High Court (Admiralty Jurisdiction) (Amendment) Bill

Order for Second Reading read.

5.20 pm

The Senior Minister of State for Law (Mr Edwin Tong Chun Fai) (for the Minister for Law): Mr Deputy Speaker, on behalf of the Minister for Law, I beg to move, “That the Bill be now read a Second time.”

Sir, this Bill complements Singapore's upcoming accession to the International Convention on Salvage 1989, or the Salvage Convention. The Merchant Shipping (Miscellaneous Amendments) Act was passed last year, to implement the Salvage Convention. To-date, 72 countries have ratified the Salvage Convention. A key aspect of the Salvage Convention is the introduction of special compensation. These are compensation for claims arising from salvage operations.

Special compensation claims allow a salvor to be compensated for salvage operations to prevent or minimise environmental damage, even if the salvor did not save the vessel or its cargo. This differs from traditional salvage claims dealt with under an earlier convention adopted in Brussels in 1910, where salvors are only awarded if the salvage of the vessel or its cargo was successful. This Bill expands the High Court's admiralty jurisdiction to cover special compensation claims that arise under the Salvage Convention, or by way of contract. Currently, the High Court's admiralty jurisdiction covers only traditional salvage claims.

By placing special compensation claims on the same footing as traditional salvage claims, this Bill further incentivises salvors to protect the environment and keeps Singapore abreast with other signatories to the Salvage Convention, including the UK and Hong Kong, who have also made similar amendments to their own admiralty jurisdiction.

Mr Deputy Speaker, this is a short Bill. I will highlight the key amendments very quickly.

Clause 2 amends the current section 3(1)(i) of the Act, which relates to salvage claims. Clause 2 provides that the High Court's admiralty jurisdiction includes any claim arising under the Salvage Convention. This includes Article 14 of the Salvage Convention, which provides for special compensation. It also provides that the High Court's admiralty jurisdiction covers contractual claims relating to salvage services. This includes contractual clauses that provide for special compensation, such as the Special Compensation Protection and Indemnity clause. Finally, it provides that the High Court's admiralty jurisdiction covers any other claim in the nature of salvage. This ensures that all salvage claims previously covered by admiralty jurisdiction continue to be covered. Clause 2 also preserves the principle that there is parity in treatment of claims arising from salvage operations in respect of both ships and aircraft.

Clause 3 of the Bill repeals section 176 of the Merchant Shipping Act, which provides that the High Court has jurisdiction to decide all claims relating to salvage. This provision is a historical anachronism and is unnecessary. The High Court (Admiralty Jurisdiction) Act already provides for admiralty jurisdiction over salvage-related claims and it should be the single piece of legislation dealing with this issue.

Sir, this Bill updates our maritime legal framework in line with international practice and will pave the way for Singapore's accession to the Salvage Convention. With that, Mr Deputy Speaker, I beg to move.

Question proposed.

5.27 pm

Mr Christopher de Souza (Holland-Bukit Timah): Sir, Singapore is a port city. Situated in a strategic geographical location with strong supporting networks comprising professional services, marine technology and logistical solutions, Singapore was ranked as the leading maritime capital of the world in 2019.

Singapore has taken active steps to accede to the International Convention on Salvage. The Merchant Shipping (Miscellaneous Amendments) Act 2019 enacted the International Convention on Salvage. While that Act paved the way for the substantive law, it is this Bill deals with the jurisdiction of the High Court with respect to salvage claims.

Salvage operation refers to any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever. The party doing the salvage operation is known as a salvor. Situations that give rise to the need for salvage are varied, for example, grounding, fire, collisions, engine failure, structural failure and sinking.

Previously, the 1910 Brussels Convention for the Unification of Certain Rules of Law respecting Assistance and Salvage at Sea, salvors would only be rewarded if they were successful. However, this did not adequately recognise the skills and efforts of salvors who prevented or minimised environmental damage, providing little incentive for riskier salvage operations. An example is where a major pollution incident was avoided by towing a damaged tanker away from an environmentally sensitive area of where the ship or cargo could not be salvaged.

In light of this, the 1989 International Convention on Salvage introduced something called "special compensation". This provided some reward to salvors who prevented or minimised environmental damage even though they were unsuccessful in saving the ship or the cargo. While the Merchant Shipping (Miscellaneous Amendments) Act 2019 enacted the law that allowed such claims in Singapore, it is this Bill that will extend the Singapore High Court's admiralty jurisdiction to include such salvage claims. Therefore, this law is important and I support it because it will further incentivise and encourage ships at sea to help fellow ships in distress to reduce environmental damage within the seas and oceans. Reduction of environmental damage to the seas and oceans are key and we should support such a reduction. Hence, I am supportive of this Bill.

