did not genuinely desire trial in India. Although it commenced an Indian action against the receivers, it was not clear to the Court how Golden Shore could maintain a genuine claim against the receivers as all the receivers did was to present the very bills (i.e. the switched bills) that Golden Shore had issued.

7. UCO’s action against Golden Shore was time-barred in India. UCO did not have a good explanation for why it failed to file a protective writ in India but the time-bar was a neutral factor. If a plaintiff wished to take a gamble that the Singapore court would not stay his action, then the dice should not be loaded against him.

Comment
As is commonly the case with banks which hold bills of lading as security for payment, UCO did not come forward to claim the goods. Typically for situations of this sort, Golden Shore argued that UCO had no intention to take delivery of the logs and had therefore consented to the delivery to the Indian receivers. The judge held that this was not a plausible defence because mere omission could not, by itself, amount to consent. To the writer’s knowledge, there is no reported Singapore judgment in which the shipowner had ever successfully argued that the bank’s failure to take delivery of itself amounted to consent to someone else doing so without producing the bills of lading.

Golden Shore appealed to the Court of Appeal. On appeal, the judgment at first instance was upheld, as explained in the introduction to this case note.

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