Legal Updates for November 2022

Shipping Law Updates

The Shipping Law Updates is a publication by our Regional Shipping Group which marshals legal expertise, industry insight, and commercial acumen in the fields of maritime and trade from the diverse talent pool of specialist lawyers at the Rajah & Tann Asia offices. The publication provides a snapshot of the key legal, regulatory, case law and industry developments in the region that have an impact on the shipping industry and your operations.

In this issue, we consider the occurrence of supply disruptions in commodities trading and the contractual remedies available to affected parties along the supply chain – specifically, we take a look at the example of the Indonesia oil export ban earlier this year and the options available under the Palm Oil Refiners Association of Malaysia contracts. On the topic of international trade, we also examine the relationship between the sale contract, the carriage contract and the financing arrangements in the context of a recent judgment of Malaysia’s apex court in Malayan Banking Berhad v Punjab National Bank [2022] 4 MLJ 758 (Federal Court).

Moving on to topics involving vessels and crew, we discuss the statutory regimes for the payment of compensation to employees for workplace injury and how it interacts with private settlements, against the backdrop of the recent Singapore High Court decision involving a crewmember aboard a vessel in M.T.M. Ship Management Pte Ltd v Devaswarupa & 3 Ors [2022] SGHC 178. We also take a look at the Bombay High Court's decision The Swedish Club v V8 Pool Inc. and Other. (Commercial Appeal Nos. 108 and 111 of 2021), which considered whether crew wages incurred post-arrest could be ranked as Sheriff's (or marshal's) expenses, and whether recoupment of such wages and Maritime Labour Convention expenditure by a P & I club are also to be treated as Sheriff's expenses.

Malaysia’s Corporate Green Power Programme: Virtual Power Purchase to the Fore

Following the teasers in the announcement by the Prime Minister of Malaysia in August 2022 and the launch of the National Energy Policy 2022 - 2040 in September 2022, the Corporate Green Power Programme ("CGPP") was finally launched by the Energy Commission of Malaysia on 7 November 2022.

The CGPP is essentially a programme which allows eligible corporate consumers ("CCs") to enter into power purchase agreements with solar power producers ("SPPs") for the purchase of renewable energy virtually instead of via direct delivery.

We set out in this Update a summary of the features of the CGPP and eligibility conditions which apply to SPPs and CCs should they wish to participate in the programme.

BTI v Sequana: What the UK Supreme Court Decision Means for Malaysia

On 5 October 2022, the UK Supreme Court delivered its long-awaited judgment in BTI 2014 LLC v. Sequana SA and others [2022] UKSC 25 ("Sequana Case") which concerns the question of the trigger point when directors must have regard to the interests of creditors ("Creditor Duty"). This case raised questions of considerable importance for Malaysian company law.

The UK Supreme Court in the Sequana Case considered for the very first time, the existence, content, and engagement of the Creditor Duty. The Supreme Court effectively confirmed the existence of the Creditor Duty in the arena of insolvency and held that the Creditor Duty is engaged when the directors know, or ought to know, that the company is insolvent or bordering on insolvency, or that an insolvent liquidation or administration is probable.

In this Update, we summarise the legal issues and decision of the UK Supreme Court and discuss the possible impact of the Sequana Case for Malaysian companies.