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Increased Ship Arrests And Sheriff Sales?
March 2010 | Finance | Maritime | Litigation & Arbitration | Maritime | Multidisciplinary Practices | Maritime | Starboard

Lawyers consider Singapore to be an "arrest friendly jurisdiction" and expect arrest work to increase in 2010. This year, cash strapped shipping companies continue to struggle with their finances and parties in dispute, particularly those relating to charterparty contracts, will continue to seek alternatives to Rule B attachments in New York courts for security.

In 2009, 24 vessels were sold through sheriff sales and 86 vessels were arrested, compared to the one ship sold and 63 ships arrested for all of 2008 (for tabulated figures from 2005 to 2007, see below).

Notwithstanding this increase, Rodyk & Davidson LLP partner Lawrence Teh suspects the number of arrests would have been higher if the banks had enforced their ship mortgages. Instead of calling in their loans, he believes the banks decided to restructure their financing and security arrangements with shipowners. Should conditions in 2010 continue to be tough, Mr Teh expects this leniency to change. Other practitioners similarly anticipate that the floodgates may yet open.

Shipowners and operators also faced extreme difficulties and sought bankruptcy protection. An example of this would be the case of dry bulk shipping operator Armada, which forecasted a S$2 billion annual turnover and profits of approximately S$350 million before the freight market collapsed in late 2008. In January 2009, it used a scheme of arrangement as bankruptcy protection from its creditors.