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Maritim dan Undang-undang Perkapalan

CONTRACT (BILL OF LADING) – NO DUTY TO DETECT FRAUD: COURT CLEARS MAERSK OF LIABILITY FOR FALSE CONTAINER WEIGHTS

In Stournaras Stylianos Monoprosopi EPE v Maersk A/S [2025] 2 Lloyd’s Rep 323, the English Commercial Court held that carriers are not liable for fraudulent misdeclarations by shippers where bills of lading are issued for sealed containers. The Court ruled that Maersk had no duty to verify or cross-check declared weights against Verified Gross Mass (VGM) data under the SOLAS Convention, as its obligation under the Hague Rules extended only to the apparent external condition of cargo. However, the judgment signals that a limited duty of care could arise in future where a carrier is put on notice of fraud. For now, carriers may rely on shipper declarations, but consignees must exercise commercial vigilance and due diligence when relying on bills for payment.

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Tort

EXEMPLARY DAMAGES – STATUTORY BODY DUTY – DAMAGES – OBTAINING APPROVAL

In Big Man Management Sdn Bhd v Tenaga Nasional Bhd [2025] 5 MLJ 290, the Federal Court reinstated nearly RM3.56 million in special damages and awarded RM100,000 in exemplary damages against TNB for wrongfully disconnecting electricity to an ice factory. The Court ruled that “strict proof” of special damages does not mean a higher burden beyond the civil standard of proof and affirmed that TNB, as a statutory monopoly, breached its statutory duty by using disconnection as leverage to collect payment. The judgment underscores that public utilities cannot misuse statutory powers, and consumers wrongfully deprived of essential services may be entitled to punitive remedies in exceptional cases.

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Maritim dan Undang-undang Perkapalan

LEGAL UPDATES – ADMIRALTY JURISDICTION BROADENS: TRUST AND CONVERSION CLAIMS RECOGNISED IN THE MERLION APPLICATION

In Burrows v The Ship “Merlion” [2025] 2 Lloyd’s Rep 281, the Federal Court of Australia confirmed that trust, equitable ownership, conversion, and detinue claims can fall within Admiralty jurisdiction where they relate to a ship’s ownership or possession. However, the Court struck out the Australian Consumer Law claim, finding it a personal cause of action that could not ground an in rem proceeding. The judgment is persuasive for Malaysia, where under section 24(b) of the Courts of Judicature Act 1964 and Order 70 of the Rules of Court 2012, Malaysian courts are also likely to recognise trust-based or possessory interests as proprietary maritime claims, while maintaining the need to file personal contractual claims separately.

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Maritim dan Undang-undang Perkapalan

ADMIRALTY – SINGAPORE HIGH COURT CLARIFIES RIGHTS OF SUIT UNDER BILLS OF LADING ACT AND WRONGFUL ARREST THRESHOLD IN THE JEIL CRYSTAL

In Owners of the Cargo Lately Laden on Board “Jeil Crystal” v Owners of the Vessel “Jeil Crystal” [2025] 2 Lloyd’s Rep 299, the Singapore High Court clarified the operation of the Bills of Lading Act 1992 and the threshold for wrongful arrest. The Court held that Banque Cantonale de Genève (BCGE) ceased to be the lawful holder of the bills of lading once it endorsed and delivered them to its customer, GP Global. Having divested itself of all rights, BCGE had no standing to sue for wrongful switch bills or misdelivery when it arrested the vessel months later. The arrest was found wrongful, as BCGE acted with gross negligence by failing to verify that it possessed the original bills before seeking arrest. This decision reinforces the strict requirement of poss…

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Undang-undang Kontrak

BREACH OF CONTRACT – COURT FINDS EDGENTA IN BREACH: SUPPLYING USED LINENS NOT GOOD ENOUGH FOR UKM HOSPITAL

In Universiti Kebangsaan Malaysia v Edgenta Facilities Management Sdn Bhd [2025] 11 MLJ 783, the High Court held that Edgenta breached its laundry services contract with UKM by failing to supply new linens as intended under the agreement. Although the contract did not explicitly use the word “new,” the Court admitted extrinsic evidence under section 92(b) of the Evidence Act 1950 to establish both parties’ common understanding. The Court also upheld UKM’s RM3.99 million penalty as valid and proportionate, finding that the formula including “days delayed” was consistent with the contract and served a legitimate commercial purpose. Edgenta’s counterclaim for wrongful deductions was dismissed for lack of proof.

