Establishment of an Admiralty Court: A key ingredient in making Malaysia a globally competitive maritime nation. Nazery Khalid Amy Aai

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1 Establishment of an Admiralty Court: A key ingredient in making Malaysia a globally competitive maritime nation Nazery Khalid Amy Aai A glaring omission Malaysia has many features that have contributed to its impressive achievements in maritime activities such as merchant shipping, port operations and offshore oil and gas exploration and production. It has, in MISC Bhd, the world s largest owner/operator of LNG tankers. Port Klang and Port of Tanjung Pelepas were ranked as the 15 th and 18 th largest container ports in 2009 by way of container throughput handled. For a nation like Malaysia which is strategically located along the world s busiest shipping lanes and in waters hosting many economic activities, the absence of a specialised court to hear admiralty disputes has long been a glaring omission among the ingredients that make a maritime nation competitive. It was a long-standing grouse of maritime players that these activities had not been backed by an institutional framework commensurate with Malaysia s position as a leading maritime nation. This resulted in Malaysia being shunned by many parties in the maritime sector, including local parties, who preferred to hear disputes in jurisdictions like Singapore and Hong Kong which have dedicated Admiralty Courts. The admiralty practice in Malaysia is said to be weak as the Malaysian court system cannot effectively deal with maritime disputes due to their unique nature. Some of the weaknesses include the lack of knowledge and familiarity with admiralty principles and procedures amongst judges and court staff, lack of uniformity among the courts and excessively delays. A MIMA research in 2004 identified that the apparent weakness of admiralty practice in Malaysia can be resolved through specialization in Malaysian courts. A study of admiralty courts of leading maritime jurisdictions such as the United Kingdom, Hong Kong, and Singapore, shows that specialization of the courts led to increased reliability and consistency which in turn encourages confidence amongst court users. Users of the court consist of a wide scope of players in the maritime and support services sectors including, inter alia, shipping companies, shippers, insurance companies, banks, and companies involved in the oil and gas sector. Having an Admiralty Court to provide a linkage between the maritime industry and the law is an essential support service that provides a much needed avenue for industry players and related parties to seek legal redress for maritime-related cases. 1

2 By forming an Admiralty Court to hear maritime-related cases that can ensure speed, efficiency, uniformity and quality judgments, Malaysia will be taking a major step forward in enhancing its reputation as a maritime nation and its attraction as a regional shipping hub. Support for an Admiralty Court The then Deputy Prime Minister, YAB Datuk Seri Mohd Najib Tun Abdul Razak had mentioned during a speech at the National Maritime Conference held in Kuala Lumpur in 2007 that the formation of the Admiralty Court would send a strong message to the maritime industry that Malaysia is serious about looking after the interests of shipping companies, shippers and other maritime industry players. Following this, the Admiralty Court was established on 30 th September 2010 as a specialist court within the Commercial Division of the High Court of Malaya in Kuala Lumpur. The Admiralty Court, helmed by qualified judges its own registry and properly trained staff, provides a specialized platform for parties involved in various maritime activities such as merchant shipping, port operations, shipbuilding and ship repairing, passenger shipping, offshore oil and gas, and ship financing, among many others, to seek legal redress for cases and disputes related to these activities in a fair, speedy and efficient manner. Such an institution provides one of the key success factors for globally renowned maritime centres and has made Singapore, Hong Kong and London the jurisdictions of choice for maritime cases and contributed significantly to making these centres attractive to shipping lines and other maritime players. The Admiralty Court is supported by an Admiralty Registry comprising of registrars, clerks and bailiffs, who are available outside of normal business hours in matters of urgency. The Admiralty Court will maintain the Registers of Central Admiralty Cause Book, Central Admiralty Caveat against Arrest Book and central Admiralty Caveat against Release Book. It will operate as a one stop centre to provide easy access to information on arrest, release and sale of vessels. Recognizing the urgency of admiralty and maritime matters, writs of summons in actions in rem, warrants of arrest and release from arrest shall be processed and issued within the day of filing and all applications or motions filed on an urgent basis will be heard immediately and disposed of within two months from the date of filing. The clearance target for the disposal of all claims filed in the Court is within 9 months from the date of filing and the same period from the date of service of the writ of summons for admiralty in rem cases. Effective 1 October 2010, admiralty and maritime cases falling within its jurisdiction will be registered with the Admiralty Court. Admiralty and maritime cases which are registered with other High Courts can be transferred to the Admiralty Court if the parties so agree. 2

