Shipping 2019 Comparisons

Last Updated March 19, 2019

Contributed By Gurbani & Co

Law and Practice

Authors



Gurbani & Co has, since its inception, represented clients in all areas of transport, freight-forwarding, aviation and the shipping industry, including ship-owners, operators and charterers; governments and government-owned carriers; marine insurers and reinsurers including P&I insurers, FD&D associations, hull and machinery underwriters and war risk insurers; freight-forwarders and other shipping agents; cargo interests; lending banks and other financial institutions. The firm undertakes and advises on ship arrests and all admiralty and maritime lien claims arising out of ship collisions, carriage of cargo, charterparties, hull and cargo limitation of liability, general average, ship repairs, salvage, bunkering and ship-chandling, ship agency/management, crew wages and injury/death claims. The firm is often commissioned to investigate and report on piracy incidents and maritime casualties such as groundings, fire and sinkings. Partners involved are Mr R Govin, Ms Tan Hui Tsing with Mr Richard Kuek and Mr Ang Yong Tong, the firm’s consultants.

The Maritime Port Authority of Singapore offers maritime sector incentives to shipping enterprises to grow their business in Singapore.

There are three types of financial incentives or awards available:

  • the Approved International Shipping enterprise award encourages international ship-owners and operators to establish their commercial shipping operations in Singapore. The company will enjoy tax exemption on qualifying shipping income for:

(a)       a ten-year renewable period; or

(b)       a five-year non-renewable period, with option of graduating to the ten-year renewable period after the first five years.

The company must show in its business plan how its shipping operations will generate economic contributions in Singapore through total business spending and that strategic or commercial decision-making functions will be taken in Singapore.

  • the Maritime Leasing award encourages entities to use Singapore as their capital and funding base to finance their vessels or sea containers. The ship or container leasing company will enjoy tax concessions for up to five years on their lease income, while an approved manager of the asset-owning entity will get a concessionary tax rate of 10% on the management income. Companies with a good track record in respect of their ship and container financing operations may apply for the award by 31 May 2021; and
  • the Shipping-related Support Services award seeks to promote the growth of ancillary shipping service-providers and to encourage shipping conglomerates to set up their corporate services functions in Singapore. The shipping-related support services include ship brokering; freight forwarding and logistics services; ship management; ship agency; and corporate services rendered to qualifying parties who are in the business of shipping. The approved company will enjoy a concessionary tax rate of 10% on the incremental income derived from provision of such shipping-related support services.

LLMC 76 came into force on 1 May 2005 in Part VIII of the Merchant Shipping (Amendment) Act 2004.

Singapore is a party to the LLMC 76 without the 1996 protocol (at time of writing, however, the bill for implementation of the 1996 protocol was recently debated in Parliament, and it is expected that the 1996 protocol and 2012 amendment will come into force later in the year in Singapore).

There is no time-bar imposed for the filing of a limitation of liability action.

Pursuant to Article No 2 of LLMC 76, read with Section 136 of the Merchant Shipping Act, the following claims are subject to limitation liability:

  • claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;
  • claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
  • claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations; and
  • claims of a person other than the person liable in respect of measures taken in order to avert or minimise loss for which the person liable may limit his or her liability in accordance with this Convention, and further loss caused by such measures.

Section 136 of the Merchant Shipping Act excludes the following claims under Article No 2 of LLMC 76 from limitation of liability:

  • claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship; and
  • claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship;

Article No 3 of LLMC 76 also excludes the following claims from limitation of liability:

  • claims for salvage or contribution in general average;
  • claims for oil pollution damage within the meaning of the International Convention on Civil Liability for Oil Pollution Damage, dated 29 November 1969, or of any amendment or protocol thereto which is in force;
  • claims subject to any international convention or national legislation governing or prohibiting limitation of liability for nuclear damage;
  • claims against the ship-owner of a nuclear ship for nuclear damage;
  • claims by servants of the ship-owner or salvor whose duties are connected with the ship or the salvage operations, including claims of their heirs, dependants or other persons entitled to make such claims if, under the law governing the contract of service between the ship-owner or salvor and such servants, the ship-owner or salvor is not entitled to limit its liability in respect of such claims, or if it is by such law only permitted to limit its liability to an amount greater than that provided for in Article No 6.