This Bill has two operative clauses – clauses 2 and 3. Sir, at this stage, please allow me to declare that part of my practice as an advocate and solicitor includes admiralty disputes.

Clause 2 is the clause that expands section 3(1)(i) of the High Court (Admiralty Jurisdiction) Act to provide for salvage claims under the 1989 International Convention on Salvage. The way the relevant provision has been restructured sets out more clearly what is covered. Flowing from this restructuring though, would the Minister please clarify if there is any other difference in the admiralty jurisdiction of the High Court over salvage claims besides the addition of salvage claims under the Convention?

By allowing special compensation claims in the Singapore High Court, our High Court will have an expanded jurisdiction over a variety of claims in admiralty law and places it in a good position to administer justice on admiralty claims. This furthers Singapore's position as a dispute resolution hub, particularly in the admiralty law practice.

In the press release on MinLaw's website on this Bill dated 4 May 2020, paragraph 3 states and I quote, "By placing special compensation claims on the same footing as traditional salvage claims, the Bill incentivises salvors to protect the environment during salvage operations". Would the Minister please clarify whether the statement that special compensation claims are placed on the same footing as traditional salvage claims is to be understood only in the context of High Court admiralty jurisdiction and not, for instance, the ranking of a maritime lien? Would the Minister please also elaborate how having a High Court jurisdiction over special compensation claims impacts salvors and incentivises them to protect the environment? Further, would the Minister be able to explain whether the introduction of special compensation might translate into a better marine environment near Singapore shores?

Clause 3 repeals section 176 of the Merchant Shipping Act which provides for the jurisdiction of the High Court over salvage claims in addition to section 3(1)(i) of the High Court (Admiralty Jurisdiction) Act. By locating all relevant provisions under the same Act, clause 3 tidies our statute book and makes the law clearer.

In conclusion, Sir, this Bill supports and supplements the Merchant Shipping (Miscellaneous Amendments) Act 2019 in preparing Singapore for accession to the 1989 International Convention on Salvage. That Convention more adequately reflects the service that salvors do and incentivises salvors to protect the environment. This Bill furthers and strengthens Singapore as a maritime dispute resolution hub and a key maritime capital in the world and, therefore, I support this Bill.

Mr Deputy Speaker: Mr Dennis Tan.

5.35 pm

Mr Dennis Tan Lip Fong (Non-Constituency Member): Mr Deputy Speaker, I declare my interest as a shipping lawyer in private practice.

The High Court (Admiralty Jurisdiction) Act sets out the Admiralty jurisdiction of our High Court. A robust admiralty law and regime is always important to a major international maritime hub. Singapore is one of the major maritime hubs in the world alongside Hong Kong and London.

One other advantage we have had for many years is that we have one of the busiest ports in the world and many ships stop by for bunkering, transhipment or other services. Many ships also passed by Singapore en route to ports elsewhere in the world. A busy port allows greater possibility of seizing jurisdiction for admiralty claims in our courts.

Mr Deputy Speaker, Sir, on 14 January 2019, I spoke at the Second Reading of the Merchant Shipping (Miscellaneous Amendment) Bill and supported the Bill. The Merchant Shipping (Miscellaneous Amendment) Act brought into force two key maritime conventions, one of which is the International Convention on Salvage of 1989.

Today, the proposed amendments to the High Court (Admiralty Jurisdiction) Act (HCAJA) are consequential to the adoption of the Salvage Convention in our laws. The HCAJA provides for the admiralty jurisdiction of the High Court. It essentially sets out the various maritime claims allowed under our admiralty law and how admiralty jurisdiction can be invoked for any claim and against any ship or any company or even individual.

The amendment Bill today proposes to extend the admiralty jurisdiction of the High Court to any claim for salvage which falls under the Salvage Convention of 1989 and also any contractual claim for salvage. It also provides that services rendered in saving life from a ship is made under the Salvage Convention and not under a previous provision.

Mr Deputy Speaker, Sir, at the Second Reading of the Merchant Shipping (Miscellaneous Amendment) Bill, I mentioned that the English House of Lords had in the case of the "Nagasaki Spirit" identified problems with the wording of Article 14 of the Convention. Essentially, it was decided that the term "fair rate" in Article 14 for environmental salvage only cover expenditure but does not include an element of profit.

I said we could address this issue in our law by including an extended definition of "damage to the environment" to any place where the damage may occur and the "fair rate" as referred to in Article 14 is deemed to include an element of profit, just like what South Africa did in their law. I was then disappointed that this was not taken up.

