PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT / LITIGATION PRIVILEGE This memorandum is protected by attorney-client privilege and the work product doctrine. It is prepared in anticipation of litigation and for the purpose of providing legal advice. Any disclosure, copying, or distribution of this memorandum or any action taken or omitted to be taken in reliance upon it is prohibited without the prior written consent of Calderwood & Harkness LLP.
CALDERWOOD & HARKNESS LLP 45 Moorgate, London EC2R 6AR Tel: +44 (0)20 7429 8800
MEMORANDUM
TO: Samuel Eklund, Responsible Partner Patrick Gallagher, Working Associate
FROM: Hannah Brinkley, Lead Associate
DATE: 27 September 2024
RE: Judicial Sale Process — M/V Crimson Horizon (IMO 9801334) — Singapore High Court (Admiralty Division)
MATTER: Thalassa Shipping & Logistics SA v. Korinthian Maritime Holdings Ltd. — Enforcement of LCIA Award No. 224718
RELATED PROCEEDINGS: OS No. 872/2024 (Singapore High Court); CL-2024-000487 (Commercial Court, England & Wales)
CLASSIFICATION: Privileged and Confidential — Attorney Work Product / Litigation Privilege
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1. Purpose and Summary
The purpose of this memorandum is to analyze in detail the procedure, timeline, and practical considerations for the judicial sale of M/V Crimson Horizon (IMO 9801334) following her arrest in Singapore waters on 20 August 2024, and to outline the steps required to bring the vessel to sale and distribute the sale proceeds toward satisfaction of LCIA Award No. 224718. This memorandum is intended to serve as a comprehensive working guide for the team at Calderwood & Harkness LLP ("C&H"), for our local counsel Straits Meridian LLP in Singapore, and as a briefing document for our clients at Thalassa Shipping & Logistics SA ("TSL").
By way of summary, TSL is the award creditor under the Final Award dated 28 June 2024 rendered by the tribunal in LCIA Case Reference No. 224718 in the total principal amount of £96,450,000, together with costs of £12,150,000 and post-award interest accruing at a rate of 5.25% per annum simple from 29 June 2024. The grand total of the Award and Costs is £108,600,000. The vessel was arrested by the Sheriff of the Supreme Court of Singapore on 20 August 2024, acting pursuant to an in rem writ of summons issued by the Singapore High Court (Admiralty Division) on behalf of TSL. Leave to enforce the LCIA Award in Singapore was granted by the Singapore High Court on 6 September 2024 in OS No. 872/2024. To date, Korinthian Maritime Holdings Ltd. ("KMH") has not offered any form of security for the vessel's release, nor has KMH or its subsidiary Korinthian Bulkers (Singapore) Pte. Ltd. made any application for the vessel's release from arrest. We understand from Straits Meridian LLP that neither KMH nor the registered owner has communicated any intention to provide security or satisfy the Award.
The key conclusion of this memorandum is that the judicial sale process in Singapore is well-established and relatively efficient. It is expected to take approximately two to three months from the date of the application for appraisement and sale through to completion and distribution of proceeds. We have instructed Northcape Maritime Advisory Ltd. to provide an independent valuation of M/V Crimson Horizon on both a fair market value and forced sale value basis. The estimated recovery from the vessel sale will contribute materially to the overall multi-jurisdictional enforcement campaign being conducted by C&H on behalf of TSL. The proceeds of the sale will not, by themselves, be sufficient to satisfy the Award in full, but they represent a significant component of the overall recovery strategy. The team should now move expeditiously to file the application for appraisement and sale in order to minimize the period during which maintenance costs accrue and to secure the best possible sale outcome in current market conditions.
2. Background
2.1 The Underlying Award
The arbitration giving rise to the present enforcement proceedings was conducted under the auspices of the London Court of International Arbitration ("LCIA") under LCIA Case Reference No. 224718. The arbitration was seated in London and governed by English law, both as to the substance of the disputes and the law of the arbitration. The underlying disputes arose out of a series of charterparty agreements between TSL, as disponent owner and head charterer, and KMH (and its associated vessel-owning subsidiaries), as registered owners and charterers, in respect of three vessels: M/V Aegean Fortuna, M/V Crimson Horizon, and M/V Volga Spirit.
The tribunal was constituted as follows:
• Presiding Arbitrator: Sir Malcolm Fenton-Clarke
• Co-Arbitrator (Claimant-nominated): Professor Athena Drakopoulos
• Co-Arbitrator (Respondent-nominated): Dr. Henrik Dalmqvist
• Tribunal Secretary: Fiona Beckett
The tribunal issued its Final Award on 28 June 2024 in the total principal amount of £96,450,000, comprising the following heads of damage:
(a) M/V Aegean Fortuna damages (wrongful early redelivery): £42,300,000
(b) M/V Crimson Horizon damages (outstanding hire of £4,280,000 plus loss of bargain of £23,870,000): £28,150,000
(c) M/V Volga Spirit restitution (fabricated off-hire deductions): £2,740,000
(d) Loss of profit / market differential across the fleet: £16,480,000
(e) Pre-award interest: £6,780,000
The tribunal further ordered that costs be allocated 85% to KMH, resulting in a costs award in the total amount of £12,150,000, comprising LCIA institutional costs of £3,240,000 and TSL's legal costs of £8,910,000.
