Judgment

[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

                                                                                                                                                               Judgment reserved.

Karthigesu JA (delivering the judgment of the court):

1           This appeal raises a short but important question of law. It is whether a salvage award made in arbitration  proceedings may be enforced by an admiralty action in rem against the salvaged ship or a ‘sister ship’ by invoking the court’s admiralty in rem jurisdiction under s 3(1)(i) of the High Court (Admiralty Jurisdiction) Act (‘the Act’) and if so whether the costs of the arbitration proceedings in securing the salvage award may also be claimed as part of the salvage award.

2           The appellant to whom we shall refer hereafter as ‘the salvors’ rendered certain salvage services to the vessel the ‘Atlas Pride’, her bunkers and cargo under a Lloyd’s standard form of salvage agreement approved and published by the Council of Lloyd’s and known as ‘No Cure — No Pay’ (‘the agreement’) dated 30 August 1991. The ‘Atlas Pride’ a bulk oil or ore carrier of 112,306 tons gross had suffered a casualty in heavy weather off the coast of South Africa on 29 August 1991 and was partially disabled. The salvage services being successfully performed the salvage remuneration payable to the salvors was the subject of arbitration proceedings in London under the terms of the agreement as provided for. The arbitrator published his award on 22 April 1993 under which he awarded a sum of £3,802,000 to the salvors with interest at 13.85% pa from 4 December 1991 until 29 April 1993 and interest at 8% pa from 2 June 1993 until payment(by virtue of cl 10(ii) of the agreement). Further the salvors were awarded their costs of the arbitration, the fees and the costs charged by the Council of Lloyd’s for their services and the costs of the arbitrator amounting in total to £196,812.97. The sums awarded were to be apportioned among the parties whose properties were salved in proportion to the salved values of the properties salved as fixed by the arbitrator. Accordingly the amounts of the award payable by the ‘Atlas Pride’ and her bunkers were:

(1) £532,609.78 and £8,205.43 respectively;

(2) interest for the period 4 December 1991 to 29 April 1993 at 13.85% pa on the two sums under (1) above amounting to £105,224.50 and interest at 8% pa from 2 June 1993 until payment on the two sums under (1) above;

(3) £27,995.65 being the apportioned costs of the arbitration, the fees and costs charged by the Council of Lloyd’s and the costs of the arbitrator.

3           No payment in satisfaction of the award was made.

4           To enforce payment of the amounts of the award payable by the ‘Atlas Pride’ and her bunkers in the sums stated above the salvors commenced proceedings by Admiralty in Rem Suit No 645 of 1992 against the owners of the ‘Atlas Pride’ invoking s 3(1)(i) of the Act. The ‘Atlas Pride’ was then already under admiralty arrest in Singapore in Admiralty in Rem Suit No 455 of 1992. In addition to the amounts of the award as stated above, the salvors also claimed a sum of £7,300.41 which they claimed they had incurred by way of costs and expenses in bringing Admiralty in Rem Suit No 645 of 1992 against the owners of the ‘Atlas Pride’. The salvors also claimed interest on the said sums of £27,995.65 and £7,300.41 at 8% pa from judgment until payment.

5           The respondent to whom we will refer as Keppel had carried out repairs to the ‘Atlas Pride’ and had her still at its repair yard in Singapore when she was arrested by the plaintiffs in Admiralty in Rem Suit No 455 of 1992. Accordingly Keppel claimed a possessory lien over the ‘Atlas Pride’. In fact Keppel had a real and substantial claim on the ‘Atlas Pride’ ranking in priority immediately after the salvor’s claim and in priority over the numerous other claimants against the ‘Atlas  Pride’ (see Keppel Corp Ltd v Chemical Bank). It is not surprising therefore that Keppel got leave to and intervened in Admiralty in Rem Suit No 645 of 1992 to contest the salvor’s claim against the ‘Atlas Pride’.

