Crédit Agricole v The "Sahand": UN Sanctions, Admiralty Law & Vessel Arrest
In Crédit Agricole Corporate and Investment Bank v The "Sahand", the Singapore High Court addressed applications related to the arrest of three vessels, the “Sabalan”, the “Sahand” and the “Tuchal”, focusing on the implications of UN sanctions against Iran. The plaintiff, Crédit Agricole, initiated admiralty actions against the vessels due to unpaid sums under a Loan Agreement. The defendants, subsidiaries of the Islamic Republic of Iran Shipping Lines (IRISL), faced difficulties in making payments due to EU sanctions. The court considered whether the UN sanctions required the impounding or detention of the vessels and ultimately rescinded the order to sell the vessels, ordering their release after transfers of funds were made, subject to the usual release papers being filed and the Sheriff's expenses being paid.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Order to sell the Vessels rescinded and Vessels ordered to be released from arrest.
1.3 Case Type
Admiralty
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court addresses UN sanctions' impact on admiralty law, concerning the arrest of Iranian-owned vessels and fund transfers.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Crédit Agricole Corporate and Investment Bank | Plaintiff | Corporation | Claims Met | Won | Winston Kwek, Joseph Tang |
| Thirteenth Ocean GmbH & Co KG | Defendant | Corporation | Release of Vessel | Won | Thomas Tan, Janice Choy |
| Fourteenth Ocean Gmbh & Co KG | Defendant | Corporation | Release of Vessel | Won | Thomas Tan, Janice Choy |
| Fifteenth Ocean GmbH & Co KG | Defendant | Corporation | Release of Vessel | Won | Thomas Tan, Janice Choy |
| Attorney-General | Other | Government Agency | Neutral | Neutral | Ho Hsi Ming Shawn |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Quentin Loh | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Winston Kwek | Rajah & Tann LLP |
| Joseph Tang | Rajah & Tann LLP |
| Thomas Tan | Haridass Ho & Partners |
| Janice Choy | Haridass Ho & Partners |
| Ho Hsi Ming Shawn | Attorney-General's Chambers |
| Jeyendran Jeyapal | Sheriff |
| Leong Weng Tat | Sheriff |
| Lionel Leo Zhen Wei | Sheriff |
| Vivian Ang | Allen & Gledhill LLP |
4. Facts
- Crédit Agricole initiated admiralty actions against three vessels due to unpaid sums under a Loan Agreement.
- The defendants, owners of the vessels, are wholly owned subsidiaries of the Islamic Republic of Iran Shipping Lines (IRISL).
- The Loan Agreement provided financing for the construction of container carriers and interest rate swap transactions.
- The defendants failed to pay sums under the Loan Agreement and related ISDA Master Agreements.
- The plaintiff applied to sell the vessels pendente lite.
- The defendants transferred €155m to Société Générale in an attempt to satisfy the claims.
- The transfers were subject to EU sanctions, requiring authorisations from the Direction générale du Trésor.
5. Formal Citations
- The “Sahand” and other applications, Admiralty in Rem No 166 of 2010 (Summons Nos 5744 of 2010, 5800 of 2010 and 23 of 2011), Admiralty in Rem No 176 of 2010 (Summons Nos 5735 of 2010, 5799 of 2010 and 24 of 2011) and Admiralty in Rem No 178 of 2010 (Summons Nos 5734 of 2010, 5798 of 2010 and 25 of 2011), [2011] SGHC 27
6. Timeline
| Date | Event |
|---|---|
| Loan Agreement signed | |
| Monetary Authority of Singapore (Sanctions and Freezing of Assets of Persons – Iran) Regulations 2007 (S 104/2007) made | |
| United Nations (Sanctions – Iran) Regulations 2007 (S 105/2007) made | |
| Plaintiff and Société Générale entered into ISDA Master Agreement with the Borrowers | |
| Loan Agreement amended by letter | |
| 13th Ocean executed a German Mortgage | |
| 14th Ocean executed a German Mortgage | |
| Loan Agreement amended by letter | |
| 15th Ocean executed a German Mortgage | |
| Defendants failed to pay sums under the Loan Agreement | |
| Defendants failed to pay sums under the Loan Agreement | |
| Total outstanding sum was US$37,161,645.35 | |
| Plaintiff filed admiralty actions in rem against the Vessels | |
| The “Tuchal” was arrested | |
| €4,754,463.91 was transferred to Société Générale | |
| The “Sahand” and the “Sabalan” were arrested | |
| Defendants entered appearances to the actions and applied for the release of the “Sabalan” and the “Tuchal” | |
| €49,228.35 was transferred to Société Générale | |
| Société Générale accelerated the amounts owed under the Loan Agreement | |
| Second set of admiralty actions in rem were filed | |
| Plaintiff applied to sell the Vessels pendente lite for the “Sahand” | |
| Plaintiff applied to sell the Vessels pendente lite for the “Sabalan” and the “Tuchal” | |
| Plaintiff’s applications for sale were first heard | |
| High Court ordered the sale of the Vessels | |
| Defendants’ solicitors requested the court’s bank account information for payment into court, and requesting a postponement of the sale | |
| Defendants filed three applications for a postponement of the sale to 4 January 2011 | |
| Plaintiff’s London solicitors were instructed that the full amount owing by the defendants, including interest projected to 14 December 2010, was US$203,855,277, excluding payments which had been remitted but not cleared | |
| Applications for postponement dismissed | |
| Defendants filed a second set of applications for the discharge of the order to sell the Vessels, and for the Vessels to be released | |
| Defendants transferred €155m to Société Générale | |
| Plaintiff confirmed the receipt of €155m by Société Générale | |
| Defendants made three applications for eight crew members to join each of the Vessels for the purposes of familiarisation | |
| Court decided that the order to sell the Vessels should be rescinded and that the Vessels should be released from arrest | |
| KEXIM was authorised by the Direction générale du Trésor to receive its share of the €155m transfer | |
| Counsel came before the court to settle some orders |
7. Legal Issues
- Applicability of UN Sanctions
- Outcome: The court found that the defendants were not entities caught under the assets freeze imposed by the Iran Resolutions, and therefore the sanctions did not apply to the vessels.