3 Responding with speed and efficiency With the establishment of the Admiralty Court, the expectation of the users is for quick and efficient settlement of maritime disputes. This is not surprising given that to maritime industry players, time is money and speed and efficiency are crucial in their business. In this dynamic industry, any delays along the supply chain could be costly to their business. Take, for example, it would be of priority for shippers of perishable goods to get quick judgment to give clearance for a ship arrested for contractual non-compliance to set sail. The shipowner in question would also stand to suffer from losses arising from missed connections, not to mention of loss of opportunity for not having his vessel deployed. Without an Admiralty Court, there would be delays to get the cargos and vessel moving. To shippers and shipping lines which operate in a fiercely competitive environment, such uncertainty is simply unacceptable. As shipping traffic volumes and activities in the maritime sector in and around Malaysia waters increase, there is bound to be more incidents such as collisions, grounding and breach of contracts. These cases will require quick and efficient resolutions among the parties involved. International shipping companies and parties involved in maritime activities have high expectations of countries where they do business to provide comprehensive maritime support services and an efficient legal framework. The absence of an Admiralty Court presented tremendous opportunity loss for Malaysia which would have long benefited from having a legal institution that could have contributed significantly to the growth of its maritime sector and its reputation as a maritime nation. The court s jurisdiction The admiralty jurisdiction of the High Court is prescribed by Section 24(b) of the Court of Judicature Act 1964, which adopts the admiralty jurisdiction in the United Kingdom, under sections 20 and 21 of the Supreme Court Act Admiralty procedure is provided under Order 70 of the Rules of the High Court and relevant practice directions. Admiralty jurisdiction and procedures remain unchanged with the set up of the Admiralty Court. The Admiralty Court will hear admiralty matters as prescribed by Section 20 of the Supreme Court Act 1981, i.e., those pertaining to possession or ownership of ships or shares in a ship; possession, employment or earnings of a ship as between co-owners of a ship; mortgage of or charge on a ship or share in a ship; damage received by a ship; damage done by a ship; loss of life or personal injury sustained in consequence of a defect in a ship or neglect of persons in control of ship; loss or damage to goods carried on a ship; any agreement relating to the carriage of goods on a ship or to the use or hire of a ship; salvage of a ship; towage of a ship; pilotage of a ship; goods or materials supplied to a ship for her operation or maintenance; construction, repair or equipment of a ship or dock charges or dues; master or crew s wages; master or agent s 3

4 disbursements made on account of a ship; general average; bottomry; forfeiture or condemnation of a ship or goods carried in a ship. In addition to the regular admiralty jurisdiction above, the following maritime-related cases are also to be heard by the Admiralty Court: claims relating to transaction of international trade and commerce; limitation actions; marine insurance and reinsurance including marine and shipping agency and brokerage matters; civil claims arising out of marine pollution; marine related agency, multimodal transport and warehousing; claims related to ship financing and documentary credit for the carriage of goods by sea; death or personal injury, loss or damage arising out of a marine activity in or about a marine facility; marine regulation and compliance; and disputes pertaining to the welfare of seamen. In relation to arbitration, interim applications for the preservation of assets pending final arbitration awards, disputes on appointments of arbitrators; the review, setting aside and enforcement of maritime awards will also be heard by the Admiralty Court. The specific inclusion of marine insurance and reinsurance cases, and civil claims arising out of marine pollution in the list above are particularly welcomed as it recognizes the close nexus between shipping and insurance and reflects Malaysia s commitment towards protecting the marine environment. Conclusion The establishment of the Admiralty Court is essentially an administrative arrangement which does not create an expansion of procedural rights enabling a wider class of litigants to avail themselves of the advantages of in rem proceedings. The substantive law pertaining to admiralty jurisdiction and the rules of procedure remain unchanged. Despite this, it is nonetheless a step towards the development of an admiralty jurisdiction which is comprehensive, accessible and consistent with Malaysia s needs as a maritime nation and which is in line with international standards of civil jurisdiction over ships. There is no doubt that the establishment of the court will make Malaysia a more attractive jurisdiction to resolve maritime disputes. The presence of an Admiralty Court that can hear and judge maritime disputes speedily and efficiently will not only elevate Malaysia s status as a maritime jurisdiction of international reputation but will also generate tremendous value-adding business opportunities that can contribute to the growth of the nation s maritime sector. By setting up an Admiralty Court, Malaysia will be taking a major step forward towards fulfilling its aspiration to become a regional shipping hub and a globally competitive maritime nation. 4

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