Continental Shipping Line Pte. Ltd. v Jonathan John Shipping Ltd

Continental Shipping Line Pte Ltd, a Singapore company running a liner service between Singapore and Myanmar, chartered the MV Aegean Express from Jonathan John Shipping Ltd, a Marshall Islands company, on or around 23 November 2020. The vessel was its only operating vessel in 2022. An addendum, whose validity the charterer disputed, purportedly extended the charter. The owner took the vessel for dry docking on 15 October 2022 but did not return it within the expected time. The charterer treated the delay as a repudiatory breach and terminated the charter by letter dated 17 January 2023. The owner alleged wrongful termination and began arbitration in London on 1 February 2023.

On 10 November 2023 the owner applied without notice in HC/OA 1152/2023 under s 12A of the International Arbitration Act 1994 for a worldwide Mareva injunction up to US$22,573,870.33, which was granted on 14 November 2023. The charterer then made withdrawals from the frozen accounts, telling the owner of them shortly after. The owner obtained further disclosure orders and a variation in SUM 391; the charterer's application to set the injunction aside (SUM 995) was dismissed. The charterer appealed in Court of Appeal / Civil Appeal No 72 of 2024.

1. Whether the charterer's cessation of its primary business showed a real risk of dissipation.
2. Whether the liquidity of its assets, its corporate structure or its director's nationality showed such a risk.
3. Whether the withdrawals made after the injunction supported an inference of a real risk of dissipation.

The court stressed that Mareva relief is exceptional and turns on a real risk of unjustified dealings with assets, proved by solid evidence, citing Bouvier, Yves Charles Edgar and another v Accent Delight International Ltd and another and another appeal [2015] 5 SLR 558, JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and others [2018] 2 SLR 159 and Milaha Explorer Pte Ltd v Pengrui Leasing (Tianjin) Co Ltd [2023] 1 SLR 1072. Dealings for legitimate commercial reasons do not count.

The charterer had ceased chartering because the owner itself had withdrawn and kept the only vessel; that was a genuine commercial reason, unlike the unexplained closure in Guan Chong Cocoa Manufacturer Sdn Bhd v Pratiwi Shipping SA [2003] 1 SLR(R) 157. Holding mostly current assets was natural for a business operating a chartered vessel and was at best neutral without signs of dishonesty of the kind found in JTrust. The group structure was known to the owner from the start, and a director's foreign nationality could not on its own justify the inference; reliance on it was described as clutching at straws.

The withdrawals were openly reported and, the court was satisfied, paid staff salaries and office rent. Keeping staff in the hope of resuming operations was a business decision, CPF records showed the charterer as employer, and paying rent for premises it occupied on behalf of a dormant related company was not remarkable. These payments had been made since before the injunction. A Mareva injunction is not security against a defendant's possible insolvency. Having found no risk of dissipation, the court did not decide the good arguable case or abuse of process points, or the further evidence.

The Court of Appeal allowed the appeal and discharged the Mareva injunction, finding no evidence of any risk of dissipation. It set aside the orders made in SUM 391, ordered an inquiry into damages suffered by the charterer because of the injunction, and fixed costs of the appeal and the summonses below at $50,000 (all in) payable to the charterer.