Case Update: Five Ocean Corporation v Cingler Ship [2015] – interim orders in aid of international arbitration

Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311

Significance: High Court exercised its powers under s 12A of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the IAA”) on the basis of urgency and necessity to make an interim order to preserve the value of goods pending the resolution of arbitration.

The case involved an application to preserve the value of a cargo of 77,000 mt of Indonesian steam coal (“the Cargo”) as an interim measure in aid of arbitration between the relevant parties in Singapore under the auspices of the Singapore Chamber of Maritime Arbitration Rules.

Section 12A of the IAA gives the court the power to order interim measures in aid of international arbitrations, whether or not the place of arbitration is in the territory of Singapore. The interim measures that the court may order under s 12A may be found in s 12(1)(c) to (i) of the IAA: [37].

The main legislative intention behind the enactment of s 12A was to give the court powers over assets and evidence situated in Singapore and to make orders in aid of arbitrations that were seated in Singapore and overseas. However, if the seat of the arbitration is in Singapore and the assets are overseas, the court would have the power to protect or preserve assets and evidence situated outside Singapore. This exercise of power to grant interim measures is not unlike the exercise of the court’s powers and jurisdiction in granting an injunction that covered assets outside Singapore provided the court has in personam jurisdiction over the parties to the local proceedings: [39].

On the requirements of s 12A(4) of the IAA, the applicant has to satisfy the court on the following matters: (a) the application is an urgent one; and (b) that an order would be necessary for the purpose of preserving assets (ie, under s 12(1)(d), the property which is or forms part of the subject-matter of the dispute): [41].

The Court of Appeal in Maldives Airport Co Ltd v GMR Male International Airport Pte Ltd [2013] 2 SLR 449 (“Maldives Airport”) held at [39] that while the term “assets” under s 12A(4) of the IAA was drafted widely for the purpose of including choses in action or rights under a contract, this was limited to contractual rights that were capable of being preserved. It would be necessary to distinguish between contractual rights that could and were ordinarily preserved by way of an order for specific performance or an injunction, and contractual rights which, if breached, would give rise to a secondary obligation to pay damages. The touchstone of the distinction between the two lie in whether damages would be an adequate remedy for the breach: [42].

A contractual lien is in the nature of security and may be defined as a right to retain possession of goods or documents belonging to another until all claims against that other are satisfied. A lien may exist at common law or, as in this case under the Bill of Lading, as a term of an agreement. This security interest is as an additional right under a contract to obtain payment, is one which is capable of being preserved under s 12A(4) of the IAA: [44].

A contractual lien is also a chose in action and qualifies as an “asset” within the meaning of s 12A(4) of the IAA: [46].

Order 29 r 4 of the 2014 ROC (which is the same as O 29 r 4 of 1970 RSC) is similar to s 12A(4) of the IAA in that it gives the court the power to make orders of sale. The rationale behind O 29 r 4 is that where goods are perishable, or likely to deteriorate if kept, the value of the movable property the subject-matter of the proceedings would be lost. This rationale fits squarely into the intention behind s 12A(4) read with s 12(1)(d) of the IAA, which is to preserve the property which is or forms part of the subject-matter of the dispute that is or will be referred to arbitration: [54].

The court found on the facts that there was a clear case of urgency. It also noted that the arbitral tribunal had not yet been constituted: [59].

Besides the element of urgency, an order made under s 12A(4) of the IAA must also be one that is “necessary for the purpose of preserving evidence or assets”. In Maldives Airport, the Court of Appeal held that an order under s 12A(4) would not be “necessary” if other reasonably available alternatives for securing the evidence or asset existed: [60].

In the final analysis, the court granted the application and held that the net proceeds of the sale of the Cargo are to be paid into court pending further order from the arbitral tribunal.

The decision is being appealed against to the Court of Appeal.

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