The aggregate amount of the Award and Costs is therefore £108,600,000. Post-award interest accrues at a rate of 5.25% per annum simple on the principal sum of £96,450,000 from 29 June 2024 until the date of payment. As of the date of this memorandum, approximately three months of post-award interest have accrued, representing an additional sum in the region of £1,265,000.
It is noteworthy that the damages awarded in respect of M/V Crimson Horizon alone total £28,150,000, which exceeds the estimated market value of the vessel itself. This is because the loss of bargain component reflects the difference between the contracted hire rate and the prevailing market rate over the remaining unexpired period of the charterparty at the date of KMH's repudiatory breach, at a time when the dry-bulk market had experienced a significant upturn.
2.2 The Vessel — M/V *Crimson Horizon*
The relevant vessel particulars are as follows:
The beneficial ownership chain of M/V Crimson Horizon has been established through the asset tracing work conducted by Hartwell Pemberton LLP in coordination with Patrick Gallagher at C&H. The chain is as follows:
• Registered Owner: Korinthian Bulkers (Singapore) Pte. Ltd. (Singapore-incorporated special purpose vehicle)
• Intermediate Holding Company: Oceangate Ventures Ltd. (Cyprus, Registration No. HE 401293)
• Parent Company / Award Debtor: Korinthian Maritime Holdings Ltd. (Cyprus, Registration No. HE 387421)
• Ultimate Beneficial Owner: The Volkov family, principally through BVI and Cypriot holding structures, with Mr. Andrei Volkov as the ultimate beneficial owner and de facto director of KMH.
This beneficial ownership structure is significant for the purposes of the arrest and judicial sale, as it underlies the application of the associated ship doctrine under Singapore law (discussed further at Section 3.3 below). A separate C&H memorandum on the beneficial ownership of M/V Crimson Horizon has been prepared by Patrick Gallagher with input from Hartwell Pemberton LLP, and is appended as Appendix F for cross-reference.
M/V Crimson Horizon was one of the three vessels at the center of the charterparty dispute. Hire payments on this vessel ceased from 1 July 2022 onward, with arrears of £4,280,000 having accrued before TSL withdrew the vessel from KMH's service on 15 September 2022 following KMH's persistent failure to pay hire. The vessel was redelivered to TSL's order but subsequently returned to KMH's operational control when TSL was unable to find alternative employment at the then-prevailing market rate. The vessel has since been trading in the spot market under the operational management of Korinthian Bulkers (Singapore) Pte. Ltd.
2.3 Arrest of the Vessel
M/V Crimson Horizon was arrested on 20 August 2024 by the Sheriff of the Supreme Court of Singapore. The arrest was effected while the vessel was at anchorage in Singapore waters, having arrived in the port of Singapore for bunker replenishment during a voyage from Gladstone, Australia, to Mundra, India, with a cargo of thermal coal.
The arrest was executed on behalf of TSL, acting through our Singapore local counsel, Straits Meridian LLP. The responsible partners and associates at Straits Meridian LLP handling this matter are:
• David Teo Wei Lin, Partner
• Priya Subramaniam, Senior Associate
Straits Meridian LLP, 1 Raffles Place, #44-01 One Raffles Place Tower 2, Singapore 048616
The basis for the arrest was an in rem writ of summons issued by the Singapore High Court (Admiralty Division), filed in support of the enforcement of LCIA Award No. 224718. The arrest proceeded under the associated ship doctrine established under the High Court (Admiralty Jurisdiction) Act (Cap. 123), which permits the arrest of a vessel owned by a related entity — in this case, Korinthian Bulkers (Singapore) Pte. Ltd. — where the underlying claim lies against the parent or beneficial owner, KMH. The legal basis for invoking the associated ship doctrine in these circumstances is set out in the separate C&H memorandum on beneficial ownership referenced above.
The arrest was confirmed to C&H by email from David Teo Wei Lin dated 20 August 2024 (Appendix B). A copy of the in rem writ of summons is annexed at Appendix A. Since the date of arrest, KMH has not provided security for the release of the vessel, nor has Korinthian Bulkers (Singapore) Pte. Ltd. made any application for the vessel's release. We understand from Straits Meridian LLP that no communication has been received from KMH, the registered owner, or their legal advisors in Singapore concerning the arrested vessel. The vessel's P&I Club (Gard) has likewise not communicated any intention to post security on behalf of the registered owner.
2.4 Singapore Enforcement Proceedings
The application for leave to enforce the LCIA Award in Singapore was filed on 14 August 2024 in the Singapore High Court, designated as OS No. 872/2024. The application was made ex parte, supported by an affidavit from David Teo Wei Lin exhibiting the Final Award, the LCIA arbitration agreement, and evidence of service of the Award on KMH. The application was heard by the Honourable Justice Quentin Loh Sze On on 6 September 2024.