Pursuant to Article No 4 of LLMC 1976, a person will be barred from his or her right to limitation of liability if it is proved that the loss was caused by their personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.

The general limits of liability are set out in Section 137 of the Merchant Shipping Act read together with Article No 6 of LLMC 76 as following:

  • In respect of claims for loss of life or personal injury, the limits of liability for:

(a)       a ship with a tonnage less than 300 tons is 166,667 Special Drawing Rights (SDR);

(b)       a ship with a tonnage not exceeding 500 tons is SDR333,000;

(c)       a ship with a tonnage in excess of 500 tons, the following amount in addition to 333,000 will be:

(i)       for each ton from 501 to 3,000 tons, SDR500;

(ii)       for each ton from 3,001 to 30,000 tons, SDR333;

(iii)       for each ton from 30,001 to 70,000 tons, SDR250; and

(iv)       for each ton in excess of 70,000 tons, SDR167.

For a ship licensed as a harbour craft under the Maritime and Port Authority of Singapore Act, the aggregate of the amounts refers to the sum insured under the policy of insurance required by the Port Master to be in force in respect of third-party risks for that harbour craft.

  • In respect of any other claims, the limits of liability for:

(a)       a ship with a tonnage less than 300 tons is SDR83,333;

(b)       a ship with a tonnage not exceeding 500 tons is SDR167,000;

(c)       a ship with a tonnage in excess of 500 tons, the following amount in addition to SDR167,000 will be:

(i)              for each ton from 501 to 3,000 tons, SDR167;

(ii)       for each ton from 3,001 to 70,000 tons, SDR125; and

(iii)       for each ton in excess of 70,000 tons, SDR83.

For a ship licensed as a harbour craft under the Maritime and Port Authority of Singapore Act, the aggregate of the amounts refers to the sum insured under the policy of insurance required by the Port Master to be in force in respect of third-party risks for that harbour craft.

The limit for passenger claims is set out in Article No 7 of LLMC 76.

By proving that the loss was caused by his or her personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result (Article No 4 LLMC 76), a party can break the shipowner's right to limit liability.

A fund may be constituted by depositing the sum into Court (Article No 11(2) LLMC 76) or by producing a P&I Club LOU [Letter of Undertaking] (pursuant to Order 70 rule 36A of the Rules of Court).

Pursuant to Article No 13 of LLMC 76, any person having made a claim against the fund shall be barred from exercising any right relating to the claim against any other assets of a person by or on behalf of whom the fund has been constituted.

All claims arising out of the collision must also be brought against that limitation fund.

A judicial sale of the vessel may occur pendent lite or after a judgment has been obtained. 

The vessels are appraised by court-appointed surveyors.

If the highest bidder’s offer is lower than the appraised value of the vessel, the vessel may be put through a second round of bidding.

The appraised value is not made known to the bidders and therefore if none of the bids, including the highest bid, clears the appraised value, the vessel may be put through a second round of bidding, or such further rounds of bidding as permitted by the court, until a bid clears the appraised value of the vessel.

The sale takes place through a closed-bid auction process. Prospective bidders submit sealed offers to the sheriff within the given timeline. The bids are opened together, with the sale going to the highest bidder (assuming the bid is greater than the appraised value of the vessel).

The assistance of an attorney or solicitor is not required when making a bid. Bids can be made directly to the sheriff.

To participate in a judicial sale, prospective bidders must submit their offers/bids in a sealed envelope together with a deposit of SGD50,000 to the Sheriff of the Supreme Court within the timeline provided.