6           The owners of the ‘Atlas Pride’ did not enter an appearance to Admiralty in Rem Suit No 645 of 1992 and when the salvors moved the court for judgment in default of appearance the contest was between the salvors and Keppel. Kan Ting Chiu J gave judgment in favour of the salvors for the two sums claimed under(1) above as being the proportion of the award payable by the owners of the ‘Atlas Pride’ and interest thereon as claimed but he declined to give judgment for the £27,995.65 being the proportion of the costs of the arbitration, the fees and costs charged by the Council of Lloyd’s and the costs of the arbitrator payable by the owners of the ‘Atlas Pride’ or for £7,300.41 which the salvors claimed they had incurred by way of costs and expenses in bringing Admiralty in Rem Suit No 645 of 1992. The former claim was rejected as the learned judge held that they were not claimable in rem and the latter claim was rejected as the learned judge perceived it to be a claim for special damages. In his grounds of decision he said:

I also did not give judgment for the £7,300.41 claimed as costs and expenses of the plaintiffs’ (the salvors’) agents in connection with the present action which cannot be claimed as special damages, and should be dealt with as the costs of the action.

7           The salvors’ appeal is in respect of the two items of which they did not get judgment.

8           In order to answer the questions raised by this appeal it is necessary to consider in wider perspective the question of enforcing arbitration awards generally by invoking the jurisdiction of the court. This question was considered by the English Court of Appeal in Bremer Oeltransport, GmbH v Drewry. The question arose in this way. A charterparty was made in London for the hire of the plaintiffs’ vessel to the defendant who was resident in Paris. A clause in the charterparty provided that disputes arising between the parties would be arbitrated upon in Hamburg. A dispute having arisen the matter was referred by the parties to arbitration in Hamburg where an award was made that the defendant should pay the plaintiffs about £21,000, payment to be made in English currency. The plaintiffs then issued a writ in London claiming £21,000 odd under the award and obtained leave to serve the writ out of the jurisdiction on the defendant. The defendant’s application to set aside the writ was refused. Slesser LJ in delivering the only judgment said:

I proceed, therefore, to consider the case made on behalf of the plaintiffs that the award, on which they seek to sue, arose in respect of a contract made within the jurisdiction. This contention raises at the outset the following juridical problem: What is the nature of an action based upon an award? On the one hand, it is said for the respondents that, in so far as the submission is a contract whereby the parties to it impliedly undertake to abide by and carry out the award of the arbitrators, the submission is contained in the charter-party which is made in London, and, therefore, the enforcement of the award would be the enforcement of a contract made within the jurisdiction. On the other hand, it is contended for the appellant that the action is brought on the award itself, and that consequently, as the award was made in Hamburg, the action is not the enforcement of a contract made within the jurisdiction.

The respective contentions require for their proper consideration some study of the history of the legal principles which govern the enforcement of awards at common law and in equity. The contention of the respondents that the submission is the contract on which an action based on the award is founded is well supported by authority.

9           After considering and reviewing the law he concluded:

It would appear, therefore, that the greater weight of authority is in favour of the view that in an action on the award the action is really founded on the agreement to submit the differences of which the award is the result.

10       Bremer Oeltransport v Drewry became the foundation of the statement in 2 Halsbury’s Laws of England (4th Ed) (Reissue) para 712 which reads:

There is an implied promise in every arbitration agreement that the parties will perform the award. If a party to an arbitration agreement acts in breach of this implied promise by failing to comply with the award, the successful party may bring an action to enforce the award in any court of competent jurisdiction. (Our emphasis.)

11       Three years later in The Beldis another division of the English Court of Appeal had to consider the same question and came to a different conclusion on the law. It appears that Bremer Oeltransport v Drewry was neither cited in argument nor considered by the learned judges in their judgments. We set out below the headnote in The Beldis in so far as it is relevant to the question of law under discussion in this appeal. It reads:

An action in rem was brought in a county court having admiralty jurisdiction by the plaintiffs against the defendants, the owners of the Norwegian SS Beldis, for 27l. 4s. 6d. payable by the defendants to the plaintiffs under an arbitrator’s award in respect of overpayment of chartered freight. The arbitration was held by virtue of a clause in a charterparty relating, not to the Beldis, but to the SS Belfri, another ship belonging to the defendants. The defendants failed to appear and judgment was entered against them by default. Thereupon the present appellants, who held a mortgage on the Beldis, intervened, and by agreement an issue was submitted to the county court judge as to ‘whether the plaintiffs’ action in rem against the SS Beldis is maintainable in view of the fact that the plaintiffs’ claim in this action arose out of a charter-party of the SSBelfri belonging to the same owners.

         On appeal, the court raised the question whether, apart from the point for decision in the agreed issue, the issue itself was not based on a misconception, as it asserted that the plaintiffs’ action arose out of a charterparty, whereas it appeared to be based upon an award.

