Malaysia: Admiralty Practice In Malaysia

Last Updated: 15 April 2016
Article by Philip Teoh

The Malaysian Admiralty Court is based in Kuala Lumpur and operates as a specialist Court within the Commercial Division of the Kuala Lumpur High Court. Set up in October 2010, the establishment of the Court1 quickly became an important support to the growth of the Maritime sector2 in Malaysia. The Malaysian Judiciary recognized the importance and utility of specialist courts3 to support the specialist sectors and the Admiralty Court has since its inception rapidly became an important adjunct to spurring the growth of the maritime sector in Malaysia.

The Industry quickly embraced the Admiralty Court as a preferred means to resolve shipping disputes, as the Court possessed several important attributes. The appointment of an Admiralty Judge meant that the cases will be heard before a specialist arbiter, who better appreciates the industry and the technical aspects of a shipping claim. The realm of admiralty practice with its in rem procedure and technical aspects is not easily understood by generalist judges, and the industry and shipping lawyers no longer have to delve into the basics of the law every time a shipping case is argued. The other attribute that is appreciated by the users of the Admiralty Court is that the Court operates within a nine-month deadline in which the Court will strive to complete a trial from the date of the filing of the writ. The other apparent benefit of the Admiralty Court is that there are nominal costs as the only costs parties need to incur are the court filing fees. Thus, the Court offered very real to litigants – specialist judge, speed and costs. These benefits were traditionally only found in the realm of arbitration .

Admiralty Jurisdiction

The Admiralty Court exercises "the same jurisdiction and authority in relation to matters of admiralty as is for the time being exercisable by the High Court of Justice in England under the UK Supreme Court Act 1981"5. Traditionally the admiralty jurisdiction was limited to hearing claims falling under Sections 20(1) and (2) of the UK Supreme Court Act 1981.

Type of cases

Under the Admiralty Court Practice Directions, the categories of cases that can be heard by the Admiralty Court was expanded from the 18 categories of Admiralty matters within s.24 (b) of UK Supreme Court Act 1981 as applied by the Courts of Judicature Act 1964 to include the following6 :

  1. Claims relating to carriage of goods by sea
  2. Limitation of actions for maritime claims, including actions seeking to limit liability or for extension of time where the limit of liability or the time for commencement of proceedings is prescribed by maritime convention or legislation
  3. Disputes pertaining to marine insurance and reinsurance contracts, including marine insurance agents and brokerage contacts
  4. Disputes arising from shipbuilding agreements, including issues with regard to the construction, design, maintenance and repair of ships
  5. Disputes arising out of the sale and purchase of ships
  6. Civil claims arising out of marine pollution
  7. Marine or shipping-related agency, freight and multimodal transport and warehousing of goods at any port in Peninsular Malaysia
  8. Claims related to ship financing and documentary credit for the carriage of goods by sea
  9. Death or personal injury, loss or damage arising out of a marine activity in or about a marine facility, which includes ports, docks, berths or any form of structure defined as a 'ship' under maritime law
  10. Civil claims arising from any breach of any marine regulations, notices, by-laws, rules or guidelines
  11. Disputes pertaining to the welfare of any seaman, including wages and contract of service
  12. Applications in connection with maritime arbitrations, including applications for the preservation of assets pending maritime arbitration and the review, setting aside and enforcement of maritime arbitration awards
  13. Appeals in respect of a maritime claim determined by the Subordinate Courts.

The expanded jurisdiction allows for the specialist adjudication of the Admiralty Court to be applied to the shipping related activities such as marine insurance and freight forwarding and will spur the growth of the maritime connected activities which now has a important specialist venue for dispute resolution.

Invoking In Rem jurisdiction – Ship Arrest

The Admiralty Court accepts the filing of both in rem and in personam writs/actions. Under the expanded jurisdiction of the Admiralty Court the where the Defendant does own vessels or where the claim does not concern an unidentified vessel, the case can be initiated by the filing of an in personam writ. Where the claim involve a substantial Malaysian ship-owner, the filing of an in personam action will be sufficient as there would be adequate resources within jurisdiction to levy execution without a ship arrest.

A distinct feature of the Admiralty Court and Admiralty jurisdiction is the invocation of the Court's admiralty jurisdiction. This is invoked whenever any party intends to proceed with the arrest of a vessel. Traditionally this is applied for at the Court in the jurisdiction where the vessel is located. The Admiralty Court jurisdiction is not limited to the geographical jurisdiction of the Kuala Lumpur High Court, but is within the whole of Peninsular Malaysia and the Federal Territory of Labuan7. This allows for a case to be heard by the Admiralty Judge with specialist expertise in shipping matters instead of a generalist one outside of Kuala Lumpur.

Once arrested the Defendant who wishes to obtain the release of his ship will have to provide security in lieu of the arrested vessel8. If this is not provided then the Plaintiff can apply for the sale of the vessel pendente lite.

Arrest for Arbitration

Prior to the Arbitration (Amendment) Act 2011, a ship cannot be arrested/retained as security for a maritime dispute that is referred to arbitration, unless the Plaintiff can satisfy the court under the Rena K9 principles.

