The "Pacific Vigorous"

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The "Pacific Vigorous"
Singapore High Court: Belinda Ang Saw Ean J: 9 June 2006; [2006] 3 SLR 374; [2006] SGHC 103

Ang & Partners for the Claimant, Agritrade International Pte. Ltd.
Rajah & Tann for the "Pacific Vigorous"
Where a shipowner delivered cargo without production of the bills of lading against letters of indemnity, the fact that the seller of the cargo had accepted part payment of the purchase price from the buyer did not amount to an election on its part not to pursue a claim against the ship for misdelivery. The principles of election, at common law and in equity, clarified.

DMC Rating Category: Confirmed

This Case Note was contributed by Ang & Partners, the Website’s International Contributors for Singapore

The Claimant, "Agritrade", sold a cargo of coal to Bhatia International Limited ("Bhatia"), who were sub-charterers of the ship "Pacific Vigorous" from the head charterers Eitzen Bulk A/S – ("Eitzen"). The cargo was loaded in Muara Satui, Indonesia in February 2005 and carried to the Port of Pipavav in India, where it was delivered without production of the bills of lading, against letters of indemnity provided by Bhatia to Eitzen. Eitzen in turn gave back-to-back letters of indemnity to the shipowner. Bhatia disputed the quality of the goods, but instead of rejecting them, delivered them to its end buyers and paid a unilaterally reduced price to Agritrade. Agritrade remained the holder of the bills of lading. It accepted the reduced price as part payment, then commenced an admiralty action against the owners of "Pacific Vigorous" for the misdelivery to Bhatia. The shipowner argued that delivery to Bhatia was with Agritrade’s consent and, alternatively, that Agritrade’s acceptance of part payment amounted to an election that precluded it from recovering damages from the shipowner.

Agritrade applied for summary judgment (an expedited process on the basis that there is no defence which needs to go to a full trial) against the shipowner. The Assistant Registrar granted the shipowner leave to defend the action at trial. Agritrade appealed to the High Court.

(1)    The defence that the cargo was released to Bhatia with the consent of the claimant was unsustainable. The release was against letters of indemnity, not on the basis of any prior consent by Agritrade.
(2)    Election at common law occurs where a person has two inconsistent rights or courses of action, only one of which can be exercised. In such a case, his choice by overt act communicated to the other party that he is relying on one such right precludes him from later claiming the benefit of another.
(3)    Election in equity means that a party cannot both accept (approbate) an instrument or judgment and reject (reprobate) it.
(4)    In this case, there was no common law election because Agritrade was not exercising two inconsistent rights. It had separate and independent causes of action against two persons, against the shipowner for conversion and against Bhatia for the balance of the sale price. These were cumulative, and not alternative, remedies
(5)    Even if there were alternative and inconsistent remedies, the common law doctrine of election takes effect only where a stage is reached where some choice has finally to be made. In this case, Agritrade had not commenced proceedings against Bhatia for the price. Furthermore, acceptance of part payment was not an unequivocal act which outwardly signified an election under either common law or equity.
(6)   One element common to both doctrines – namely election at common law and election in equity - is that a party will not be held to have made an election if he did not know that he had a right to elect. In the present case, the shipowner did not show that the claimant had the requisite knowledge of the existence of choice.

In consequence, Agritrade’s appeal succeeded and judgment was entered in its favour.

The shipowner’s appeal to the Court of Appeal was withdrawn. The High Court judgment is a useful exposition on the principles of election, which differ from the doctrine of estoppel.

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