Leave to enforce the LCIA Award was granted on 6 September 2024. A copy of the order granting leave is annexed at Appendix C. The standard 14-day period for KMH to apply to set aside the leave order has now expired, and no such application has been made. Accordingly, the leave order is now final and enforceable.
In addition to the in rem arrest of M/V Crimson Horizon and the enforcement of the Award, parallel garnishee proceedings are underway in Singapore against Pinnacle Bank (Singapore) Ltd. (6 Battery Road, #20-01, Singapore 049909) in respect of bank accounts held by Korinthian Bulkers (Singapore) Pte. Ltd. These garnishee proceedings are being handled by Straits Meridian LLP and form part of the broader Singapore recovery efforts. The garnishee proceedings are at an early stage, and we await information from Pinnacle Bank on the balances held in the relevant accounts. The garnishee proceedings and the vessel sale proceeds together form the total Singapore recovery within the multi-jurisdictional enforcement campaign.
3. Legal Framework for Judicial Sale in Singapore
3.1 Governing Legislation and Rules
The judicial sale of arrested vessels in Singapore is governed by a well-established body of legislation, procedural rules, and judicial practice. The principal legislative and procedural instruments are as follows:
(a) High Court (Admiralty Jurisdiction) Act (Cap. 123) — This Act confers admiralty jurisdiction on the Singapore High Court and provides the statutory basis for the arrest and judicial sale of vessels. It sets out the categories of claims that may give rise to admiralty proceedings in rem, including claims arising out of agreements relating to the use or hire of ships, and claims for the enforcement of foreign arbitral awards.
(b) Rules of Court 2021 — The current procedural rules governing all civil proceedings in the Singapore High Court, including admiralty actions. The Rules of Court 2021 replaced the former Rules of Court (Cap. 322, R 5), under which admiralty proceedings were governed by Order 70. The Rules of Court 2021 consolidate and modernize the procedural framework, but the substance of the admiralty sale procedure remains substantially the same.
(c) Supreme Court of Judicature Act — This Act establishes the jurisdiction of the Supreme Court of Singapore, of which the High Court forms part, and provides the general framework for the administration of justice.
(d) Practice Directions of the Singapore High Court (Admiralty and Shipping) — The Registry of the Supreme Court of Singapore issues Practice Directions that supplement the Rules of Court and provide detailed guidance on the procedural requirements for admiralty actions, including the procedures for arrest, appraisement, sale, and distribution of proceeds.
The court has broad discretion to order the sale of an arrested vessel. Such a sale may be ordered either pendente lite — that is, pending the final determination of the underlying claim — or after judgment has been entered or, as in this case, after leave to enforce a foreign arbitral award has been granted. The threshold for ordering sale is generally met where the vessel has been arrested and the respondent or registered owner has not provided adequate security for its release, particularly where the arresting party holds an enforceable judgment or award.
3.2 Basis for Judicial Sale
The legal basis for the judicial sale application in this matter is straightforward. Where a vessel has been arrested in admiralty proceedings and no security has been provided for its release, the arresting party may apply to the court for an order for appraisement and sale of the vessel. The court will grant such an order where it is satisfied that the arresting party has an enforceable claim against the vessel and that the interests of justice are served by the sale.
In the present case, the grounds for sale are particularly strong:
(a) Leave to enforce the LCIA Award has already been granted in Singapore (OS No. 872/2024, dated 6 September 2024), and the time for applying to set aside the leave order has expired without any challenge by KMH. TSL therefore holds a final and enforceable order in Singapore.
(b) KMH has not offered or provided any form of security for the release of the vessel, nor has it made any application for the vessel's release.
(c) The vessel is incurring significant ongoing costs while under arrest, including crew wages, provisions, port charges, and insurance premiums. These costs are mounting daily and will ultimately be deducted from the sale proceeds.
(d) There is a risk of depreciation of the vessel's value the longer it remains under arrest and out of employment. Handymax bulk carriers are actively traded assets, and prolonged idleness can lead to deterioration in the vessel's physical condition, class status, and marketability.
The court may also order sale pendente lite where it is satisfied that the vessel is deteriorating, that maintenance costs are mounting disproportionately, or that there is a risk that the vessel will depreciate in value if the sale is delayed. While these pendente lite grounds are not strictly necessary in the present case — given that leave to enforce has already been granted — they provide additional support for the application and may be deployed in the event that KMH seeks to resist the sale.
3.3 Associated Ship Doctrine
The arrest of M/V Crimson Horizon proceeds under the associated ship doctrine provided for in the High Court (Admiralty Jurisdiction) Act (Cap. 123). This doctrine permits the arrest of a vessel owned by a company that is "associated" with the person who would be liable on the claim in personam — in this case, KMH, the party against whom the LCIA Award was rendered.
Under the Act, a company is "associated" with another company if the same person owns a majority of the shares in each company, or if the same group of persons owns a majority of shares in each company. The test focuses on beneficial ownership and control, looking through corporate structures to identify the ultimate controlling interest.
