The "Chem Orchid": Admiralty Jurisdiction, Demise Charter, and Ostensible Authority Dispute
In The "Chem Orchid" case before the High Court of Singapore on January 6, 2014, several admiralty claims (ADM 184/2011 by Winplus Corporation Co. Ltd, ADM 197/2011 by Frumentarius Ltd, ADM 198/2011 by KRC Efko-Kaskad LLC, and ADM 201/2011 by Mercuria Energy Trading SA) were consolidated. The registered owner of the vessel, Han Kook Capital Co. Ltd (HKC), sought to set aside the writs, arguing that the court's admiralty jurisdiction was improperly invoked. The court considered whether Sejin Maritime Co. Ltd was the demise charterer at the time the writs were issued and whether HKC could be held liable under ostensible authority. The court ultimately set aside the ADM proceedings, finding that Sejin was not the demise charterer at the time of commencement. The court declined to strike out the claims against HKC in ADM 198 and ADM 201.
1. Case Overview
1.1 Court
High Court1.2 Outcome
The ADM proceedings are set aside on the basis that the admiralty jurisdiction in rem of the Court under the High Court (Admiralty Jurisdiction) Act had been improperly invoked against the Vessel.
1.3 Case Type
Admiralty
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court addressed admiralty jurisdiction in rem, determining whether a demise charter was validly terminated and considering ostensible authority.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Han Kook Capital Co, Ltd | Respondent | Corporation | Judgment for Respondent | Won | |
| Winplus Corporation Co, Ltd | Plaintiff | Corporation | Claim Dismissed | Dismissed | |
| Frumentarius Ltd | Plaintiff | Corporation | Claim Dismissed | Dismissed | |
| KRC Efko-Kaskad LLC | Plaintiff | Corporation | Claim Dismissed | Dismissed | |
| Mercuria Energy Trading SA | Plaintiff | Corporation | Claim Dismissed | Dismissed | |
| Sejin Maritime Co Ltd | Other | Corporation | |||
| The "Chem Orchid" | Defendant | Other |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tan Teck Ping Karen | Assistant Registrar | Yes |
4. Counsels
4. Facts
- HKC was the registered owner of the vessel "CHEM ORCHID" until it was sold pursuant to a Court Order.
- HKC leased the Vessel to Sejin under a Vessel Lease Contract governed by Korean law.
- HKA was formed to deal with the bad debts of HKC, and the credit under the Lease Agreement was transferred to HKA.
- HKA issued a letter titled “Lease contract termination notice”.
- Winplus, Frumentarius, KRC, and Mercuria commenced actions against the vessel for various claims.
- HKC sought to set aside the writs, arguing that the admiralty jurisdiction was improperly invoked.
- KRC and Mercuria raised an alternative claim against HKC on the ground that the Master of the Vessel had ostensible authority to bind HKC.
5. Formal Citations
- The “Chem Orchid”, ADM Suit No 184 of 2011(SUM No 999 of 2012), ADM Suit No 197 of 2011(SUM No 1009 of 2012), ADM Suit No 198 of 2011(SUM No 1002 of 2012) and ADM Suit No 201 of 2011(SUM No 1005 of 2012), [2014] SGHCR 1
6. Timeline
| Date | Event |
|---|---|
| HK AMC Co. Ltd (HKA) was formed to deal with the bad debts of HKC. | |
| Notice of Credit Transfer from HKC to Sejin was given by HKC to Sejin. | |
| Asset Transfer Agreement was signed, transferring the lease credit from HKC to HKA. | |
| HKA issued a letter titled “Lease contract termination notice”. | |
| Cargo of palm oil/products shipped from Belawan, Indonesia to Taman, Russia. | |
| Tanker Bill of Lading DUM/HAV-01 issued at Dumai Port of Indonesia. | |
| Winplus supplied bunkers to the vessel at Dumai Port, Indonesia. | |
| Winplus supplied bunkers to the vessel at the Port of Singapore. | |
| Writ filed in ADM 184 and the Vessel arrested. | |
| Writs filed in ADM 197, ADM 198 and ADM 201. | |
| Judgment reserved. |
7. Legal Issues
- Admiralty Jurisdiction in Rem
- Outcome: The court found that the admiralty jurisdiction in rem was improperly invoked as Sejin was not the demise charterer at the time of the commencement of the action.
- Category: Jurisdictional
- Sub-Issues:
- Improper invocation of admiralty jurisdiction
- Validity of demise charter termination
- Termination of Demise Charter
- Outcome: The court found that the Lease Agreement was terminated at the latest on 15 July 2011.
- Category: Substantive
- Sub-Issues:
- Validity of termination notice
- Requirement of redelivery
- Interpretation of charterparty clauses
- Ostensible Authority
- Outcome: The court declined to strike out the claims against HKC based on ostensible authority.