Within three working days upon the acceptance of the offer by the sheriff, the successful bidder shall pay 10% of the purchase price, less a deposit of SGD50,000. Thereafter, within five working days, the remaining 90% of the purchase price must be paid to the sheriff, along with the sums payable for unconsumed bunker fuel and lubricants remaining on board the vessel.

Any party can place a bid for the vessel during a judicial sale auction, including a party who may have a claim or a judgment against the vessel. However, to complete the sale, the successful bidder must pay the purchase price in cash. The judicial sale process is not an enforcement process and therefore there is no ‘set-off’ of a claim or judgment against the sale price of the vessel.

The winning bid is typically the highest bid, having cleared the appraised value of the vessel. The winning bidder is not concerned with the arrest expenses incurred within the claim giving rise to the judicial sale proceeding.

Singapore is a signatory to the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading and has ratified of the Hague Visby Rules.

The Hague Visby Rules in force in Singapore is annexed at Schedule 1 of the Singapore Carriage of Goods by Sea Act. Pursuant to s. 3(1) of the Carriage of Goods by Sea Act (Cap 33), the Hague Visby Rules have the force of law in Singapore.

A bill of lading can evidence a contract of carriage.

The bill of lading contains the terms by which parties are bound. The presence of the terms and the fact that parties intend to be bound by those terms means that the bill of lading in itself serves as evidence of the presence of a contract of carriage and the terms of the contract of carriage.

In the hands of a charterer (other than demise-charterer), the bill of lading does not act as a contract of carriage to which the charterer is bound. Instead, as far as the charterer is concerned, the bill of lading serves only as a receipt of cargo and the contract of carriage is as between the proper holder of the bill of lading and the carrier.

The contract of carriage is between the carrier and the proper holder of the bill of lading.

In the event where the shipper arranges for the carriage of goods by sea, the shipper would form the contract of carriage with the carrier.

Once the bill of lading has been transferred and endorsed to the consignee, the consignee becomes the proper holder of the bill of lading and the contract of carriage is now between the consignee and the carrier.

The owner of the cargo can commence a claim in tort and bailment against the carrier and other third parties.

The proper holder of the bill of lading can commence a claim in contract against the carrier.

The carrier, the consignee, previous holders of the bill of lading, third parties handling cargo can be sued for cargo claims.

If the vessel is not chartered, the ship-owner is the carrier.

If the vessel is time-chartered or voyage chartered, the ship-owner is the carrier.

If the vessel is demise-chartered, the demise-charterer is considered the carrier.

The vessel can be sued in rem for cargo claims.

One of the heads of claim in the High Court (Admiralty Jurisdiction) Act (Cap 123) is that the claim brought is in respect of loss of or damage to goods carried in a ship.

For the admiralty jurisdiction of the Court to be invoked in rem, two additional requirements must be satisfied:

  • the claim arises in connection with a ship; and
  • the person who would be liable on the claim in an action in personam is the beneficial owner in respect all shares or the demise charterer of that ship.

Upon the satisfaction of all the requirements contained in the High Court (Admiralty Jurisdiction) Act, a vessel can be sued in rem for cargo claims.

Cargo claims do not give rise to a maritime lien. Cargo claims give rise to a statutory right of action in rem.

In the event that there exists a cargo claim and the cause of action is in tort, the claimant can commence a claim in tort.

Singapore recognises the effectiveness of the Himalaya clause in bills of lading, subject to the Contract (Rights of Third Parties) Act.

The complete defences of the carrier are stated in the Hague Visby Rules.

No want of due diligence in ensuring that vessel was seaworthy.

The carrier will not be liable for loss or damage arising from unseaworthiness of the vessel unless it can be proved that carrier did not exercise due diligence to make the ship seaworthy, to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation.

In the event where there is no want of due diligence on the part of the carrier in ensuring that the vessel was seaworthy, and that the loss or damage arose due to the unseaworthiness of the vessel, the carrier has a complete defence.