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Undang-undang Perkapalan

MARINE INSURANCE – WAR RISKS, NOT BUREAUCRACY: UK COURT OF APPEAL UPHOLDS COVER IN INDONESIAN DETENTION CASE

In Delos Shipholding SA & Ors v Allianz Global Corporate & Specialty SE & Ors [2025] 2 Lloyd’s Rep 117, the UK Court of Appeal upheld insurers’ liability for the constructive total loss of the Win Win, rejecting reliance on the “customs or quarantine regulations” exclusion in a war risks policy. The Court ruled that detentions arising from Indonesia’s assertion of sovereignty were not “similar” to customs or health-related arrests, confirming a narrow interpretation of the exclusion. It also clarified under the Insurance Act 2015 that nominee directors without decision-making power do not constitute “senior management,” and that the insured had no duty to disclose criminal charges unrelated to the vessel’s operations. The decision provides key guidance on wa…

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Undang-undang Kontrak

MONEYLENDING – ILLEGALITY– COURT OF APPEAL: LICENSED MONEYLENDERS CAN RECOVER VOID LOANS UNDER RESTITUTION

In Golden Wheel Credit Sdn Bhd v Dato’ Siah Teong Din [2025] MLJU 2245, the Court of Appeal ruled that a licensed moneylender may recover loan monies under section 66 of the Contracts Act 1950, even when the moneylending agreements are void for technical non-compliance with the Moneylenders Act 1951. The Court held that while the agreements were void and unenforceable, they were not illegal, as the lender was duly licensed and the transactions were genuine. Applying the Federal Court’s Detik Ria principles, the Court found that restitution was proportionate and justified, ordering repayment of RM3.38 million to prevent unjust enrichment.

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Harta Intelektual

TRADEMARKS ACT 1976 – INFRINGEMENT OF TRADEMARK AND/OR TORT OF PASSING OFF – LEXUS VS LEX: FEDERAL COURT REAFFIRMS EXCLUSIVE TRADEMARK RIGHTS FOR MUNCHY’S

In Munchy Food Industries Sdn Bhd v Huasin Food Industries Sdn Bhd [2022] 1 MLJ 377, the Federal Court restored the High Court’s decision in favour of Munchy’s, ruling that Huasin’s LEX biscuits infringed and passed off the LEXUS trademark. The Court held that “honest concurrent use” cannot be raised where the defendant’s mark is unregistered and unpleaded, and that a trademark owner need not vary its registered mark before commencing infringement or passing off actions. The decision strengthens protection for registered proprietors and highlights that pleadings and exclusivity remain central in trademark disputes.

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Undang-undang Kontrak

BREACH OF CONTRACT – COURT OF APPEAL AFFIRMS LAD: CONTRACTOR LIABLE FOR DELAY, EXTRA CLAIMS REJECTED

In Savelite Engineering Sdn Bhd v Askey Media Technology Sdn Bhd [2025] CLJU 1808, the Court of Appeal upheld the employer’s entitlement to RM768,900 in liquidated damages (LAD) for a 233-day delay in completing a factory project. The Court held that time was of the essence, and the contractor was estopped from denying liability after applying for extensions of time. Applying section 75 of the Contracts Act 1950 and Cubic Electronics, the LAD was found proportionate (~9% of the contract price) and thus reasonable compensation. Claims for additional losses, such as lost rental profits and indemnity to tenants, were barred where an LAD clause exists.

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Recent Legal Updates

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.

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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.

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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.

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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.

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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.

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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.

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