The Singapore Law Gazette

The Importance of Developing Singapore Law and Jurisprudence for the Maritime Industry

This article discusses the importance of an autochthonous regime of law and how the development of such a regime can assist Singapore’s maritime industry.

Introduction

The maritime industry is a lifeblood of Singapore’s economy. There is constant pressure on Singapore to maintain its attractiveness as a maritime hub in the fear that our competitors may surpass us. At present, competition in the form of the Kra Canal, the opening of the North Sea route, as well as the One Belt One Road initiative, loom across the horizon. It would be disastrous for Singapore if our plans to maintain our attractiveness as a maritime hub are not constantly tested and improved.

Although the Maritime and Port Authority of Singapore (MPA)¹ For example, the future Tuas mega port will have floating platforms to allow ships to clear immigration, refuel and resupply whilst awaiting berth. There will also be drones to carry out ship to shore deliveries swiftly, thus reducing the reliance on traditional launches. Further, cranes discharging containers will be fully automated with computers, sensors and cameras to ensure safe and precise handling of containers. In terms of software, the MPA will be rolling out a Just-In-Time Arrival System to cut delays and waiting times of ships calling in Singapore. A single government portal will also be established for ships to submit documents for MPA, immigration and quarantine clearances. has spearheaded efforts to reinvent and improve our port, more can be done to improve the attractiveness of Singapore as a maritime hub. Such efforts thus far are physical and tangible ones which include, amongst other things, the relocation and expansion of our port facilities in Tuas. However, more can be done on the intangible side of things. In particular, the development of an autochthonous regime of maritime case law can assist in promoting confidence amongst maritime stakeholders, thereby ensuring that such stakeholders would continue to be attracted to Singapore’s maritime hub.

Benefits of an Autochthonous Regime of Law

Most people view the law as merely a set of rules and principles (whether in statutes or case law) to control the legal relationships and obligations amongst parties. However, the effects and consequences brought about by the law, in particular, a reliable autochthonous regime of law, can be significant and far reaching. The following are two positive effects of an autochthonous regime of law.

First, an autochthonous regime of law would instil confidence amongst stakeholders because a court or tribunal exercising Singapore law would have at their disposal ample resources in the form of well written cases to reach a fair decision. Such confidence is likely to attract stakeholders to have their businesses conducted in Singapore and to have any disputes arising resolved in accordance with Singapore law. In this regard, based on the Singapore Academy of Law Annual Review of Singapore Cases, there are not many maritime cases published and reported in Singapore annually.² The statistics presented hereafter are based solely on the admiralty and shipping section of the Singapore Academy of Law Annual Review of Singapore cases. The aforementioned publication is an annual conspectus that encapsulates and evaluates decisions of the Singapore courts in the preceding year. In 2017, there were only two reported cases on admiralty law and one on shipping law (Admiralty and Shipping Law (2017) 18 SAL Ann Rev 37). In 2016, there were six for admiralty and three for shipping (Admiralty and Shipping Law (2016) 17 SAL Ann Rev 51). In 2015, four for admiralty and two for shipping (Admiralty, Shipping and Aviation Law (2015) 16 SAL Ann Rev 62). In 2014, three cases for admiralty and one for shipping (Admiralty, Shipping and Aviation Law (2014) 15 SAL Ann Rev 25). The author acknowledges that there are a number of cases which may not have been documented by the Singapore Academy of Law. However, the fact remains that there are far more English maritime cases than Singapore cases. In resolving maritime disputes, the Singapore courts and lawyers often refer to English cases. This in turn may generate a vicious cycle where stakeholders shy away from using Singapore law because they believe that English law, as opposed to Singapore law, may be better at resolving their legal disputes, thereby impeding the development of Singapore law.

Second, having a reliable and autochthonous regime of case law would not only improve the standing of Singapore as a dispute resolution hub but as a country in general. Today, English law is the foremost choice of law to resolve commercial disputes because it is both robust and well developed. Various countries have therefore tried to mimic the English legal system in a bid to reshape themselves into a dispute resolution hub.³ See for example the Dubai International Financial Centre Courts; See also Tom Moseley “Why English Courts are opening in the EU” BBC (28 February 2018) <https://www.bbc.com/news/uk-politics-42979920> (accessed 1 January 2019) where European nations like France are establishing English language courts in their own country using English law to resolve disputes in order to improve the standing of their respective country as a “commercial law centre”. Singapore in having a common law legal system, is in a prime position to develop a robust jurisprudence to place itself at the centre of the dispute resolution arena. Further, an autochthonous regime of law symbolises stability and certainty within a country because the law has been mooted, tried and tested numerous times before the courts. By reason thereof, stakeholders are likely to have ample confidence to have their businesses conducted in Singapore and to utilise Singapore law to resolve their legal disputes. This would then put in motion a virtuous cycle that would continue to develop and strengthen Singapore law as an autochthonous regime of law.

