Ship Arrest by the Admiralty High Courts in India

What is the purpose of arresting a ship vessel?

A vessel maybe arrested for the following purpose-

• acquire the jurisdiction;
• obtain any security for the satisfaction of the claim;
• for execution of a decree.

If the defendant Ship provides sufficient bail which covers the claim then the court may order the release of ship if it is arrested under the order of attachment. In a situation where the ship is arrested before any judgment and the defendant has not secured the release of the ship by depositing any sufficient bail or its condition is worsening then the court can order the sale of property upon the notice being duly served to the interested parties.

Article 1 of the International Convention Relating to the Arrest of Sea-Going Ships, 1952 defines the term arrest as the following: “(2) “Arrest” means the detention of a ship by judicial process to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment.”

Further, Article 2 of the 1952 Convention states that a ship flying the flag of one of the Contracting States may be arrested in the jurisdiction of any of the Contracting States in respect of any maritime claim only. However, this Convention does not prevent or restricts the right of government or their departments, public authorities, or dock or harbor authorities under their existing domestic laws/regulations to arrest, detain or otherwise prevent sailing of vessels within their jurisdiction.

In case the arrest is made maliciously or in bad faith then the court having admiralty jurisdiction has the discretion to insist that the Claimant makes good the loss to the Defendant. This is because wrongful arrest can cause irreparable loss and damages to the ship-owner and he should in that event be compensated by the arresting party.

Whether the 1952 convention is applicable in India?

In the case of M.V. Elisabeth and Others vs. Harwan Investment and Trading Pvt. Ltd, the Apex Court noted that, “The High Courts in India are superior courts of record. They have original and appellate jurisdiction. They have inherent and plenary powers. Unless expressly or impliedly barred, and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers….”

The Law Commission had recommended in respect of Colonial Courts of Admiralty Act to adopt the necessary substantive provisions of the English Statute to make Indian law more comprehensive. But the law was not brought in line with international conventions on maritime law passed in 1952. Nonetheless, despite India not adopting the Brussels Conventions of 1952 and lagging behind in many other countries in ratifying and adopting the beneficial provisions of various other conventions intended to facilitate international trade, but since the principles incorporated in the conventions are themselves derived from the common law of nations, they form part of common law of India and are applicable for the enforcement of maritime claims against foreign ships.

The arrest of Ship is governed by which law in India?

In 2017, The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act consolidated all laws relating to Admiralty in India. The Act gives jurisdiction concerning admiralty matters to respective High Courts, and the concerned courts shall exercise their authority within the territorial waters of their jurisdiction. The Act gives jurisdiction to the coastal regions High Court to deal with admiralty matters- Calcutta HC, Bombay HC, Madras HC, Karnataka HC, Gujarat HC, Orissa HC, Kerala HC, HC of judicature at Hyderabad for the State of Telangana and Andhra Pradesh.

Section 5 of the Act provides for arrest of vessel in rem, where:

1. The Owner of the vessel is liable for the claim, or
2. The demise charterer of the vessel is liable for the claim, or
3. The claim is based on mortgage or similar charge, or
4. The claim relates to possession or ownership, or
5. The claim is against the owner, demise charterer, manager, or operator of the vessel.

Section 5(1) is reproduced below for reference:

“High Court may order arrest of any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim which is the subject of an admiralty proceeding, where the court has reason to believe that –

1.  The person who owned the vessel at the time when maritime claim arose is liable for the claim and is the owner of the vessel when the arrest is effected, or
2. The demise charterer of the vessel at the time when the maritime claim arose is liable for the claim and is the demise charterer or the owner of the vessel when the arrest is effected, or
3. Claim is based on a mortgage or a charge of the similar nature on the vessel,
4. The claim related to ownership or possession of the vessel,
5. The claim is against the owner, demise charterer, manager or operator of the vessel and is secured by a maritime lien as provided in Section 9.”

The High Court may also order arrest of any other vessel to secure security against a maritime claim, in lieu of the vessel against which a maritime claim has been made under this Act, subject to the provisions of Section 5(1) of the Act. However, no vessel shall be arrested for the purpose of dispute regarding possession or ownership of a vessel or the ownership of any share therein in Section 4(1).

What is the procedure for seeking arrest of a ship?

