Hong Kong: The Decurion: Hong Kong Court Rules On Meaning Of "Control" In The Context Of A Ship Arrest

Last Updated: 22 October 2012
Article by Max Cross and William Blagbrough

Chimbusco Pan Nation Petro-Chemical Co Ltd v. The Owners and/or Demise Charterers of the Ship or Vessel "Decurion" (The Decurion) [2012] HKCFI 630; HCAJ141/2010 (4 May 2012)

This case arose out of the common scenario where a supplier delivers bunkers to a "fleet" of ships it believes are under common control and extends credit terms to its customer. If the customer fails to pay, the supplier will try to arrest one or more ships in the fleet to settle its invoices. As the supplier in this case found, there can often be considerable difficulties enforcing in this way.

The background facts

The bunker supplier, Chimbusco Pan Nation Petro-Chemical Co Ltd ("Chimbusco") had supplied bunkers to the vessel, Decurion, for which it had not been paid. This vessel was owned by Maruba SCA, which was part of the Maruba Group. The claim for these unpaid bunkers amounted to about US$ 85,000.

Chimbusco had also supplied bunkers to 10 other vessels through bunker supply contracts with Maruba SCA. It had not been paid for the provision of these bunkers either; a claim in excess of US$ 4.1 million.

Maruba SCA did not, however, own any of those other vessels. They were chartered by Clan SA, another company within the Maruba Group. Maruba SCA supplied those vessels with bunkers when they were in Hong Kong through another Maruba Group company and pursuant to a separate Services Agreement between the Maruba Group companies.

The Decurion called in Hong Kong and was arrested by Chimbusco. Chimbusco claimed against the Decurion the outstanding sums for the provision of bunkers for all 11 vessels, not just the bunkers supplied to the Decurion.

Maruba SCA accepted that Chimbusco had a claim against the Decurion for bunkers supplied to the Decurion. Maruba SCA denied, however, that Chimbusco could claim against the Decurion for the unpaid bunkers in relation to the other 10 vessels. It sought to have this element of Chimbusco's claim struck out.

The legal background

The Admiralty Jurisdiction in Hong Kong is governed by the High Court Ordinance ("HCO"). Under the HCO, a bunker supplier can arrest a ship in respect of claims for bunkers which are sold to the owners and supplied to that ship for her operation.

Where bunkers are supplied to ship A for her operation, a bunker supplier may also arrest ship B for claims for bunkers supplied to ship A only if two conditions are met. Those conditions are specified in the HCO and are as follows:

  1. that when the cause of action arose, the defendant to the claim was the "owner, charterer of, or in possession or control" of ship A; and
  2. that at the time the action was brought (i.e. when the writ was issued), the defendant was the beneficial owner of ship B.

In this instance, it was clear that Maruba SCA owned the Decurion at the time the writ was issued, so point (2) was not in issue. Maruba SCA were, however, neither the registered owners nor the charterers of the other 10 vessels. The issue before the court was, therefore, the interpretation of the words "in possession or control," as contained in the HCO.

The court's decision: the meaning of "control"

The court looked at the limited cases relating to "control" that had been heard previously in other common law jurisdictions. It found that there may be control of a ship without possession of it, and that the term "control" in such circumstances must mean something else other than the kind of control that comes with possession. The most obvious example of that kind of control would be the ability to tell the person in possession of the ship what to do with the ship.

In this instance, the court found that this ability lay with the charterers, Clan SA, by virtue of the employment clauses contained in the charterparties which it had entered into with the various ships' registered owners.

Chimbusco pointed to many factors that it said meant Maruba SCA effectively controlled Clan SA and, therefore, the other 10 ships. The court, however, refused to look beyond the charterers in determining who exercised control of the ships:

"[e]ven if (say) Maruba SCA might be treated as the parent of Clan or the individual companies owning the 10 vessels at the relevant times, there is no basis for piercing the corporate veil."

Accordingly, Chimbusco's claim in relation to the bunkers which it had supplied to the other 10 ships was struck out.


By adopting the analysis above, the court in this case set out a clear and rigorous test for the meaning of "control" under the HCO. Control of a ship rests with the person who is able to tell the person in possession of the ship what to do with that ship. For a ship under time charter, control will normally rest with the time charterer.

The court refused to widen the circumstances in which a ship may be arrested in Hong Kong, which has helped to preserve certainty. It does, however, reinforce the need for bunker suppliers, if they are going to extend credit terms to owners, to have a properly drafted contract which would at least allow for the arrest of the vessel supplied if payment is not made on time. Equally, managers who decide to extend credit to a whole fleet should be aware that recovering payment may still require a series of separate arrests.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions