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Rajah & Tann: Vessel arrests in Singapore continue to be on the up, despite COVID-19

20 Aug 2020

Max Lim, a Partner of legal firm Rajah & Tann Singapore LLP, on Wednesday (20 August) provided marine fuel industry readers of Manifold Times a briefing on why the arrest of vessels at the world’s largest bunkering port continues to be an effective method of obtaining recovery on maritime-related claims.

SINGAPORE.

It is business as usual as far as vessel arrests in Singapore are concerned.

Notwithstanding the COVID-19 pandemic, 2020 has not seen a slowdown in vessel arrests, with numbers comparable to years past.

In 2020, there have been 25 vessel arrests in Singapore to date, or an average of just over 3 arrests per month so far. This figure is comparable to last year’s numbers, and bears testament to Singapore remaining the jurisdiction of choice for vessel arrest.

As at the time of writing, there are 7 vessels presently still under arrest in Singapore.

Further, in 2020 alone, as of date, an impressive total of about 194 court actions (or writs) have been filed against vessels and vessel owners in the Singapore court.

Singapore is one of the few jurisdictions in the world which allow maritime claimants to file a protective claim in Court, even before the vessel calls into Singapore. It is “protective” because upon filing, the claim is lodged as against the owner as of that date, and protects against any subsequent change in ownership.  That protective claim may then serve as the basis for arresting the vessel when she comes, notwithstanding that ownership may have changed in the interim.

Other key reasons for Singapore being a jurisdiction of choice for vessel arrests, apart from geography and being a popular bunkering hub, include the efficient and reliable system and because there is no requirement for counter-security or power of attorney.

So far in 2020, 2 vessels have been sold by the Singapore Court.  S&P brokers will also be keen to know that there are currently a further 5 vessels up for sale.

Fig.  Singapore arrests – YTD numbers at a glance

A quick word on COVID-19.  The Singapore Court was quick to implement Zoom hearings for urgent applications, including vessel arrest and release.  Anecdotally, this actually proved to be more efficient than the traditional physical hearing. No doubt, the implementation of Zoom hearings has been instrumental in ensuring that Singapore remains the jurisdiction of choice for arrests.

The parties making the arrests in Singapore primarily tend to include banks seeking to enforce their mortgages. At least one of the arrests in 2020 was a bank enforcement action, taken out by a Swiss-headquartered bank.

Bunker players are also active in vessel arrests here – no surprise given Singapore’s status as a bunkering hub.  For bunker players, swift and decisive action to arrest is necessary, especially before the shipowner takes steps towards restructuring which may impede enforcement.

Parties with cargo-related or charter party-related claims also look to arrest in Singapore to obtain security for their arbitration (whether taking place in Singapore, London or elsewhere).

The spate of commodities-related defaults in 2020 (both here and elsewhere) has also contributed to the arrest numbers in Singapore, but perhaps not to the extent one may have expected.  One such case that springs to mind would be the Hontop-related arrest in (“Miracle Hope”) that was reported in the international press.

Trade financiers seeking to arrest the carrying ship to enforce their security may do so on the basis of original, bona fide bills of lading. Part of the reason why there has not been that many vessel arrests relating to the collapse of the commodity players could be because of the apparent use of forged bills of lading as has been widely reported, or duplicates. Trade financiers who find themselves in such a position would have to seek alternate means of recovery.

If the year-to-date numbers are anything to go by, the arrest of vessels in Singapore continues to prove to be an effective method of obtaining recovery on maritime-related claims.

 

Written by: Max Lim, Partner, Rajah & Tann Singapore LLP © 2020
Photo credit: Manifold Times
Published: 20 August, 2020

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