- Category: Substantive
- Sub-Issues:
- Representation by principal
- Reliance by third party
- Authority of master to issue bills of lading
8. Remedies Sought
- Damages
- Interest
- Costs
9. Cause of Actions
- Breach of Contract
- Negligence
- Breach of Duty
10. Practice Areas
- Admiralty Litigation
- Commercial Litigation
11. Industries
- Shipping
- Energy
- Commodities Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| The “Bunga Melati 5” | High Court | Yes | [2001] 4 SLR 1017 | Singapore | Cited for the law on invoking the admiralty jurisdiction of the court and the onus on the plaintiff to establish jurisdiction under s4(4) of the HCAJA. |
| The “Bunga Melati 5” | Court of Appeal | Yes | [2012] 4 SLR 546 | Singapore | Cited for the law on invoking the admiralty jurisdiction of the court and the standard of proof required by the plaintiff under s4(4) of the HCAJA. |
| Halcyon Isle | N/A | Yes | [1980] 2 MLJ 217 | N/A | Cited for the position that whether there was a demise charterparty and whether the charter was terminated at the time the action was commenced is to be decided by Singapore law and not Korean law. |
| The “Andres Bonifacio” | N/A | Yes | [1993] 3 SLR(R) 71 | N/A | Cited for the position that whether there was a demise charterparty and whether the charter was terminated at the time the action was commenced is to be decided by Singapore law and not Korean law. |
| The Sangwon | Singapore Court of Appeal | Yes | [1999] 3 SLR(R) 919 | Singapore | Cited as support for the position that Korean law should be applied in determining whether the Lease Agreement has been validly terminated. |
| Banque Nationale de Paris v Tan Nancy and another | N/A | Yes | [2001] 3 SLR(R) 726 | Singapore | Cited for the definition of actual and apparent authority. |
| Hely-Hutchinson v Brayhead Ltd | N/A | Yes | [1968] 1 QB 549 | N/A | Cited for the definition of actual and apparent authority. |
| ASP Holdings Ltd v Pan Australia Shipping Pty Ltd | N/A | Yes | [2006] FCA 1379 | Australia | Cited for the principle that there is no bright line test to determine whether a valid notice of termination has been issued and that the court will examine the notice to determine if it effectively terminated the charter. |
| The Aegnoussiotis | N/A | Yes | [1977] 1 Lloyds’s Rep 268 | N/A | Cited for the principle that no particular form of words or notice is required to terminate a charter, but the charterers must be informed that the owner is treating the non-payment of hire as having terminated the charterparty. |
| The Mihalios Xilas | N/A | Yes | [1979] 2 Lloyd’s Rep 303 | N/A | Cited for the principle that what is required is an unequivocal act or statement by the owner communicated to the charterer showing that the owner intends to terminate the charter. |
| Patrick Stevedores No 2 Pty Ltd v MV “Turakina” | N/A | Yes | May 1998, unreported | Australia | Cited for the principle that redelivery is required to terminate a demise charterparty. |
| The “Rangiora”, “Ranginui” and “Takitimu” | N/A | Yes | [2000] 1 Lloyd’s Reports 36 | New Zealand | Cited for the principle that a demise charterer is only terminated when both control and possession are withdrawn and that redelivery is required for possession by the charterer to be terminated. |
| Gulf Marine and Industrial Supplies Inc. v The Demise Charterer of the Ship or Vessel M.V. ‘Trident Dawn’ | N/A | Yes | [1992] HKCFl 273 | Hong Kong | Cited for the principle that redelivery is not required for termination. |
| CMC (Australia) v The Ship “Socofl Stream” | N/A | Yes | [1999] FCA 1419 | Australia | Cited for the principle that the key in determining whether delivery is required to terminate the charterparty is the terms of the agreement. |
| CMC (Australia) v The Ship “Socofl Stream” | N/A | Yes | [2001] FCA 961 | Australia | Cited for the principle that the key in determining whether delivery is required to terminate the charterparty is the terms of the agreement. |
| Ships “Hako Endeavour”, “Hako Excel”, “Hako Esteem” and “Hako Fortress” v Programmed Total Marine Services Pty Ltd | N/A | Yes | [2013] FCAFC 21 | Australia | Cited for the principle that clauses 28 and 29 would allow the demise charterparty to be terminated once a notice of termination was issued and that no redelivery was required. |
| The Munster | N/A | Yes | [1983] 1 Ll. LR 20 | N/A | Cited in Turakina for the principle that if an owner is entitled to treat the breach as a repudiation or on behalf accepts the repudiation the charter is thereafter at an end. |
| The Munster | N/A | Yes | [1983] 1 Ll LR 370 | N/A | Cited in Turakina for the principle that if an owner is entitled to treat the breach as a repudiation or on behalf accepts the repudiation the charter is thereafter at an end. |
| The Gregos | N/A | Yes | [1995] 1 Lloyd’s Rep 1 | N/A | Cited in Turakina for the principle that if an owner is entitled to treat the breach as a repudiation or on behalf accepts the repudiation the charter is thereafter at an end. |
| Italian State Railways v. Mavrogordatos & Another | N/A | Yes | [1919] 2 K.B. 305 | N/A | Cited in Rangiora for the principle that charter hire obligation continue until it is effected. |
| Three Rivers District Council v Governor and Company of the Bank of England | N/A | Yes | [2001] UKHL 16 | N/A | Cited for the grounds upon which a party’s claim may be struck out by the court. |
| Homburg Houtimport B.V. v Agrosin Private Ltd (The Starsin) | N/A | Yes | [2000] 1 Lloyd’s Rep 85 | N/A | Cited for the general principle of ostensible authority to the issuing of bills of lading by a time charterer or local agent. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| High Court (Admiralty Jurisdiction) Act | Singapore |
| Rules of Court | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Demise Charter
- Admiralty Jurisdiction
- Ostensible Authority
- Lease Agreement
- Notice of Termination
- Redelivery
- Beneficial Owner
- Action in Rem
- Credit Transfer
- Bills of Lading
15.2 Keywords
- Admiralty Jurisdiction
- Demise Charter
- Ostensible Authority
- Chem Orchid
- Singapore High Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Admiralty and Maritime Law | 90 |
| Shipping Law | 85 |
| Demise Charter | 80 |
| Vessel Lease Contract | 70 |
| Charterparty Disputes | 65 |
| Breach of Contract | 60 |
| Contract Law | 50 |
| Jurisdiction | 40 |
| Property Law | 30 |
16. Subjects
- Admiralty
- Shipping
- Charterparty
- Civil Procedure