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SINGAPORE \u2013 The ripples caused by a jack-up oil rig that capsized in 2018 on its maiden voyage from Vietnam to Taiwan continue to hit Singapore. The latest fallout involves home-grown OCBC Bank \u2013 the mortgagee of the vessel \u2013 which had its US$56 million (S$71.6 million) insurance claim dismissed by Singapore\u2019s apex court after a five-year court battle. <\/p>\n
The Court of Appeal on March 19 held that the bank had not proved that the vessel was lost due to what courts refer to as \u201cperils of the seas\u201d and that it was a total loss.<\/p>\n
The highest court, comprising Chief Justice Sundaresh Menon, Justice Steven Chong and Justice Hri Kumar Nair, allowed an appeal by five insurers, overturning an earlier High Court decision that had ruled in favour of OCBC.<\/p>\n
Delivering the decision by the court on March 19, Justice Chong wrote in a 68-page written judgment: \u201cNot infrequently, ships in the course of their voyages are lost at sea. Such incidents call for investigations to determine the cause, especially in the context of a claim under a marine insurance policy. How can a shipowner be expected to prove the cause of the loss where the vessel has sunk? <\/p>\n
\u201cIs there room to invoke Sherlock Holmes\u2019 celebrated investigation theory that \u2018when you have eliminated the impossible, whatever remains, however improbable, must be the truth\u2019?\u201d<\/p>\n
Justice Chong noted that the House of Lords in Britain has observed that it \u201cdoes not accord with common sense\u201d to find that an event is more likely to have occurred even if it is \u201cextremely improbable\u201d.<\/p>\n
He added: \u201cIt remains the task of the court to undertake its fact-finding process in order to determine whether the burden of proof has been discharged.\u201d<\/p>\n
The dispute centred on a marine insurance claim arising from the capsize of the jack-up rig Teras Lyza during a tow voyage in June 2018.<\/p>\n
The vessel, operated by Ezion Holdings and owned by Tera Lyza, had been insured under a marine insurance policy for up to US$56 million. <\/p>\n
OCBC, as the mortgagee, was named a co-assured and the sole loss payee under the policy.<\/p>\n
On June 5, 2018, while being towed from Vung Tau in Vietnam to Taichung in Taiwan, the vessel developed a list before capsizing later that day. It was later towed in a capsized state to Batangas Bay in the Philippines before being disposed of in deep waters on Aug 20, 2018, after no buyers were found.<\/p>\n
OCBC filed a claim in 2021 under the insurance policy, arguing that the vessel had suffered a total loss and that the capsize was caused by \u201cperils of the seas\u201d \u2013 a term in marine insurance referring to fortuitous maritime accidents. <\/p>\n
The High Court on April 30, 2025, agreed, finding that seawater entering the vessel had led to the capsize and that the loss was covered under the policy.<\/p>\n
Dissatisfied with the decision, the insurers of the vessel \u2013 Argoglobal Underwriting Asia Pacific, China Taiping Insurance (Singapore), Great American Insurance Company, MS First Capital Insurance, QBE Insurance (Singapore) \u2013 appealed and the case went before the Court of Appeal on Jan 21, 2026.<\/p>\n
Both sides assembled formidable legal teams before the apex court. The insurers were represented by Incisive Law, with seven lawyers led by senior counsel Chan Leng Sun, while a WongPartnership team helmed by senior counsel Tan Chee Meng represented OCBC. <\/p>\n
The Court of Appeal considered two key issues in the case: first, whether OCBC had proven that the loss was caused by \u201cperils of the seas\u201d; and second, whether the vessel was a constructive total loss \u2013 meaning it was so badly damaged that it was not worth recovering or repairing.<\/p>\n
On the first issue, the apex court said an insured party must prove its case \u201con a balance of probabilities\u201d. This means that the court must be satisfied that an event occurred if, based on the evidence, the occurrence of the event was more likely than not.<\/p>\n
The court found that OCBC had failed to do so. It said OCBC \u201cdid not propound a positive cause of the seawater ingress\u201d, meaning it did not explain how the seawater entered the vessel or show that it was due to an unexpected event at sea.<\/p>\n
OCBC also could not rely on a legal presumption that the loss was caused by perils of the seas. The court said this presumption only applies where a vessel is lost in \u201cwholly unexplained circumstances\u201d.<\/p>\n
In this case, the vessel had capsized but remained afloat for weeks, giving time for investigations. The court said it \u201cdid not sink in wholly unexplained circumstances\u201d.<\/p>\n
\u201c(The) vessel only capsized and did not sink until some time later, when it was scuttled… (it) remained afloat in a capsized state at sea for around 76 days,\u201d the court noted.<\/p>\n
On the second issue, the court found that OCBC had also failed to prove that the vessel was a constructive total loss, where the cost of recovering or repairing it would exceed its insured value.<\/p>\n
OCBC had relied on various documents, including repair estimates and reports, to support its claim. The court said OCBC needed to prove that the rig was a total loss by providing evidence through a witness who would be subject to cross-examination, but the bank did not do so. <\/p>\n
The court said the documents OCBC relied on would not have proved the claim, noting that \u201cnone of the (constructive total loss) documents indicated the costs of repair and\/or recovery based on the actual damage suffered by the vessel\u201d.<\/p>\n
The court did, however, agree with the High Court that OCBC did not breach the conditions required by the insurance policy and it had proven the debt under the mortgage.<\/p>\n
Nevertheless, these findings were not enough to support OCBC\u2019s insurance claim. <\/p>\n
As a result, the Court of Appeal allowed the insurers\u2019 appeal and dismissed OCBC\u2019s claim, bringing an end to the dispute over the ill-fated voyage of the Teras Lyza.<\/p>\n<\/div>\n