Singapore allows alteration in marine claimant priority

The Singapore High Court has held that it is possible to alter the usual order of priorities between maritime claimants. Greece’s Piraeus Bank began two mortgagee actions in Singapore and effected a double arrest on the vessels Posidon and Pegasus as a result of the ship owners’ default on a loan. The vessels were subsequently sold pursuant to a judicial sale.

World Fuel Services (WFS), which had indirectly supplied bunkers to the vessels on credit, subsequently intervened in both actions. WFS claimed that the usual order of priorities relating to distribution of the proceeds from the sale of the vessels should be altered so as to raise WFS’s claim for unpaid bunkers above the Bank’s claim as mortgagees. This would reverse the normal priority.

In a written Judgment (The “Posidon” (2017) SGHC 138) Justice Belinda Ang held that the Court did have the power to alter priorities between maritime claimants if exceptional circumstances were shown. Previous cases had only ruled that the Court had the power to allow certain claims to be treated as Sheriff’s expenses, thus giving them a higher priority.

In this instance the Court declined to alter priorities because WFS were found to be unable to show exceptional circumstances. The Court said that the extension of credit to the ship owners by WFS was a normal business risk.