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Recently, Shanghai Maritime Court successfully identified and applied Singapore law, concluded a dispute over ship-related financial loan contract between two foreign parties, and accumulated experience in solving problems in the identification and application of extraterritorial laws.


In this case, the State Bank of India signed a loan contract with Varun Asia PTE. LTD. (hereinafter referred to as Varun Company), which was used to pay part of the price of the Singapore ship "AMBA bhakti". The loan contract stipulates that laws of the Republic of Singapore shall apply. After the loan was issued, Varun signed the mortgage contract and the first ranking commitment deed with the State Bank of India for the ship "AMBA bhakti" and handled the mortgage registration in Singapore.


Since September 2016, the National Bank of India has issued a notice of default and accelerated maturity to Varun Company as it failed to pay the loan as agreed. After that, Shanghai Maritime Court auctioned the ship“AMBA BHAKTI” owned by Varun Company due to an outsider’s enforcement application according to the law. During the auction announcement period, the National Bank of India applied to the court for the registration of creditor's rights and filed a lawsuit for rights confirmation as the mortgagee of the ship, requesting the defendant to repay RMB 10.88 million yuan and to confirm that it has the mortgage right over the ship and has the priority to be paid from the auction price.  


When hearing this case, the collegial panel decided to apply the Singapore law to the case by considering the relevant provisions of the flag state of the ship mortgage and the Singapore law agreed by the plaintiff and the defendant in the loan agreement as the intention expression of the applicable law. Ascertain foreign law, the collegial panel according to one of the partners of the Shanghai maritime court,——East China University of Political Science and Law in legal opinions issued by the Singapore ascertain foreign law research center, verify the cognizance of ship mortgage aspects needed statute law and the civil and commercial contract law principles, hereby confirms that the loan contract effectiveness, and the preferred payments of mortgage of ships shall be established in a foreign country.

The ascertainment of the content of foreign law, also known as "the determination of the content of foreign law", refers to the problem of how to determine and prove the content of a certain foreign law, which should be applied in foreign-related cases according to the domestic conflict rules. As a common question in cases involving foreign elements, the ascertainment of foreign law is an important prerequisite for judges to apply the applicable law accurately to solve substantive disputes in foreign-related trials. The main difficulty in hearing this case lies in the application of common law in the Republic of Singapore. In many common law countries, there is no statutory law in certain legal areas. Instead, the basic legal principles formed through case studies will be applied to solving legal issues.

According to the principle of current civil and commercial contract law in Singapore, Loan Agreement signed between two parties concluded legal and valid, the Plaintiff and the Defendant shall perform their respective obligations in accordance with the agreement. At the same time, according to the Merchant Shipping Act of Singapore, a Singapore ship or any share therein may be made a security for a loan or other valuable consideration. If there are more mortgages than one registered in respect of the same ship or share, the mortgagees shall, notwithstanding any express, implied or constructive notice, be entitled in priority one over the other, according to the date and time of the record of each mortgage in the register. The court hereby holds that the Plaintiff is entitled to the mortgage right of M/V AMBA BHAKTI, shall be entitled to claim the rights under Loan Agreement and Mortgage Contract. (Translated by Tang Huizhi, Li Yuanhang)