Arrest Of Foreign Ship For Maritime Claim Permissible Only If There Is No Change Of Ownership Between The Date Of Claim And Date Of Arrest [Read Judgment]

The judgment of the Supreme Court in Chrisomar Corporation v. MJR Steels Private Ltd. holds 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. In fact, this is only one of the several other propositions laid down, as the judgment authored by Justice Rohinton Nariman discusses several important concepts of maritime law as well as mercantile law, including issues in the Indian Contract Act.Factual Background.Chrisomar Corporation supplied bunkers and other necessaries to one ship M.V Nikolaos at the port of Durban. The ship was owned by one company incorporated in Cyprus, Third Element Enterprises. The invoices raised by Chrisomar for the supply of services to the ship were not honored by the ship-owner. While so, the ship set on voyage, and happened to be berthed at Calcutta en route its voyage to Bangkok. At that juncture, Chrisomar filed a suit in the Caclutta High Court, invoking its admirality jurisdiction, raising a maritime claim for the amount due to it under the contract of services. On 06.01.2000, the Calcutta High Court ordered the arrest of vessel for the claim. On the next posting day, 25.01.2000, the plaintiff informed the Court that the claim with the ship owner was settled out of court as per agreement dated 18.01.2000. The settlement agreement dated 18.01.2000 provided that the ship-owner will satisfy the claim of Chrisomar out of its consideration received from Bangkok on delivery of cargo. Taking note of the settlement, the Court recalled the arrest order. However, the ship continued to be docked in Calcutta, without proceeding for sail to Bangkok. In the subsequent posting, the respondent in Supreme Court, MJR Steels Pvt.Ltd, appeared and stated that it had acquired ownership of the ship from the original owner.Proceeding with the suit, the Single Judge of Calcutta High Court decreed the suit. However, the Division Bench set aside the decree and dismissed the suit. The reasons for dismissal were the following : Liability can be attached to the ship only if the maritime claim amounts to a ‘maritime lien’. A claim arising out of supply of necessaries to ship will not amount to a ‘maritime lien’. If it is not a maritime lien, then there cannot be any action against the ship as such, and the ship-owner at the time of receipt of services should be proceeded against. The subsequent owner cannot be saddled with the liability. The settlement agreement dated 18.01.2000 between Chrisomar and Three Elements(original owner) has resulted in the novation of the original agreement, as per Section 62 of the Contract Act. Therefore, the claim based on original agreement was not maintainable.The Supreme Court elaborately considered the issues, discussing the evolution of admirality law, tracing its origins and developments through common law cases, international treaties, and even the latest law passed by the Parliament, The Admirality( Jurisdiction and Settlement of Maritime Claims) Act 2017. The issues were considered and answered the Court in the following manner.Whether supply of necessaries to a ship can lead to a maritime lienThe Court held that there was a nuanced difference between a ‘maritime claim’ and a ‘maritime lien’. All maritime liens are maritime claims, but not all maritime claims are maritime liens. Maritime lien attaches itself to the ship, wherever it goes, not getting affected by change of ownership. The following claims may give rise to maritime lien namely:“(a) Damage done by a ship (b) Salvage (c) Seamen’s wages (d) Master’s wages and disbursements (e) Bottomry and respondentia (Quoting with approval from the judgment of Calcutta High Court in Saba International Shipping and Project Investment Private Limited v. Owners and parties interested in the Vessel M.V. Brave Eagle)Referring to the celebrated case on admirality law, M.V. Elisabeth and others v. Harwan Investment and Trading Private Limited, 1993 Supp. (2) SCC 433, it was observed that a claim for necessaries supplied to a vessel does not become a maritime lien which attaches to the vessel.Manner of enforcement of maritime claimsDrawing extensive support from M.V Elisabeth, it was stated that Admiralty Law conferred upon the claimant a right in rem to proceed against the ship or cargo as distinguished from a right in personam to proceed 36 against the owner. An action in rem is directed against the ship itself to satisfy the claim of the plaintiff. The ship is for this purpose treated as a person, It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff. He does not sue the owner directly and by name; but the owner or anyone interested in the proceedings may appear and defend.Therefore, even if the claim did not create a lien on the ship, it was a maritime claim, which could be proceeded against the ship, regardless of its ownership, if the ship was...

Arrest Of Foreign Ship For Maritime Claim Permissible Only If There Is No Change Of Ownership Between The Date Of Claim And Date Of Arrest [Read Judgment]

Manu Sebastian

Tags