Jan De Nul NV v Inai Kiara Sdn Bhd ("Inai Selasih") : Admiralty Jurisdiction, Sham Charterparty & Vessel Arrest
Jan De Nul NV, the plaintiff/appellant, appealed against the High Court's decision to set aside the in rem Writ of Summons filed against Inai Kiara Sdn Bhd, the defendant/respondent, for damages for the non-payment of charter hire under an agreement for the use of the appellant's dredger. The High Court had also set aside the Warrant of Arrest issued for the respondent's vessel, the Inai Selasih, and ordered damages to be assessed against the appellant. The Court of Appeal allowed the appeal in part, setting aside the order for damages but affirming the decision to set aside the Writ and Warrant of Arrest, finding that the charterparty was a sham.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal allowed in part; order for damages set aside, decision to set aside the Writ and Warrant of Arrest affirmed.
1.3 Case Type
Admiralty
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal regarding the setting aside of a writ of summons and warrant of arrest. The court examined the validity of a charterparty.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Jan De Nul NV | Appellant | Corporation | Appeal allowed in part | Partial | |
| Inai Kiara Sdn Bhd | Respondent | Corporation | Order for damages set aside | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chao Hick Tin | Justice of Appeal | Yes |
| Judith Prakash | Judge | No |
| Yong Pung How | Chief Justice | No |
4. Counsels
4. Facts
- Appellant and respondent were in similar businesses; respondent chartered dredgers from appellant since 2001.
- Respondent needed Malaysian-registered and owned dredgers to obtain a 15-year concession.
- Parties entered into a MOU with an 'external framework' to appear compliant with Malaysian requirements.
- The external framework involved incorporating companies in Luxemburg and Labuan.
- The Labuan company would nominally own and register the dredgers in Malaysia and charter them to the respondent.
- The MOU's true arrangement was that the appellant retained ownership and control of the dredger.
- Appellant alleged substantial sums were overdue from the respondent, leading to termination notices.
- Appellant instituted admiralty action and arrested respondent's vessel, Inai Selasih, as security for arbitration.
5. Formal Citations
- Inai Selasih (ex Geopotes X), CA 41/2005, [2006] SGCA 4
6. Timeline
| Date | Event |
|---|---|
| Respondent chartered dredgers from the appellant. | |
| Respondent sought a 15-year concession from Malaysian authorities. | |
| Memorandum of Understanding (MOU) was signed. | |
| Charterparty entered into between Inai Kiara (L) Ltd and Inai Kiara Sdn. Bhd. | |
| Appellant gave notice to terminate the MOU. | |
| Labuan company gave notice of termination of the charterparty. | |
| Appellant instituted admiralty action and arrested the Inai Selasih. | |
| Assistant registrar disallowed the respondent’s application to have the action struck out/set aside and to set aside the Warrant of Arrest. | |
| Appeal heard by the Court of Appeal. | |
| Court of Appeal delivered its decision. |
7. Legal Issues
- Admiralty Jurisdiction and Arrest
- Outcome: The court held that the appellant could not rely on the charterparty to show the respondent was the charterer, in possession, or in control of the vessel, as the charterparty was a sham.
- Category: Jurisdictional
- Sub-Issues:
- Action in rem
- Sham charterparty
- Non-disclosure of material facts
- Mala fides
- Crassa negligentia
- Wrongful Arrest
- Outcome: The court held that there was no evidence to suggest malice or crassa negligentia on the part of the appellant and set aside the order on damages made against the appellant.
- Category: Substantive
8. Remedies Sought
- Damages for breach of contract
- Outstanding charter hire
9. Cause of Actions
- Breach of contract
- Damages for non-payment of charter hire
10. Practice Areas
- Admiralty
- Shipping
- Commercial Litigation
- Arbitration
11. Industries
- Construction
- Shipping
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Snook v London and West Riding Investments Ltd | Queen's Bench | Yes | [1967] 2 QB 786 | England and Wales | Cited for the definition of a 'sham' in legal context, requiring a common intention among parties that the documents do not create the legal rights and obligations they appear to create. |
| The Evangelismos | Privy Council | No | (1858) 12 Moo PC 352; 14 ER 945 | United Kingdom | Cited for the principle that damages for wrongful arrest require a showing of mala fides or malicious negligence, or crassa negligentia, on the part of the plaintiffs. |
| Walter Turnbull v The Owners of the Ship “Strathnaver”, The Strathnaver | House of Lords | No | (1875) 1 App Cas 58 | United Kingdom | Cited for the principle that damages for wrongful arrest require a showing of mala fides or malicious negligence, or crassa negligentia, on the part of the plaintiffs. |
| The Kiku Pacific | Singapore Court of Appeal | Yes | [1999] 2 SLR 595 | Singapore | Cited for the test to determine wrongful arrest, requiring a showing of mala fides or malicious negligence, or crassa negligentia, on the part of the plaintiffs. |
| The Maule | Hong Kong Court of Appeal | No | [1995] 2 HKC 769 | Hong Kong | Cited for the test to be applied in determining wrongful arrest, focusing on whether the plaintiff knew the arrest was illegitimate or acted with malicious negligence. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) | Singapore |
| Offshore Companies Act 1990 (Act No 441 of 1990) | Malaysia |
15. Key Terms and Keywords
15.1 Key Terms
- Admiralty jurisdiction
- Action in rem
- Charterparty
- Memorandum of Understanding
- External framework
- Unincorporated cooperation
- Warrant of arrest
- Mala fides
- Crassa negligentia
- Sham
15.2 Keywords
- Admiralty
- Shipping
- Charterparty
- Arrest
- Singapore
- Contract
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Admiralty and Maritime Law | 90 |
| Arrest of Vessel | 90 |
| Arbitration | 60 |
| Breach of Contract | 50 |
| Contract Law | 50 |
| Sham Contract | 40 |
| Company Law | 30 |
16. Subjects
- Admiralty
- Shipping
- Contract Law
- Arbitration