In this case, the relevant ownership structure is that Korinthian Bulkers (Singapore) Pte. Ltd. — the registered owner of M/V Crimson Horizon — is a wholly-owned subsidiary (through the intermediary Oceangate Ventures Ltd., Cyprus) of KMH, the Award debtor. Both companies are ultimately beneficially owned and controlled by Mr. Andrei Volkov through the Volkov family's BVI and Cypriot holding structures. The legal analysis supporting this conclusion is set out in the separate C&H memorandum on beneficial ownership prepared by Patrick Gallagher with input from Hartwell Pemberton LLP (Appendix F).
The associated ship doctrine is critical to the present proceedings because it provides the legal basis for proceeding in rem against M/V Crimson Horizon notwithstanding that the vessel's registered owner, Korinthian Bulkers (Singapore) Pte. Ltd., is not itself a party to the LCIA Award. Without the associated ship doctrine, TSL would be unable to proceed in rem against this vessel. Singapore law is well-developed in this area, and the Singapore courts have consistently applied the associated ship doctrine in enforcement proceedings involving one-ship company structures designed to insulate vessel-owning SPVs from the liabilities of their parent companies.
4. Application for Appraisement and Sale
4.1 Filing the Application
The application for appraisement and sale of M/V Crimson Horizon is to be made by summons within the existing admiralty action in the Singapore High Court. Straits Meridian LLP will prepare and file the application on behalf of TSL.
The application must be supported by an affidavit — to be affirmed by David Teo Wei Lin or Priya Subramaniam on behalf of TSL — setting out the following matters:
(a) The circumstances of the arrest of M/V Crimson Horizon, including the date and location of the arrest, the in rem writ of summons, and the Sheriff's return of service;
(b) The enforcement judgment and leave to enforce, including the order of the Singapore High Court dated 6 September 2024 granting leave to enforce LCIA Award No. 224718 in Singapore, together with a copy of the Final Award;
(c) KMH's failure to provide security for the vessel's release or to satisfy the Award in whole or in part, including confirmation that no communication has been received from KMH or the registered owner indicating any intention to post security;
(d) The ongoing costs of maintaining the arrested vessel, including crew wages, provisions, port charges, bunker costs, insurance premiums, and custodian fees, together with an estimate of the monthly costs and the total costs incurred to date since the arrest;
(e) The grounds justifying sale, including the absence of security, the existence of an enforceable award, the mounting maintenance costs, the risk of depreciation, and the interests of all parties (including the crew and any other creditors) in bringing the vessel to a prompt sale;
(f) Any further matters required by the Practice Directions or the Rules of Court 2021.
Straits Meridian LLP should file the application at the earliest practicable date. Given that the leave order is now final and enforceable, there is no procedural impediment to filing immediately. We recommend that the application be filed no later than the first week of October 2024.
4.2 Appraisement
Upon the filing of the application, the court will typically order an appraisement — that is, a formal valuation — of the vessel prior to ordering its sale. The appraisement serves the dual purpose of establishing the vessel's value for the purpose of setting a reserve price at auction and of ensuring that the court has reliable information on which to base its decision to order the sale and to supervise the sale process.
The procedure for appraisement is as follows:
(a) The Sheriff of the Supreme Court of Singapore will appoint one or more qualified appraisers to inspect the vessel and provide a sworn valuation.
(b) The appraisers will typically inspect the vessel's physical condition, review its classification records and survey history, consider the vessel's age, type, deadweight tonnage, and trading history, and assess the prevailing market conditions for comparable vessels.
(c) The appraisers will submit a sworn report to the court setting out their valuation of the vessel on a fair market value basis, and may also provide a forced sale value or a distressed sale value to reflect the circumstances of a judicial sale.
Separately, and in addition to the court-appointed appraisement, Northcape Maritime Advisory Ltd. has been instructed by C&H to provide an independent valuation of M/V Crimson Horizon on both a fair market value and forced sale value basis. Northcape Maritime Advisory is led by Captain Ian Forsyth, Managing Director, and is based at 3 Thomas More Square, London E1W 1WY. Captain Forsyth has extensive experience in vessel valuations for the purposes of judicial sale proceedings and international enforcement actions.
The instruction letter to Northcape Maritime Advisory is annexed at Appendix E. The Northcape valuation will serve several important purposes:
(a) It will provide C&H and TSL with a preliminary estimate of the vessel's value in advance of the court-appointed appraisement, enabling the team to plan the enforcement strategy and to advise TSL on the likely recovery from the vessel sale;
(b) It will serve as a reference point and cross-check against the court-appointed appraiser's valuation, and may be deployed in submissions to the court if the court appraisement is considered to be unreliable or significantly below market value;
(c) It will inform TSL's decision on whether to submit a protective bid at the auction (discussed further at Section 8.4 below);
(d) It will be shared with Straits Meridian LLP to support their submissions to the court on the appropriate reserve price and sale method.
The factors relevant to the valuation of M/V Crimson Horizon include: the vessel type (Handymax bulk carrier, a standard and liquid asset class); the deadweight tonnage (37,500 DWT, within the standard Handymax range); the age of the vessel (built 2018, making the vessel approximately six years old at the date of sale — relatively modern tonnage with significant remaining useful life); the vessel's classification status with Bureau Veritas; current market conditions for dry-bulk tonnage, which have been moderately positive in 2024; and the vessel's physical condition following the period of arrest.
