Areas of practice:
Malaysian law permits the discharge of cargo on board a ship that is under arrest when the cargo itself is not. The discharge of the cargo will be at the expense of the intervener that asserts its rights over the cargo – namely, the cargo interest. Applications of this nature are usually filed and heard on an urgent basis by way of a certificate of urgency.
In the wake of the World Health Organisation's declaration that COVID-19 is now classified as a pandemic, the Malaysian Marine Department (MMD) has issued instructions to shipowners, shipping agents, masters, seafarers, port operators, recognised organisations and the maritime industry. This article examines the MMD's instructions in detail.
The Court of Appeal recently overturned a High Court decision regarding the alleged breach of a contract of carriage. The plaintiff claimed that the carrier had failed to deliver the contracted goods when the original bills of lading had been presented and that this amounted to a fundamental breach of the underlying contract. Although the High Court had held that the defendant-carrier had not breached the contract, the Court of Appeal found that the High Court had erred in respect of its findings with respect to liability and quantum.
In a recent case, a plaintiff claimed that the defendant's vessel had collided into its vessel. To stop the plaintiff from arresting the vessel, the defendant obtained a letter of undertaking from the London Protection and Indemnity Club. However, notwithstanding the issue of the first letter of undertaking, the plaintiff arrested the vessel. The defendant subsequently asked the court to, among other things, declare the first letter of undertaking binding on the parties and set aside the warrant of arrest.
The government has decided to exempt from its cabotage policy foreign vessels repairing undersea cables at any cable landing station in Malaysian waters. This decision has eliminated restrictions which generated unintended effects and created significant delays and costs in repairing undersea cables. Now, highly specialised, purpose-built vessels can berth in Malaysian waters to repair undersea cables.
A high court recently dismissed a plaintiff's claim against the defendant-carrier for breach of its contract to carry and deliver cargo to the plaintiff on the basis that the plaintiff had failed to prove its claim. However, on appeal, the Court of Appeal upheld the plaintiff's claim and found the defendant liable.
A recent case before the High Court of Kuala Lumpur concerned an agreement to deliver cargo from Indonesia to India. The plaintiff, Jiang Xin Shipping Co Ltd, had brought an action against the defendant seeking indemnity for the losses incurred by the plaintiff in connection with an arrest of the plaintiff's vessel on delivery of the cargo.
In a recent case, the plaintiff had instructed the defendant – the owner of the vessel Silver Moon – to head to the South Indian Ocean for cargo operations. Despite having received the instructions, the vessel had to deviate and deal with multiple repair works. In view of the vessel being unseaworthy, the plaintiff contended that the defendant was in repudiatory breach of the time charterparty and had the vessel arrested.
The prime minister recently proposed that Sabah, Sarawak and Labuan be exempted from the National Cabotage Policy, which governs maritime transport between Peninsular Malaysia and East Malaysia, effective June 1 2017. Under the proposal, foreign ships can transport cargo domestically. This announcement attracted differing opinions regarding its possible impact.
A court recently considered an insurance claim under a marine cargo all-risk insurance policy for damages to a ship unloader crane that had occurred while it was being unloaded onto a barge at West Port, Port Klang. The court ultimately found that the plaintiffs had proven their case on the balance of probability and granted their claim for RM4.5 million, with costs.
In a recent high court case, the plaintiff's notice of lien stipulated that it had exercised a lien over the bunkers, and that the defendants should pay the plaintiff and not the second intervener. The defendants applied to set aside or strike out the plaintiff's subsequent in rem action, as they had no contractual nexus with the plaintiff for the purchase and supply of the bunkers. The court held that since there was no direct contract between the plaintiff and the defendants, a contractual lien did not arise.
The Court of Appeal recently reviewed a high court decision which had dismissed an application by the first defendant for determination of a preliminary issue. The Court of Appeal had to consider whether the limitation period in the bill of lading, as provided for in the Hague Rules, was contrary to Section 29 of the Contracts Act 1950 and whether an earlier Court of Appeal decision was binding on the high court.
The courts recently dealt with a case involving competing claims for the vessel Safir Kish 4. After hearing extensive arguments over which party had priority over the ship, the court found the registration and transfer of the ship from the shipbuilder to the first defendant to be null and void. As such, the court ordered the ship to be retransferred and reregistered in the shipbuilder's name.