However, today, I am happy to note that, in the explanatory note to today's amendment Bill, it has been explained that the existing coverage under section 3(1)(i) has been expanded to, and I quote:

"(a) Any claim under the Salvage Convention, including Article 14 of the Convention which relates to the entitlement of a salvor that has carried out salvage operations in respect of a vessel which by itself or its cargo threatened damage to the environment, to special compensation where such salvage did not result in any vessel or other property being salved;

(b) Any claim under a contract for salvage services to carry out any salvage operation to prevent or minimise damage to the environment, even where such salvage operation did not result in any ship, apparel, cargo or wreck being salved."

I welcome these inclusions not just because they are consistent with the Salvage Convention. More importantly, they encourage salvors to carry out salvage work on a vessel which by itself or its cargo threatened damage to environment or to prevent or minimise damage to environment even when the salvage work did not result in the ship or cargo being salved. In this way, salvors will not be motivated solely by or pressured merely by the need to achieve a positive salvage in terms of the ship or cargo. This will encourage salvors to place significant consideration on possible damage to environment or to mitigate such damage.

This is consistent with environmental concerns of the international community which developed in the last 30 years as a result of the huge damage to environment caused by numerous notorious cases like the Exxon Valdez, the Erika, the MSC Prestige and which also led to changes in the United Nations Convention on Law of the Sea and the International Convention on Civil Liability for Oil Pollution Damage. Mr Deputy Speaker, Sir, I support this Bill.

Mr Deputy Speaker: Senior Minister of State for Law.

5.39 pm

Mr Edwin Tong Chun Fai: Mr Deputy Speaker, I thank Mr de Souza and Mr Tan for their support of this Bill and also for the comments and suggestions that have been raised.

Let me address the questions raised directly.

Mr de Souza asks if the Bill change the High Court's admiralty jurisdiction over salvage claims, other than adding claims currently proposed under the Salvage Convention.

The answer is no. The Bill expands the High Court's admiralty jurisdiction to also cover special compensation claims that arise under contract, such as under the Lloyd's Open Form SCOPIC clause. But in other respects, the jurisdiction of the High Court is preserved.

Mr de Souza also asked about ranking and whether the Bill provides for special compensation claims to enjoy a maritime lien.

The Bill does not do so and let me explain this. My Ministry has studied this and consulted with maritime law experts. We eventually opted not to confer a maritime lien on special compensation claims, in view of admiralty law principles and also international practice.

Today, the common law grants traditional salvage claims a maritime lien because property has been saved, either the vessel itself or the cargo. And this in turn ensures that there are assets from which all other claims can then be paid. This rationale, however, does not apply or may not apply to special compensation claims, because these claims arise in situations where possibly, neither the vessel nor the cargo has been saved.

We also considered international practice on whether these claims are given a ranking of a maritime lien.

Jurisdictions like the UK and Hong Kong, who have similarly expanded their admiralty jurisdiction laws to cover special compensation claims, have not provided legislatively for such claims to be conferred a maritime lien.

The 1993 International Convention on Maritime Liens and Mortgages, which 19 countries have acceded to, also does not provide for special compensation claims to give rise to maritime liens.

For these reasons, the Bill does not confer a lien on such claims.

Both Mr de Souza and Mr Tan touched on the impact that this Bill has on the environment. Mr de Souza asked, in particular, how this Bill might incentivise salvors in the context of environmental protection.

Ultimately, this incentivises salvors undertaking a rescue or salvage of a vessel even when the prospects of saving the vessel or the goods are remote or it is inherently risky because it allows compensation for these claims, thereby encouraging them to help either to salvage the remains or to move the vessel into another location which is less environmentally damaging.

Today, salvors commonly obtain security to satisfy their special compensation claims through the relevant P&I clubs.

This Bill provides an additional avenue for obtaining security for such claims. This avenue may be needed where contractual arrangements for security are absent, or could perhaps, in some cases, be inadequate. By broadening the range of enforcement options available, this amendment gives salvors greater assurance of compensation when they undertake operations to protect the environment.

Mr de Souza asked how the introduction of such claims might affect the eco-system of such projects and the environment near Singapore.

The mechanism of special compensation was created to ensure that salvors are incentivised to assist endangered vessels that might provide a threat to the environment. Mr de Souza might be aware that under the Salvage Convention, salvors who engage in salvage operations in any waters will be able to enforce special compensation claims in any proceedings brought before a Court or arbitral tribunal in Singapore. And the availability of such claims under our current framework will be a positive development for the marine environment, generally, and also for Singapore.

Sir, I believe I have addressed questions raised by Members. I thank both Members who have spoken and supported this Bill. I would like to say that this is one step taken towards updating Singapore's legislative framework governing admiralty jurisdiction and also, of course, maintaining a progressive legal framework for the maritime industry. Mr Deputy Speaker, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Edwin Tong Chun Fai].

Bill considered in Committee; reported without amendment; read a Third time and passed.