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Lien over sub-freight/sub-hire is a registrable charge?

Just how much Singapore wants its maritime commerce to flourish unhindered was demonstrated in a recent case The V8 Stealth II [2018], where the court was considering an important question of ‘whether lien over sub-freight/sub-hire is a registrable charge’.

The decision was actually a cause of much dismay to owners. CA did not fail to recognize that when it said that "...this may have a negative impact on the local shipping industry.” and further went on to recognize that “…to maintain Singapore’s competitive edge as a leading maritime hub…” legislative reforms (as in Hong Kong) are needed to circumvent their decision. Ministry of Law has actually carried out public consultation on proposed amendments to the domestic Companies Act in respect of Shipowner’s liens.


Why the court's decision created quite a furore among owners: lien over sub-freight/sub-hire is a key contractual right afforded to the owners under the head charterparty. Should the head charterer fail to pay its dues (perhaps because he is insolvent – as was Siva Ships), owners may seek to direct the sums payable to the charterers by sub-charterers, to themselves. Against industry's understanding, court decided that owners must register this contractual lien with ACRA to exercise it.



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