Bcen-Eurobank Now Known as Vtb Bank (France) Sa Appellant v [1] Vostokrybporm Company Ltd [2] Apex Luck Business Ltd [3] The Department of Maritime Administration [4] The Registrar of Ships [5] Attorney General of Saint Vincent and the Grenadines Respondents [ECSC]

JurisdictionSt Vincent and the Grenadines
CourtCourt of Appeal (Saint Vincent)
JudgeBaptiste JA,Justice of Appeal,Justice of Appeal [Ag.],Davidson Kelvin Baptiste,Don Mitchell,Clare Henry
Judgment Date10 June 2013
Judgment citation (vLex)[2013] ECSC J0610-6
Docket NumberSVGHCVAP2011/0011
Date10 June 2013
[2013] ECSC J0610-6

THE EASTERN CARIBBEAN SUPREME COURT IN THE COURT OF APPEAL

Before:

The Hon. Mr. Davidson Kelvin Baptiste Justice of Appeal

The Hon. Mr. Don Mitchell Justice of Appeal [ag.]

The Hon. Mde. Clare Henry Justice of Appeal [ag.]

SVGHCVAP2011/0011

Between:
Bcen-Eurobank Now Known as Vtb Bank (France) Sa
Appellant
and
[1] Vostokrybporm Company Limited
[2] Apex Luck Business Limited
[3] The Department of Maritime Administration
[4] The Registrar of Ships
[5] The Attorney General of Saint Vincent and the Grenadines
Respondents
Appearances:

Mr. Stephen Hofmeyr, QC, with him, Mr. Samuel Commissiong, for the Appellant

Mr. Duane Daniel for the First Respondent

Mr. Graham Dunning, QC, with him, Mr. Richard Williams for the Second Respondent

Ms. Ruth-Ann Richards for the Third, Fourth and Fifth Respondents

Vessel registered in Saint Vincent and the Grenadines Register of Ships — Mortgage registered as an encumbrance — Voluntary sales of vessel — Judicial sales of vessel in North Korea and China — Shipping Act 2004 — Whether vessel fulfilled statutory requirements to remain registered in Saint Vincent and the Grenadines Register of Ships — Effect of judicial sales — Whether judicial sales conferred clean title — 1993 International Convention on Maritime Liens and Mortgages incorporated into the laws of Saint Vincent and the Grenadines — North Korea and China not parties to the 1993 Convention — Applicability of the 1993 Convention where judicial sale takes place in a non-Convention State

The MV Phoenix ("the vessel") was registered in the Saint Vincent and the Grenadines Register of Ships in 1999. It remained there until June 2011 when the closure transcript of deregistration was given. The vessel became the subject of a mortgage taken in favour of the appellant. The mortgage was registered in the Register of Ships in 1999. The vessel was sold to several purchasers by voluntary sales as well as judicial sales in North Korea and China. The vessel was also registered in jurisdictions other than Saint Vincent and the Grenadines. The first respondent instituted a claim against the third, fourth and fifth respondents seeking, inter alia, an order compelling the court to deregister the vessel. The second respondent also sought deregistration and an order that it was the owner of the vessel free from encumbrances.

The Court made various orders including that the second respondent (the second claimant in the court below) is the owner of the vessel free of all encumbrances; that the fourth respondent shall terminate the registration of the vessel and issue a closure transcript in relation to the vessel as it was not entitled to remain on the Register of Ships as it no longer satisfied the requirements of the Shipping Act, 2004; 1 that an undischarged mortgage was no bar to deregistration of the vessel. The Court also ordered that the appellant pay the second respondent's costs of $14,000.00 Eastern Caribbean dollars. The appellant appealed against the orders of the judge. The second respondent filed a counter notice of appeal against the judge's refusal to admit affidavit evidence of deponents. The first respondent also appealed against the judge's order dismissing its claim and ordering it to pay the appellant's costs.

Held: dismissing the appellant's appeal and allowing the second respondent's cross-appeal and dismissing the first respondent's counter appeal that:

  • 1. By reason of the judicial sales and the intervening private sales, the vessel had ceased to be eligible for registration in Saint Vincent and the Grenadines according to the requirements of section 6 of the Shipping Act, 2004 and there was no other basis on which on which the vessel was eligible for registration in Saint Vincent and the Grenadines.

  • 2. The failure to meet the requirements of section 6 of the Shipping Act, 2004 allied with the effect of the judicial sales made it legitimate to secure the termination of the vessel's registration. In the circumstances the learned judge rightly directed the registrar to deregister the vessel as it would have been wrong in principle to perpetuate the registration of the vessel as it no longer and had long ceased to be eligible for registration under section 6 of the Shipping Act, 2004.

