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27 January 2021
In a recent case, the Admiralty Court considered whether, in an admiralty action, an intervener (ie, a party other than the proper defendant) can apply to set aside a warrant of arrest of a vessel on non-traditional grounds.
The traditional grounds for setting aside a warrant of arrest include:
The plaintiff was the operator of the Kuantan Port. The defendant was the owner of the vessel MT HE XIE HAO. The intervener was the owner and person entitled to the immediate possession of the cargo, approximately 1,727,269 metric tonnes of fuel oil laden on board the vessel.
On 17 August 2019 the vessel collided with a navigational beacon owned and maintained by the plaintiff at the Kuantan Port. The plaintiff later obtained the Marine Department's assistance to detain the vessel and prevent it from leaving the port until the plaintiff's claim was resolved.
The intervener loaded the cargo onto the vessel without any notice of the dispute between the plaintiff and defendant.
On 15 October 2019 the vessel was arrested at Kuantan Port pursuant to a warrant of arrest issued by the Admiralty Court at the plaintiff's behest.
On 21 October 2019 the plaintiff applied to the Admiralty Court for an omnibus order pursuant to Order 70, Rule (11) of the Rules of Court 2012.
An 'omnibus order' is an order made by the Admiralty Court during the advance stages of proceedings in relation to the preservation, management or control of a ship, vessel or maritime property that is under arrest.
On 31 December 2019 the Admiralty Court allowed the plaintiff's application for an omnibus order, pursuant to which the plaintiff had to obtain port risk insurance cover for the vessel under the sheriff's name in order to properly maintain and preserve the vessel's interest while it was under arrest. All costs and expenses connected or incidental thereto were to be treated as forming part of the sheriff's costs and expenses under the omnibus order.
In early June 2020 the intervener applied for leave to intervene in the admiralty proceedings. In the same application, the intervener applied to have the cargo on board the arrested vessel discharged to it or its nominee. The court allowed this application.
In mid-June 2020 the intervener wrote to the plaintiff asking if it had secured port risk insurance cover for the arrested vessel. The intervener also alerted the plaintiff that the vessel had neither protection and indemnity insurance cover nor hull and machinery insurance cover. This was confirmed by the defendant's solicitors.
Without any insurance protection for the vessel, the intervener could discharge the vessel's cargo by way of a ship-to-ship transfer of the cargo from the arrested vessel to a receiving vessel. It is a requirement of the Marine Department that vessels involved in a ship-to-ship transfer be insured due to the inherently risks.
In October 2020 the plaintiff still had not obtained port risk insurance cover for the vessel. Thus, the intervener could not discharge its cargo.
The intervener filed an application to set aside the warrant of arrest against the vessel on account of the plaintiff's failure to obtain port risk insurance cover.
The requirement to preserve a vessel by way of an omnibus order is set out in:
The intervener submitted that:
The intervener further submitted that:
The intervener relied on the earlier judgment of the Admiralty Court delivered in Majorole Shipping Sdn Bhd v Semua Bahagia v M&G Tankers (L) Pte Ltd (Suit WA-27NCC- 68-11/2016).
The plaintiff submitted that:
In delivering the Admiralty Court's judgment, Judicial Commissioner Atan Mustaffa Yussof Ahmad opined and ruled as follows:
The Admiralty Court set aside the warrant of arrest and ordered the vessel's release.
The main takeaway points from this judgment are that:
For further information on this topic please contact Rajasingam Gothandapani at Shearn Delamore & Co by telephone (+60 3 2027 2911) or email (email@example.com). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.
(1) See The Fordeco 12 and 17; Owners of and all other persons interested in the ships Fordeco 12 and Fordeco 17 v Shanghai Hai Xing Shipping Co Ltd, the owners of the ship MV Xin Hua 10  1 MLJ 449.
(5) See Kertih Port Sdn Bhd v Owners of the vessel ' Shema'  2 MLJ 589; Vitol Asia Pte Ltd v Owners of the ship or vessel 'Malik Al Ashtar' (IMO 9525900) of the Malta Port, ING Bank NV, interveners,  MLJU 692.
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