Mandatory injunction requiring surrender of possession of an oil tanker

Barristers 7KBW of the Temple have reported how barrister Charles Holroyd (7KBW, instructed by Reed Smith LLP) acted for the Security Trustee under a Loan Agreement and successfully obtained an interim injunction requiring Fire Navigation Inc, the owners of MT Megacore Honami to surrender possession of the vessel.

The Security Trustee’s case was that the Owners had defaulted under the Loan Agreement, meaning that the Security Trustee was entitled to possession of the Vessel under a ship mortgage and a General Assignment. The owners disputed that there had been a default. The Loan Agreement and the General Assignment were governed by English law.

The Security Trustee had been seeking to arrest the Vessel since January 2018, but the Vessel had been concealing its position and not trading, making an arrest impossible.

In August 2018 the Security Trustee attempted to exercise what it claimed was its right to take possession of the Vessel, but the Master and Owners refused to cede possession.

Following reports (the accuracy of which was later disputed) of the Vessel failing to comply with orders of the Singapore Navy and resisting boarding by Indonesian maritime police, Mr Holroyd successfully applied on Saturday September 22nd 2018 for an emergency interim injunction against the Owners, the Managers and the Master personally, requiring surrender of possession of the Vessel, which by now was in Indonesia. The purpose of taking possession was so that the Security Trustee could procure the arrest of the Vessel and then her judicial sale pendente lite (“awaiting the litigation”).

The Owners applied to discharge the injunction on the merits and on the grounds of alleged non-disclosure and/or unclean hands.  In particular, the Owners said that the reports which had prompted the emergency injunction application were inaccurate, that a fair presentation of their defences had not been made and that the Security Trustee had acted in an underhand or overly aggressive way.

Mr Justice Andrew Baker upheld the injunction. He said that he could not resolve the factual disputes as to what had or had not happened in relation to the Singapore Navy or the Indonesian police, but that, even if the Security Trustee had been misinformed, this did not come anywhere near a successful complaint of unclean hands. He dismissed the complaints of underhand or overly aggressive behaviour and held that there had not been any breach of the duty of full and fair disclosure.

Mr Holroyd observed that the case was interesting as a reminder of a seldom used method of enforcement, which can be effective in circumstances where more usual methods (such as arrest) are not. injunction requiring surrender of possession of an oil tanker/