A recent case before the High Court in Kuala Lumpur concerned the loss of cargo delivered from Indonesia to Saudi Arabia. The plaintiff shipper brought the claim against the non-vessel owning common carrier for acting in breach of contract as carrier or duty of care as bailee under the terms of the bill of lading by releasing the shipper's cargo without due production of the original house bills of lading.
The plaintiff in a recent High Court case brought an in rem action against the owners of four vessels for wrongful occupation of its lay-up site and trespassing. The defendants applied to strike out the action, contending that the plaintiff's claim did not fall within the High Court's admiralty jurisdiction. As the plaintiff failed to prove that its claim fell squarely within the court's admiralty jurisdiction, the court struck out the claim with costs.
The plaintiff in a recent case commenced admiralty proceedings against two vessels for unpaid bunkers supplied to those vessels. After both vessels were arrested, the defendant contended that the arrests were flawed, as the plaintiff had not applied to strike out the other vessel from the plural writ after the first vessel was arrested. The court rejected the defendant's argument, holding that the plaintiff need not strike out the other vessel named in the plural writ.
The Admiralty Court recently ruled on the liability of a shipowner in a case involving a ruptured oil pipeline. The court found that the defendant shipowner had failed to discharge its burden to establish that the damages were not caused by its actual fault or privity and that, on a balance of probability, it was liable to the plaintiff for negligence.
A recent maritime incident brought into play the provisions under the Merchant Shipping Ordinance 1952 that relate to collisions. The ordinance requires that special inquiries and investigations take place whenever there are shipping casualties. It also makes clear what constitutes a 'shipping casualty' and outlines responsibility for damages.
The Merchant Shipping Order 1952 stipulates that ships must notify the director general of the Marine Department before engaging in certain activities in Malaysian waters. In a recent case the sessions court found Komas Energy responsible for anchoring a ship without proper notification. On appeal, the high court held that the prosecution had failed to prove a prima facie case against the appellant and that the latter had raised reasonable doubt.
On March 1 2014 the Convention on the Limitation of Liability For Maritime Claims 1976, as amended by the 1996 Protocol to Amend the Convention on Limitation of Liability for Maritime Claims 1976, came into force in Malaysia. Prior to this, the 1957 International Convention on the Limitation of the Liability of Owners of Seagoing Ships was in force.
The High Court recently considered a loan granted to one party to part-finance the purchase of two vessels owned by a second party. As security for the loan, the two vessels were to be mortgaged by way of a third-party mortgage charged to the plaintiff. Some time later, the first party defaulted on its payment and the plaintiff initiated foreclosure proceedings. However, the plaintiff had failed to register the mortgage.
A fire and subsequent explosion during the loading of a cargo of dangerous goods at Port Klang resulted in the loss of both the vessel and its other cargo. In a recent court judgment, the shipper was found liable in negligence to the carrier. The court argued that the shipper owed a reasonable duty of care to the carrier to prevent the dangerous goods from causing or doing injury to the vessel.
The Malaysian courts recently considered the applicability of a plea of limitation under the Hague Rules, as incorporated into national law. The case arose following alleged damage to cargo as a result of faulty refrigeration. The court held that as the plaintiff's claim was brought after the expiry of the one-year limitation period under the rules, it was time barred and the plea of limitation was therefore a valid defence.
A Malaysian court recently examined liability for loss caused by the discharge or delivery of cargo without the production of original bills of lading. The court held that the act of discharging cargo belonging to the plaintiff into the hands of a third party at a different destination from that contracted for under the bill of lading was the cause of the loss. The defendant was found to have failed in carrying out its duties as bailee.
It is not uncommon for a bill of lading to have a pre-agreed stipulation that any dispute or claim arising out of the bill is to be brought before and determined by a foreign tribunal or court, known as a forum selection clause. Malaysian courts of first instance seized with jurisdiction over disputes between a shipper and a carrier have considered the application of such a pre-agreed forum selection clause.
The Court of Appeal recently ruled that an appeal by an owner in a collision action was allowed in part. The court overturned an earlier High Court decision that had held that the owner was not entitled to limit its liability for damage under Section 360 of the Merchant Shipping Ordinance. The appellate court held that the owner was liable in negligence but was granted limitation pursuant to the ordinance.
