Malaysia – Wrongful Vessel Arrest In Collision Claim.

2 August, 2019

 

Case overview

 

In The Owner of Ship or Vessel ‘Lavela’ v The Owner of Ship or Vessel ‘Basilia’¹, the plaintiff claimed that the defendant’s vessel (Basilia) had collided into the plaintiff’s vessel (Lavela), which had been anchored at the Istanbul port in Turkey. To stop the plaintiff from arresting Basilia, the defendant obtained a letter of undertaking from the London Protection and Indemnity (P&I) Club, which was dated 13 February 2018.

 

The plaintiff initiated a collision claim in the Malaya High Court. Notwithstanding the issuance of the first letter of undertaking, the plaintiff proceeded to arrest Basilia on 15 February 2018 at the Tanjung Pelepas port in Malaysia. The defendant subsequently procured a second letter of undertaking from the London P&I Club, which was dated 20 February 2018. Basilia was released on 22 February 2018.

 

The defendant requested that the court:

 

• stay the proceedings before the Malaya High Court on the basis that the plaintiff’s claim should be adjudicated before the English courts as per the terms in the first letter of undertaking;
• set aside the 14 February 2018 warrant of arrest;
• declare the first letter of undertaking binding on the parties;
• discharge, cancel and return the second letter of undertaking;
• declare the arrest of Basilia from 15 February 2018 to 22 February 2018 as wrongful; and
• assess damages for Basilia’s wrongful arrest.

 

Decision

 

Having considered the evidence and submissions, the court found that:

 

• the first letter of undertaking was binding on the parties;
• the plaintiff should not have arrested the vessel on the receipt of the first letter of undertaking;
• the second letter of undertaking had been procured by duress;
• the defendant had little choice to accede to the second letter of undertaking in order to expedite the release of the vessel;
• the plaintiff was guilty of material non-disclosure and in breach of the duty to act in good faith for failing to disclose the existence of the first letter of undertaking to the court in the plaintiff’s application for the warrant of arrest; and
• the defendant was entitled to stay the proceedings in the Malaya High Court by acceding with the jurisdiction agreed under the first letter of undertaking.

 

In conclusion, the court ruled that:

 

• Basilia’s arrest was wrongful; and
• the defendant was entitled to damages (to be assessed) for Basilia’s wrongful arrest.

 

Further, the court ordered:

 

• the proceedings before the Malaya High Court to be stayed (save for the proceedings to assess damages); and
• the costs of the proceedings to be paid to the defendant at the end of the assessment of damages proceedings.

 

For further information, please contact:

 
Rajasingam Gothandapani, Partner, Shearn Delamore & Co​

rajasingam@shearndelamore.com