  • 3. In circumstances where a vessel is no longer entitled to remain on the Register of Ships, the registration of a mortgage does not act as an indefinite bar to deregistration.

  • 4. The 1993 International Convention on Maritime Liens and Mortgages is clearly intended to apply in respect of judicial sales taking place in State Parties to the Convention. Where the judicial sale takes place in a country which is not a party to the Convention, the common law rules apply. Thus, such a sale would be recognised under the laws of Saint Vincent and the Grenadines and given legal effect of transferring title to the purchaser free from encumbrances.

  • 5. A foreign judicial sale is to be recognised as giving effect qua assignment/transfer of title unless it is invalid under the laws of the country where the sale took place. There was no evidence that the judicial sales at issue were invalid.

  • 6. The court in North Korea had jurisdiction to decide on the disposition of the vessel and did not act beyond its jurisdiction. The process by which the vessel was sold clearly operated in rem, flowing as it did from the initial arrest of the vessel. The sale conferred clean title to the purchaser with all claims against the vessel being extinguished and transferred to the proceeds of sale.

  • 7. The judicial sale in China was critical. The sale was on notice to the appellant; the appellant participated in the process and tried to stop it. There could be no issue of breach of natural justice in relation to that sale. There was no evidence of fraud. The sale was by public auction and it was not suggested that it was anything other than a fair market value. The judicial sale in China was effective in transferring good title free from encumbrances regardless of whatever was the prior position.

  • 8. The trial judge had no proper basis for refusing to admit the evidence of the deponents. The factual evidence in the affidavit was not in dispute, the appellant was in possession of the affidavits before the trial and had every opportunity to put in evidence of its own, agreeing with, disputing or qualifying such evidence. The real issue was what weight should be attached to the evidence.

  • 9. There was no good reason to disturb the order dismissing the first respondent's claim and ordering it to pay the appellant's costs.

Baptiste JA
1

This appeal concerns the law of Saint Vincent and the Grenadines relating to the registration of ships and the mortgages of ships. The ship in question is a factory shipping vessel, the MV Phoenix ("the Vessel"), registered in the Saint Vincent and the Grenadines Register of Ships in 1999. It remained registered until 2011 when the closure transcript of deregistration for the vessel was issued. The vessel became the subject of a mortgage which was taken in favour of BCEN-EUROBANK ("the appellant") and duly registered in the Register of Ships in 1999. The vessel underwent a series of sales involving voluntary sales and judicial sales in the Democratic People's Republic of Korea ("North Korea") and in the People's Republic of China ("China"). The first respondent, Vostokrybporm Company Limited ("Vostok"), was the penultimate purchaser of the vessel and the second respondent, Apex Luck Business Limited ("Apex"), the ultimate purchaser. The vessel was also registered in jurisdictions other than Saint Vincent and the Grenadines.

The appeal
2

The critical issues between the parties are as to whether the appellant's maritime lien has been extinguished as a consequence of the judicial sales in North Korea and China and whether the vessel should remain registered in the Saint Vincent and the Grenadines Register of Ships. The appellant's case is that its maritime lien in the vessel subsists and that the vessel should not be deleted from the registry while the maritime lien subsists. The appellant states that it has not consented to the deregistration of the vessel, as stipulated by Article 3 of the 1993 International Convention on Maritime Liens and Mortgages2 ("the 1993 Convention") before deregistration can take place. The appellant contends that notwithstanding the various transactions involving the vessel, under the laws of Saint Vincent and the Grenadines, it continues to have a legal proprietary interest in the vessel in the form of a registered mortgage. Such a registered mortgage could only be treated as discharged if it has been so noted in accordance with the procedure set out in section 70(1) of the Shipping Act, 20043 and there has been no such discharge of its mortgage in this case.

3

The appellant also contends, inter alia, that it was not open to a court in Saint Vincent and the Grenadines to make an order compelling the Registrar of Ships to deregister the vessel from the Ship Register; accordingly, the first and second respondents were not entitled to that relief. The appellant challenged the finding that the Shipping Act, 2004 allows for the deregistration of a vessel notwithstanding an undischarged mortgage. The appellant also challenged the findings that: (i) where there is a judicial sale the maritime lien, which arises by virtue of the mortgage, is extinguished as it relates to the ship and all the interested parties rights are transferred to the proceeds of the sale of the ship; (ii) that it is a general rule that a judgment in rem of a foreign court of competent jurisdiction in respect of a maritime lien is regarded as binding against all the world; and (iii) that Apex received title, free from all encumbrances, when it purchased the vessel at the judicial sale of the Qingdao Maritime Court.

4

Apex cross-appeals against the...

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