ADMIRALTY LAW– SIGNIFICANCE OF THE UNITED NATIONS CONVENTION ON THE LAW OF THE SEA (UNCLOS)

Legal Updates from YHA Law Firm

UNCLOS (1982 Dec. 10) 1833 U.N.T.S. 397

Purpose of the UNCLOS and has it been ratified by Malaysia?
1. Establishing a legal order for the Seas and oceans with the aim of:
– Spurring international communication on maritime fronts between states.
– Promoting peaceful use of the seas and oceans.
– Conserving the living resources and the marine environment.

2. Malaysia ratified UNCLOS on the 14th of October 1996 as a state party Malaysia has always and continues to implement into practice various provisions under UNCLOS 1982.

What is the significance of UNCLOS 1982 in Malaysia?

Malaysia is strategically located between the South China Sea and the straits of Malacca and Singapore, it is one of the most important waterways connecting the Indian Ocean to the Pacific Ocean, the growing presence of the Straits in international trade poses evolving challenges. UNCLOS 1982 ensures the economic viability and sustainability of the ecosystem along the abovementioned shipping channels are preserved.

What are the measures under UNCLOS 1982 practiced by Malaysia?

Malaysia practices the Traffic Separation Scheme, prescribed under UNCLOS 1982 to ensure safe passage through the Straits, this eases international navigation for ships through the straits.
UNCLOS 1982 also provides cooperative arrangements between states as a method to strengthen communication.
The cooperation aids in the preservation of marine environment. For instance, states may establish requirements to reduce and control pollution to allow the entry of foreign vessels into their ports.
The mechanism also acts as a platform for companies and other stakeholders of the shipping industry to actively contribute towards efforts to maintain and improve safety of navigation and preservation of biodiversity in the shipping channels.

What are the current maritime co-operations pursued by Malaysia?

Malaysia promotes cooperation in maritime security through the Association of South East Asian Nations (ASEAN) through forums such as the ASEAN Maritime forum.
Malaysia alongside Indonesia, Singapore and Thailand formed the Malacca Straits Coordinated Patrols they pursue activities to maintain the security in the Straits of Malacca.
Malaysia, Indonesia and the Philippines share an avenue under the Trilateral Cooperative Arrangement with the aim of meeting common goals such as strengthening maritime security in the Sulu and Sulawesi Seas.

ADMIRALTY IN REM – WRONGFUL ARREST – POSSESORY RIGHT – ARREST GONE WRONG: WHEN A SHIP ARREST BACKFIRES WITH DAMAGES

In Eletson Holdings Inc & Ors v The Vessel “Paros” [2026] 8 MLJ 80, the High Court set aside an arrest after finding that the plaintiffs had no proprietary or possessory right to the vessel at the time of the writ, as the bareboat charter had already been terminated. The Court held that the claim was in substance a corporate control dispute dressed up as an admiralty action, and emphasised that such disputes do not fall within admiralty jurisdiction. Critically, the plaintiffs’ failure to disclose the termination of the charter when obtaining the arrest warrant amounted to a serious breach, leading the Court to find mala fides or gross negligence and order damages for wrongful arrest. The decision reinforces that ship arrest is a powerful remedy that must be exercised with full disclosure and a proper maritime foundation.

14 July ,2026 No Comments

GUARANTEE – PERSONAL GUARANTEE ≠ PAY ON DEMAND: COURT DRAWS THE LINE BETWEEN SURETYSHIP AND DEMAND GUARANTEES

In CE Energy DMCC v Bashar [2026] Lloyds’s Rep 267, the Commercial Court clarified that not all guarantees labelled “on demand” will be treated as demand guarantees. On a proper construction, the court held that the personal guarantee in question was a contract of suretyship, requiring proof of the principal debtor’s liability rather than automatic payment upon demand. Crucially, the court found that the debtor’s “irrevocable” admissions of debt in a payment agreement created a binding contractual estoppel, which the guarantor could not challenge. The decision also confirms that, where payment is due on a “day certain”, a seller may still claim the price notwithstanding retention of title. The case underscores the importance of precise drafting and the risks of entering into settlement agreements that conclusively fix liability.

14 July ,2026 No Comments

MARITIME NEGLIGENCE – PLAINTIFF CLAIMED FOR DAMAGES CAUSED DURING ANCHOR DEPLOYMENT OPERATION – CALDERBANK OFFERS

In Tom Eastwind 365 Sdn Bhd v The Owners of the Vessel “Icon Sophia” [2025] 9 MLJ 397, the High Court held that the doctrine of res ipsa loquitur applied in a maritime collision during an anchor deployment operation, allowing an inference of negligence against the tug owner. The Court clarified that the doctrine is not defeated merely because the defendant adduces evidence explaining the accident – such evidence goes to rebutting the inference, not preventing it. While liability was established due to the tug master’s error of judgment in manoeuvring too close to a stationary barge, the plaintiff failed to properly prove its damages and was awarded only RM50,000. Notably, despite succeeding on liability, the plaintiff was ordered to pay costs after rejecting reasonable Calderbank offers, underscoring the risks of pursuing litigation without properly substantiated claims.

14 July ,2026 No Comments

JURISDICTION – BILLS OF LADING – BREACH OF HIMALAYA CLAUSE – BREACH OF EXCLUSIVE JURISDICTION CLAUSE – ONEROUS OR UNUSUAL TERMS

In Maersk Guinéa-Bissau SARL v Almar-Hum Bubacar Baldé SARL [2026] 1 Lloyd’s Rep 215, the English Commercial Court held that a shipper was liable for breach of an exclusive jurisdiction clause and a Himalaya clause after commencing proceedings in Guinea-Bissau instead of England. The Court confirmed that such clauses are standard and enforceable, and that commencing foreign proceedings in breach of them can give rise to a claim for damages. Notably, the Court also recognised that Himalaya clauses may be used offensively, allowing subcontractors to recover losses caused by wrongful litigation. The foreign judgment was not recognised due to lack of jurisdiction and denial of natural justice.

14 July ,2026 No Comments

DELIVERY WITHOUT PRESENTATION OF BILL OF LADING – LOI WON’T SAVE YOU: SHIPOWNER LIABLE FOR MISDELIVERY DESPITE INDEMNITY

In United Overseas Bank Ltd v The “Maersk Katalin” [2026] 1 Lloyd’s Rep 18, the Singapore High Court reaffirmed that delivery of cargo without presentation of original bills of lading remains a fundamental breach, even where carried out against letters of indemnity. The Court held that LOIs merely shift commercial risk but do not authorise misdelivery, and rejected arguments of consent, ratification and causation. Significantly, the Court emphasised that the burden lies on the carrier to prove that the loss would have occurred in any event – a burden not easily discharged. The decision underscores the continued strict liability regime in misdelivery cases, particularly where banks as bill holders are involved.

14 July ,2026 No Comments

CONTRACT LAW – ‘UK COURTS’ MEANS ENGLAND: COURT UPHOLDS JURISDICTION DESPITE VAGUE CLAUSE

In SMT Global Logistics Ltd v Georgian Airlines LLC [2025] Lloyd’s Rep. Plus 89, the Commercial Court held that a clause referring disputes to “the court in accordance with current legislation of the United Kingdom” was a valid jurisdiction clause in favour of the High Court of England and Wales. The Court also confirmed that the Montreal Convention does not apply to pure contractual claims for non-performance, such as repayment and loss of profits. Emphasising a broad and commercially sensible interpretation, the Court enforced the parties’ choice of forum and refused to stay proceedings, reaffirming that jurisdiction clauses will be upheld unless there are overwhelming reasons to depart.

14 July ,2026 No Comments