4.3 Court Order for Sale
Once the appraisement has been completed and the appraiser's report has been filed with the court, the court will issue an order authorizing the Sheriff to sell the vessel. The order for sale will specify the method of sale and the terms upon which the sale is to be conducted.
In Singapore, the sale of an arrested vessel is typically conducted by one of two methods:
(a) Public auction: The Sheriff will conduct the auction, either at the Supreme Court or at a venue designated by the court. This is the most common method of sale and provides transparency and competitive pricing. Public auction is generally preferred where there is a reasonable expectation of competitive bidding.
(b) Private treaty: In some cases, the court may authorize a sale by private treaty — that is, a negotiated private sale — if it is satisfied that a private treaty sale would achieve a better price for the vessel than a public auction. This may be appropriate where the vessel is of an unusual type, where market conditions are such that a public auction is unlikely to attract competitive bidding, or where a credible offer has already been received.
The court may set a reserve price based on the appraisement. The reserve price is the minimum price below which the vessel will not be sold at auction. The reserve price is typically set at or near the appraised forced sale value, though the court has discretion to set the reserve at a different level depending on the circumstances.
TSL should advocate for a sale process that maximizes proceeds. In this regard, we recommend that Straits Meridian LLP make submissions to the court on the following points:
(a) That the reserve price be set at a level that reflects the vessel's genuine market value, taking into account the Northcape independent valuation;
(b) That the advertising period be sufficiently long and broad in scope to attract international bidders (discussed further at Section 5.1 below);
(c) That the sale method most likely to achieve the highest price in the circumstances — whether public auction or private treaty — be adopted.
5. Sale Process — Requirements and Procedure
5.1 Advertising
The Sheriff is required by the Rules of Court and the Practice Directions to give notice of the sale by advertisement. The purpose of the advertising requirement is to ensure that the sale is brought to the attention of the widest possible pool of prospective purchasers, thereby maximizing the price achieved at auction.
The advertising requirements are as follows:
(a) Advertisements must be published in appropriate maritime and trade publications, as well as in local newspapers in Singapore. The standard practice is to publish in Lloyd's List, TradeWinds, and at least one major Singapore daily newspaper (typically The Straits Times).
(b) The court will specify the minimum advertising period, which is typically at least seven days before the date of the auction. However, longer advertising periods are common and advisable, particularly for high-value vessels and for sales that are intended to attract international bidders. We would recommend an advertising period of no less than 21 days to allow sufficient time for international shipping companies, tonnage providers, and vessel acquisition funds to conduct due diligence and arrange financing.
(c) Given the international market for Handymax bulk carriers — which is one of the most liquid segments of the dry-bulk shipping market — advertising should also be directed at international shipping publications and online vessel sale platforms, including platforms such as VesselsValue, the BIMCO marketplace, and reputable sale and purchase broking platforms.
C&H will coordinate with Straits Meridian LLP on the advertising strategy. The objective is to ensure that the sale attracts the maximum number of qualified bidders, which will drive competitive bidding and maximize the sale price. We note that Handymax bulk carriers are standard, fungible assets with a broad market of potential purchasers, and there is no reason to believe that the auction will not attract competitive interest, provided the advertising is conducted appropriately.
5.2 Competitive Bidding
The standard procedure for the sale of an arrested vessel by public auction in Singapore is as follows:
(a) Registration of bidders: Prospective bidders must register with the Sheriff in advance of the auction. Registration typically requires the submission of proof of identity, evidence of financial capacity, and a deposit. The deposit is usually set at 10% of the reserve or appraised value and must be paid by cashier's order or bank draft prior to the auction.
(b) Conduct of the auction: The Sheriff will conduct the auction. Bidding will proceed in increments determined by the Sheriff. The auctioneer (the Sheriff or the Sheriff's appointed agent) will call for bids and will accept the highest bid that meets or exceeds the reserve price.
(c) Acceptance of the highest bid: The highest bid meeting or exceeding the reserve price will be provisionally accepted by the Sheriff, subject to the court's approval. The court will review the auction result and may confirm or decline the sale. In practice, the court will confirm the sale unless there are concerns about the integrity of the auction process or the adequacy of the price achieved.
(d) No bids meeting the reserve: If no bids meet the reserve price, the court may order a re-auction at a reduced reserve or may authorize a sale by private treaty. In some cases, the court may invite the arresting party or other interested parties to submit offers.
An important practical consideration is whether TSL itself should bid at the auction. There is no legal impediment to the arresting party bidding at a judicial sale of an arrested vessel, and it is not uncommon for creditors to do so as a protective measure. If there is a risk that the vessel will sell at an undervalue — whether due to insufficient bidding interest, adverse market conditions, or the timing of the auction — TSL may wish to submit a protective bid to ensure that the vessel is not sold for less than its genuine market value. The decision to bid should be taken in consultation with Nikolaos Papadimitriou and Ioanna Christodoulou at TSL and should be informed by the Northcape valuation. This issue is discussed further at Section 8.4 below.
