Update on Singapore High Court’s decision on the arrest of the “STX Mumbai”

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The High Court of Singapore has upheld a first instance decision striking out the action in rem commenced by Transocean Oil Pte Ltd against the vessel “STX MUMBAI” and also set aside the arrest of the “STX MUMBAI”.

The Honourable Justice Belinda Ang also ordered an inquiry into the damages suffered by the firm’s clients who are the vessel owners following the wrongful arrest. The Registrar in the first instance hearing had ordered the striking out of the action but denied the application to set aside the arrest of the vessel.

The opposing party’s action was struck out because the vessel was arrested before the debt fell due. In the written judgment reported at (2014) SGHC 122 the main issues considered were: (a) whether insolvency of a debtor or the debtor’s parent company would necessarily result in an anticipatory breach of the debtor’s obligations, and (b) whether the Plaintiff had fulfilled its duty to make a full and frank disclosure of all material information. In her judgment, the judge also considered whether the principle of anticipatory breach can be applied where one party in an executory contract had already fully performed (or executed) its obligations under the contract.

The ruling of the Singapore High Court is significant as this Court has again affirmed the test for a wrongful arrest executed in bad faith or with gross negligence first espoused in England in the The Evangelismos (1858) 12 Moo PC 352 and has on the facts in this case ordered an inquiry into damages suffered due to the wrongful arrest which the Courts here have typically been reluctant to do. This decision also provides a Singaporean authority for the proposition that the insolvency of a company does not in and of itself indicate an anticipatory breach by that company unless performance has been rendered impossible.

This case is of interest because of the judge’s consideration of the applicability of the exception of executed contracts to the doctrine of anticipatory breach. As Justice Belinda Ang stated in her written Judgment published recently, “As the parties have not submitted on this specific point, my observations on this interesting point – the first time a Singapore court appears to be directly looking at this exception – are entirely provisional in nature. It must be left to another forum to specifically rule on the point”.

The present case concerned an executed contract where the Plaintiffs had “fully performed”  their part of the contract and the only obligation for the Defendants was the obligation to make payment at a future date. The question then is whether the innocent party can properly invoke the doctrine of anticipatory breach or does the “innocent party have to wait until the time of performance as stipulated in the contract before taking action”.

The court went through the law in different jurisdictions on this point. The court looked at the law in the United States, the United Kingdom, Australia and Canada and even gave an academic commentary on the same. The learned judge, upon an analysis of the authorities from various jurisdictions, considered that on balance the doctrine of anticipatory breach should not apply in cases of executed contracts.”

The Plaintiff meanwhile has filed an appeal to the Singapore Court of Appeal which is the court of final appeal in Singapore.

Moses Lin of Clasis LLC acted as lead counsel for the owners of “STX MUMBAI”.

The Singapore court proceedings are conducted by Singapore law firm Clasis LLC, which is instructed by Clyde & Co Clasis Singapore Pte Ltd, who are instructed by the Vessel’s owners.
—therese.gallenero

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