![Global rules on foreign direct investment](https://www.nortonrosefulbright.com/-/media/images/nrf/nrfweb/knowledge/publications/us_24355_legal-update--fdi-alert.jpeg?w=265&revision=a5124a65-abf9-40e4-8e96-9df39ffdb212&revision=5250068427347387904&hash=96B456347C3246E5649838DF281C5F5D)
Publication
Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
EMEA | Publication | giugno 2024
As noted in our June 2024 Legalseas “What is a “ship?” article, the summary of the “WORLD DREAM” Singapore High Court’s judgments is summarised below.
The “WORLD DREAM” was a large cruise ship with a capacity for 5,000 passengers. She had a variety of facilities on board for the entertainment of her passengers, including spas and swimming pools. Her construction and acquisition were financed by a syndicated term loan. Following various events of default under the facility agreement, the mortgagee bank commenced action in the Singapore High Court and arrested the “WORLD DREAM”. The “WORLD DREAM” was subsequently sold and the sale proceeds were paid into Court.
The defendant owners sought to assert a claim against part of the sale proceeds on the basis that there was “gaming equipment” on board the “WORLD DREAM”, such as slot machines, casino tables and smaller paraphernalia, that had been sold along with the vessel, but which did not form part of the mortgage. In connection with this, the defendant owners applied to the Singapore High Court for a declaration that any “gaming equipment” that was on board the “WORLD DREAM” did not fall within the scope of the ship mortgage granted to the mortgagee bank. If the owners successfully obtained the declaration sought, their next step would have been to pursue a claim against the sale proceeds for the value of the gaming equipment.
In considering the owners’ application, the issue that the Singapore High Court had to determine was: having regard to the terms of the finance documents (in particular, the facility agreement, the mortgage and the deed of covenant), did the mortgage created thereunder include or extend to the “gaming equipment” on board the vessel?
At the outset, the Honourable Justice S. Mohan dismissed the application based on the bank’s evidential objection: that the reference to “gaming equipment” was too ambiguous – the evidence led by owners was insufficient to identify the subject matter of the “gaming equipment”.
Nonetheless, Justice Mohan took the opportunity to consider the legal merits of the application on a generic interpretation of “gaming equipment” as tangible objects permitting passengers to engage in gaming. After considering the parties’ submissions, he accepted the position advanced by the mortgagee bank and was satisfied that the reference to “ship” in the mortgage included or was wide enough to cover “gaming equipment”.
Edgar Chin and Samantha Ch’ng from Ascendant Legal LLC (in alliance with Norton Rose Fulbright) acted for the successful Plaintiff to enforce the mortgage against the “WORLD DREAM” in Singapore.
Norton Rose Fulbright acted for certain financiers on various financings and the subsequent restructuring and insolvency of the Genting Hong Kong Group. Following the insolvency of the Genting Hong Kong Group, Norton Rose Fulbright assisted its clients with enforcement and arrest proceedings in respect of various cruise ships owned and operated by the Genting Hong Kong Group, including the “WORLD DREAM” enforcement proceedings in Singapore.
The terms of the finance documents and the definition of “ship”
The mortgage was in the standard Bahamian statutory form, recording the owners’ agreement to “mortgage to [the bank] all sixty four sixty-forth (64/64th) shares of which we are the Owners in the ship above particularly described and in her boats, guns, ammunition, small arms and appurtenances”.
The term “ship” was also defined in the deed of covenant as follows:
Ship means the vessel described in the Schedule and includes any share or interest in it and its engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or later acquired by the Owner and also any and all additions, improvements and replacements made in or to such vessel or any part of it or in or to its equipment and appurtenances.
The vessel was described in the said schedule with various details (name, flag, port of registry, official number and IMO number).
The Singapore High Court’s findings
In dismissing the owners’ application, the Singapore High Court made the following findings of note in relation to the words “ship”, “appurtenances” and “belongings”.
Meaning of “ship”
Meaning of “appurtenances”
Meaning of “belongings”
In the circumstances, the Court found that the Plaintiff’s mortgage over the “WORLD DREAM” extended to the “gaming equipment” on board. Owners’ application for declaratory relief was consequently dismissed.
Concluding words
In considering the Singapore High Court’s findings, it is useful to consider the following observation by the learned authors of Chitty on Contracts (Hugh G. Beale gen ed) (Sweet & Maxwell, 34th Ed, 2022) at [15-065] (as cited by Justice Mohan in The “WORLD DREAM” at [100]): “Where the same words of contractual provisions have for many years received a judicial construction, the court will suppose that the parties have contracted upon the belief that their words will be understood in the accepted legal sense”. Commercial parties are assumed to have ordered their commercial dealings around long-standing interpretations.
Equally from a drafting perspective, the Singapore High Court’s observations and clarification on the issue of “what is a ship” provide practical guidance, allowing parties to a ship finance deal to better appreciate the precise extent of a mortgage over a ship. If parties – whether the borrower and/or lender – have specific intentions for the scope of their mortgage or specific articles on board, this should be made abundantly clear.
Publication
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Publication
Artificial intelligence (AI) raises many intellectual property (IP) issues.
Publication
We are delighted to announce that Al Hounsell, Director of Strategic Innovation & Legal Design based in our Toronto office, has been named 'Innovative Leader of the Year' at the International Legal Technology Association (ILTA) Awards.
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2023