5.3 Completion of Sale
Upon acceptance of the highest bid by the court, the successful purchaser must pay the balance of the purchase price — that is, the total purchase price less the deposit already paid — within the period specified by the court. This period is typically 14 days from the date of the court's confirmation of the sale. Failure to complete within the stipulated period will result in forfeiture of the deposit and the court may order a re-sale.
Following receipt of the full purchase price, the Sheriff will execute a bill of sale transferring title to the vessel to the successful purchaser. The bill of sale executed by the Sheriff in a Singapore judicial sale conveys clean title free of all liens, charges, and encumbrances, including but not limited to:
(a) Registered mortgages;
(b) Maritime liens (including crew wage liens, salvage liens, and damage liens);
(c) Statutory liens and possessory liens;
(d) Claims in rem of any nature;
(e) Any other security interests, charges, or encumbrances registered or asserted against the vessel.
This feature of a judicial sale — the conveyance of clean title — is one of its principal advantages over a private sale and is the reason why judicial sales of arrested vessels typically attract a broad pool of buyers, including buyers who might be deterred by the risk of undisclosed encumbrances in a private transaction.
Following the sale, the purchaser will be responsible for the de-registration of the vessel from the Liberian flag registry and for re-registration under the new owner's chosen flag. The purchaser will also be responsible for taking physical delivery of the vessel from the Sheriff's custody and for all costs associated with the vessel from the date of completion of the sale.
5.4 Role of the Sheriff
The Sheriff of the Supreme Court of Singapore plays a central role throughout the arrest and judicial sale process, acting as the court's officer and fiduciary of all parties with an interest in the vessel and its sale proceeds. The Sheriff's responsibilities include:
(a) Custody and maintenance of the arrested vessel: From the date of arrest, the vessel is in the custody of the Sheriff. The Sheriff will appoint custodians — typically a local ship agency or maritime services company — to maintain the vessel, manage the crew, and ensure that the vessel remains in a seaworthy and marketable condition during the arrest period.
(b) Conducting the appraisement: The Sheriff will appoint qualified appraisers to inspect and value the vessel, and will file the appraisers' report with the court.
(c) Advertising the sale: The Sheriff will publish the advertisements required by the court's order and the Practice Directions.
(d) Conducting the auction: The Sheriff will conduct the public auction, accept bids, and report the auction result to the court.
(e) Executing the bill of sale: Upon the court's confirmation of the sale and receipt of the full purchase price, the Sheriff will execute the bill of sale transferring title to the purchaser.
(f) Holding and distributing the proceeds: The sale proceeds will be paid into the court's admiralty account and held by the Sheriff until the court orders distribution. The Sheriff will distribute the proceeds in accordance with the court's order, following the established priority of maritime claims (discussed at Section 6 below).
The Sheriff's costs and expenses — including custodian charges, crewing costs, crew victualling, port dues, insurance premiums, and the administrative costs of the sale itself — constitute a first charge on the sale proceeds. These costs will be deducted from the gross sale proceeds before any distribution to creditors. It is therefore in the interests of all parties, including TSL, to minimize the duration of the arrest period by bringing the vessel to sale as expeditiously as possible.
6. Distribution of Proceeds and Priority of Claims
6.1 Priority Ranking
The proceeds of the judicial sale of an arrested vessel in Singapore are distributed according to the well-established priority of maritime claims. The priority ranking applicable to the distribution of the proceeds of the sale of M/V Crimson Horizon is as follows:
1. Sheriff's costs and expenses — First priority. This includes all costs incurred by the Sheriff in connection with the custody and maintenance of the vessel during the arrest period, including custodian charges, crew wages paid during the arrest, crew provisions, port charges, bunker costs, insurance premiums, and the costs of the appraisement, advertising, and sale itself. The Sheriff's costs are a first charge on the fund and are deducted before any distribution to other claimants.
2. Maritime liens — Second priority. Maritime liens arise by operation of law and attach to the vessel regardless of changes in ownership. They include crew wage claims (to the extent not already paid by the Sheriff from the arrest fund), salvage claims, claims for damage done by the ship, and claims for bottomry and respondentia. Maritime liens rank ahead of all other claims, including registered mortgages.
3. Registered mortgages — Third priority. If any mortgages are registered against M/V Crimson Horizon on the Liberian ship registry, the mortgagee(s) will have a claim against the sale proceeds ranking after maritime liens but ahead of statutory liens and the arresting party's claim. The tracing work conducted by Hartwell Pemberton LLP and the registry searches to be conducted by Straits Meridian LLP (discussed at Section 8.3 below) should confirm whether any mortgages exist. As of the date of this memorandum, we are not aware of any registered mortgage, but this must be confirmed.
4. Statutory liens / possessory liens — Fourth priority. These include claims by necessaries suppliers, repairers, and others who have provided goods or services to the vessel and who hold statutory liens under the High Court (Admiralty Jurisdiction) Act. Possessory liens — held by parties in physical possession of the vessel or its appurtenances — also fall within this category.
