The "Titan Unity": Stay of Proceedings in Favor of Arbitration for Misdelivery of Cargo Claim

In The "Titan Unity" case before the High Court of Singapore on December 19, 2013, the plaintiff, a German bank, claimed against the first defendant, Oceanic, and the second defendant, Singapore Tankers, for misdelivery of cargo. Oceanic applied for a stay of proceedings in favor of arbitration based on an arbitration clause in a time charterparty incorporated into the bills of lading. The court, presided over by Assistant Registrar Shaun Leong Li Shiong, granted the stay, finding that Oceanic had established a prima facie case for the existence of an arbitration agreement. The court also ordered that the arrested vessel be retained as security.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff's action against Oceanic is stayed in favor of arbitration at the Singapore Chamber of Maritime Arbitration, with the arrested vessel retained as security.

1.3 Case Type

Admiralty

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

High Court grants stay in favor of arbitration for a misdelivery of cargo claim, addressing the threshold for determining the existence of an arbitration agreement.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
The "Titan Unity"PlaintiffOtherAction StayedStayed
OceanicDefendant, ApplicantCorporationStay GrantedWon
Singapore TankersDefendantCorporationNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Shaun Leong Li ShiongAssistant RegistrarYes

4. Counsels

Counsel NameOrganization
Toh Kian SingRajah & Tann LLP
Nathanael LinRajah & Tann LLP
Ting Yong HongRajah & Tann LLP
Chan Leng SunBaker & McKenzie.Wong & Leow
Edwin CaiDennisMathiew
Dennis TanDennisMathiew
Kenneth TanKenneth Tan Partnership
Thio Shen YiTSMP Law Corporation
Tan Mui TzePan Asia Wikborg Rein LLC

4. Facts

  1. Plaintiff provided financing to Onsys Energy for fuel oil purchase via a letter of credit.
  2. Plaintiff held bills of lading for 5,003.373 MT of fuel oil on board the vessel "TITAN UNITY".
  3. Cargo was delivered to third parties without presentation of the bills of lading.
  4. Plaintiff claimed US$3,687,485.90 representing the invoice value of the cargo.
  5. Oceanic is the alleged demise charterer of the vessel.
  6. Time charterparty existed between Oceanic and Onsys dated 1 November 2011.
  7. Bills of lading incorporated the time charterparty, including the arbitration provision.

5. Formal Citations

  1. The “Titan Unity”, Admiralty in Rem No 276 of 2012 (Summons No 4021 and 4490 of 2013), [2013] SGHCR 28

6. Timeline

DateEvent
Letter of credit issued for fuel oil purchase.
Bills of lading dated acknowledging carriage of fuel oil.
Cargo delivered to third parties without presentation of bills of lading.
Admiralty in rem action filed against the defendants.
Demise charterparty dated.
Warrant of arrest for the vessel granted.
Oceanic filed application for stay of admiralty action in favour of arbitration.
Time charterparty entered into between Oceanic and Onsys.
Plaintiff filed a cross-application.
Judgment reserved.

7. Legal Issues

  1. Existence of Arbitration Agreement
    • Outcome: The court found that Oceanic had established a prima facie case for the existence of an arbitration agreement.
    • Category: Substantive
    • Sub-Issues:
      • Incorporation of arbitration clause into bill of lading
      • Validity of incorporation clause with missing information
  2. Stay of Proceedings in Favor of Arbitration
    • Outcome: The court granted a stay of proceedings in favor of arbitration.
    • Category: Procedural
    • Sub-Issues:
      • Threshold for granting a stay
      • Court's role in determining the existence of an arbitration agreement
  3. Security for Arbitration Award
    • Outcome: The court ordered that the arrested vessel be retained as security in satisfaction of any arbitral award given.
    • Category: Procedural
    • Sub-Issues:
      • Retention of arrested vessel as security
      • Conditions for stay of proceedings
  4. Time Bar Defence
    • Outcome: The court did not impose a time-bar condition, finding that the issue should be determined by the arbitral tribunal.
    • Category: Substantive
    • Sub-Issues:
      • Applicability of Hague-Visby Rules
      • Date of cargo discharge and delivery

