Best Soar Ltd v Praxis Energy Pte Ltd [2017] SGHC 158 (“Best Soar”) Should the Singapore Court decide whether an arrest that took place in Lebanon was wrongful?
Background
The Bunker Supplier is a Singapore company that supplied bunkers to the Vessel in Singapore. As payment was not received for the bunkers, the Bunker Supplier arrested the Vessel in Beirut, Lebanon. It also filed a substantive action against the Owners/Vessel in Beirut for the bunker claim.
The Owners filed an objection in the Lebanon Court, claiming that the arrest was wrongful and should be revoked, and sought an order that the Bunker Supplier provide security for damages (“Objection”). The Owners also furnished security and the Vessel was later released.
The Owners subsequently commenced an action against the Bunker Supplier in the Singapore Court (“Singapore Proceedings”) seeking a declaration that the Owners were not liable for the bunkers and that the arrest of the Vessel was wrongful; damages for wrongful arrest; an injunction to restrain the Bunker Supplier from pursuing its claim in Lebanon and any other jurisdiction; and the return of the security provided to release the Vessel.
The Bunker Supplier applied to stay the Singapore Proceedings in favour of Lebanon on the ground of forum non conveniens or Case Management (partial stay pending the outcome in Lebanon). The Bunker Supplier’s stay application before the Assistant Registrar (“AR”) was successful and the Owners appealed. On appeal, the Judge affirmed the AR’s decision. Dissatisfied, the Owners appealed to the CA, who also dismissed the appeal.
THE JUDGE’S WRITTEN GROUNDS OF DECISION
The two-stage test whether to grant a stay of proceedings on the ground of forum non conveniens is enunciated in Spiliada Maritime Corporation v Cansulex [1987] AC 460. In the first stage, the applicant must show that another forum is the distinctly more appropriate forum to hear the dispute. In the second stage, the respondent has to show that there are circumstances by reason of which justice requires that a stay should nonetheless be granted.
Stage 1 of the Spiliada Test
As the alleged tort of wrongful arrest took place in Lebanon, this pointed to Lebanon as the natural forum. Further, since the Lebanese Court granted the arrest order under Lebanese law, and the Objection had to be resolved under Lebanese law, the Lebanese Court would be best placed to apply its own law.
Parallel proceedings in both Lebanon and Singapore would give rise to a duplication of resources and the risk of conflicting judgments. The latter, with regard to the correctness of the arrest, was worrying. It dovetailed with the consideration of international comity, which favoured Lebanon as the more appropriate forum for the Owners’ claim for wrongful arrest.
For these reasons, the Judge found that the Bunker Supplier had succeeded in showing that Lebanon was the more appropriate forum.
Stage 2 of the Spiliada Test
The Owners argued that there was no procedure for discovery of documents or cross-examination in Lebanon unlike in Singapore. This was rejected as it merely pointed to differences between the common law system in Singapore and the civil law system in Lebanon – it was not a denial of substantial justice.
The Owners submitted that it was seeking an injunction against the Bunker Supplier and it could only be granted by the Singapore Court since the Bunker Supplier was a Singapore company. The Judge also rejected this argument as this would always be the case whenever a Singapore company is involved.
Limited stay on the ground of Case Management
The Judge held that he would, in any event, have granted a limited stay of the Singapore Proceedings pending the outcome of the action in Lebanon. The Singapore Court can make such an order when there is a multiplicity of proceedings so as to ensure the efficient and fair resolution of the dispute.
Given the advanced stage of the Lebanon Proceedings, the Judge said that a limited stay would ensure an efficient and fair resolution of the dispute; avoid the possibility of conflicting decisions; and promote international comity.
The CA unanimously dismissed the Owners’ appeal. Significantly, the CA said that the crux of the issue went beyond whether to stay the action based on forum non conveniens or Case Management. It was troubled that the essence of the Owners’ claim and remedies sought in the Singapore Proceedings appeared to be aimed at preventing the Bunker Supplier from exercising its rights by arresting the Vessel in Lebanon.
The CA recognised that it is common for ships to be arrested all over the world if the laws of that country allow it – it is a risk that shipowners take. Since the Bunker Supplier had the right to arrest the Vessel in Lebanon and possesses certain rights in or flowing from the arrest, it was wrong of the Owners to sue in Singapore to prevent the Bunker Supplier from exercising those rights in Lebanon. The CA found that the Owners had no basis to ask for such a relief and, on this ground alone, the Appeal must fail.
The CA also found that the Lebanese Court was unquestionably the appropriate forum to determine the issues arising from the arrest in Lebanon, for which the proceedings were already well underway in Lebanon.
CONCLUSION
What a bunker supplier can take away from this decision is that the Singapore Courts acknowledge that a ship can be arrested anywhere in the world to obtain security for a claim so long as the laws of that country permit such an arrest. This includes jurisdictions which recognise an unpaid bunker claim as a maritime lien against the ship.
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