The High Court of Bombay has held that the pendency of an arbitration proceeding between the parties on the same cause of action is not a bar to the institution of an admiralty suit.
The Bench of Justice N.J. Jamadar held that merely because the vessel owner has instituted an arbitration against the charterer, the same would not preclude the charterer from filing an admiralty suit for recovery of its dues and arrest of the vessel in an action in rem.
The parties entered into a Bareboat Charterparty BAREON 2001 dated 19.10.2015 for a term of five years whereby the respondent carried out a special survey, drydocking and repair work on the vessel. A dispute arose between the parties regarding the payment for the said work.
Accordingly, the applicant filed an application for the appointment of the arbitrator which was allowed by the Court. Thereafter, the respondent filed a Commercial Admiralty Suit for the recovery of its claims and filed an application for arrest of the ship. The Court granted ex-parte ad-interim relief of arrest to the respondent.
Aggrieved by the order of the Court, the applicant filed an application for vacating the order of arrest of the ship.
Objection regarding maintainability of admiralty suit when arbitration is already pending
The applicant contended that since an arbitration proceeding was already pending between the parties, the admiralty action in rem in aid of security for Indian arbitration proceeding is not permissible in law.
The applicant further contended that the suit is filed merely to ensure the security in aid of arbitration proceeding and the same has been held to be impermissible by the Division Bench of the Bombay High Court in Altus Uber v. Siem Offshore Rederi AS, 2019 SCC OnLine Bom 1327.
The respondent contended that right in rem is available to a party having a maritime claim notwithstanding the commencement of any in-personam proceeding in respect of the same claim or cause of action.
Analysis by the Court
The Court held that pendency of an arbitration proceeding between the parties on the same cause of action is not a bar to the institution of an admiralty suit.
The Court observed and held that merely because the vessel owner has instituted an arbitration against the charterer, the same would not preclude the charterer from filing an admiralty suit for recovery of its dues and arrest of the vessel in an action in rem.
The Court held that the reliance of the applicant on the decision of the court in Altus Uber (supra) is misplaced as the Court merely cautioned that in an admiralty suit where prayer for arrest of ship is also made for securing the claim in arbitration, the Court should evaluate if the requirements of Section 4 of the Admiralty Act are fulfilled or not.
The Court held that on a careful reading of the entire plaint of the respondent, it cannot be said that the suit is merely filed for the arrest of the ship for securing the claim in the arbitration as the respondent has made a substantive claim for recovery of its dues. The Court held that the claim of the respondent is a maritime claim within the meaning of Section 4 of the Admiralty Act, 2017.
Accordingly, it rejected the objection of the applicant.
Case Title: Vision Projects Technologies Pvt. Ltd. (Respondent/ Original Petitioner) v. OSV Crest Mercury 1 (Applicant/ Defendant) in Commercial Admiralty Suit (L) No. 13462 of 2021
Citation: 2022 LiveLaw (Bom) 270
Counsel for the Applicant: Mr. Ashwin Shanker
Counsel for the Respondent: Prathmesh Kamat with Ms. Priyanka Patel.