A powerful bargaining tool for an unsecured creditor against a recalcitrant counterparty is the possibility of arresting a ship as security for the claim. The purpose of arresting a ship is to obtain security for a foreign or Singapore arbitration award or a Singapore court judgment. This ensures that the claimant’s prospects of recovery is not affected by the shipowners’ impecuniosity. However, there are many pitfalls to arresting a ship, which might result in the arresting party being liable for wrongful arrest and pay damages to the shipowner. This article explores the general requirements of ship arrest in Singapore and its relevance to a claim for price under bunker supply contracts. It also briefly discusses ship arrest and its interaction with the insolvency regime, and highlights what to look out for if you are contemplating an arrest.

MT: What are the requirements for arresting a ship in Singapore?

There are two main requirements to support an arrest.

First, there must be an underlying claim that falls within the scope of claims listed in Section 3(1) of the Singapore High Court (Admiralty Jurisdiction) Act 1961 (“HCAJA”). A claim for the price of bunkers supplied to a ship is covered under Section 3(1)(l).

Second, the claimant must additionally comply with Section 4(4) to show that:

1. At the time the claim arose, the party liable must be either the owner or charterer of the offending ship, or be in possession or control of the offending ship; and
2. At the time a claim is filed, the party liable must be the bareboat charterer or beneficial owner of the offending ship, or the beneficial owner of a “sister ship” (discussed below).

MT: Are there any risks involved in arresting the ship which (1) received the bunkers supplied or (2) delivered the bunkers?

This means that if a bunker supplier wishes to arrest a ship for a claim for the price of bunkers supplied, it must ensure that at the time the claim is filed in the Singapore courts, the party liable to pay the bunker supplier is the owner or bareboat charterer of the ship.

In practice, bunkers are often supplied pursuant to a chain of contracts; the bunker supplier may not have a direct contractual relationship with the ship’s owner or bareboat charterer. A key issue is whether the owner or bareboat charterer is bound by the bunker supply contract. If they are not, it may be difficult to satisfy the requirement that the party liable must be the bareboat charterer or beneficial owner of the offending ship (or a sister ship).

To arrest a ship owned by a party other than the contracting party, claimants often argue that the buyer, for example, a time charterer, is an agent of the owners or bareboat charterer. It is often very difficult to succeed on this argument. The act of receipt of the bunkers by the ship, without more, is generally insufficient to establish the necessary contractual relationship under Singapore law.

Additionally, under the bunker supply contract, apart from the ship which receives the bunkers supplied, another ship involved is the one which delivered the bunkers. Under Singapore law,  a claimant would typically try to rely on documents such as bills of lading to arrest a bunker barge. Bunker suppliers should be very cautious in relying on documents issued by the owner of the bunker barge relating to the delivery of bunkers. Such documents, such as the bills of lading, may not constitute a contract of carriage or document of title, and may lack contractual force necessary to support a claim for misdelivery. This was the outcome in the case The “Luna” and another appeal [2021] SGCA 84. Helmsman LLC successfully represented the owners of the bunker barges which loaded bunkers sold by the claimant.

MT: What if the offending ship has been sold, or the offending ship is no longer under bareboat charter?

A sister ship arrest is relevant if the owner of the offending ship sells the offending ship, but maintains ownership over other ships (referred to as “sister ships”). The claimant may potentially arrest a sister ship.

A significant obstacle to a sister ship arrest is the common practice of setting up “one ship companies” for the purpose of limiting liability. Even if the original owners of the offending ship and the owners of the sister ship are related companies, the Singapore Courts generally view the two companies as separate legal entities and are generally reluctant to pierce the corporate veil.

Therefore, it is important to be aware of any changes in the ownership of the offending ship, and where the offending ship is under a bareboat charter, whether the bareboat charter has been terminated or expired. If there are such risks, a claimant should consider first issuing an “in rem” originating claim to protect its claim against subsequent changes in ownership.

MT:  What if the offending ship is owned by a company that has applied for judicial management or scheme of arrangement, or is undergoing liquidation?

Ship arrest in circumstances where the shipowner or bareboat charterer is undergoing insolvency or restructuring proceedings can be quite complicated. For instance, there may be a moratorium whereby no proceedings may be commenced against the company except with the Court’s permission. An important issue to consider is whether the claimant should first seek the Court’s permission to issue an in rem originating claim, and whether any arrest may be seen by the Court as an unsecured creditor attempting to “get ahead” of other unsecured creditors.

Concluding thoughts

There are many potential pitfalls in a ship arrest, which a claimant must be aware of. Although a party is generally not expected to prove its case in full at the arrest stage, it is nevertheless essential to carefully evaluate any potential legal and factual obstacles to establishing the underlying claim. This is to minimise the risk of wrongful arrest, which would expose the claimant/arresting party to a claim for damages from the owner or bareboat charterer of the ship.

Related: Helmsman details insolvency processes in Singapore amidst closure of oil, shipping firms

Photo credit: Helmsman
Published: 29 August, 2025