Disputes Arise Easily in the Maritime Industry Thus Requiring a Robust and Reliable System of Law

One might ask why must there be an autochthonous and reliable regime of law for the maritime industry? The answer is simply because of the nature of the industry where disputes are rife and common.

To illustrate this point, most contracts between a ship owner and a charterer to charter and use a ship (charter party) are neither bespoke nor are the terms clear. A charter is typically fixed between a ship owner and a charterer by a broker using proforma templates.⁴ Examples of such templates include the New York Produce Exchange Time Charter Party Form (“NYPE”) 1946, NYPE 1993 and NYPE 2015. Amendments may be made to the templates but the primary terms of the charter party are usually summarised and encapsulated in a separate document known simply as a “recap”. The terms of the recap would take precedence over that of the proforma template. Problems arise because the terms stipulated in a recap as well as the amendments in the proforma templates are generally made in abbreviations and archaic shipping terms which may be difficult to interpret legally, thereby creating a hotbed of potential disputes.

Moreover, charter fixtures often have to be negotiated within a short window frame thus lawyers may not be engaged to review and draft the amendments in the templates or the finalised recaps. Further, the aforementioned documents are usually prepared by brokers who may be commercially minded but not legally trained. By reason thereof, a charter party and its corresponding recap have the potential to be a minefield of legal problems. The need to make complicated amendments to a charter party can be significantly reduced if the law can provide clarity on certain areas where disputes are common. For example, English law has made it clear that the obligation and responsibility of loading cargo is shifted from the ship owner to the charterer in the event clause 8 of the New York Produce Exchange (NYPE) form is incorporated into a charter party.⁵Court Line v Canadian Transport (1940) 4 Ll.L.Rep. 24. Maritime stakeholders would definitely welcome the development of jurisprudence which can provide clarity on both operational matters and the legal effects of commonly used charter party terms.

Another reason why disputes are common in the maritime industry is because the maritime trade is inherently fraught with risks. Ship owners can face liabilities on multiple levels from a host of different parties. From a ship owner’s perspective, third party liabilities can come from cargo interests, an opposing ship, the crew, or even a port terminal.⁶ See for example Rule 1 of Class 1 of The Rules of Classes 1 & 2 of The West of England Ship Owners Mutual Insurance Association (Luxembourg)2018, pg 6-18; See also <https://www.westpandi.com/globalassets/rulebook/2018.pdf> (accessed 1 January 2019). Within the charter chain, ship owners can face a variety of legal disputes relating to inter alia freight, demurrage, off-hire, as well as speed and performance claims. Other legal problems which may plague ship owners include disputes arising out of marine insurance and ship-building contracts.⁷ See for example Rule 2 of Class 2 of The Rules of Classes 1 & 2 of The West of England Ship Owners Mutual Insurance Association (Luxembourg)2018, pg 106-107; See also <https://www.westpandi.com/globalassets/rulebook/2018.pdf> (accessed 1 January 2019).

Charterers, despite not being the registered owner of the ship, are not spared from third party liabilities because they may face cargo claims if they issue a charterers’ bill of lading. Further, if a charterer sub-lets a ship, they will in turn become disponent owners and they will pick up similar third-party liabilities faced by the registered owners.

With a wide range of potential liabilities, a small simple incident may lead to a multitude of legal disputes on many levels. Take for example a hypothetical scenario where fuel supplied on board a ship was contaminated and had caused the ship’s engine to lose power thus delaying the ship. On the defensive front, ship owners may have to defend a claim from cargo interests for potential damage to perishable cargo. A claim may also arise by reason of a depreciation in the value of the cargo due to the delays in delivering the cargo as well as fluctuations of the market value of the cargo. On the offensive front, ship owners would have to make a claim against the charterers or the bunker suppliers for damage caused to the engine as well as a claim for indemnity for the losses suffered by the cargo interests. Ship owners may also have to manage disputes with salvors who are activated to render assistance to the distressed ship.

