Mandatory injunction requiring surrender of possession of an oil tanker

Charles Holroyd

[2018] EWHC 2790 (Comm)

Charles Holroyd (instructed by Reed Smith LLP) acted for the Security Trustee under a Loan Agreement and successfully obtained an interim injunction requiring Fire Navigation Inc (“Owners”), owners of the m.t. “MEGACORE HONAMI” (“the Vessel”), to surrender possession of the vessel.

The Security Trustee’s case was that the Owners had defaulted under the Loan Agreement.   If that were correct, it would mean that the Security Trustee was entitled to possession of the Vessel under a ship mortgage and a General Assignment.  However, 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 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, Charles successfully applied on Saturday 22 September 2018 on behalf of the Security Trustee for an emergency interim injunction (against the Owners, managers and Master personally) requiring surrender of possession of the Vessel, now 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.

The Owners then applied at the return date to discharge the injunction, both 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.

The case is 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.

Please view the judgment here.

Date added: October 30th, 2018


Area of Expertise

Banking & Finance
Injunctions
Shipping, Admiralty & Transport