The “STX Mumbai”: Anticipatory Breach & Insolvency in Bunkering Contract Dispute

Transocean Oil Pte Ltd (Appellant) appealed against the High Court's decision to strike out its in rem action against POS Maritime VX SA (Respondent), the owner of the vessel "STX Mumbai." The Appellant had supplied bunkers to the vessel and arrested it, claiming anticipatory breach of contract due to concerns about the Respondent's ability to pay, given the insolvency of STX Pan Ocean. The Court of Appeal allowed the appeal, finding that the in rem action was not plainly unsustainable and that the issue of anticipatory breach should be further examined at trial. The court also addressed the issue of whether the doctrine of anticipatory breach applies to executed contracts, finding that it does.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Admiralty

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding anticipatory breach of a bunkering contract. The court considered insolvency's impact and the doctrine's application to executed contracts.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Transocean Oil Pte LtdApplicant, AppellantCorporationAppeal allowed in partPartial
POS Maritime VX SARespondentCorporationAppeal dismissed in partPartial

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Chao Hick TinJustice of the Court of AppealNo
Andrew Phang Boon LeongJustice of the Court of AppealYes
Judith PrakashJudgeNo
Quentin LohJudgeNo

4. Counsels

Counsel NameOrganization
Leong Kah WahRajah & Tann Singapore LLP
Navinder SinghNavin & Co LLP
Koh See BinRajah & Tann Singapore LLP
Vellayappan BalaRajah & Tann Singapore LLP
Prakash NairCLASIS LLC
Gerald YeeCLASIS LLC
Moses LinCLASIS LLC
Nazirah K DinCLASIS LLC

4. Facts

  1. Appellant supplied bunkers to the Respondent’s vessel, STX Mumbai.
  2. Payment was due within 30 days.
  3. Appellant demanded immediate payment before the due date, citing the poor financial health of the STX group.
  4. STX Pan Ocean, named as the "group owner" of the Vessel, had filed for bankruptcy.
  5. Appellant commenced in rem proceedings and arrested the Vessel.
  6. Respondent applied to strike out the in rem action.
  7. The High Court upheld the decision to strike out the in rem action.

5. Formal Citations

  1. The “STX Mumbai” and another matter, Civil Appeal No 80 of 2014, [2015] SGCA 35
  2. The “STX Mumbai”, , [2014] 3 SLR 1116

6. Timeline

DateEvent
Appellant received an order from STX Corporation for the supply of bunkers to the Vessel
Appellant agreed to supply bunkers with payment term of 30 days
Appellant supplied bunkers to the Vessel
STX Pan Ocean obtained a bankruptcy order from the Seoul Central District Court
Payment fell due under the contract for the supply of bunkers to STX Alpha, but no payment was received by the Appellant
Appellant learnt from a news report that one of STX Pan Ocean’s charter vessels, New Ambition, had been arrested in Seattle for unpaid bunkers
Appellant sent an email to STX Corporation, demanding immediate payment of a global sum of US$2,845,987.78
Appellant obtained a warrant of arrest for the Vessel and served it on her
Respondent’s solicitors wrote to the Appellant’s solicitors requesting the security breakdown in respect of the Vessel
Respondent made an application to strike out the Appellant’s in rem action
Respondent put up the security and the Vessel was released
Application for the in rem action to be struck out was allowed
Registrar's Appeal No 297 of 2013 and Registrar’s Appeal No 298 of 2013 were heard by the Judge
Registrar's Appeal No 297 of 2013 and Registrar’s Appeal No 298 of 2013 were heard by the Judge
Registrar's Appeal No 297 of 2013 and Registrar’s Appeal No 298 of 2013 were heard by the Judge
Court of Appeal allowed the Appellant’s appeal

7. Legal Issues

  1. Anticipatory Breach
    • Outcome: The court held that the doctrine of anticipatory breach applies to both executed and executory contracts. The court also held that insolvency cannot, in and of itself, amount to an anticipatory breach.
    • Category: Substantive
    • Sub-Issues:
      • Impossibility of Performance
      • Renunciation of Contract
  2. Wrongful Arrest
    • Outcome: The court found that there is no basis for the Respondent’s complaint and allowed the Appellant’s appeal against the Judge’s decision to set aside the warrant of arrest. The court reserved the question of damages for wrongful arrest to the trial judge after the relevant findings have been made.
    • Category: Substantive
    • Sub-Issues:
      • Material Non-Disclosure

8. Remedies Sought

  1. Arrest of Vessel
  2. Monetary Compensation

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Admiralty
  • Commercial Litigation
  • Shipping Disputes
  • Insolvency
  • Bunker Claims

