Damage or loss to cargo or other property caused by carrying ship is not “Damage done by a ship”

The Vinalines Pioneer [2016] 1 SLR 448

The Singapore High Court has confirmed that damage or loss to cargo or other property caused by the carrying ship (i.e. offending ship) was not a claim within the meaning of “a claim for damage done by a ship” under Section 3(1)(d) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (“HCAJA”), and did not give rise to a right of arrest.

The background facts

The Plaintiffs, Hung Dao Container Joint Stock Co (“Hung Dao”), commenced in rem proceedings in Singapore and arrested the vessel, Vinalines Pioneer, for the loss of the 111 containers that were on board the Phu Tan, which capsized and sank in the Gulf of Tonkin in heavy seas on 16 December 2010. At all material times, the Defendants, Vietnam National Shipping Lines (the “Owners”), were the Owners of the Phu Tan and theVinalines Pioneer.

Following the arrest of the Vinalines Pioneer, the Owners’ application to set aside the in rem writ under Order 12 rule 7 and Order 18 rule 19 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) was dismissed by the assistant registrar’s decision in The Vinalines Pioneer [2015] SGHCR 1. The Owners appealed, contending, amongst other things, that Hung Dao’s claim did not fall within the meaning of “a claim for damage done by a ship” under Section 3(1)(d) of the HCAJA (the “Jurisdictional Issue”).

The High Court decision

The High Court allowed the Owners’ appeal in part. In relation to the Jurisdictional Issue, the Court held that, as a matter of Singapore law, in establishing jurisdiction in rem under Section 3(1)(d) of the HCAJA, the following three criteria had to be satisfied:-

1.  The damage caused or loss that resulted had to flow from the fault or breach of duty of those engaged in the physical navigation or management of the ship (the “Navigation Criterion”);

2.  The ship had to be the actual or noxious instrument by which the damage was done (the “Instrumentality Criterion”); and

3.  The damage had to be sustained by property external to the ship (the “Externality Criterion”).

Hung Dao sought to rely on authorities from Australia and New Zealand to illustrate that the Externality Criterion was not needed to fall within the legal character described in Section 3(1)(d), and thus could extend to damage to or loss of containers caused by the offending ship. In this regard, the High Court clarified that the Externality Criterion is a reflection of English law supported by principle and authority, and should be followed in Singapore. The alternative would serve to extend the ambit of the Court’s jurisdiction in rem and the established category of a damage lien beyond legal bounds.

Comment

The High Court’s clarification that the phrase “damage done by a ship” does not include damage or loss to cargo or other property carried on board the offending vessel chimes with authorities which accept that a claim for damage to cargo lately laden on board an offending vessel is not a claim that gives rise to a maritime lien (damage lien), which would survive any subsequent change of ownership of the said offending vessel.

Furthermore, this decision is consistent with the Singapore Court’s practice to consider a claim for goods lost or damaged on board a ship as a claim coming under the provision regarding “loss of or damage to goods carried in a ship” (Section 3(1)(g) of the HCAJA), rather than under the provision regarding “damage done by a ship” (Section 3(1)(d) of the HCAJA).

Article authors:

Edgar Chin, Jonathan Thio

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