IMSML Website Article 35/2025: Asia Capital Commodities Trade Sdn Bhd v The Owner of the Ship ‘Oriental Dragon’ [2024] MLJU - More Drama’ from the ‘Oriental Dragon’ Case
The vessel ‘Oriental Dragon’ has been the subject-matter of the IMSML Website Article series more than once before. If you are interested in what has happened before, check out these previous articles:
[1] From last year … IMSML Website Article 5/2024: Mulair Oleg (mendakwa sebagai Nakhoda Kapal ‘Oriental Dragon’) & Anor v Pemunya dan/atau pihak-pihak yang mempunyai milikan atau kawalan terhadap kapal ‘Oriental Dragon’ dari Pelabuhan Panama (BRT UW Ltd & Ors, interveners) [2022] MLJU 2599; AND …
[2] From this year, about 10 articles ago … IMSML Website Article 25/2025: Mulair Oleg (Suing as Master of the Ship ‘Oriental Dragon’) and Another v The Owners and/or Persons in Possession or Control of the Ship ‘Oriental Dragon’ of the Port of Panama (Brit UW Limited and Others, Interveners) and Another Case [2023] MLJU 3050 - The Proper Date for the Conversion of the Equivalent in Ringgit Malaysia (RM) of Claims Made in Foreign Currencies
The ‘Oriental Dragon’ is a passenger ship. She was owned by the Defendant (D) (ie Worldport Corp Ltd, HK) when the dispute arose, see Paragraph [2]. The Plaintiff (P) allegedly incurred costs after the Vessel was abandoned by the registered owners. Hence, the P sought to recover the cost of goods / materials supplied and disbursement made on account of the Vessel (via the ship’s operator or ship manager / agent. The P arrested the Vessel via a writ in rem under the Senior Courts Act 1981, Section 24(b), see Paragraph [1].
What has Gone on Before, in a Nutshell?
The Vessel has since been sold by the Sheriff pursuant to a judicial sale. There was a separate action in rem brought by the crew pursuant to an Order for Sale pendent lite dated 13 August 2021 to Virma Maritime Corp on 15 December 2021 for a sum of RM30,802,988.49. The proceeds of sale are presently in court. The Court will be making a determination of priorities claims and distribution, see Paragraph [2(ii)].
How was the Oriental Dragon used in the Business?
She was to operate as a passenger cruise cum casino business outside Penang Port limits in international waters under a joint venture business (JVB). The JVB was between the Defendant and one Mr Cheah Kah Chye (CKC). CKC was a director and substantial shareholder of the P, see Paragraph [3]. However, although the P was aware of CKC’s business dealings with the D, the P claimed that it is not a party to the JVB or any other signed MOU concerning the JVB, despite CKC being a director of the P and 50 percent shareholder of the P, see Paragraph [5].
The P alleged that on 12 November 2019, it was appointed by the D as ‘ship operator’. P’s task was to arrange for the smooth operation of the Vessel at Penang Port, see Paragraph [6]. The alleged job scope of P was to attend the safe day-to-day operation and maintenance of the Vessel whilst she was in Malaysia. Other tasks within the job job scope include, see Paragraph [7]:
[1] Agency services;
[2] Supplying the Vessel with goods and materials for her safe operation;
[3] Maintenance;
[4] Paying staff salaries;
[5] Welfare expenses.
What were the Circumstances that Led to the Dispute?
At the start, business appeared to be profitable. Later on 18 March 2025, the first Movement Control Order (MCO) was implemented by the Malaysian Government to curb the spread of COVID-19 during the pandemic. The business on the Vessel closed and JVB funds quickly depleted. Hence no funds were being generated to pay the Vessel’s continuing expenses, including salaries of the crew and other operational expenses, see Paragraph [9]. The P claimed a sum of RM8,130,181.34 for expenses incurred until the date of the Vessel’s arrest, see Paragraph [11].
Note, that when this case was heard in court, the Master and crew had arrested the ship for unpaid wages of the master and crew wages. In addition, judgment had been obtained and the various claims have been ranked according to their order of priorities, see Paragraph [10].
What were the terms of the MOU between CKC and the D?