         By s 2, sub-s 1 of the County Courts Admiralty Jurisdiction Amendment Act 1869, any county court appointed to have admiralty jurisdiction ‘shall have jurisdiction … to try … any claim arising out of any agreement made in relation to the use or hire of any ship … : —

Held, (a) that the cause of action alleged was an ordinary common law claim for payment of money under an award and was not within the jurisdiction conferred by the Act of 1869; …

12       It is undeniable that the county court in The Beldis was a court of competent jurisdiction on the authority of the Bremer Oeltransport v Drewry and the action to enforce the award could have been brought, but as we have said, Bremer Oeltransport v Drewry was not commented on or distinguished in The Beldis. The Court of Appeal’s judgment in The Beldis3 led to the following statement in Russell on Arbitration (20th Ed) p 350:

An action to enforce an award cannot be brought as an action in rem, even where the dispute giving rise to the award is such that if it had not been submitted to arbitration the claimant could have proceeded in rem. But it seems that such award does not bar the claimant from proceeding in rem on his original cause of action.’

13       Similar views were also expressed by the authors of Commercial Arbitration published by Butterworths in 1982.

14       But in 1972 in F J Bloemen Pty Ltd (formerly Canterbury Pipelines (Aust) Pty Ltd) v The Council of the City of Gold Coast [1972] 3 All E.R. 357 the Judicial Committee of the Privy Council, in a building construction case, gave express recognition to Bremer Oeltransport v Drewry. Lord Pearson delivering the judgment of the Board said in p 363:

The award of an arbitrator differs materially from a judgment. The plaintiff’s right to sue and the court’s right to give judgment for him if he proves his case are not derived from the agreement of the parties and the judgment when given is an entirely fresh departure. The award of an arbitrator on the other hand cannot be viewed in isolation from the submission under which it was made. It was this sort of consideration which led the Court of Appeal in Bremer Oeltransport GmbH v Drewry to hold that an action brought to recover a sum awarded by an award made in Hamburg under a submission contained in a contract made in London was an action brought to enforce a contract made within the jurisdiction …

15       In The Saint Anna Sheen J had to consider whether an arbitration award made pursuant to an agreement to refer disputes to arbitration contained in a voyage charterparty could be enforced by an admiralty action in rem. The brief facts were that the ‘Saint Anna’ was chartered to the plaintiffs by her owners for the carriage of fuel oil. The plaintiffs alleged a short delivery of the fuel oil and the dispute was arbitrated as provided for under the charterparty. The arbitrators found in favour of the plaintiffs. However, the award was not satisfied. An action in rem based on the award was begun against the proceeds of sale of the ‘Saint Anna’ as she had been sold in earlier admiralty in rem proceedings and the proceeds of sale brought into court. Sheen J applied Bremer Oeltransport v Drewry and allowed the plaintiffs the principal sum on the award as well as the plaintiffs’ costs and the costs of the award. The plaintiffs in invoking the admiralty in rem jurisdiction had relied on s 20(2)(h) of the United Kingdom Supreme Court Act 1981 which is in pari materia with s 3(1)(h) of the Act and which reads: ‘any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship.’ Accordingly Sheen J said at p 640:

If that decision of the Court of Appeal [referring to Bremer Oeltransport v Drewry] were the only relevant authority there could be no doubt that this action is within the admiralty jurisdiction and has been properly brought against the proceeds of sale of Saint Anna. But the later decision of the Court of Appeal in The Beldis … insofar as it is relevant to the instant case, does not seem to be consistent with the decision in Bremer Oeltransport GmbH v Drewry, which was not cited in argument.

16       And later at p 641 he said:

… then it seems to me that this action arises out of the charterparty. One ground of the decision of the Court of Appeal in The Beldis is inconsistent with the decision of the Court of Appeal in Bremer Oeltransport v Drewry. This leave (sic) me free to decide which authority I should follow. As the decision in the latter case was not brought to the  attention of the Court of Appeal during argument in The Beldis, and as I find myself convinced by the reasoning in the latter case, I have no hesitation in following it. I therefore hold that this claim is within the admiralty jurisdiction of the court and I give judgment for the plaintiffs on their claim.

