AQUILO SHIPPING INC v SRTT MARINE TRADING & SERVICES PTE LTD

Facts

Aquilo Shipping Inc, a Liberian company, bought the chemical tanker MT "VAYU" (formerly "QIAN TAI 1") from SRTT Marine Trading & Services Pte Ltd under a memorandum of agreement dated 10 October 2024 based on the Norwegian Saleform 2012, governed by Singapore law with arbitration in Singapore. Clause 9, identical to the standard form, contained the seller's warranty that the ship was free of encumbrances and an undertaking to indemnify the buyer against all consequences of claims made against the vessel incurred before delivery. The vessel was delivered on 13 January 2025.

On 18 November 2025 PT Industri Nabati Lestari arrested the vessel in Singapore in HC/ADM 64/2023, claiming against the former owner or demise charterer for misdelivery of a palm olein cargo without production of the bills of lading, and demanded security of US$3,672,687.10 and S$300,000.00. Aquilo's P&I club refused cover and SRTT did not answer Aquilo's demands. Aquilo applied in HC/OA 1376/2025 under ss 12A(2) and 12A(4) of the International Arbitration Act 1994 for an interim mandatory injunction compelling SRTT to furnish that security or pay the sums to procure the release. It had not begun arbitration.

Issues

1. Whether the case was one of urgency under s 12A(4) of the International Arbitration Act 1994.
2. Whether clause 9 of the Norwegian Saleform 2012 obliges a seller to furnish security to release an arrested vessel.
3. Whether the balance of convenience favoured granting the interim mandatory injunction.

Holding

Sushil Nair J dismissed the application on 3 March 2026 and later gave full grounds. Parties were directed to file submissions on costs, limited to 5 pages, within 14 working days.

Reasoning

On urgency, the judge noted that the application was filed on 3 December 2025 yet, two months after the arrest, Aquilo had not commenced arbitration, gave no reason for the delay, and offered no evidence that it intended to arbitrate. A proposed condition requiring arbitration to be started within days could not cure the absence of urgency, and Aquilo's failure even to enter an appearance in the admiralty action was inconsistent with its claim of urgency. That alone was enough to dismiss the application. The requirement in s 12A(6) was met because no tribunal had been constituted.

On the merits, there was a serious question to be tried whether the arrest was a claim against the vessel within clause 9, following Rank Enterprises Ltd v Gerard [2000] 1 All ER (Comm) 449, which treats the indemnity as covering claims whether or not they prove valid. However, using the power under O 9 r 19(1) of the Rules of Court 2021 to decide a question of construction summarily, the judge held that clause 9 was a compensatory indemnity, under which the seller reimburses losses after they are suffered, not a preventive one obliging it to intervene. A seller cannot prevent the immediate losses an arrest causes, the market texts take the same view, the buyer keeps the freedom to choose how to respond, an indemnity claim arises only on actual loss, and indemnities are construed strictly in favour of the indemnifier. Cases ordering security under maritime letters of indemnity turned on express clauses requiring security, which clause 9 lacks. There was therefore no serious question to be tried on the obligation actually relied on.

On the balance of convenience, damages would adequately compensate Aquilo; the risk of a sale pending the action and being a one-ship company were common to every arrested owner, and no evidence was given of the beneficial owner's means. SRTT could be compensated with damages and interest, but an injunction would in effect order specific performance of a non-existent obligation, with no assurance that Aquilo would pursue arbitration.

From the judgment