[171210.EN.SEA] IRISL : Owners of Seized Ships Fighting Sale

OWNERS of the three Iranian ships detained in Singapore waters will go to court next week to seek a postponement of the sell-date of the vessels, which are worth about US$144 million (S$188 million).

They want a month's adjournment to provide the time to raise the security deposit sought by Credit Agricole Corporate and Investment Bank. The deposit will enable them to get their ships back and allow them to fight the latter's claims in court.

The bank, through lawyer Winston Kwek from Rajah and Tann, are seeking US$210 million in alleged loan defaults and associated costs, which had led to the three vessels being detained.

The three German-registered container vessels - Tuchal, Sabalan and Sahand - were seized on a High Court warrant. They belong to the Islamic Republic of Iran Shipping Lines (IRISL), the Iranian equivalent of Singapore's Neptune Orient Lines. The IRISL is understood to have a fleet of more than 170 vessels.

Several prospective buyers have inspected the vessels, which are now moored off the Marina Barrage, pending the Sheriff's sale - or a public auction in a forced sale - and the offers were originally due to close next Tuesday.

The bank foreclosure against the IRISL was triggered by European Union sanctions against Iran's nuclear programme that kicked in last July.

Following this, the European insurers for the vessels pulled out as they could no longer underwrite the vessels, leaving the owners to engage Iranian insurers Moallem. That was a breach of the mortgage agreements, according to court documents. The German-based managers for the vessels also pulled out their services, which constituted another breach.

Key to the case is how the Iranians can settle their loans when funds going in and out of Iran are subject to scrutiny and rejection.

According to court papers, the vessel owners, through their lawyers from Haridass, Ho and Partners, had offered to pay deposits into Zurich-based United Bank AG or French-based Tejarat Bank as security, but the proposals were rejected by the plaintiffs. The owners were instead given the option of either getting guarantees from a major bank here, or paying the monies into court before they can argue against allegations of loan defaults.

It is understood Singaporean banks are not prevented from giving bank guarantees to such Iranian-linked sources, unless there are reasonable grounds to believe such services contribute to proliferation of sensitive nuclear activities in Iran.

The arrest action against the three ships are not the only cases pending. Four European banks, led by German-based HSH Nordbank, are also seeking the arrest of five vessels linked to the IRISL over loan foreclosures, following alleged defaults worth US$268 million.

The banks are also seeking an additional €113,917 (S$197,000) as at Oct 10 in associated costs, according to court documents filed by lawyer S. Mohan of Gurbani and Co.

The IRISL was a guarantor of the loans which were given in 2006 for the construction and delivery of the five vessels. But it was put on the list of the United States Treasury Department's Office of Foreign Assets control in September 2008, which prevented it from transacting in US dollars, the currency of the loan.

Two of the five vessels, the Dandle and the Decretive, were detained in Malta and Hong Kong last month.

Lawyers say the arrest moves are being made in Singapore as it is a frequent port of call and its efficient court system provides for effective enforcement of arrest warrants for wanted vessels.

Source : Strat Times, 11.12.10.