17       The learned judge in his grounds of decision after referring to The Beldis, Bremer Oeltransport v Drewry, FJ Bloemen Pte Ltd v Gold Coast City Council and The Saint Anna in that order said: ‘Against the backdrop of these authorities, I prefer the reasoning in Bremer and Bloemen and I find that the plaintiffs’ claim for the salvage costs awarded in the arbitration was a claim in the nature of salvage [our emphasis] which they can proceed in rem to recover.’ Notwithstanding that there is no appeal against this part of the learned judge’s decision and with respect, we think it still remains to be answered whether the admiralty jurisdiction of the court can be invoked to enforce a salvage award made pursuant to a salvage agreement by invoking s 3(1)(i) of the Act where the jurisdiction of the court is confined to ‘any claim in the nature of salvage’. A claim in the nature of salvage refers to a claim for a salvage reward: it does not refer to a claim arising out of salvage (see The Tesaba at p 400) in the same way as a claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship, as in The Saint Anna.

18       How then should the words ‘in the nature of salvage’ in s 3(1)(i) of the Act be interpreted? Sheen J in The Tesaba interpreted these words in the pari materia para of the United Kingdom Supreme Court Act 1981 by reference to the Convention Relating to the Arrest of Seagoing Ships, signed at Brussels on 10 May 1952 to mean a claim ‘ arising out of salvage’, since those were the equivalent words of the Convention. This court did the same in The Trade Fair when interpreting s 3(1)(f) of the Act by reading ‘any claim arising out of loss of life or personal injury’ for ‘any claim for loss of life or personal injury’ (see the discussion at p 832).

19       If it is right that the words ‘in the nature of salvage’ in s 3(1)(i) of the Act ought to be read as ‘arising out of salvage’, and in our judgment it is right, then applying the judgment in The Saint Anna, with which judgment we are in entire agreement, there is no doubt that this action which was brought to enforce the award is within the admiralty in rem jurisdiction and has been properly brought against the ‘Atlas Pride’. The agreement to refer to arbitration in London the assessment of the salvage reward or remuneration payable to the salvors arose out of the salvage of the ‘Atlas Pride’ and the award of the arbitrator was the result of that reference.

20       Viewed in this way not only the salvage reward or remuneration of £532,609.78 and £8,205.43 being the proportions to be borne by the ship and bunkers respectively together with interest thereon are recoverable but also the costs and expenses with respect to the arbitration proceedings apportioned to the ship and bunkers in the total sum of £27,995.65. These comprise the costs of the arbitration, the fees and costs charged by the Council of Lloyd’s and the costs of the arbitrator. It cannot be gainsaid that the costs and expenses with respect to the arbitration did not arise out of the salvage of the ‘Atlas Pride’ for without incurring those costs and expenses there would have been no arbitration and there would have been no award. We can see no justification for separating the costs and expenses of securing a quantification of the salvage reward or remuneration from the salvage  reward or remuneration. The two together comprise the award as is evident from a reading of the arbitrator’s award.

21       The same, however, cannot be said of the sum of £7,300.41 claimed as the ‘cost and expenses in bringing this claim.’ In no sense can these costs and expenses be said to arise out of the salvage of the ‘Atlas Pride’. They were incurred to enforce the award and did not form part of the award.

22       In this connection we will draw attention to Sheen J’s reference in The Saint Anna at p 641 to what must be pleaded and proved in an action on an award. He accepted as accurate the following statement by the authors of Commercial Arbitration at p 368:

We submit that the better view is that the plaintiff must plead and prove both the arbitration agreement and the award: both are essential elements in his cause of action.

23       With respect, we endorse that statement. The salvors, the plaintiffs and appellants, in this case have done just that but in seeking to include the claim of their costs and expenses in bringing this claim they have gone outside the award. For this reason too their claim for £7,300.41 must fail.

24       Counsel for Keppel contended that in the event the salvors succeeded in their appeal in respect of the £27,995.65 he would still dispute the items of costs, or at least some of them, which went to make up the sum of which the £27,995.65 is the proportion chargeable to the ship and bunkers. We are content to decide this question on principle. We are not minded to enter into a taxation or to direct one as we do not think anything useful will be gained but could well prove to be costly and time consuming.

25       In the result and for the foregoing reasons we will allow this appeal in part and give judgment for Alexander G Tsavliris & Sons Maritime Co, the appellants and plaintiffs herein, for £27,995.65 in addition to the judgment already entered in their favour by the learned judge, and three-quarters of the costs of this appeal.  The appeal deposit will be paid out to the appellant’s solicitors.

Appeal allowed in part.

Reported by Hoo Sheau Peng