1. Once Claim is decided then the claimant has to file an application for substantive suit stating detailed facts along with other particulars.
2. First, it should be determined which particular High Court has the jurisdiction in the matter
3. Then the claimant in this admiralty suit shall specify:
   1. Claimant’s name
   2. Vessel’s name
   3. Vessel’s flag
   4. Details of owner of the vessel
   5. Facts stating the dispute
   6. Ground
   7. Prayer
4. After the arrest warrant is issued from the registry upon payment of fees and other expenses, the Marshall or the authorised officer is given intimation.
5. Claimant also has to take the undertaking that in case of a wrongful arrest he will pay the compensation.
6. Marshall and other officers can take an undertaking from the claimant to make further deposits towards the expenses as incurred by him in connection with the custody of the ship under arrest.
7. Custom and harbor authorities have to be notified of the arrest.
8. Subsequent to issuing an arrest warrant, the vessel’s owner has to appear and settle the claim or challenge the arrest made.
9. If the seller fails to settle the claim, then the ship may be sold and the sale proceed may be used to settle the claim. Or in cases where the ship is not released because of the owner bankruptcy, or the master/crew has abandoned the vessel then the Marshall or the authorised office must protect the vessel and its equipment in accordance with the regulations.

What is ‘custody’ in the context of an arrest in admiralty law?

In the case of MV Tongli Yantai v. Great Pacific Navigation, this question was considered by the Bombay High Court where it was decided that seizure under a court process for arrest of a ship in admiralty operates in rem. The arrest transfers the custody of the property to the court or its officer and holds hood against the world at large. If there is any interference or disturbance to this custody then it will amount to contempt of the court and is actionable. The arrest is notified to the world at large by serving an arrest warrant on the ship with communication to all concerned authorities such as port administration and customs signifying the custody of the court.

The court highlighted the process of ship arrest wherein upon issue of arrest warrant, the bailiff appointed by the Sheriff serves copies upon Conservator or Deputy Conservator of Port and Customs Office within whose water territorial jurisdiction the ship is located who makes entries in their records. Then the bailiff carries the original warrant to the ship and executes the same personally on the Master or other officer appointed to man the ship and, in case of an unmanned ship, pastes the original to the wheel of the vessel. The custody of the court is thus indicated conspicuously so as to avoid any interference by anyone with such custody.

What are Maritime Claims?

Section 2(f) of the AJSMCA says that maritime claim means a claim referred to in Section 4 of the 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.

1. Dispute related to possession or ownership of a vessel or ownership of any share therein;
2. Dispute between co-owners of a vessel as to the employment or earnings of the vessel;
3. Mortgage or charge of the same nature on a vessel;
4. Loss/damage caused by operation of a vessel;
5. Loss of life or personal injury in direct connection to operation of vessel whether land or water;
6. Loss/damage to or in connection with any goods;
7. Agreement relating to the carriage of goods/passengers on board of a vessel which may be mentioned in charter party or not;
8. Agreement related to use/hire of a vessel, whether contained in charter-party or not;
9. Salvage services;
10. Towage;
11. Pilotage;
12. 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;
13. Construction, reconstruction, repair, converting or equipping of the vessel;
14. 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;
15. Claim by a master/member/ their heirs or dependents of the crew of a vessel for wages/other due sums;
16. Disbursements incurred on behalf of the vessels or its owners;
17. Particular average or general average
18. Dispute arising out of contract for the sale of the vessel;
19. Insurance premium related to the vessel, payable by or on behalf of the vessel owners or demise charterers;
20. Commission, brokerage or agency fees payable in respect of the vessel, payable by or on behalf of the vessel owner or demise charterer;
21. Damage or threat to damage caused by the vessel to the environment, coastline or related interests;
22. 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;
23. Maritime lien.

What does action in rem means?

Section 5 of the Act provides right of arrest of vessel in rem. Its implication 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 any one 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?

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 taken 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.  

Recent Judicial Development:

In the case of Chrisomar Corporation v. MJR Steels Private Ltd., Justice Rohinton Nariman and Justice Sanjay Kishan Kaul have noted that the arrest of a foreign ship for a maritime claim is permissible only if there is no change of ownership between the date when claim arose and the date of arrest of ship.

So, the case dealt with the question whether there can be arrest of vessel if there is change of ownership? Court relief upon Article 3 of the International Convention on the Arrest of Ships which is reproduced below:

“Article 3: Exercise of right of arrest 1. Arrest is permissible of any ship in respect of which a maritime claim is asserted if: (a) the person who owned the ship at the time when the maritime claim arose is liable for the claim and is owner of the ship when the arrest is effected.”

Relying upon Article 3 of the International Convention on the Arrest of Ships was relied upon for reaching the conclusion that the ownership of the vessel to enforce maritime claim has to be seen at the stage of arrest and not the stage of institution of suit.

Conclusion:

The arrest of vessel is only of provisional nature done by the Marshall or any other authorized staff and it is done with the nature to detain the ship till the matter is settled by the competent court. It is only to safeguard the interest of the Plaintiff in form of security. As per Section 5 of the Act the right of arrest is in rem which gets in personam once the owner of the ship comes to give appearance, so the owner becomes liable for all the claims.