Introduction
In a maritime collision case, legal responsibility is usually apportioned based on the diploma to which every vessel was at fault. Underneath the only legal responsibility precept, the quantum of the smaller recoverable declare is normally deducted from the quantum of the bigger recoverable declare, leaving just one internet stability to be paid by the web payor to the web payee.
In The CARAKA JAYA NIAGA III-11 [2021] SGHC 43 (“The Caraka“), the Singapore Excessive Court docket thought-about how the only legal responsibility precept interacts with limitation durations below shipping regulation. Particularly, in a case the place the declare of the web payor in opposition to the web payee is time-barred, the Court docket discovered that the web payor can’t avail itself of the only legal responsibility precept to cut back its legal responsibility to the web payee.
This determination highlights the significance of observing limitation durations and to provoke proceedings to keep away from being time-barred in related circumstances. It additionally marks the primary time the problem has squarely arisen for willpower earlier than the Singapore Courts. Whereas the problem has beforehand been thought-about within the English Courts, the Singapore Excessive Court docket right here selected to not observe the English place.
On this Replace, we summarise the important thing factors of the Court docket’s determination and take into account its affect on the administration of maritime claims, together with whether or not it’s going to have an effect on the applying of limitation durations within the defence of set-off and in invoking limitation below the Conference on Limitation of Legal responsibility for Maritime Claims 1976 (“1976 Conference“).
Temporary Info
The plaintiffs have been the registered proprietor and demise charterer of the vessel Grand Ace12. The defendant was the demise charterer of the vessel Caraka Jaya Niaga III-11. A collision occurred between the Grand Ace12 and the Caraka Jaya Niaga III-11.
The plaintiffs and defendant entered right into a Consent Judgment which offered that the plaintiffs would bear 40% of the blame for the collision and the defendant 60% of the blame. The Consent Judgment was entered into with out prejudice to the defendant’s reliance on the only legal responsibility precept and with out prejudice to the plaintiffs’ proper to problem the defendant’s reliance on the only legal responsibility precept.
Underneath part 8 of the Maritime Conventions Act 1911 (“MCA“), there’s a two-year limitation interval for the graduation of proceedings for, amongst others, collision claims. This time bar applies equally to counterclaims. On this case, the plaintiffs had filed their Writ in opposition to the defendant inside the two-year interval, however the defendant had did not file its Writ for its counterclaim inside this limitation interval. The defendant’s counterclaim was subsequently time-barred.
Because the defendant was the web payor within the circumstances, the Court docket needed to decide whether or not the defendant might nonetheless depend on the only legal responsibility precept to cut back its legal responsibility to the plaintiffs even if its counterclaim was time-barred.
Holding of the Excessive Court docket
The Court docket held that the defendant was not entitled to depend on the only legal responsibility precept because of the time-bar. In reaching its determination, the Court docket thought-about the English case regulation on the problem and the character and intention of the only legal responsibility precept.
The only legal responsibility precept arose from the English determination of The Khedive [1882] 7 App Cas 795. It primarily offers that the place two vessels are concerned in a collision for which each vessels are guilty, there doesn’t exist two cross-liabilities in damages. As a substitute, there’s solely a single legal responsibility for the distinction between the bigger declare and the smaller declare.
The difficulty of limitation durations and their impact on the only legal responsibility precept had been thought-about within the English Excessive Court docket’s determination of MIOM 1 Ltd v Sea Echo ENE (No 2) [2012] 1 Lloyd’s Legislation Studies 140 (“Sea Echo“). The English Court docket in Sea Echo acknowledged (in obiter dictum) that the web payor could not want to start proceedings in opposition to the web payee, however could want to depend upon the only legal responsibility precept provided that sued by the web payee with the intention to scale back its legal responsibility. In that occasion, the web payor can be merely defending himself, and wouldn’t be bringing proceedings as such. Accordingly, following the reasoning in Sea Echo, the web payor can be entitled to depend on the only legal responsibility precept even when he failed to look at the limitation interval for graduation of a declare/counterclaim imposed by the English equal of part 8 of the MCA.
