ADMIRALTY JURISDICTION AND ARREST OF VESSELS IN INDIA

Ms. Hailey Dubey, Intern @ V.J Mathew & Co.

INTRODUCTION

India’s maritime endeavours have a rich historical background dating back to the 3rd millennium BC, primarily focusing on sea trade and commerce both domestically and internationally. During this period, the regulation and governance of maritime activities relied solely on customs, traditions, and established practices. Europe was the first continent to codify the laws pertaining to maritime activities which gradually trickled down to its colonies. The Colonial Courts of Admiralty Act of 1891 is where the Admiralty Jurisdiction first came into existence in India. The said legislation and all other legislations relating to admiral law were replaced by the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. The present article discusses major developments regarding the scope of admiral jurisdiction of High Courts as well as the scope, purpose and procedure of ship arrest in India.

ADMIRALTY JURISDICTION: EVOLUTION THROUGH YEARS

Colonial Admiralty Acts

As mentioned above, the Colonial Courts of Admiralty Act, 1891 established admiralty jurisdiction in India. The British parliament had earlier enacted the Colonial Courts of Admiralty Act, 1890. Section 2 of the 1890 Act stated, among other things, that “every court of law in the British possession which for the time being declared to be so in pursuance of the said Act to be a Court of Admiralty with Original Unlimited Civil jurisdiction” and that the Colonial Courts would exercise the same jurisdiction as the Admiralty Court of High Court in England, whether existing by virtue of any statute or otherwise, was covered by the provisions of the Act. According to Section 3 of the Colonial Courts of Admiralty Act of 1890, any court having unrestricted civil jurisdiction may be designated as a Colonial Court of Admiralty by the government of a British possession.  The High Courts of Calcutta, Bombay, and Madras were designated as “Colonial Courts of Admiralty” with unrestricted jurisdiction by the Colonial Courts of Admiralty (India) Act, 1891.

The Supreme Court’s ruling in the case of M.V. Elisabeth[1] clarifies that admiralty jurisdiction, despite its unique historical development, is an integral part of the overall jurisdiction vested in the High Court as the superior Court of record. Unlike the earlier position in England, where admiralty jurisdiction was distinct and separate, in India, it has been unified with the jurisdiction of the High Court. The Colonial Courts of Admiralty Act, 1890, and the Colonial Courts of Admiralty (India) Act, 1891 granted admiralty jurisdiction to the Indian High Courts, considering them as courts with unlimited jurisdiction. These acts did not establish a separate or distinct jurisdiction but rather elevated the Indian High Courts to a position equivalent to that of the English High Courts in exercising admiralty powers within their jurisdiction. It is important to note that this jurisdiction is not limited to the High Courts that were granted power and jurisdiction solely under the Act of 1891.

Post M.V. Elizabeth Development

India passed and implemented the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (hereafter The Act). The said Act came into force on Aril 1, 2018. The Admiralty Act’s goal was to eliminate all of the previous, out-of-date legislation dealing to admiralty by consolidating the relevant laws.

The High Courts were granted admiralty jurisdiction under Section 3 of the Act, so that each High Court can exercise power inside its own territorial waters. The Admiralty Act, 2017 expanded the purview of admiralty jurisdiction and provided a response to the issue raised by the Supreme Court’s decision in the MV Elizabeth Case. By virtue of the said Act, in addition to the Presidency Courts, the High Courts of Andhra Pradesh, Odisha, Gujrat, and Kerela are also vested with jurisdiction to deal with Admiralty matters.

SHIP ARREST

Meaning and Scope

Liabilities against the ships are realised by having maritime claims against the ship enforced. Since maritime claims are enforced in rem, or against the property, which is a ship, under admiralty laws, a study of the relevant rules, regulations, and process pertaining to the arrest of ship becomes important in order to comprehend the complexities of admiralty law. In the civil law, a ship arrest is an admiralty procedure in which an admiralty court is given exclusive competence to seize a vessel in the course of securing a maritime claim.

Ship arrest in the simplest terms means “a legal procedure wherein a ship’s trading or movement is halted until the resolution of a particular matter.”

