What Does Arrest of a Vessel Mean Under Maritime Law mean?
As per Section 2(c) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 arrest means detention or restriction for removal of a vessel by order of a High Court to secure a maritime claim including seizure of a vessel in execution or satisfaction of a judgment or order.
When and How a Ship is Arrested in India?
The right to get a ship arrested is provided in Section 5 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 which provides right of arrest of vessel in rem. It provides security against a maritime claim. These claims can be broadly speaking- 1) proprietary or possessory claims or 2) debt recovery or damages claims.
What are Maritime Claims?
Section 2(f) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 says that maritime claim means a claim referred to in Section 4 of the said Act. Section 4 of the Act provides twenty-three types of maritime claims with respect to which a High Court can exercise jurisdiction against any vessel. Following are the types of maritime claim under the Act:
- Dispute related to possession or ownership of a vessel or ownership of any share therein;
- Dispute between co-owners of a vessel as to the employment or earnings of the vessel;
- Mortgage or charge of the same nature on a vessel;
- Loss/damage caused by operation of a vessel;
- Loss of life or personal injury in direct connection to operation of vessel whether land or water;
- Loss/damage to or in connection with any goods;
- Agreement relating to the carriage of goods/passengers on board of a vessel which may be mentioned in charter party or not;
- Agreement related to use/hire of a vessel, whether contained in charter-party or not;
- Salvage services;
- Towage;
- Pilotage;
- Goods, materials, perishables or non-perishables provisions, bunker fuel, equipment (including containers), supplied or services rendered to the vessel for its operation, management, preservation, or maintenance including any fee payable or leviable;
- Construction, reconstruction, repair, converting or equipping of the vessel;
- Dues related to any port, harbour, canal, dock or light tolls, other tolls, waterway or any charges of similar kind chargeable under any law for the time being in force;
- Claim by a master/member/ their heirs or dependents of the crew of a vessel for wages/other due sums;
- Disbursements incurred on behalf of the vessels or its owners;
- Particular average or general average
- Dispute arising out of contract for the sale of the vessel;
- Insurance premium related to the vessel, payable by or on behalf of the vessel owners or demise charterers;
- Commission, brokerage, or agency fees payable in respect of the vessel, payable by or on behalf of the vessel owner or demise charterer;
- Damage or threat to damage caused by the vessel to the environment, coastline or related interests;
- Costs or expenses relating to raising, removal, recovery, destruction or the rendering harmless of a vessel which is sunk, wrecked, stranded or abandoned, including anything that is on board such vessel, and costs or expenses relating to the preservation of an abandoned vessel and maintenance of its crew;
- Maritime lien.
What Does Arrest of Ship In Rem Mean?
Implication of ‘in rem’ was clarified in the case of MV Elizabeth and Ors. v. Harwan Investment and Trading, wherein court held that, “Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo as distinguished from a right in personam to proceed against the owner… An action … though originally commenced in rem, becomes a personal action against a defendant upon appearance, and he becomes liable for the full amount of a judgment unless protected by the statutory provisions for the limitation of liability.”
So, the owner is not sued directly and by name, but the owner or anyone interested in the proceedings may appear and defend. In a situation where the owner does not submit to the jurisdiction and appear before the court to put in bail and release the ship, it is liable to be condemned and sold to satisfy the claims against her. But if the owner submits to the jurisdiction and obtains the release of the shipby depositing security, he becomes personally liable to be proceeded against in personam in execution of the judgment if the amount decreed exceeds the amount of the bail. This was reiterated by Gujarat High Court in the case of Gp Global Apac Pte. Ltd vs Mv Silvia Glory.
What Can the Defendant do After his Ship is Arrested?