The Singapore Court docket right here selected to depart from the English place within the Sea Echo. The Court docket held that the only legal responsibility precept is in actuality a rule of process permitting a Court docket, following the process within the Court docket of Admiralty, to pronounce a single judgment in favour of the web receiving occasion. As such, it pre-supposes the existence of legitimate or maintainable claims and cross-claims or counterclaims.
The Court docket thus discovered that the applying of the only legal responsibility precept requires that each the declare and the cross-claim (or counterclaim) are maintainable and never time-barred. As a procedural rule, the only legal responsibility precept doesn’t apply or function in a case the place part 8 of the MCA prevents the defendant from bringing or sustaining proceedings within the first place. In stark distinction with the Sea Echo, the Court docket right here highlighted {that a} shipowner who expects to be the web payor can’t select to sit down again, do nothing and depend on the only legal responsibility precept to defend himself as an alternative of issuing proceedings in time.
The Defence of Set-Off
The Singapore Court docket’s determination in The Caraka raises the query of whether or not it could have an effect on the operation of the defence of set-off. Set-off could also be mentioned to be analogous to the only legal responsibility precept – it permits a debtor who has a declare in opposition to a creditor to depend on the defence to cut back the quantity of the creditor’s declare by the quantity of his personal declare. Adopting the reasoning of the Court docket in The Caraka, would a debtor even be obliged to concern proceedings inside the limitation interval with the intention to depend on set-off?
The query is additional difficult by the very nature of set-off – as a defence to a declare. As a result of it’s utilized in response to a declare, it has been characterised as a protect reasonably than a sword. As such, if, following the reasoning in The Caraka, a debtor is required to provoke proceedings in order to keep away from being time-barred, there’s the chance that the defence of set-off could also be transformed right into a device of offence as an alternative.
Nevertheless, it ought to be famous that the Court docket in The Caraka sought to tell apart between set-off and the only legal responsibility precept. Whereas the applying of the only legal responsibility precept may normally have the identical sensible impact as making use of set-off, the Court docket highlighted that the only legal responsibility precept is a procedural mechanism primarily based on “a rule of some antiquity originating within the English Court docket of Admiralty”, and thus doesn’t pertain to set-off or represent a type of set-off. The Court docket’s place subsequently means that its holding on the only legal responsibility precept wouldn’t have an effect on reliance on the defence of set-off (if relevant).
Limitation below 1976 Conference
The choice of The Caraka can also probably affect reliance on limitation below the 1976 Conference, which is given drive of regulation in Singapore by way of the Service provider Transport Act. The 1976 Conference units uniform guidelines regarding the limitation of legal responsibility for maritime claims. Article 5 of the 1976 Conference offers that, the place a respondent entitled to limitation of legal responsibility has a declare in opposition to the claimant arising out of the identical incidence, their respective claims shall be set off in opposition to one another and the provisions of the 1976 Conference shall solely apply to the stability.
The Court docket’s reasoning in The Caraka thus raises the query of whether or not a respondent should concern proceedings earlier than any time bar with the intention to depend on Article 5 of the 1976 Conference. Article 5 appears to function in a way much like the only legal responsibility precept, and can also probably be considered as a procedural mechanism.
Concluding Phrases
The Singapore Court docket’s determination in The Caraka highlights the significance of being conscious of and complying with limitation durations in maritime claims. As demonstrated right here, in a maritime collision case, even when defending a declare, events with present counterclaims could also be well-served by issuing a Writ on the counterclaim inside the limitation interval as a type of protecting measure in order to make sure that they don’t seem to be time-barred from counting on defensive choices equivalent to the only legal responsibility precept.
As mentioned above, the choice can also probably have an effect on the defence of set-off and limitation below the 1976 Conference.
There can also be an enchantment and this is probably not the ultimate phrase. We are going to maintain you up to date on any additional determination(s) clarifying the place in Singapore regulation.