5. The arresting party's claim — Fifth priority. TSL's enforcement claim under LCIA Award No. 224718, to the extent that sale proceeds remain after satisfaction of all senior claims. It is in this category that TSL's recovery from the vessel sale will be realized.
6. Other in rem claimants — Sixth priority. Any other parties who have commenced or who commence in rem proceedings against the vessel and who file claims against the sale proceeds. Such claimants rank pari passu among themselves and behind the arresting party.
7. Surplus to registered owner — Any surplus remaining after satisfaction of all claims will be returned to Korinthian Bulkers (Singapore) Pte. Ltd. as the registered owner of the vessel.
This priority ranking is well-established in Singapore admiralty law and follows the general principles applicable in common law admiralty jurisdictions. The practical effect of this ranking is that TSL's recovery from the vessel sale will be the gross sale proceeds less the Sheriff's costs, less any maritime liens, less any registered mortgage claims, and less any statutory liens. We expect that the Sheriff's costs will be the most significant deduction, particularly if the arrest period extends over several months. Maritime liens (principally crew wage claims) may also be a factor, although these are likely to be relatively modest in amount.
6.2 Determination of Claims
Following the completion of the sale, the court will issue a notice inviting all persons claiming an interest in the sale proceeds to file their claims within a specified period. This period is typically between 28 and 60 days from the date of the notice, depending on the circumstances.
The claims determination process proceeds as follows:
(a) The court's notice will be published in appropriate maritime and trade publications and served on all known claimants and interested parties, including the registered owner, any known mortgagees, the crew, and any parties who have filed caveats against the release of the vessel or the payment out of the sale proceeds.
(b) Claimants must file their claims in the prescribed form, setting out the nature and amount of their claim, the basis for their asserted priority, and supporting evidence.
(c) If there are competing claims, or if the priority of claims is disputed, the court may convene a priorities hearing to determine the order of distribution. Such hearings can add several weeks to the distribution timeline, depending on the complexity of the disputes.
(d) Once all claims have been filed and any disputes resolved, the court will issue an order directing the Sheriff to distribute the proceeds in accordance with the established priority ranking.
TSL should be prepared to address any competing claims that may be filed against the sale proceeds. In particular:
(a) Crew wage claims: The crew of M/V Crimson Horizon may have outstanding wage claims arising during or after the arrest period. Crew wage claims are maritime liens and rank second in priority, ahead of TSL's enforcement claim. Straits Meridian LLP should ascertain the status of crew wages and whether any arrears exist.
(b) Mortgage claims: As noted above, Straits Meridian LLP should conduct a search of the Liberian ship registry to identify any registered mortgages. If a mortgage exists, the mortgagee will have a senior claim.
(c) Necessaries and supplies claims: Suppliers of bunkers, provisions, and other necessaries during the vessel's trading may have outstanding claims that could be asserted as statutory liens.
Straits Meridian LLP should conduct a thorough investigation of potential competing claims and should file TSL's claim against the proceeds promptly upon the court's invitation.
6.3 Estimated Net Proceeds Available to TSL
The net proceeds available to TSL from the judicial sale of M/V Crimson Horizon will depend on several variables, including the actual sale price achieved at auction, the total Sheriff's costs and expenses, and the extent of any senior claims.
For planning purposes, the following estimates are relevant:
(a) Vessel value: The vessel's value will be determined by the court-appointed appraisement and ultimately by the price achieved at auction. Northcape Maritime Advisory Ltd.'s independent valuation, once completed, will provide a preliminary estimate. Current market conditions for Handymax bulk carriers of approximately 37,500 DWT and approximately six years of age suggest a market value in the range of USD $20,000,000 to USD $25,000,000, depending on the vessel's condition, class status, and the state of the dry-bulk freight market at the time of sale.
(b) Sheriff's costs and expenses: These will depend on the duration of the arrest period and the costs of maintaining the vessel. Based on information from Straits Meridian LLP, the estimated monthly cost of maintaining the vessel under arrest (including crew wages, provisions, port charges, and insurance) is in the range of USD $80,000 to USD $120,000 per month. If the vessel is under arrest for approximately three months before the sale is completed, the total Sheriff's costs (including the costs of the sale process itself) could amount to approximately USD $300,000 to USD $500,000.
(c) Senior claims: The extent of any maritime liens, mortgage claims, or statutory liens will be determined through the registry searches and the claims determination process. If no significant senior claims exist, the deduction from the gross sale proceeds will be limited to the Sheriff's costs.
(d) Actual sale price: The actual sale price of M/V Crimson Horizon at the judicial auction will ultimately be USD $22,800,000, yielding approximately £18,330,000 in GBP equivalent (applying the prevailing USD/GBP exchange rate at the time of the sale). After deduction of the Sheriff's costs and any senior claims, the net proceeds available to TSL are expected to represent the substantial majority of this amount.
The net proceeds will be a significant contribution to the overall enforcement recovery but will represent only a fraction of the total Award and Costs of £108,600,000. The judicial sale of M/V Crimson Horizon must therefore be viewed as one component of the multi-jurisdictional enforcement campaign, which includes parallel proceedings in England and Wales, Cyprus, the UAE, and other jurisdictions.