Section 2 (1) (c) of the Act defines ‘arrest’ to mean “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.”

Therefore, it can be concluded that a ship can be arrested for the following purposes:

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

As stated earlier, ship arrest is usually also conducted for satisfaction of maritime claims. Section 4 of the Act provides a list of maritime claims for fulfilment of which, a ship may be arrested. These include mortgage or a charge of the same nature on a vessel; loss or damage caused by the operation of a vessel; pilotage; damage to environment; a dispute regarding the possession or ownership of a vessel or the ownership of any share therein; maritime lien, among many others.

Jurisdiction of courts

The admiralty jurisdiction of the High Court is dependent on the presence of the foreign ship in Indian waters and founded on the arrest of that ship. The concerned High Court may exercise this jurisdiction whether or not the defendant resides or conducts business there or whether or not the cause of action originated entirely or partially within the territorial limits of its jurisdiction. Once a foreign ship is arrested within the local limits of the High Court’s jurisdiction and its owner has appeared before the court and provided adequate security to secure the ship’s release, the case is continued as a personal action.

The Arrest Convention of 1952[2] and the Arrest Convention of 1999[3] are also relied on by courts while dealing with issues of arrest of ships.

Section 5 of the Act

Section 5 of the Act outlines the circumstances under which a vessel may be arrested in rem, which include:

• The owner of the vessel being responsible for the claim.
• The demise charterer of the vessel being responsible for the claim.
• The claim being based on a mortgage or similar charge.
• The claim pertaining to possession or ownership.
• The claim being against the owner, demise charterer, manager, or operator of the vessel.

Meaning of in rem: Judgements

Section 5 of the Act grants the right to arrest a vessel in rem. The case of MV Elizabeth and Ors. v. Harwan Investment and Trading[4] provided further clarity on the implications of this section. The court emphasized that admiralty law allows the claimant to proceed against the ship or cargo itself, rather than directly suing the owner by name. However, the owner or any interested party in the proceedings has the option to appear and defend their interests.

If the owner fails to submit to the court’s jurisdiction and appear to secure the ship’s release by providing bail, the vessel may be condemned and sold to satisfy the claims against it. On the other hand, if the owner submits to the court’s jurisdiction and obtains the release of the ship by depositing security, they become personally liable and can be pursued in personam for execution of the judgment if the amount decreed exceeds the bail amount. The Gujarat High Court, in the case of G.P. Global Apac Pte. Ltd v. Mv Silvia Glory,[5] reaffirmed these principles, reiterating that the owner’s liability can extend beyond the bail amount if the judgment exceeds it.

Procedure For Arrest of Vessels in India along with Judgments

The following points explain the procedure for seeking arrest of a ship:

