ASL BULK MARINE LIMITED v OWNERS OR DEMISE CHARTERERS OF THE SHIP OR VESSEL STINGRAY PENCELAH Gladys Holdings Incorporated

Case Significance

Illustrates that a party arresting a vessel as security is not bound to accept every form of substitute security, and that a refusal is not wrongful or unreasonable where the security offered is affected by a want of legal capacity on the part of the party proposing it.

This High Court decision from the Admiralty jurisdiction in Kuala Lumpur concerns an intervener's application in an action in rem, complaining that the arresting party had wrongfully refused the alternative security it offered for the release of an arrested vessel. The plaintiff had arrested the vessel — identified by its International Maritime Organization number and since renamed — as security for claims it was pursuing against another company in a London arbitration. An intervener, a Liberian-registered company asserting an interest in the vessel, offered the plaintiff alternative security in exchange for the vessel's release, which the plaintiff declined to accept. The intervener then applied, invoking Order 70 rule 33 of the Rules of Court 2012, for a declaration that the plaintiff's refusal to accept the security offered was wrongful and unreasonable. The Court examined the nature of the security proposed and the plaintiff's obligations in responding to it. A central point in its reasoning was that the plaintiff had no obligation to deal with the intervener in relation to the proposed solicitors' undertaking or agreement where the intervener lacked the legal capacity to provide it, so the plaintiff's refusal could not be characterised as wrongful or unreasonable. Finding the intervener's application to be without merit, the Court dismissed it with costs. The decision illustrates that a party who has arrested a vessel as security is not obliged to accept every form of alternative security offered, and that a refusal will not be branded wrongful or unreasonable where the security proposed suffers from a want of legal capacity on the part of the party offering it. It is a useful example of how the admiralty court supervises the provision of substitute security for the release of an arrested ship. The Court's approach reflects that the release of an arrested vessel on substitute security depends on the security being one the arresting party can properly be expected to accept, and that the court will not compel acceptance of, or penalise refusal of, a security tendered by a party unable in law to furnish it.