11. Industries

  • Shipping
  • Oil and Gas

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
The “STX Mumbai”High CourtYes[2014] 3 SLR 1116SingaporeDecision from which this appeal arose; the High Court struck out the in rem action, which was overturned on appeal.
Tan Hock Keng v L & M Group Investments LtdCourt of AppealYes[2002] 1 SLR(R) 672SingaporeCited in commentary regarding anticipatory breach.
Avery v BowdenCourt of Queen's BenchYesAvery v Bowden (1855) 5 E & B 714EnglandCited regarding the option to terminate the contract in a situation of anticipatory breach.
Heyman and another v Darwins, LimitedHouse of LordsYes[1942] AC 356EnglandCited regarding the option to terminate the contract in a situation of anticipatory breach.
Bunge SA v Nidera BV (formerly known as Nidera Handelscompagnie BV)UK Supreme CourtYes[2015] UKSC 43United KingdomCited regarding the rules and principles with regard to proof, causation, quantification as well as mitigation.
Golden Strait Corporation v Nippon Yusen Kubishka KaishaHouse of LordsYes[2007] 2 AC 353EnglandCited regarding the rules and principles with regard to proof, causation, quantification as well as mitigation.
Moschi v Lep Air Services Ltd and othersHouse of LordsYes[1973] AC 331EnglandCited as permitting the operation of the doctrine of anticipatory breach in the situation where the contract was executed.
Synge v SyngeCourt of AppealYes[1894] QB 466EnglandCited as permitting the operation of the doctrine of anticipatory breach in the situation where the contract was executed.
The Progressive Mailing House Proprietary Limited v Tabali Proprietary LimitedHigh CourtYes(1985) 157 CLR 17AustraliaCited in arriving at the conclusion that the doctrine of anticipatory breach does apply to executed as well as unilateral contracts.
Mackenzie v Rees and anotherHigh CourtYes(1941) 65 CLR 1AustraliaCited with approval the American position of excepting executed contracts from the doctrine of anticipatory breach.
Melanson v Dominion of Canada General Insurance CoNew Brunswick Supreme Court (Appellate Division)Yes[1934] 2 DLR 459CanadaCited as holding that the doctrine of anticipatory breach is not applicable in the context of executed contracts.
Maredelanto Compania Naviera SA v Bergbau-Handel GmbH, The Mihalis AngelosCourt of AppealYes[1971] 1 QB 164EnglandCited regarding terminology.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appealCourt of AppealYes[2007] 4 SLR(R) 413SingaporeCited for setting out the various situations which would justify the plaintiff’s election to treat the contract concerned as discharged as a result of the defendant’s breach of contract.
Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan DavidCourt of AppealYes[2008] 1 SLR(R) 663SingaporeCited for the four situations which entitle the innocent party to elect to treat the contract as discharged as a result of the other party’s breach.
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha LtdCourt of AppealYes[1962] 2 QB 26EnglandCited for the 'Hongkong Fir approach'.
Geden Operations Ltd v Dry Bulk Handy Holdings Inc, The Bulk UruguayHigh CourtYes[2014] 2 All ER (Comm) 196EnglandCited regarding inevitability.
Federal Commerce and Navigation Co Ltd v Molena Alpha Inc and othersHouse of LordsYes[1979] AC 757EnglandCited regarding the court taking into account the umpire’s findings.
Afovos Shipping Co SA v Romano Pagnan and Pietro Pagnan (trading as R Pagnan & F.lli)House of LordsYes[1983] 1 WLR 195EnglandCited for the view that there could indeed be an anticipatory breach which might entitle the plaintiff concerned to elect to treat the contract as discharged.
Valilas v JanuzajCourt of AppealYes[2015] 1 All ER (Comm) 1047EnglandCited for performing a “multi-factorial” or “fact-sensitive” assessment in line with the Hongkong Fir approach.
Sports Connection Pte Ltd v Deuter Sports GmbHCourt of AppealYes[2009] 3 SLR(R) 883SingaporeCited regarding the 'Hongkong Fir approach'.
Universal Cargo Carriers Corporation v CitatiHigh CourtYes[1957] 2 QB 401EnglandCited as the oft-cited (and leading) decision regarding situations where there is an inability to perform on the part of the defendant.
The “Vasiliy Golovnin”Court of AppealYes[2008] 4 SLR(R) 994SingaporeCited regarding the setting aside of the arrest.
The “Bunga Melati 5”Court of AppealYes[2012] 4 SLR 546SingaporeCited regarding the setting aside of the arrest.
Morgan and another v Bain and anotherCourt of Common PleasYes(1874–75) LR 10 CP 15EnglandCited regarding the ability of the party to complete its performance due, while the latter goes towards its willingness to carry out its obligations.
Jennings’ Trustee v KingHigh CourtYes[1952] 1 Ch 899EnglandCited regarding the trustee in bankruptcy might well decide to adopt the contract.
In re Agra Bank; Ex parte TondeurCourt of ChanceryYes(1867) LR 5 Eq 160EnglandCited regarding the trustees might still choose to perform the contract; and it might be beneficial to the estate that they should do so.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) s 4(4)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Bunkers
  • Anticipatory Breach
  • In Rem Action
  • Insolvency
  • Letter of Demand
  • STX Pan Ocean
  • STX Mumbai
  • Repudiation
  • Impossibility of Performance
  • Executed Contract
  • Executory Contract

15.2 Keywords

  • Admiralty
  • Shipping
  • Bunkers
  • Anticipatory Breach
  • Insolvency
  • Contract Law
  • Singapore

17. Areas of Law

Area NameRelevance Score
Bunker Supply80
Anticipatory Breach75
Admiralty and Maritime Law70
Shipping Law70
In Rem Proceedings60
Contract Law60
Breach of Contract50
Wrongful arrest40
Arbitration30
Property Damage20

16. Subjects

  • Admiralty
  • Contract Law
  • Shipping
  • Commercial Law
  • Civil Procedure