The position has since changed with the amendment of the Arbitration Act 200510. The Malaysian court that exercises admiralty jurisdiction is now empowered to order the retention of vessels or the provision of security, pending the determination of arbitration proceedings related to admiralty/maritime disputes.

Ship Collision cases

The International Regulations for Preventing Collisions at Sea 1972 is adopted in Malaysia as a schedule to the Merchant Shipping (Collisions Regulations) Order 198411.

One particular issue that arises from collision cases is the availability of tonnage limitation, which limits the liability of the ship-owner to an amount equivalent to the ship's tonnage12.

There has been an important development in the area of tonnage limitation. With the Merchant Shipping (Amendment and Extension) Act 2011, the applicable limitation regime is no longer the 'fault or privity' regime under the 1957 Limitation Convention but the 1976 Limitation Convention13. This brings the Malaysian regime in line with major jurisdictions such as England and Singapore.

Conclusion

The renowned shipping judge Lord Mustill said with respect of the practice of shipping law;

"The Law and practice of shipping law have always been closely entwined. There can surely be no other branch of commerce where the practical people know, and need to know, so much of the law; and where professionals know, and need to know, so much of the practice."

The Admiralty and Shipping Practice in Azmi & Associates is helmed by a practitioner of more than 25 years standing with practice experience in Singapore and in Malaysia as counsel, arbitrator and author of several practitioners' texts. We understand the industry and provide practical and practicable solutions. We are confident to be of service to the industry with unmatched technical expertise.

Footnotes

* The author is the Head of the Shipping, Insurance and International Trade Department at Azmi & Associates. He has over 25 years' experience in the specialist area and handles both contentious and non-contentious matters. He is an accredited arbitrator with the Kuala Lumpur Regional Centre for Arbitration and has appears at all levels of Malaysian Courts up to the apex Federal Court. He is also the author of Malaysian Forms and Precedents on Shipping, Insurance Claims, Wills and Trusts, Annotated Statutes on Sale of Goods Act, Merchant Shipping Ordinance, Merchant Shipping (Oil Pollution) Act, Collision Regulations, Halsbury's Laws of Malaysia on Shipping, Carriers ( Land, Air and Sea), Conflict of Laws, Equity, Bailment and Liens. He has previously practised in Singapore and has spoken at Industry conferences in Malaysia and abroad.

1. The author acted for the Plaintiff cargo owner in the case of the Istana VI [2011] 7 MLJ 145 the inaugural reported decision of the Admiralty Court, a claim against a shipowner for delivering cargo without presentation of original bills of lading.

2. In the 2014, Malaysia ranked No. 25 in exports and 24 in imports in terms of trade volume and growth in trade average 5 % year to year from 2005 to 2013. Source: WTO website.

3. The other specialist courts include the Intellectual Property Court and the Construction Court.

4. Under the vibrant leadership of its Director Datuk Professor Sundra Rajoo, the Kuala Lumpur Regional Centre had revised its existing rules to better adapt its rules to industry needs. The revamp of the KLRCA Fast Track Arbitration Rules took into account the requirements of the maritime industry.

5. Section 24(b) Courts of Judicature Act 1964 stipulates that the civil jurisdiction of every high court includes "the same jurisdiction and authority in relation to matters of admiralty as is for the time being exercisable by the High Court of Justice in England under the UK Supreme Court Act 1981". See the Malaysian Court of Appeal case of The Owners of the Ship or Vessel 'Siti Ayu' and 'Melati Jaya' v Sarawak Oil Palm Sdn Bhd ([2006] 1 MLJ 630

6. Under the Admiralty Practice Directions No.1 of 2012.

7. The author has arrested vessels outside of Port Klang with writs filed in the Kuala Lumpur / Admiralty High Court in ports such as Kemaman and Johor Bahru.

8. This can be provided in several ways vide a judicial bail bond, bank guarantee or P&I Club letter of undertaking.

9. See the case of The Rena K [1979] 1 All ER 379.

10. Vide the Arbitration (Amendment) Act 2011 which empowers the Malaysian court that exercises admiralty jurisdiction to order the retention of vessels or the provision of security, pending the determination of arbitration proceedings related to admiralty/maritime disputes.

11. PU (A) 438/94. Implemented vide the Merchant Shipping Ordinance 1952 (FM Ord No 70 of 1952) ss 250, 252. The Merchant Shipping (Collisions Regulations) Order 1984 is referred to as the 'collision regulations' under the Merchant Shipping Ordinance 1952 and makes provision with respect to the steps to be taken to prevent any collision involving a vessel and in consequence of any collision involving a vessel. The author has written the annotation for both the Merchant Shipping Ordinance and the Merchant Shipping (Collisions Regulations) Order 1984.

12. See Halsbury's Laws of Malaysia on Bailment, Lien and Limitation of Liability written by the author.

13. The Convention on Limitation of Liability for Maritime Claims 1976 as amended by the Protocol of 1996.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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