ENRA Group Berhad Annual Report 2021

FINANCIAL STATEMENTS & OTHERS Annual Report 2021 | ENRA Group Berhad 183 NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2021 41. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (cont’d) (c) Claim against ENRA SPM Labuan Limited On 22 July 2020, ESPML a wholly-owned indirect subsidiary of the Company received a Notice for Arbitration to commence arbitration proceedings (“Notice of Arbitration”) by PT Cakra Manunggal Semesta (“PT CMS”). The alleged claim arises out of a BIMCO Standard Bareboat Charter “BARECON 2001” (“Charterparty”) dated 16 October 2017 between ESPML and PT CMS for the vessel known as “MT. BRATASENA” (“Vessel”) and a Settlement Agreement dated 9 December 2019 entitled “Mutual Agreement on Exit Terms” between ESPML, PT CMS, ENRA SPM (the parent company of ESPML), and Sea Trust Marine Pte. Ltd., a related company to PT CMS (the “Settlement Agreement”). PT CMS allegedly claimed that ESPML is in breach and/or repudiatory breach and/or anticipatory repudiatory breach of the Charterparty and/or Settlement Agreement. PT CMS’ claim for damages is currently unspecified. Pursuant to the arbitration agreement under the Charterparty, the arbitration is referred to the Asian International Arbitration Centre (formerly known as the Kuala Lumpur Regional Centre for Arbitration). On 6 November 2020, ESPML had filed its Response to PT CMS’ Notice of Arbitration. On 6 May 2021, PT CMS via its solicitor has served their first memorial and related documents which include submission on fact and law, supported by Witness Statements and expert report to ESPML’s solicitor. Based on PT CMS’s submission of claims, PT CMS is seeking approximately USD5.57 million. ENRA SPM has until 28 July 2021 (being an extension of time from 28 June 2021) to serve its similar memorial with the help from its solicitor to defend itself and to counter claim against PT CMS. ESPML denied that it is in breach and/or in repudiatory breach and/or anticipatory breach of the Charterparty and/or the Settlement Agreement as alleged or at all. On the contrary, it is PT CMS who is in breach and/or repudiatory breach of the Charterparty and/or the Settlement Agreement. As a result of PT CMS’s breach and/ or repudiatory breach, ESPML has suffered loss and damages (including fines and penalties) presently in the excess of approximately USD 10.00 million. ESPML and ENRA SPM, had through their solicitors filed a Writ of Summons (in rem) (“Singapore Writ”) at the High Court of the Republic of Singapore on 25 July 2020 against PT CMS and/or Demise Charterer of “MT BRATASENA” (“Defendant”) filed a Writ in Action in rem at the High Court of Malaya at Kuala Lumpur and at the High Court of Sabah and Sarawak at Kota Kinabalu on 27 July 2020, and at the High Court of Sabah and Sarawak at Kuching on 28 July 2020 (collectively “the Writs”), against PT CMS or other persons interested in the Vessel for claims on damages in relation to the breach and/or repudiatory breach and/or anticipatory repudiatory breach of the Charterparty and/or Settlement Agreement. Details of the Writs are as follows: i. ESPML claims against the Defendants is for damages (to be assessed) together with the interest and costs for various breaches and/or repudiatory breach of the BIMCO Standard Bareboat Charter “BARECON 2001” dated 16 October 2017 and a Mutual Agreement on Exit Terms dated 9 December 2019 and/or for the unlawful detention and/or conversion of the vessel and/or various property on board the said vessel. ii. ENRA SPM’s claim against the Defendant is for damages (to be assessed), together with interest and costs, for unlawful detention and or/ conversion of the vessel and/or various property on board the said vessel. On 11 January 2021, the ESPML and ENRA SPM’s writ in the High Court in Sabah and Sarawak at Kuching has been renewed for a period of 6 months from 28 January 2021 to 27 July 2021. ESPML’s solicitor advised that ESPML has valid and viable defences and a meritorious counterclaim on the facts. Based on that, ESPML has not made any provision for liabilities in respect of PT CMS’s claims beyond what was already recognised in the financial year ended 31 March 2021. Similarly, ESPML has not recognised any asset arising from potential counter claim against PT CMS for the loss and damages it suffered.