Ship Arrest in India

Akash Singh, ILS Law College, Pune

Since the advent of the human race the thing that has remained inevitable till date is the conflict among our race. In the words of Martin Luther King Jr. “Man must evolve for all human conflict a method which rejects revenge, aggression and retaliation. The foundation of such a method is love.” Now when these disputes occur over open waters, the resolution is provided in accordance with the admiralty law. The most common relief sought by parties in disputes under admiralty law is seeking ‘Ship Arrest’.


What is Ship Arrest?

The term Ship Arrest might seem hysterical and unreal for someone who isn’t accustomed to Admiralty Law. However under the admiralty law ship arrest refers to a civil judicial procedure, wherein a ship is seized from trading or moving in order to fulfill the claims against the vessel or the owner of the vessel. In other words it is an exclusive jurisdiction vested with the admiralty courts to arrest a ship in order to secure and settle a maritime claim.


The International Convention Relating to the Arrest of Sea-Going Ships, 1952 defines the term arrest as:

"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."[1]

Under the Indian jurisdiction the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (hereinafter the Act), confers the High Court with the power to arrest any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim[2]. Therefore at this juncture, it becomes very clear that a ship is arrested under admiralty law to settle a maritime claim, and hence, understanding the term ‘Maritime Claim’ becomes of paramount importance before proceeding any further.


Concept of Maritime Claim

To put it lucidly, maritime claims refer to any claim that an injured party has from any ship. These claims includes any disputes between vessel co-owners about the employment or earnings of the vessel, claims regarding mortgages or charges on a vessel, loss or damage caused by the operation of a vessel (including environmental damage), loss or damage to or in connection with any goods. The Act, has laid down an exhaustive list as to what all falls within the ambit of Maritime Claims under section 4, and includes the following: -

  1. Dispute regarding the possession or ownership of a vessel or the ownership of any share therein;

  2. Dispute between the co-owners of a vessel as to the employment or earnings of the vessel;

  3. Mortgage or a charge of the same nature on a vessel;

  4. Loss or damage caused by the operation of a vessel;

  5. Loss of life or personal injury occurring whether on land or on water, in direct connection with the operation of a vessel;

  6. Loss or damage to or in connection with any goods;

  7. Agreement relating to the carriage of goods or passengers on board a vessel, whether contained in a charter party or otherwise;

  8. Agreement relating to the use or hire of the vessel, whether contained in a charter party or otherwise;

  9. Salvage services, including, if applicable, special compensation relating to salvage services in respect of a vessel which by itself or its cargo threatens damage to the environment;

  10. Towage;

  11. Pilotage;

  12. Goods, materials, perishable or non-perishable 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 in connection with 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 or member of the crew of a vessel or their heirs and dependents for wages or any sum due out of wages or adjudged to be due which may be recoverable as wages or cost of repatriation or social insurance contribution payable on their behalf or any amount an employer is under an obligation to pay to a person as an employee, whether the obligation arose out of a contract of employment or by operation of a law (including operation of a law of any country) for the time being in force, and includes any claim arising under a manning and crew agreement relating to a vessel, notwithstanding anything contained in the provisions of sections 150 and 151 of the Merchant Shipping Act, 1958 (44 of 1958);

  16. Disbursements incurred on behalf of the vessel or its owners;

  17. Particular average or general average;

  18. Dispute arising out of a contract for the sale of the vessel;

  19. Insurance premium (including mutual insurance calls) in respect of 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 by or on behalf of the vessel owner or demise charterer;

  21. Damage or threat of damage caused by the vessel to the environment, coastline or related interests; measures taken to prevent, minimise, or remove such damage; compensation for such damage; costs of reasonable measures for the restoration of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third parties in connection with such damage; or any other damage, costs, or loss of a similar nature to those identified in this clause;

  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 or has been on board such vessel, and costs or expenses relating to the preservation of an abandoned vessel and maintenance of its crew; and

  23. Maritime lien.[3]

Jurisdiction

Before India gained Independence, under The Colonial Court of Admiralty Act, 1890, the High Court of Bombay, Madras and Calcutta were the only judicial authorities competent to deal with matters relating to Admiralty. Under the Admiralty Courts Act, 1861, the three presidency courts were vested with the same powers as that of the High Court of England.