7. Expected Timeline
7.1 Estimated Timeline — Arrest to Distribution
The following table sets out the estimated timeline for each phase of the judicial sale process, from the date of arrest through to the distribution of proceeds:
Total estimated timeline from arrest (20 August 2024) to sale completion: approximately 2–3 months. An additional period of 4–8 weeks should be allowed for the claims determination and distribution of proceeds.
Based on current planning assumptions and the indicative timeline above, we anticipate that:
• The actual sale date will be approximately 15 November 2024;
• The net proceeds will be received by TSL approximately 2 December 2024.
These dates are subject to adjustment depending on the factors discussed at Section 7.2 below.
7.2 Factors That May Affect Timeline
Several factors may accelerate or delay the timeline set out above:
(a) Opposition by KMH or Korinthian Bulkers (Singapore) Pte. Ltd.: KMH or the registered owner may contest the application for appraisement and sale, for example by arguing that they intend to provide security, by challenging the enforceability of the Award in Singapore, or by raising procedural objections. Any contested hearing could introduce delays of 2–4 weeks. However, given that KMH has not engaged to date and has not provided security, we consider the risk of a contested hearing to be low, though it cannot be excluded.
(b) Competing claims by other creditors: If other creditors — such as crew members with wage claims, necessaries suppliers, or mortgage holders — file claims against the vessel or the sale proceeds, the claims determination and distribution phase may be more complex and time-consuming. A priorities hearing, if required, could add several weeks to the distribution timeline.
(c) Market conditions: The state of the dry-bulk freight market and the market for second-hand Handymax bulk carriers may influence the court's decision on the appropriate sale method (auction versus private treaty) and the reserve price. If market conditions are unfavorable, the court may delay the sale or reduce the reserve price to facilitate a sale. Conversely, favorable market conditions may encourage a quicker sale at a higher price.
(d) Seasonal factors and market liquidity: The timing of the auction may be affected by seasonal factors in the shipping market. The fourth quarter of the calendar year is typically an active period for vessel sales, which should be favorable for the timing of this sale. However, the year-end holiday period (late December through early January) may affect the court's schedule and the availability of prospective purchasers.
(e) Vessel condition: If the vessel is found to be in poor condition during the appraisement, this may reduce the appraised value and the reserve price. Conversely, a vessel in good condition with up-to-date class surveys will be more attractive to purchasers and may achieve a higher price.
8. Practical Considerations and Recommendations
8.1 Coordination with Parallel Enforcement Proceedings
The judicial sale of M/V Crimson Horizon is one element of the broader multi-jurisdictional enforcement campaign being conducted by C&H on behalf of TSL. The vessel sale proceeds must be carefully tracked and accounted for within the overall recovery framework.
In particular:
(a) Multi-jurisdictional recovery tracker: The proceeds of the vessel sale must be recorded in the multi-jurisdictional recovery tracker maintained by C&H. This tracker consolidates all recoveries and anticipated recoveries across all jurisdictions (England and Wales, Singapore, Cyprus, UAE, and any other jurisdictions in which enforcement proceedings are pursued). The tracker is essential for ensuring that TSL's overall recovery does not exceed the amount of the Award and Costs (including interest), and for informing strategic decisions about the enforcement campaign.
(b) English worldwide freezing order: The worldwide freezing order ("WFO") granted on 16 July 2024 by Mr. Justice Ashworth in the Commercial Court, England and Wales (CL-2024-000487), up to the amount of £108,600,000, imposes disclosure and notification obligations. Any recoveries obtained by TSL in other jurisdictions must be disclosed to the English court. The Singapore vessel sale proceeds must therefore be reported to the English court in TSL's next disclosure affidavit or at such earlier time as the WFO requires.
(c) Avoidance of double recovery: Singapore law, like English law, prohibits double recovery. The Singapore court must be informed of the total amounts recovered in other jurisdictions to ensure compliance with this obligation. Straits Meridian LLP should be instructed to make appropriate disclosures to the Singapore court at the relevant time.
(d) Garnishee proceedings: The parallel garnishee proceedings against Pinnacle Bank (Singapore) Ltd. are proceeding alongside the vessel sale. The Singapore garnishee order and the vessel sale proceeds together form the total Singapore recovery. Straits Meridian LLP should ensure that the two streams of recovery are coordinated and that the total Singapore recovery is accurately reported.
8.2 Vessel Maintenance During Arrest
TSL, as the arresting party, has an obligation to ensure that the arrested vessel is properly maintained during the arrest period. The rationale for this obligation is that the arresting party has caused the vessel to be taken out of trading and into the court's custody, and must bear the responsibility for ensuring that the vessel does not deteriorate while under arrest.
In practice, the Sheriff will appoint custodians — typically a local ship agency — to manage the day-to-day maintenance of the vessel, including the management of the crew, the provision of food, water, and other supplies, the maintenance of the vessel's engines and equipment, and compliance with port authority regulations. The costs of maintenance are borne in the first instance by the arresting party, but are recoverable as a first charge on the sale proceeds.
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