Admiral Shipping v Rainbow Spring

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Note: the judgement in this case  has been upheld by the Singapore Court of Appeal. To access a note of the Court of Appeal's decision, click here

Admiral Chartering Ltd v Owners of Ship "Rainbow Spring"
Singapore High Court: Belinda Ang JC:, 29 October 2002
Joseph Tan Jude Benny, for Admiral
Rajah & Tann, for Rainbow Spring Shipping Ltd., Owners of "Rainbow Spring"
Admiral, as time charterers of "Rainbow Spring", brought an in rem action against and arrested the vessel for damages for breach of the time charterparty. Her registered owners, Rainbow Spring Shipping Ltd Inc ("RSSL") entered appearance and applied to set aside the writ of summons and the warrant of arrest on the ground that RSSL was not a party to the time charterparty. Under section 4(4) of the Singapore High Court (Admiralty Jurisdiction) Act (cap 123) (the "Act"), the court only has jurisdiction to entertain an action in rem for breach of charterparty if the person who would be liable in personam on the claim is the owner of the vessel, both when the cause of action arose and when the action was brought.

DMC Rating Category: Developed

This case note has been supplied by Ang and Partners, the International Contributors for Singapore

Admiral time chartered "Rainbow Spring" in 1998 and sub-chartered her in May 2000 on a voyage charter to carry a cargo of crystalline potassium nitrate from Chile to Costa Rica and Guatemala. The cargo sustained wet damage and the sub-charterer commenced arbitration in New York against Admiral for damages. Admiral commenced an action in rem against "Rainbow Spring" in September 2001 and arrested her in Singapore in December of that year. Security was provided for her release by West of England P&I on behalf of its member, RSSL, the vessel’s registered owners. RSSL entered appearance and applied to set aside the writ of summons and the warrant of arrest on the ground that it was not a party to the time charterparty, and therefore, the court had no jurisdiction to entertain an action in rem against its vessel. Under the Act, the plaintiff who brings an action in rem for breach of a charterparty must establish that the person who would be liable in personam is the owner of the vessel at the time the cause of action arose and also when the action is brought.

RSSL also alleged that the warrant of arrest ought to be set aside because Admiral had failed to disclose material facts in its affidavit supporting the arrest. RSSL claimed, in addition, damages for wrongful arrest.

1. The Court held that, to establish jurisdiction in rem, Admiral only had to show that it had an arguable case that RSSL was the person who would be liable in personam on the claim.
2. The time charterparty itself, and the conduct of the parties subsequent to the conclusion of the charter, were inconsistent as regards the identity of the "owner" of the "Rainbow Spring" with whom the charterers had contracted.
3. The Court considered decisive the fact that the fixture was concluded by exchange of correspondence before the formal charter was drawn up and signed, in particular by the exchange of faxes between Admiral’s brokers and the vessel’s agent in January 1998. Admiral’s brokers confirmed that the charter was "clean fixed" with "Oriental Shipway Inc" identified as the contracting owners. The Court observed that "clean fixed" in chartering parlance is used to signify a binding charterparty contract or concluded fixture.
4. It was therefore plain that Admiral’s case against RSSL was unarguable and the writ of summons, as well as the warrant of arrest, were set aside.
5. With regard to the argument that there had been failure on the part of Admiral to disclose material facts in its affidavit, the Court held that the issue of a warrant of arrest in Singapore (unlike England) is a discretionary remedy and therefore, full material disclosure of material facts is required. How much detail is required in the affidavit depends upon the facts of a particular case. The aim of Order 70 r 4(6) and r 4(7) (the rules stipulating the contents of an affidavit in support of an arrest) is twofold: (i) to enable the court to assess whether, on the facts of the particular case, it has in rem jurisdiction under the Act; and (ii) to enable the defendant or prospective defendant, or other persons interested in the vessel, to identify the basis upon which and the claim in respect of which the property has been arrested.
6. Even where there has been material non-disclosure, the Court has a discretion to uphold the warrant of arrest. Where the jurisdiction requirements of the Act are satisfied and the writ has not been set aside, and there being no complaint that rules 4(6) and (7) have not been complied with, the court in the exercise of its discretion ought not to set aside the warrant of arrest purely on the basis that the claimant had failed to disclose material matters in obtaining the warrant of arrest.
7. In the present case, as Admiral had sued on the charterparty based on the view that the signed charter (as opposed to the prior exchanges of correspondence) constituted the binding contract, it was not unreasonable for Admiral to have excluded the pre-fixture documents (from their affidavit in support of the application for the arrest of the vessel) because of the parol evidence rule (the rule that extrinsic evidence is not admissible to interpret the terms of a contract which has been reduced in writing – there are exceptions to this rule, for example, where there is ambiguity on the face of the contract). The charterparty had been the working document for the parties over the 4-year relationship and RSSL’s slipshod documentation had created confusion. Furthermore, Admiral’s solicitors had advised that it had a good claim against RSSL. For these reasons, the Court did not consider that a case had been made out to justify setting aside the arrest on the ground of non-disclosure of material facts.
8. For the reasons explained, it could not be said that the arrest of the vessel was so obviously groundless as to amount to bad faith or gross negligence implying malice. A weak case for a plaintiff is not gross negligence. The Court therefore found that there was no wrongful arrest.

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