In a landmark decision, the Singapore High Court held that it is possible to alter the usual order of priorities between maritime claimants.
Piraeus Bank, one of the largest Greek Banks, commenced two mortgagee actions in Singapore and effected a double arrest on the vessels Posidon and Pegasus, flowing from the ship owners’ default of a loan agreement. The vessels were subsequently sold pursuant to a judicial sale.
Subsequently, World Fuel Services, who had (via various companies) supplied bunkers to the vessels on credit, intervened in both actions.
World Fuel Services claimed that the usual order of priorities, in terms of entitlement to the vessels’ sale proceeds, should be altered so as to elevate their claim for unpaid bunkers above the Bank’s claim as mortgagees, who would ordinarily enjoy a higher priority.
Justice Belinda Ang in a written Judgment (The “Posidon” (2017) SGHC 138) held that the Court did have the power to alter priorities between maritime claimants provided that exceptional circumstances were shown.
This is the first local decision on the point as prior cases had only ruled that the Court had the power to allow certain claims to be treated as Sheriff’s expenses and thereby enjoy a higher priority.
Applying the above principle, the Court declined to alter priorities as World Fuel Services were unable to show exceptional circumstances.
The Court went on to state that the extension of credit by World Fuel Services to the ship owners was a business risk assumed in the course of business.
Piraeus Bank was represented by K Murali Pany and Ng Lip Kai of Joseph Tan Jude Benny LLP.