The Admiralty Court recently issued Practice Direction 1/2012 in relation to admiralty and maritime claims, which is to be followed in relation to admiralty and maritime matters at the high courts. The Kuala Lumpur Admiralty Court and the other high courts are to hear all matters pertaining to 'maritime claims', which are defined in detail in the practice direction.
There are two key items of Malaysian legislation that address marine pollution from ships - the Merchant Shipping (Oil Pollution) Act 1994 and the Merchant Shipping Ordinance 1952. Both were recently amended in order to bring domestic legislation into line with international conventions on the prevention of oil pollution.
The Arbitration (Amendment) Act 2011 was recently passed. This bill amends the Arbitration Act 2005 and empowers a Malaysian court that exercises admiralty jurisdiction to order the retention of vessels or the provision of security, pending the determination of arbitration proceedings related to admiralty disputes. The bill brings into force the amendments to Sections 10 and 11 of the 2005 act.
Previously, settled law and existing legislation in Malaysia did not permit the arrest of a vessel in admiralty proceedings to secure a claim in arbitration. However, a new bill seeks to amend the Arbitration Act to empower a Malaysian court that exercises admiralty jurisdiction to order the retention of vessels or the provision of security pending the determination of arbitration proceedings related to admiralty disputes.
As a matter of policy, Malaysian flagged vessels plying their trade within Malaysian waters are encouraged to employ local crew. However, merchant shipping laws do not prohibit the use of foreign crew on board a Malaysian flagged vessel working in foreign waters. Part III of the 1952 Merchant Shipping Ordinance governs the merchant shipping requirements in respect of rules relating to the qualifications of officers and crew.
The new Admiralty Court has been formally launched in Kuala Lumpur. The court is designed to meet the needs and expectations of various stakeholders within the maritime industry. It aims to give litigants the option, by consent, to have all their claims litigated and resolved expeditiously at one centralised location, in a court that routinely deals with such matters.
The Domestic Shipping Licence Board is responsible for regulating and controlling the licensing of ships engaged in domestic shipping in Malaysia. However, before engaging in domestic shipping, a ship must possess a valid domestic shipping licence. To qualify for a licence, the ship must qualify as a 'Malaysian ship' and the licence applicant must fulfil certain requirements.
A shipowner may find itself faced with a claim against its ship. If its attempts to negotiate a settlement are unsuccessful, it is alive to the possibility of the claimant availing itself of the option to arrest the ship. The shipowner knows that ship arrest will severely disrupt its commercial operations and may even expose it to possible claims by the cargo interest. In such a situation the shipowner could resort to lodging a caveat against arrest.
Various stakeholders are making a concerted effort to pave the way for the formation of a specialized court to hear maritime and admiralty-related disputes. It is hoped that this specialized court will be able to guarantee speed, efficiency and judicial specialization and integrity, and in the process help greatly in further developing and promoting maritime activities in Malaysia.
The National Cabotage Policy reserves domestic trade to Malaysian-flagged vessels. However, the policy is not popular - in the past year the East Malaysian states have renewed calls to abolish it, claiming that the exclusionary nature of the policy is to be blamed for high freight rates and high prices in East Malaysia. As a result, the Ministry of Transport has announced an independent study to review the mechanism of the policy.
The primary aim of commencing an in rem admiralty action is to obtain security for a maritime claim. Once the respondent's ship is arrested, it has two options: attempt to set aside the arrest or negotiate security for the claimant's claim. The question is whether a claimant can arrest a vessel in Malaysia as security for its maritime claim which is to be referred to arbitration.
The primary point of reference for a party intending to acquire, register, transfer or mortgage a Malaysian-flagged ship is the Malaysian Shipping Ordinance 1952. The ordinance was introduced with the intention of consolidating and amending the law on merchant shipping.
The purpose of arresting a vessel in an action in rem (ie, an action against the vessel) is to obtain security for the satisfaction of any judgment which the plaintiff or defendant may obtain in such an action or counterclaim. The arrest of vessels in Malaysia is carried out through the High Court exercising its admiralty jurisdiction.