Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution

High Court explains circumstances under which it would allow a direct private sale of an arrested ship – only where there is cogent evidence of “powerful special features” or “special circumstances”

When the Singapore Court orders the judicial sale of an arrested ship, it may do so either by way of public auction or private treaty. In the last 15 years or so, a third mode of sale has arisen – this is the direct sale to a named party at a specified price. In this decision, the High Court explained the circumstances under which it would allow a direct private sale of an arrested ship.

 
The Plaintiff bank had financed mortgages over two ships, and when the Defendant borrower/ shipowner defaulted under the loan facilities, it commenced admiralty actions and arrested the two ships. The Plaintiff applied for the Court’s approval of a direct private sale of the ships on the terms of a contract entered into between the Plaintiff and a named buyer, albeit subject to the approval of the Court.

 
The High Court advised that it would exercise caution when asked to approve a direct private sale, and carefully scrutinise each application. The Court would only depart from the usual mode of judicial sale via auction when the applicant has adduced cogent evidence of the existence of “powerful special features” or “special circumstances”. Here, the evidence adduced by the Plaintiff did not demonstrate the existence of powerful special features and was not sufficient to justify a departure from the usual mode of sale via auction.

 
The decision of the Court demonstrates that an application for the direct sale of an arrested ship will not be granted as a matter of course. A party seeking the Court’s approval of a direct sale must demonstrate why it is necessary. In addition, the applicant should also demonstrate that all steps have been taken to obtain the best possible price and the interests of all other interested parties have been taken into account.

For further information, please contact:

Toh Kian Sing SC, Partner, Rajah & Tann
[email protected]

Leong Kah Wah, Partner, Rajah & Tann
[email protected]

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