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Misdelivery of Cargo

10. Practice Areas

  • Arbitration
  • Admiralty
  • Commercial Litigation
  • Shipping

11. Industries

  • Shipping
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Tjong Very Sumito and other v Antig Investments Pte LtdCourt of AppealYes[2009] 4 SLR(R) 732SingaporeCited for the principle that a party applying for a stay must show they are party to an arbitration agreement and the proceedings involve a matter subject to that agreement.
Albon v Naza Motor Trading Sdn Bhd (No. 3)English High CourtYes[2007] EWHC 327 (Ch)England and WalesCited for its analysis of the statutory framework for granting a stay of proceedings in favor of arbitration.
Dalian Hualiang Enterprise Group Co Ltd v Louis Dreyfus Asia Pte LtdSingapore High CourtYes[2005] 4 SLR(R) 646SingaporeCited regarding the court's role in determining whether an arbitration agreement applies.
Nigel Peter Albon v Naza Motor Trading Sdn Bhd (No 3)English High CourtYes[2007] EWHC 665 (Ch)England and WalesCited regarding the court's role in determining whether an arbitration agreement applies.
Anglia Oils Ltd v The Owners and Demise Charterers of the Vessel Marine ChampionEnglish High CourtYes[2002] EWHC 2407England and WalesCited for the proposition that the court must determine whether a party is bound by an arbitration agreement.
Premium Nafta Products Ltd v Fili Shipping Co. Ltd.House of LordsYes[2007] UKHLUnited KingdomCited for the principle that arbitrators should generally be the first tribunal to consider their jurisdiction.
Rio Algom Ltd v Sami Steel Co LtdUnspecifiedYesXVIII Y.B.Comm.Arb. 166 (1993)CanadaCited for adopting a prima facie determination of the existence of an arbitration agreement.
Agrawest Investments Ltd v BMA Nederland BVUnspecifiedYes[2005] PEIJ No 48CanadaCited for adopting a prima facie determination of the existence of an arbitration agreement.
Morran v CarboneUnspecifiedYes[2005] OJ No 409CanadaCited for adopting a prima facie determination of the existence of an arbitration agreement.
ETR Concession Co v Ontario (Minister of Transportation)UnspecifiedYes[2004] OJ No 4516CanadaCited for adopting a prima facie determination of the existence of an arbitration agreement.
Cooper v DegganUnspecifiedYes[2003] BCJ No 1638CanadaCited for adopting a prima facie determination of the existence of an arbitration agreement.
Gulf Canada Resources Ltd v Arochem Int’l LtdBritish Columbia Court of AppealYes66 B.C.L.R.2d 113CanadaCited for the principle that the court should not make a final determination on the scope of the arbitration agreement or whether a party is a party to the arbitration agreement.
Pacific International Lines (Pte) Ltd v Tsinlien Metals and Minerals Co LtdHigh Court of Hong KongYesXVIII Y.B. Comm. Arb. 180 (H.K. S.Ct. 1992) (1993)Hong KongCited for the principle that if there is a plainly arguable case to support the proposition that there was an arbitration agreement, the court should proceed to appoint the arbitrator.
PCCW Global Ltd v Interactive Communications Service LtdHong Kong Court of AppealYes[2006] HKCA 434Hong KongCited for endorsing the prima facie threshold for determining the existence of an arbitration agreement.
In Private Company ‘Triple V’ Inc v Star (Universal) Co Ltd and AnorHong Kong Court of AppealYes[1995] 3 HKC 129Hong KongCited for the principle that the judge should form a prima facie view on whether there existed an underlying agreement to arbitrate.
Pacific Crown Engineering Ltd v Hyundai Engineering and Construction Co LtdUnspecifiedYes[2003] 3 HKC 659Hong KongCited for the test to be applied in determining whether it was for the court on a stay application or the arbitrator to decide whether an arbitration agreement existed.
Shin-Etsu Chemical Co. Ltd v Aksh Optifibre LtdSupreme Court of IndiaYes(2005) 3 Arb LR 1IndiaCited for the principle that the enquiry on whether there exists a valid arbitration agreement is limited to a prima facie standard.
Chloro Controls (I) P. Ltd. V Seven Trent Water PurificationSupreme Court of IndiaYesCivil Appeal No 7134 of 2012IndiaCited as a decision that suggests the court must make a final finding on whether the arbitration agreement is null and void, inoperative or incapable of being performed, but distinguished due to a unique provision in Indian law.
Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of PakistanUnited Kingdom Supreme CourtYes[2010] UKSC 46United KingdomCited in the context of article V(1)(a) of the New York Convention, for the principle that the court has full jurisdiction to review and determine on the merits whether there exists an arbitration agreement concluded between the parties.
The “San Nicholas”English Court of AppealYes[1976] 1 Llod’s Rep 8England and WalesCited for the principle that the omission of the date of the charterparty in the incorporation clause does not prevent the incorporation of the charterparty.
The “Duden”UnspecifiedYes[2008] 4 SLR(R) 984SingaporeCited in support of the position that the time-bar condition should be imposed, but found not relevant in the present case.
The “Xanadu”UnspecifiedYes[1997] 3 SLR(R) 360SingaporeCited in support of the position that the time-bar condition should be imposed, but found not relevant in the present case.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
International Arbitration Act (Cap. 143A, 2002 Rev Ed)Singapore
Arbitration Act (Cap. 143)Singapore
Singapore Carriage of Goods by Sea Act (Cap. 33)Singapore
Carriage of Goods by Sea Act 1971England

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration Agreement
  • Stay of Proceedings
  • Misdelivery
  • Bill of Lading
  • Time Charterparty
  • Demise Charterparty
  • Kompetence-Kompetence
  • Prima Facie
  • Security
  • International Arbitration Act
  • Singapore Chamber of Maritime Arbitration
  • Hague-Visby Rules

15.2 Keywords

  • arbitration
  • stay of proceedings
  • misdelivery
  • bill of lading
  • charterparty
  • admiralty
  • shipping

17. Areas of Law

Area NameRelevance Score
Admiralty and Maritime Law90
Shipping Law85
Arbitration75
Breach of Contract50
Contract Law40
International Trade Law30

16. Subjects

  • Arbitration
  • Admiralty
  • Shipping
  • Contract Law