SINGAPORE: An Introduction to Shipping: Domestic

Singapore Overview 

Singapore remains the leading maritime city in the world. The annual vessel arrival tonnage in the Port of Singapore surpassed three billion Gross Tonnage (GT) in 2023, making Singapore the busiest port in the world in terms of shipping tonnage.

The Singapore Registry of Ships (SRS) continues to rank among the largest ship registries globally. The total tonnage of ships under the Singapore flag in 2023 reached 99.56 million GT. Singapore is also home to more than 180 international shipping groups as well as other maritime players in finance, insurance, cybersecurity, shipbroking, law and arbitration.

Shipping Laws 

Singapore’s shipping laws are derived from UK laws and broadly cover commercial shipping, admiralty law and the shipping of goods. Maritime transportation of goods is generally governed by the Bills of Lading Act 1992 and the Carriage of Goods by Sea Act 1972 (which enacts the Hague Visby Rules), along with common law principles.

Singapore’s High Court (Admiralty Jurisdiction) Act 1961 governs admiralty law and jurisdiction. It deals with specific claims made against ships, shipowners or ship charterers that fall under the General Division of the High Court’s admiralty jurisdiction. In Singapore, a ship can only be arrested if it comes within territorial waters and the port limits of Singapore. It must be noted that in the affidavit filed in support of a warrant of arrest, the arresting party has a duty to make full and frank disclosure to the court of all material facts.

The Merchant Shipping Act is another piece of legislation that addresses a wide range of topics, including manning, crew matters, safety concerns, registration of ships in Singapore and the limitation of liability for shipowners for maritime claims.

Singapore implemented the Protocol of 1996 to Amend the Convention on Limitation of Liability for Maritime Claims on 20 December 2019. For liability arising out of an occurrence which took place before 29 December 2019, the 1976 Convention or the 1957 International Convention Relating to the Limitation of the Liability of Owners of Sea-going Ships (”the 1957 Convention”) apply (depending on when the claim arose). The test or requirement for breaking limitation for the 1976 Convention and 1996 Protocol is essentially the same. With the Merchant Shipping (Amendment) Act 2004, the regime for limitation of liability based on the tonnage of the vessel follows that of the1976 Convention. The 1976 Convention only applies to liability arising out of an occurrence that took place after 1 May 2005. Liability arising from occurrences which took place before this date continues to be governed by the 1957 Convention.

Issues of oil pollution are governed by the Merchant Shipping (Civil Liability and Compensation for Oil Pollution) Act 1998, the Merchant Shipping (Civil Liability and Compensation for Bunker Oil Pollution) Act 2008 and the Prevention of Pollution of the Sea Act 1990.

Dispute Resolution 

Singapore has been listed as an official seat of arbitration in BIMCO dispute resolution clauses since 2012. A signatory of the New York Convention, Singapore arbitral awards are enforceable in 172 countries worldwide (as at 30 May 2024). Under the International Arbitration Act 1994, courts are mandated to stay any proceedings commenced in breach of an international arbitration agreement. The courts also provide a supportive role through court-ordered interim measures. These measures play an important role in arbitration, notwithstanding the wide powers of tribunals. This is because there are occasions where arbitral tribunals are unable to provide fast enough assistance, such as where the tribunal has not yet been constituted or where the rules governing the arbitration do not permit one-party hearings. Under Section 12A of the International Arbitration Act, the General Division of the High Court is conferred with substantially the same powers as are available to arbitral tribunals in the making of interim measures such as the ordering of security for costs and the preservation of property. Emergency interim relief obtained from the court carries with it the consequences of contempt right from the outset.

The judiciary in Singapore has taken a strong pro-arbitration stand by adopting a policy of minimal judicial interference in arbitration proceedings. When faced with a setting-aside application, the preferred approach of the courts is to read the award supportively and in a manner that is likely to uphold it rather than destroy it. The overarching aim of the court is to facilitate the enforcement of arbitral awards.

The Singapore Chamber of Maritime Arbitration (SCMA) is the main arbitral body for shipping disputes and it offers an expedited procedure for claims and counterclaims that do not exceed USD300,000 in value. For arbitration matters in general, there is the Singapore International Arbitration Centre (SIAC).

Parties who prefer mediation can turn to the Singapore International Mediation Centre (SIMC) or the Singapore Mediation Centre (SMC). Both have specialist shipping mediators. Mediated settlement agreements may be recorded as an order of court under the Mediation Act 2017. With the Singapore Convention on Mediation, international settlement agreements resulting from mediation are now enforceable among signatory countries.

