The easing of the Covid-19 restrictions on dining in meant that we can finally meet in person and sit down for a meal together. Despite the advances of virtual meetings, nothing beats having in-person meetings for ideas to flow, and it was during a lunch between M Jagannath (Jagan) of NAU Pte Ltdiand Joseph Tan of JLex LLCii one day that we had a lively discussion on whether the position under Singapore law following the case of NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another [2018] 2 SLR 588 is better, or is the position under English law preferable.
We have decided to pen a joint article in the form of a debate, with Joseph Tan arguing that the position under Singapore law is better, and with Jagan arguing that English law is preferable in the context of a claim by cargo interests against the shipowner for damage to cargo.
By way of background, the holding in the NTUC Foodfare case is that proprietary interest was not necessary for the plaintiff to sue for substantive damages in the tort of negligence as pure economic loss is claimable under Singapore law, where the Singapore Court of Appeal expressly rejected the English case of The Aliakmon [1986] AC 785.
Singapore law is better
The position in Singapore has evolved in accordance with the changes in modern legal jurisprudence and changing commercial needs.
It has been shown in a number of cases where the party who actually suffered the loss arising from damage to the cargo, may not be the person who has proprietary interest in the cargo. If we are to apply the position under The Aliakmon, the end result is that the tortfeasor gets off without having to compensate the innocent party for his loss simply because the innocent party does not have proprietary interest in the cargo at the time of damage.
Take for instance a situation where a shipper sells goods to the consignee, and after receipt, the consignee discovered that the goods were partly damaged due the carrier’s failure to take care of the goods during the voyage. Instead of claiming against the carrier, the consignee may choose to claim against the shipper based on provisions in their contract of sale and deduct an amount equivalent to the value of the damaged portion of goods.
In such a situation, the one with proprietary interests in the goods has suffered no loss since his loss has been compensated for, whereas the one who suffered the loss is prevented from claiming against the carrier simply because he does not have proprietary interest in the goods. This would result in an unfair situation.
By delinking the right of suit with proprietary interest, it gives the law far more flexibility to do justice in the appropriate situation and the Courts are not bound by archaic rules.
On the other hand, we would submit that the de-linking of proprietary interest in the goods and the right of suit does not unfairly prejudice the carriers.
One needs to remember that if the goods were damaged by the carrier due to its negligence, logically the carrier ought to compensate the person who suffered the loss arising from the carrier’s negligence. There is nothing unfair or prejudicial to the carriers about this.
The prejudice, if any, to the carriers is that there may be some degree of uncertainty as to who is entitled to sue for damage to cargo arising from the carrier’s negligence. Previously the carrier’s claim handlers could simply reject any claims unless the claimant is the holder of the bills of lading. Now the claim handlers would have to be a bit more careful in examining the claims being submitted to determine if the claimant has the legal right to sue.
While this might create some additional burden for the carrier’s claim handlers, perhaps a better perspective may be that this evolution in the law may encourage carriers to look into their operations more carefully and try to avoid any negligent damage to cargo in future.
Finally, Singapore law has evolved since the case of Spandeck which was the precursor to the NTUC Foodfare case where the Singapore courts expressly departed from the English position excluding claims for pure economic loss due to the defendant’s negligence and this departure applies to all negligence claims. The question here is why should cargo claims be treated any differently from other types of negligence claims?
Thus, we think Singapore law is better as it allows the person who actually suffered the loss to recover for his loss without having to link his loss to his proprietary interest in the goods damaged.
English law is better
Singapore has indeed positioned itself as a jurisdiction which one could consider dealing with their maritime disputes (given that I am in this sector, my thoughts are focused on this industry). In this regard, Singapore has a very responsive judiciary, a legislature moving with the times, and which has resulted in the positive development of the Singapore International Commercial Court, two very active arbitration institutions i.e., Singapore International Arbitration Centre and Singapore Chamber of Maritime Arbitration (which is more focused on maritime matters) and two mediation institutions, the Singapore International Mediation Centre (focused on International matters) and Singapore Mediation Centre (the older brother, so to say and who are involved in all matters and have a bigger share in the domestic market). If Singapore wishes to grow the maritime dispute resolution pie, the changes should not be radical to shake up the process as has been caused by the recent Singapore judgements mentioned above.
While we take your fair point on the requirement on proprietary interest in the cargo at the time of damage to be entitled to claim under English law, this issue has been resolved by the Carriage of Goods by Sea Act 1992 (the Singapore Bills of Lading Act 1992 is similarly worded). Basically the new Act (COGSA 1992) introduced a different scheme of liability disconnected from the passing of property, and related to the endorsement of the bill of lading or otherwise.
The issue is simply this is that based on Singapore Law, cargo interests can pursue the Carrier without necessarily providing the “Title” to sue i.e. the B/L and for pure economic loss. While we have no issues on the pure economic losses given that the claimable amount would hopefully be dealt by Art IV 5(b) of the Hague Visby Rules which are invariably applicable by the force of law or by contractual incorporation or through a clause in the Liner Bills of Lading which exclude consequential lossiii, our concern is more on dealing with parties who have no contractual relationship (which is no longer necessary under Singapore Law) and which would mean that the Carrier will be unable to rely on the Bill of Lading terms including either the Himalaya or the Circular Indemnity Clause. This is a unhappy situation given that as and when more disputes are dealt by the Singapore Courts, there would be an increase in the costs of dealing with the claim and at the same time increased pay-outs (as the old order may no longer hold good). This may therefore result in the Carriers taking a conscious decision of avoiding the incorporation of Singapore Law (and which is what I would wish to recommend i.e. Singapore Law but regretfully am unable to do so for Shipping matters). This being the case, on this issue, it does appear to me that it is beneficial for Carriers to consider English instead of Singapore Law.
Given the importance of the maritime trade to Singapore, Singapore should reconsider the development of tort law and perhaps amendments be made in Singapore law for the requirement of the Bills of Lading in order to pursue Cargo claims. Having said that, while we recommend the use of English Law for Contracts of Carriage, we still continue to recommend Singapore as the choice of jurisdiction given that the Singapore Courts are able to hear matters under English Law.This is obviously an advantage which Singapore has over other jurisdictions given that parties can hear contractual disputes under English Law and expenses need not be incurred to seek expert evidence on a point of English Law if argued in the Singapore courts.
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Joseph Tan is the Managing Director of JLex LLC and specializes in shipping and international trade disputes. Joseph can be contacted at joseph.tan@jlex.com.sg.
Jagan is the Director of NAU Pte Ltd and which specialises on Transport Liability, P&I and H&M Claims. He can be contacted at Jagan@nau.com.sg
i. https://nau.com.sg
ii. https://jlex.com.sg
iii. See Clause 8.1 of the Maersk Bills of Lading Terms and Conditions and which can be viewed at https://terms.maersk.com/carriage
Disclaimer: This article is for general information only and not intended to constitute legal advice. We shall not be liable for any errors or omissions, nor shall we be liable for reliance on the contents of this article.