Against the above backdrop which is merely one example of the multitude of incidents which may occur at sea, one can understand why disputes arise easily within the maritime industry. For the last 200 years, the turbulent nature of the maritime industry has resulted in its constant reliance on the courts to provide elucidation on the law to resolve maritime disputes. Being both a common law country and a maritime hub, Singapore is in a prime position to develop its volume of case law to complement English law. Today, English maritime law is still developing at a relatively quick pace.⁸ Recent developments in English maritime law in the second half of 2018 include Vinnlustodin HF and Another v Sea Tank Shipping AS (2018) EWCA Civ 778 and AP Moller-Maersk t/a “Maersk Line” v Kyokuyo Co Ltd (2018) EWCA Civ 778 which concerned the issue of package limitation under the Hague Visby Rules. See also Deep Sea Maritime Ltd v Monjasa A/S (2018) EWHC 1495 on whether time bars under the Hague Visby Rules apply to misdelivery claims. On disputes regarding voyage charters, see Seatrade Group NV v Hakan Agro DMCC (2018) EWHC 654 and Lukoil Asia Pacific Pte Ltd v Ocean Tankers (Pte) Ltd (2018) EWHC 163. It is both naive and myopic to conclude that there is no need for Singapore law to be developed any further. If Singapore law can be developed to provide ample guidance to the usual types of problems and issues faced by ship owners, such a development would definitely be welcomed by the maritime industry.

Ways to Develop Singapore’s Jurisprudence to Achieve a Level of Autochthonism

Now that we have identified an area where there is a demand for Singapore case law to grow, the question which follows is how do we grow our jurisprudence for the betterment of Singapore. It is submitted that this can be achieved in the three following ways.

First, there should be greater efforts to promote the resolution of maritime disputes in the courts as opposed to arbitration.

At first glance, this may seem like a foolhardy option especially with the immense popularity of arbitration as an alternative dispute resolution (ADR) mechanism. However, one must understand that arbitration is a double-edged sword. Whilst it may be a cheaper and less formalistic ADR mechanism, arbitration decisions are confidential and are rarely published. Arbitration decisions therefore do not contribute to the direct growth and development of Singapore’s maritime case law. The continuing reliance on arbitration over a significant period of time may lead to a dearth in jurisprudence. This disadvantage of arbitration has already been recognised by eminent legal minds in both Singapore and the United Kingdom.⁹ See Justice Steven Chong (as his Honour then was), “The Singapore International Commercial Court: A New Opening In A Forked Path”, speech delivered at the British Maritime Law Association Lecture and Dinner in London (21 October 2015) <https://www.supremecourt.gov.sg/Data/Editor/Documents/J%20Steven%20Chong%20Speeches/The%20SICC%20-%20A%20New%20Opening%20in%20a%20Forked%20Parth%20-%20London%20(21.10.15).pdf> (accessed 1 January 2019). A country like the United Kingdom can afford to allow most of their disputes to be resolved by arbitration without having to sacrifice the development of their jurisprudence. This is because English law has been in existence before the 1800s and its jurisprudence has been developing for more than 200 years.

Comparatively, Singapore only has had half a century to develop its jurisprudence. Whilst Singapore’s jurisprudence has no doubt developed at an astonishing rate, English law still has a far greater volume of cases and has answered a larger number of legal issues as opposed to Singapore law. A shift to rely on arbitration as an ADR mechanism within the United Kingdom would therefore have less of an effect on the development of its jurisprudence as opposed to Singapore.

Further, arbitrations in the United Kingdom enjoy a right of appeal on issues of law which gives another avenue for English law to develop despite the reclusive nature of arbitration decisions. In Singapore, such a right of appeal on issues of law does not exist for international arbitrations. The lack of an avenue for appeal coupled with the younger nature of Singapore’s jurisprudence signal a risk that a reckless push to promote arbitration over court litigation in Singapore may lead to a dearth of jurisprudence locally.

In light of the above, the solution is not to scale back on arbitration but to allow both arbitration and the court litigation to work together in unison. The ideal way forward is to allow issues of law to be appealed to the High Court of Singapore or the Singapore International Commercial Court. This achieves a fair balance between allowing arbitration as an ADR mechanism to exist and ensuring that the courts have a chance to deliberate on legal issues and to publish their decisions accordingly. In this way, the development of Singapore’s maritime jurisprudence would not be stifled.

Second, efforts must be taken to continually promote and market Singapore law such that more stakeholders are aware of Singapore law and its benefits.