However, after nearly 46 years of Independence, the Supreme Court in the year 1993 through the case of M.V. Elizabeth v. Harwan Investment & Trading Pvt. Ltd.[4] widened the scope of Admiralty Jurisdiction in India. The bench in this case opined that "The High Court 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 powers." Furthermore the court also went on to observe that since India is a common law country, the International Convention of the Arrest of Seagoing Ships, Brussels, 1952 can be applied to India to enforce the claims of maritime law against foreign ships; even though this international convention was not ratified by India.


Later on, through the case of M.V. Sea Success[5] the Apex Court observed that the principles of the 1999 Geneva Arrest Convention were also applicable for arresting a ship in India. The court was of the view that the principles set out in these Conventions are in compliance with the domestic laws and therefore by this decision, the Supreme Court has widened the scope of the jurisdiction of the Indian Admiralty Courts. Therefore through these cases the Supreme Court settled that even though the International Convention of the Arrest of Seagoing Ships, Brussels,1952, and the Geneva Arrest Convention, 1999 are not ratified in India, still they’ll be applicable and enforceable under the India Jurisdiction as they are in compliance with the domestic laws.


Now prior to the enactment of the Act the High Courts of Bombay and Calcutta were vested with pan India jurisdiction while the other High Courts of coastal states of India only had territorial jurisdiction. However with the enforcement of the Act the Bombay and Calcutta High Court seized to exercise pan India jurisdiction and the jurisdiction of each High Court of Coastal States of India was limited to only those vessels which were under the territorial waters of their respective coastal states.[6]


Procedure for Seeking Arrest of a Ship

  • The procedure for seeking arrest of a ship is initiated by filling a substantive suit by a party before a particular High Court under whose jurisdiction that ship remains at the time of initiation of such suit. The Claimant in such a suit is required to mention the detailed facts, the nature of the dispute, the particulars of the claim, etc., along with all the documents that supports his/her claim such as the original contract, type of vessel, document regarding payment, etc.

  • Further, while filling the suits the claimant is required to pay the court fees which depends upon the amount of the claim and varies from court to court.

  • The claimant is also required to take an undertaking to pay the compensation in case of wrongful arrest. However this does not mean that the claimants are required to pay compensation every time the court sets aside the arrest, but only in those cases where the claimants are themselves at fault or are mala fide.

  • Once the aforementioned formalities are complied with and the suit is registered successfully with the High Court possessing the competent jurisdiction to entertain the same, the court hears the claimant and decides as to whether the vessel is to be arrested or not.

  • Once the court orders the arrest of the vessel, the judge will sign the order on the basis of which an Arrest Warrant will be issued by the Registry.

  • The Judge will then order the Court Bailiff to serve the Warrant of Arrest upon the vessel which is required to be arrested. The warrant is also required to be served to the customs and the port authorities requiring them not to allow the vessel to sail. [7]


What Happens after a Ship is Arrested?

After the Warrant of Arrest is served upon a vessel, there lies an obligation upon such vessel to appear through its owner and choose whether they want to settle the claims made against them or they want to challenge the order of arrest. If the owner decides to challenge the order of arrest, he has the following two options: -

  1. Opting to let his vessel sail by furnishing the security towards the claims of the claimant and then proceed to contest the arrest. In such a scenario if the court ultimately decides in favour of the claimant then the security furnished by the owner is used to settle the claims of the claimant.

  2. Meanwhile the second option is pretty straightforward wherein the owner challenges the arrest by keeping his vessel under arrest.[8]

Usually the owners opt for the first option because it allows the ship to carry on its operation without any delays. It has been rightly said that “A ship in port is safe. But that’s what not ships are built for”, this is the very reason why owners usually stay away from the second option as it results in inevitable delays in operation which consequently leads to heavy losses.