• Once a maritime claim is determined, the claimant is required to file an application for a substantive suit, providing detailed facts and other necessary particulars.
• Firstly, it is important to determine the specific High Court that has jurisdiction over the matter. The claimant must then include the following information in the admiralty suit:
• Claimant’s name
• Vessel’s name
• Vessel’s flag
• Details of the vessel’s owner
• Detailed facts outlining the dispute
• Grounds for the claim
• Prayer for relief
• Upon payment of fees and other expenses, the arrest warrant is issued by the registry, and the Marshal or authorized officer is notified accordingly. The claimant also needs to provide an undertaking that they will compensate for any wrongful arrest.
• The Marshal and other officers may request the claimant to make additional deposits to cover expenses related to the custody of the arrested ship. Furthermore, it is necessary to notify the customs and harbor authorities of the vessel’s arrest.
• Following the issuance of the arrest warrant, the vessel’s owner must appear and either settle the claim or challenge the arrest. If the owner fails to settle the claim, the ship may be sold, and the proceeds from the sale can be used to satisfy the claim. In cases where the ship is not released due to the owner’s bankruptcy or if the master/crew have abandoned the vessel, the Marshal or authorized officer must ensure the protection of the vessel and its equipment in accordance with regulations.
• In case of wrongful arrest of a ship, the court with admiralty jurisdiction may choose to demand that the claimant make up the loss to the defendant. This is due to the fact that wrongful arrest may result in the ship-owner suffering irreparable loss and damages, in which case the arresting party shall make up for it.
• Release of an arrested vessel: The defendant can get his vessel released by providing security for the plaintiff’s claim. Security may be provided in one of three ways: 1) by paying the plaintiff’s claim amount into court; 2) by posting bail in an amount sufficient to cover the plaintiff’s claim; or 3) by offering a guarantee that the plaintiff will accept. The third approach is the most popular. Additionally, the security must be sufficient to pay the plaintiff’s claim for interest and costs based on his strongest, most defensible argument. In the 1996 case of Videsh Sanchar Nigam Ltd. v. MV Kapitan Kud & Ors.,[6] the Supreme Court adopted a similar stance.
• In the recent case of Chrisomar Corporation v. MJR Steels Private Ltd.[7] the Apex court held that “arrest of a foreign ship for a maritime claim is only permitted if there is no change in ownership between the date the claim arose and the date of the arrest of the ship.” The said case dealt with the issue that whether a vessel could be arrested after a change of ownership. For answering the question, reliance was put on Article 3 of the International Convention on Arrests of Ships which provides provisions regarding exercise of right of arrest of ships. The relying on the said Article further held that to enforce a maritime claim, ownership of the vessel at the time of institution of suit has to be checked and not ownership at the time of arrest.

CONCLUSION

From the above discussion, it can be concluded that Admiralty law has undergone a massive change from colonial times to post-colonial period. Though admiralty law was introduced by the British Colonisers through the Colonial Admiralty Act of 1890, however, with the adoption of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, India’s admiralty jurisdiction and ship arrest procedures underwent substantial revisions. This legislation gives an effective procedure for ship arrest as well as a contemporary framework for resolving maritime disputes.

The article also discusses the meaning, scope and procedure for arrest of vessel in India. For claimants who want to successfully enforce their maritime claims, they must be aware of the criteria and processes for ship arrest. There are also recent judgments propounded by various High Courts and the Supreme Court further clarifying the position of law. In all, India has improved legal certainty for shipowners, creditors, and other players in the maritime industry by conforming to international standards, strengthening its position as a significant maritime jurisdiction.

REFERENCES

• https://shiparrested.com/ship-arrests-in-india-by-v-k-ramabhadran-advocate-high-court/
• https://mgclr.in/Welcome/OnlineDetails/8#_ednref31
• https://www.manupatrafast.in/NewsletterArchives/listing/Hariani/2018/Feb/The%20Admiralty%20(Jurisdiction%20and%20Settlement%20of%20Maritime%20Claims)%20Act,%202017.pdf
• https://shiparrested.com/wp-content/uploads/2016/04/IndiaSAP.pdf
• http://gnanaganga.inflibnet.ac.in:8080/jspui/bitstream/123456789/427/1/B%20C%20Uday%20Shankar.pdf (LLM thesis)
• https://www.ibanet.org/article/51CBFCEA-D7F4-4DEE-BEFA-B271D267DCA7
• https://www.mondaq.com/india/marine-shipping/817974/ship-arrests-and-indian-maritime-law
• https://redlaw.in/ship-arrest-by-the-admiralty-high-courts-in-india/
• http://www.admiraltypractice.com/ (BOOK)

[1] M. V. Elizabeth & Ors. v/s. Harwan Investment and Trading Pvt. Ltd.,1993 Supp (2) SC433.

[2] The Brussels Convention of 1952 Relating to Arrest of Sea-Going Vessels.

[3] INTERNATIONAL CONVENTION ON ARREST OF SHIPS, 1999.

[4] Supra.

[5] Gp Global Apac Pte. Ltd vs Mv Silvia Glory, IMO 9622942, C/AS/1/2019.

[6] Videsh Sanchar Nigam Ltd. v. MV Kapitan Kud & Ors, 1996 SCC (7) 127.

[7] Chrisomar Corporation v. MJR Steels Private Ltd., 2017 SCC Online SC 1104.