In this regard, the Singapore Academy of Law, which is a statutory body acting as a promotion and development agency for Singapore’s legal industry, has been diligently undertaking this task for the last 30 years.¹⁰ See Singapore Academy of Law website <https://www.sal.org.sg/About-Us/Milestones/1988-1993> (accessed 1 January 2019) where the key milestones and achievements of the Singapore Academy of Law are recorded. Its accolades are numerous, ranging from the creation of platforms and database to house the growing records of Singapore’s case law,¹¹ Examples of such database and records include the Singapore Academy of Law Journal, LawNet and the Singapore Law Reports etc. to the development of various agencies and institutions to promote the use of Singapore law.¹² For example, the Singapore Mediation Centre and the Asian Business Law Institute were launched in 1997 and 2016 respectively.

Another noteworthy example is the efforts made by the Singapore Maritime Foundation (SMF) to push for Singapore law to be included as one of the governing laws under the latest NYPE charter party form. As a result of the SMF’s initiatives, the NYPE 2015 now provides ship owners and charterers with a choice to have Singapore law to govern charter party disputes.¹³ See clause 54(c) of the NYPE 2015.

The promotion of Singapore law can also be carried out through other means such as the encouragement of academic discussion on maritime jurisprudence. In connection to this, the publication of articles in legal journals may indirectly promote Singapore law because this would show the international community that there is a vivid discourse on maritime issues in Singapore. There has also been a growing trend for the Singapore courts to cite and rely on academic material in their decisions.¹⁴ Cheah W L and Goh Yihan, “An Empirical Study On The Singapore Court Of Appeal’s Citation Of Academic Works: Reflections On The Relationship Between Singapore’s Judiciary And Academia” (2017) 29 SacLJ 75. Articles critiquing and evaluating written decisions can contribute to the growth of jurisprudence because they may provide an alternative perspective to a particular legal issue which may arise again in future cases.¹⁵ See for example Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd (1995) 1 AC 501 at 551 where the court acknowledged academic contributions to the development of the law of marine insurance.

Third, having a fair proportion of leading maritime practitioners appointed as judges would assist in the development of Singapore’s maritime jurisprudence. Specialised practitioners would not only be well versed with the law but they possess strong commercial acumen which can be useful in understanding maritime disputes.¹⁶ See The Law Society of England and Wales, “England and Wales: The Jurisdiction of Choice” at pg 8 and 9 <https://www.eversheds-sutherland.com/documents/LawSocietyEnglandAndWalesJurisdictionOfChoice.pdf> (accessed 1 January 2019); see also Mark Sachs, “The Competitive Advantage of English Law – An Internationalist Perspective” (25 April 2017) Over the last 40 years, Singapore has been fortunate to have had eminent judges who have contributed greatly to the development of Singapore’s maritime jurisprudence. A majority of these judges, such as the late Judge of Appeal Mootatamby Karthigesu, Judge of Appeal Steven Chong, Judge of Appeal Judith Prakash, Justice Belinda Ang and Justice GP Selvam, were leading practitioners before their appointment as judges.¹⁷ See list of judges at the Supreme Court of Singapore’s website <https://www.supremecourt.gov.sg/about-us/the-supreme-court-bench/justices> (accessed 1 January 2019). There is no doubt that practice has honed the legal knowledge of these renowned individuals and that they have brought a wealth of experience to the bench.

It is important to note that this does not mean that individuals who do not possess a background in maritime practice would not be good maritime judges. Indeed, Senior Judge Chao Hick Tin as well as many others have contributed positively to the growth of local maritime jurisprudence despite not hailing from a maritime practice. That said, the experience gathered at practice is invaluable and cannot be obtained elsewhere. It would be a pity if such experience garnered by leading practitioners cannot be shared with the bench for the purposes of developing case law and advancing Singapore’s jurisprudence.

Conclusion

The need to develop and strengthen our maritime jurisprudence may not be overtly apparent. However, with the world rapidly changing and with other countries continuously coming up with new initiatives to best Singapore’s position in the maritime world, we have to use all hands on deck to ensure that Singapore continues to shine as a maritime hub. This includes intangible methods such as developing our maritime jurisprudence to create an autochthonous regime of law. Doing so would further elevate Singapore’s status as a dispute resolution hub and instil confidence in stakeholders to have their businesses conducted in Singapore, as well as to have their legal disputes resolved using Singapore law.