The D submitted that the Plaintiff was bound by the terms of the MOU between CKC and the D. The D argued that the P was an entity set up by CKC to implement the terms of the MOU between him and the D, see Paragraph [12]. The D also alleged that under the MOU, the JVB is the entity responsible for all the expenses in running the Vessel, and that the P was the alter ego of CKC, see Paragraph [14].
Was the Vessel Brought to Penang to Fulfill the MOU Terms, or was it outside the MOU (ie Independent)?
Mr Justice Ahmad Murad Abdul Aziz found that the JVB was formed to undertake the business operations of the Vessel. Under Clause 2.5 of the MOU, HK4,000,000 was set aside to fund the operation and maintenance of the Vessel whilst she was within Malaysian waters, see Paragraph [17]. Further, under Clause 4 of the MOU, CKC was indemnify the D against any loss, damage or expense incurred by the D arising out of or in connection with the operation of the Vessel by CKC and/or the JVB and any lien whatsoever arising from an even occurring during the MOU, see Paragraph [20]. His Lordship concluded that CKC / the P was therefore the party responsible for the expenses of the Vessel, see Paragraph [20].
Mr Justice Ahmad Murad Abdul Aziz observed that it was unlikely that the D would provide the Vessel without receiving any payment for its use. For example, as long as the Vessel was making profits, the expenses would be deducted from the profits, see Paragraph [22]. However, should circumstances like the MCO occur in Malaysia from 18 March 2020 and the Vessel makes a loss, it would be the D’s responsibility to bear all the costs associated with the Vessel, see Paragraph [22].
This arrangement makes no sense as it would then be the D’s responsibility to bear all costs associated with the Vessel in Penang, and then proceeds to share the profit 50/50 with CKC / the P. His Lordship held that this was not logical as all the obligations and risks are on the D, who end up providing the Vessel for free, in addition to paying all the cost, whilst nothing is contributed by the P, see Paragraph [22].
Was the P was Appointed by the D as ‘Ship Operator’ Outside and Independently of the MOU?
According Mr Justice Ahmad Murad Abdul Aziz, the letter of appointment (LOA) dated 12 November 2019, that appointed the P as a ‘ship operator’, was an ancillary document. The main agreement between the parties was the MOU, see Paragraph [26]. His Lordship added that the LOA did not contain any terms or references to remuneration or other terms of payment for the services performed by the P under the LOA, see Paragraph [27].
Even thought the P described the LOA as a management agreement, this was unlikely as no management or agency fee was ever paid to the P under the LOA. Further, none was demanded by the P, see Paragraph [28]. If the LOA was indeed a management agreement, it would have contained the scope of the P’s responsibilities such as budgets, fess and duration, see Paragraph [28].
Mr Justice Ahmad Murad Abdul Aziz therefore held that the LOA was an arrangement made under the MOU as an ancillary document, see Paragraph [29]. The D therefore did not appoint the P outside and independently of the MOU, see Paragraph [30].
Was the P entitled to be reimbursed for the Expenses Incurred by Vessel in Penang?
The P is therefore the party intended to be responsible for the expenses of operation and maintenance of the Vessel whilst she was in Penang, as clearly provided for by the MOU, see Paragraph [31]. The P’s claim could not be maintained outside the terms of the MOU and the P is therefore not entitled to be reimbursed the sum of RM8,130,181.34, see Paragraph [32].
Thank you for reading IMSML Website Article 35/2025
Stay tuned for the next IMSML Website Article 36/2025: Orin Energy Investments Ltd v Futura Asia Ltd [2024] MLJU 2347 - Failure to Deliver Fuel Oil of Venezuelan Origin via a Ship-To-Ship Transfer
Signing-off for today,
Dr Irwin Ooi Ui Joo, LL.B(Hons.)(Glamorgan); LL.M (Cardiff); Ph.D (Cardiff); CMILT
Professor of Maritime and Transport Law
Faculty of Law
Universiti Teknologi MARA Shah Alam
Selangor, Malaysia
Tuesday, 2 September 2025
Note that I am the corresponding author for the IMSML Website Articles. My official email address is: uijoo310@uitm.edu.my