- Category: Substantive
- Sub-Issues:
- Scope of assets freeze
- Designated persons and entities
- Interpretation of Security Council resolutions
- Arrest of Vessels
- Outcome: The court rescinded the order to sell the vessels and ordered their release after the defendants made fund transfers to cover the plaintiff's claims.
- Category: Procedural
- Sub-Issues:
- Release of arrested vessels
- Provision of security
- Sale of vessels pendente lite
- Interpretation of Contracts
- Outcome: The court considered the terms of the Loan Agreement and related contracts in determining the sums owed by the defendants.
- Category: Substantive
- Sub-Issues:
- Loan agreement
- ISDA Master Agreement
- German Mortgage
8. Remedies Sought
- Monetary Damages
- Arrest of Vessels
- Sale of Vessels
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Admiralty
- International Trade
- Commercial Litigation
11. Industries
- Shipping
- Banking
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| The Acrux | Not Available | Yes | [1961] 1 Lloyd’s Rep 471 | England and Wales | Cited as a general rule that an order for the sale of arrested vessels would only be postponed in exceptional circumstances. |
| Yong Vui Kong v Public Prosecutor and another matter | Court of Appeal | Yes | [2010] 3 SLR 489 | Singapore | Cited to affirm that a rule of customary international law is not self-executing in the sense that it cannot become part of domestic law until and unless it has been applied as or definitively declared to be part of domestic law by a domestic court. |
| J H Rayner (Mincing Lane) Ltd v Department of Trade and Industry and others and related appeals | Not Available | Yes | [1990] 2 AC 418 | United Kingdom | Cited for the position in the United Kingdom that treaties are not self-executing and are not part of English law unless and until they have been incorporated into the law by legislation. |
| The Parliament Belge | Not Available | Yes | (1879) 4 PD 129 | England and Wales | Cited for the English position being founded on a constitutional objection against the Crown being able, through its treaty-making prerogative, to affect domestic law without the authority of Parliament. |
| Secretary of State for Social Security v Tunnicliffe | Not Available | Yes | [1991] 2 All ER 712 | England and Wales | Cited for the common law principle that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. |
| Wilson v First County Trust Ltd (No 2) | Not Available | Yes | [2004] 1 AC 816 | England and Wales | Cited for the common law principle that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Monetary Authority of Singapore Act (Cap 186, 1999 Rev Ed) | Singapore |
| United Nations Act (Cap 339, 2002 Rev Ed) | Singapore |
| Constitution of the Republic of Singapore (1985 Rev Ed, 1999 Reprint) | Singapore |
| Interpretation Act (Cap 1, 2002 Rev Ed) | Singapore |
| Immigration Act (Cap 133, 2008 Rev Ed) | Singapore |
| Merchant Shipping Act (Cap 179, 1996 Rev Ed) | Singapore |
| Regulation of Imports and Exports Act (Cap 272A, 1996 Rev Ed) | Singapore |
| Strategic Goods (Control) Act (Cap 300, 2003 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Admiralty in rem
- Assets freeze
- Designated person
- Iran Resolutions
- Loan Agreement
- German Mortgage
- Security Council
- IRISL
- Sanctions Committee
- Vessels
- Direction générale du Trésor
15.2 Keywords
- Admiralty
- Sanctions
- Iran
- Vessel Arrest
- UN Resolutions
- Shipping
- Freezing of Assets
16. Subjects
- Admiralty
- Sanctions
- International Law
- Shipping
17. Areas of Law
- Admiralty Law
- International Law
- Sanctions Law