Other complete defences

According to Article No IV(2) of the Hague Visby Rules, the carrier and the ship shall not be responsible for loss and damage arising or resulting from:

  • act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship;
  • fire, unless caused by the actual fault or privity of the carrier;
  • perils, dangers and accidents of the sea or other navigable waters;
  • act of God;
  • act of war;
  • act of public enemies;
  • arrest or restraint of princes, rulers or people, or seizure under legal process;
  • quarantine restrictions;
  • act or omission of the shipper or owner of the goods, his or her agent or representative;
  • strikes or lockouts or stoppage or restraint of labour from whatever cause, whether partial or general;
  • riots and civil commotions;
  • saving or attempting to save life or property at sea;
  • wastage in bulk of weight or any other loss or damage arising from inherent defect, quality or vice of the goods;
  • insufficiency of packing;
  • insufficiency or inadequacy of marks;
  • latent defects not discoverable by due diligence; and
  • Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

The limitation of liability regime available to carriers with regard to cargo claims is that of the Hague Visby Rules.

The bill of lading serves as prima facie evidence of the condition of the goods shipped on board the vessel. Therefore, in the event where the goods arrive at the discharge port in a damaged state, the carrier bears the burden of proving that the goods were not damaged during its carriage.

In the event where loss or damage has resulted from the unseaworthiness of the vessel, the owner of the cargo bears the burden of proving that the carrier had not exercised due diligence in ensuring the seaworthiness of the vessel.

Under the Hague Visby Rules, notice of loss or damage and general nature of such loss or damage must be given in writing to the carrier or his or her agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage. In the event where the loss or damage is not apparent, such notice must be given within three days.

Should the above notice requirements not be complied with, the removal of the goods shall be prima facie evidence of the delivery by the carrier of the goods described in the bill of lading.

According to Article No III(6) of the Hague Visby Rules, the time bar for cargo claims is one year.

According to Article No III(6) of the Hague Visby Rules, the time-bar can be extended by the parties.

Singapore court recognises the validity of jurisdiction and choice of law clauses contained in a bill of lading.

Singapore law covers marine accidents within Singapore territorial waters, including accidents within the port limits.

Pilotage is compulsory within the port limits of Singapore for liquefied gas carriers and chemical carriers and in relation to other types of vessels, the obligation of pilotage is also dependent on the size of the vessel and the area of the port which they are entering.

Typically, marine accidents in the waterways arise from collision between vessels within that waterway and hence any claim or action is as between those affected vessels.

A ship-owner would initiate a claim against the opponent or offending vessel for loss/damage arising from the collision.

The time-bar under Singapore law for collision claims is two years from date of collision.

Admiralty collision claims in Singapore are heard by a judge of the High Court.

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Gurbani & Co LLC

GURBANI & CO LLC
78 Shenton Way
#31-02
Singapore 079120

+ 65 6336 7727

+ 65 6336 0110

mail@gurbaniandco.com www.gurbaniandco.com
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Law and Practice

Authors



Gurbani & Co has, since its inception, represented clients in all areas of transport, freight-forwarding, aviation and the shipping industry, including ship-owners, operators and charterers; governments and government-owned carriers; marine insurers and reinsurers including P&I insurers, FD&D associations, hull and machinery underwriters and war risk insurers; freight-forwarders and other shipping agents; cargo interests; lending banks and other financial institutions. The firm undertakes and advises on ship arrests and all admiralty and maritime lien claims arising out of ship collisions, carriage of cargo, charterparties, hull and cargo limitation of liability, general average, ship repairs, salvage, bunkering and ship-chandling, ship agency/management, crew wages and injury/death claims. The firm is often commissioned to investigate and report on piracy incidents and maritime casualties such as groundings, fire and sinkings. Partners involved are Mr R Govin, Ms Tan Hui Tsing with Mr Richard Kuek and Mr Ang Yong Tong, the firm’s consultants.

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