Concept of Sister Ship Arrest

Sister ship refers to a ship which is identical and of the same class with respect to the other ship. For example, one of the sister ships of RMS Titanic was HMHS Britannic. In Admiralty Law, a sister ship can be related to an offending ship in respect of which a maritime claim is initiated provided that the owner of the offending ship is also the owner of the other ship at the time when the maritime claim arose.


In simple terms, the commonality of the ownership relates two ships and the relation between them makes them sister ships. According to Section 5(2) of the Act, sister ship of the offending ship can be arrested to secure maritime claims against the offending ship. However, arrest of the sister ship cannot take place in a claim regarding the ownership or possession of a ship. The International Convention on the Arrest of Ships,1999 also permits the arrest of sister ships. [9]

Compensation for Wrongful Arrest


Now, as discussed earlier while filing the suit the claimant has to file an undertaking which requires him to pay compensation to the shipowner or respondent in case of a wrongful arrest. The question of liability to pay as per this undertaking was brought up for consideration before the Bombay High Court in the case of Navbharat International Ltd v Cargo on board MV AMITEES and others[10]. The court observed rule 941 of the Bombay High Court (Original Side) Rule, 1941 (that falls within part III – Admiralty) which requires an in rem arrest application to be supported by an affidavit and an undertaking to “pay such sum by way of damages as the Court may award as compensation in the event of a party affected sustaining prejudice by such order”.


The court had to decide whether the defendant/shipowner had to show bad faith or malice on the part of the claimant in order to be able to call upon the Rule 941 undertaking. The single judge deciding the case held that “the undertaking gets triggered the moment the order of arrest is held to be wrongful and the order of arrest is vacated”.


Further the court in the case of Lufeng Shipping Co Ltd v. MV ‘Rainbow Ace’ and Ors .[11] held that, A claim for damages for wrongful arrest of a vessel is not a special law. Principles of mitigation will apply and the claim is subject to mitigation of losses arising from wrongful arrest of the vessel.


Conclusion

Now after going through the aforementioned formalities that are required to be fulfilled in order to seek arrest of a ship, and considering the fact for which the Indian Judicial System is heavily criticized i.e. delay in pronouncing decree in a matter; one may think that the process of Ship Arrest is also categorized by the same drawbacks. However that is not the case as under the Indian Jurisdiction all the aforementioned formalities to seek arrest warrant of a ship generally take 2-3 days. Also an urgent application can be filled with the court to get the warrant on the same day of filing the case provided if the court allows the same. What this means is that the claimant will either get his claim settled with the ship owner in a very short span of time, or the claimant will get an interim relief in the form of security against the claim by the ship owner if the ship owner chooses to contest the arrest of the ship before the court.


Lastly, the fact that the Indian Jurisprudence has very well settled the liability of the claimants to pay compensation in cases of wrongful arrest ensures that unnecessary filing for ship arrest does not take place in India. This happens because if the claimants does not have a solid claim against the ship and despite the fact they decide to file for the arrest of such ship then in such cases their suits could prove to be counterproductive as once the court determines a case of wrongful arrest, the claimant will have to pay for the losses suffered by the vessel due to the delay in operation it suffered as a consequence of such suit, out his own pockets.

[1] The International Convention Relating to the Arrest of Sea-Going Ships, 1952, Art. 2. [2] Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (Admiralty Act 2017), s 5. [3] Admiralty Act 2017, s 4. [4] AIR 1993 SC 1014 [5] 9 SC 218 [6] Admiralty Act 2017, s 3. [7] https://blog.ipleaders.in/procedure-ship-arrest-india/ [8] Ibid [9] https://www.tathyalaw.org/legal-snippets/maritime-law-1/sister-ship-and-its-arrest [10] Navbharat International Ltd v Cargo on board MV AMITEES and others, Notice Motion No. 2853 0f 2010 in ADMIRALTY Suit No. 19 Of 2010. [11] Lufeng Shipping Co Ltd v. MV ‘Rainbow Ace’ and Ors., Notice of Motion No. 1646 of 2013 in Admiralty Suit No. 29 of 2013.

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