Civil actions commenced in the Singapore courts typically take around 12 to 15 months from the commencement of the suit to the completion of the trial. All admiralty matters must be commenced in the General Division of the High Court, which has specialist shipping judges.

State of the Market 

With the current unrest in the Red Sea and Chinese exporters scrambling to ship goods ahead of trade curbs in the US and EU, shipping delays have more than doubled in the Port of Singapore. This comes on the back of a shortage of ships and containers, with ships remaining at sea for longer periods of time, causing a supply chain crisis and pushing prices up for consumers.

The Port of Singapore Authority has said volatility is here to stay and it will ramp up capacity and smart technologies at its terminals to mitigate disruptions.

Recent Decisions

The Singapore courts have a reputation for being robust, efficient and fair in their conduct of commercial proceedings. The General Division of the Singapore High Court currently has six docketed specialist admiralty and shipping judges and a team of assistant registrars who manage admiralty and shipping matters in consultation with the docketed judges.

The question of whether a steel dumb barge converted into a floating farm was a ship for the purposes of arrest under the High Court Admiralty Jurisdiction Act 1961 was decided in the affirmative by the High Court in Vallianz Shipbuilding & Engineering Pte Ltd v Owner of the vessel “ECO SPARK” [2024] 4 SLR 784.

In The “Victor 1” [2024] SGHC 165, the High Court held that while rights in rem are transferred to the proceeds of sale once a vessel is sold by the admiralty court, a demise charter did not survive the judicial sale. Thus, the claimant could not institute an action in rem against the sale proceeds of the vessel where the liability in personam lay against the demise charterer.

There has also been a spate of litigation among banks, shipowners and traders stemming from the collapse of the oil trading firm, Hin Leong Trading Pte Ltd. Formerly one of Asia’s largest bunker suppliers, Hin Leong’s fall has impacted the bunkering and oil trading sectors. We highlight four cases.

In The STI Orchard [2024] 4 SLR 37 and Standard Chartered Bank (Singapore) Pte Ltd v Maersk Tankers [2023] 4 SLR 572, claims were brought by banks against shipowners for mis-delivery without presentation of original bills of lading. These banks had financed Hin Leong’s purchase of gasoil from Winson Oil Trading Pte Ltd and the shipowners had allowed Hin Leong to take delivery of cargo without presentation of bills of lading. In both cases, the High Court allowed the shipowners unconditional leave to defend the banks’ claim for summary judgment as, from the financing arrangements, there was reason to believe that the banks had not relied on the bills of lading as security. It was said that the proximate cause for the losses in these cases was Hin Leong’s insolvency rather than the mis-delivery, and these banks had been lax in taking security given their longstanding relationship with Hin Leong.

On letters of credit and the fraud exception, there were two decisions. In Winson Oil Trading Pte Ltd v Overseas-Chinese Banking Corp[2024] SGCA 31, Winson was the beneficiary of two letters of credit issued by two banks and it sued both banks for non-payment of these letters of credit. Hin Leong was the applicant for the letters of credit and the buyer of the cargo. The court found (and this was upheld on appeal) that Winson had presented the banks with letters of indemnity which the banks alleged contained false representations, ie, cargo had not been shipped on board the vessels as described in the letters of indemnity. Thus, Winson could not have honestly believed that its representations to the banks were true, or it was indifferent as to whether the representations in the letters of indemnity were true. The fraud exception was successfully invoked.

In Unicredit Bank AG v Glencore Singapore Pte Ltd [2023] 2 SLR 587, in the Court of Appeal, the bank/issuer of the letter of credit proceeded against the beneficiary under the tort of deceit. Hin Leong had purchased fuel oil from Glencore and Glencore simultaneously entered into an agreement to buy back the cargo from Hin Leong. Hin Leong applied for the letter of credit from Unicredit to finance its purchase under the first contract. Unicredit was unaware of the buy-back and had been falsely informed by Hin Leong that the cargo was unsold. When Hin Leong went under, Unicredit sought to recover what it had paid to Glencore stating that Glencore had made false representations to it. However, the representations Unicredit relied on were in a letter of indemnity addressed to Hin Leong rather than Unicredit, thus the representations in the letter of indemnity were between Glencore and Hin Leong, rather than Glencore and Unicredit. The Court of Appeal found that Unicredit had been content in accepting the letter of indemnity in that form, ie, issued by Glencore and addressed to Hin Leong, and there had therefore been no fraud on the documents.