The owner may get his ship released upon provision of alternate security. As per Halsbury’s Laws of England, Volume I [I], Fourth Edition at page 436 on Admiralty Jurisdiction, Para 386, it is provided that the owner of the property arrested can get it released by giving security for the plaintiff’s claim. Security can be given by – 1) either paying the amount of the plaintiff’s claim into court, 2) by providing bail in a sufficient amount; or 3) furnishing a guarantee acceptable to the plaintiff. The third method is most common. Further, it is necessary that the security should be sufficient to cover the plaintiff’s claim of interest and costs on the basis of his reasonably arguable best case. Similar view was appointed by the Supreme Court in the case of Videsh Sanchar Nigam Ltd. v. MV Kapitan Kud & Ors., 1996
The defendant can file an appeal in the Supreme Court on the ground to determine if the arrest is necessitated by the presence of a strong triable case. In the case of Videsh Sanchar, it was noted that the Ukrainian ship is a foreign ship and if it leaves the Indian territorial waters then it would be difficult to get hold of it and it may not return and submit to the Indian jurisdiction. But the Apex Court noted that the vessel can be released on following conditions- 1) deposit sum of Rs. 10 crore, 2) take undertaking from Ukrainian Government through its accredited authority towards balance amount of Rs. 25 crores.
In the case of MV Nordlake v. Union of India, it was noted that the vessel could be released even if the entire amount claimed is not given, the discretion is given to the Court to fix the security. It is pertinent that the plaintiff is able to establish a reasonably, arguable best case. Also, the amount to be secured should be sufficient to cover plaintiff’s claim. The case also clarified that- 1) in case plaintiff’s claim is higher than the value of the arrested vessel, security must be confined to the value of the arrested vessel; 2) where value of the arrested vessel is higher than the plaintiff’s claim, security must be confined to the plaintiff’s claim and 3) where both the amounts are equals, there would be no controversy for the amount of security to be given.
In the case of Liverpool & London SP & I Asson. Ltd. v. MV Sea Success I & Anr. (2003), where the Apex Court noted that 1999 Arrest Convention is applicable in India. But they are subject to 1) domestic law which may be enacted by the Parliament, and 2) should be applied only for enforcement of a contract involving public law character. In this case it was held that the unpaid insurance premium of P&I Club would come within the purview of expression “necessaries supplied to any ship”. Such unpaid insurance premium is a maritime claim which is enforceable in India. Upon failure to pay the vessel can be rightly arrested.
What if the owner or demise charterer abands the vessel on arrest?
In a situation where the owner or demise charterer has abandoned the vessel after its arrest then the High Court shall cause the vessel to be auctioned under Section 11(3) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 and the proceeds appropriated and dealt with such manner as the court may deem fit within a period of forty-five days from the date of arrest or abandonment: Provided that the High Court shall, for reasons to be recorded in writing, extend the period of auction of the vessel for a further period of thirty days.
What are the Rights Of the Ship Owner in Case of Wrongful Arrest of the Ship?
As per Section 11 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, empowers the High Court to impose a condition prior to arrest of a vessel or for permitting an arrest already effected to be maintained that the claimant who seeks to arrest or has procured the arrest of vessel will give an unconditional undertaking to pay such sums of money as damages or such security of a kind for an amount upon such terms as High Court determines to make goo the loss/damage which maybe incurred by the defendant as a result of the arrest and for which the claimant maybe found liable. It includes situations like 1) arrest having been wrongful or unjustified or 2) excessive security have been demanded and provided.
So, the person (defendant) providing security may approach the High Court and apply to have security reduced, modifies or cancelled for sufficient reasons as maybe written in the application.
In the case of Lufeng Shipping Company Limited v. MV Rainbow Ace, the plaintiff invoked admiralty jurisdiction against a person on the suspicion that the person beneficially owns both the vessels in respect of which maritime claim has arisen as well as the vessel which is sought to be arrested. In this case, the court held that the onus to prove it is on the plaintiff and a prima facie case cannot be built merely on suspicion. The court has to consider the balance of convenience and irreparable injury involved in the matter. It was held that arrest of respondent no. 1 vessel is not justified as a matter of law by single judge which was challenged in this appeal case where the decision of single judge was upheld.
Conclusion
The Admiralty Act safeguards the right of the Claimant by providing him with the right to get the ship arrested against a maritime claim. However, to prevent damage to the trade of the defendant or instances of frivolous arrest the Act gives certain procedural safeguards to the defendant as discussed above.
