International Commercial law
Image source - https://bit.ly/37vzd6W

This article has been written by Oishika Banerji, an undergraduate student at Amity Law School, Kolkata. This is an exhaustive article that critically analyses the arrest of ships under the Admiralty Bill, 2016.

Introduction   

History reveals that India’s dealing with the seas have been in existence for a long period of time. Seas have been one of the ways to carry out trade with other countries prior to India getting independence and after independence also seas have been playing a prominent role in carrying out various activities of the country. Traditionally there existed no codified rules of conduct for the seas because of which there remained a lot of loopholes to welcome problems. As the relevance of the seas is something that needs attention, so does the law that governs actions in the seas. The law that is used for governance in the sea is the maritime law. Maritime law is a codified set of rules that regulates the matters that relate to seas and ships.

This law is also familiar with the name of admiralty law. The major issues that arise in the seas because of which there comes the need for the law are the issues revolving around the arrest of ships. Ship arrest in simple terms can be explained as the process by which a ship in question is restricted to carry forward its movement until the matter is decided further. The matters associated with the seas are heard by the admiralty court which has been provided with exclusive jurisdiction to provide a maritime claim to the one in need. There are several reasons which make it necessary to carry out ship arrests as have been provided by the  Admiralty Bill, 2016. Courts have been provided with widened jurisdiction to handle these matters swiftly and efficiently to avoid problems. The laws of the sea including arresting ships are settled law in India at present. The admiralty law is a branch of law that is subjected to development. Therefore it is through case laws, judgments of the courts that act as a precedent and past experiences that help in contributing to the evolving nature of the admiralty law. An analysis of the law including a detailed study on ship arrests has been provided below. 

Admiralty Bill, 2016 

The Admiralty (Jurisdiction & Settlement of Maritime Claims) Bill 2016, was passed by the Lok Sabha with the motive to consolidate three matters that were being handled by previous maritime laws which include Admiralty Court Act, 1861, The Colonial Courts of Admiralty Act, 1890, The Colonial Courts of Admiralty (India) Act, 1891 and provisions of the statute of Letters Patents, 1865. The matters have been listed below:

  1. Admiralty proceeding on claims related to maritime
  2. The arrest of ships which in the Bill have been identified as a vessel 
  3. Admiralty jurisdiction  of courts to deal with civil matters

Admiralty law is a codified set of laws for both domestic and international law covering within its ambit all types of contracts, injuries resulting from the contracts and offences or torts over the navigable waters. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2016 codifies the maritime lien and claims under which any ship can be arrested. At first, it was only the courts of Bombay, Calcutta, and Madras that were granted maritime jurisdiction to handle cases after which when issues related to overlapping jurisdiction started arising at a speedy rate, the Supreme Court in a landmark judgment in the case of M.V. Elisabeth and others Vs. Harwan Investment and Trading Pvt. Ltd. extended the jurisdiction of several other courts to handle the matters of the seas and this judgment gave rise to the formation of the 151st Report of the Law Commission and the coming up of the Admiralty Bill, 2005 which terribly failed to prosper and was backed up finally by the introduction of the Admiralty Bill, 2016. 

Highlights of the Admiralty Bill, 2016

The major highlights and changes that the Admiralty Bill,2016 have brought about have been provided hereunder:

  1. Extension of the admiralty jurisdiction beyond the High Courts of Bombay, Calcutta, and Madras to that of the High Courts of Karnataka, Odisha, Kerala, Gujrat, Hyderabad and any other High Courts in the nation as the Central Government may deem fit to provide.
  2. The High Courts have been vested with the powers to exercise its jurisdiction over maritime claims which may include claims associated with ownership of the vessel, mortgage and repair of the vessel etc.
  3. The bill aims to prioritise the matters and claims it deals with. The Admiralty Bill, 2016 prefers maritime claims over any other claims as having been mentioned in the bill. Under the maritime claims also focus have been made on claims associated with wages, safeguarding of lives, and injuries caused.
  4. The bill has brought in the process of streamlining jurisdictions. This means that this law proposes to streamline the jurisdiction among courts over persons and in a way brings in clarification as to what actions can be brought against them according to different circumstances that come along with the person.
  5. The bill further proposes that an appeal against a High Court judgment regarding a maritime claim can be made to the Supreme Court.
  6. The bill provides the responsibility of appointing qualified and experienced assessor to look after maritime matters on the Central Government. 

Drawbacks of the Admiralty Bill, 2016

The Bill under Section 3 has vested authority and jurisdiction upon the High Courts of the coastal states and the same is to be exercised till the territorial waters. Extension of the territorial waters rested in the hands of the Central Government. Presently it is the Bombay High Court that exercises pan India jurisdiction involving the issuance of directives towards arrest and release of vessels that can be enforced in any admiralty court within India. This in a way will be effective to resolve maritime disputes easily and in a speedy way. The High Courts having the jurisdiction of dealing with maritime disputes will have authority on the determination of the dispute of ownership of vessels, construction of vessels, mortgage and sale with regards to any vessel, repair of any vessel, and conversion of a vessel. 

In all these disputes, vessels are used to symbolise any ship or boat or a vessel that sails which may or may not be propelled mechanically. In any admiralty proceedings, the highest priority is provided to the maritime claims over any other claims as has been mentioned in the bill. The jurisdiction in the High Courts may be used in personam or in rem as the case demands. 

The ground that needs to be taken note of says that if there is a revocation of the existing pan Indian jurisdiction from the Bombay High Court, then the same will be working against the claimants. This is because the party who is initiating a suit will have to take into concern the jurisdiction of the High Court within whose territorial water extends the vessel or the ship is.  This will make the claimant vulnerable if the concerned vessel sails out. 

As soon as the vessel sails out of the previous port to a new one, it falls under the jurisdiction of the then concerned High Court and a fresh profession is to be obtained regarding arrest or release of the ship. The court fees need to be deposited once again and no scenario of refund will arise from the previous court. Before filing a new suit, the claimant has to end the previous claims in the High Court. This is time-consuming and frustrating on the part of the claimant to keep on filing suits without getting access to any kind of proper compensation from the admiralty court. It, therefore, becomes difficult for the claimant to file a legal action for arrest or release of the ship or vessel. 

A claimant who wants to get a vessel arrested by the High Court who has specific jurisdiction over that territorial water cannot do so before withdrawing the previous application that he had filed in another High Court within whose territorial water the ship was present. In the meantime taking advantage of the situation, the owner of the ship can easily dodge away any kind of liability he would have been made subject to. This is the major drawback that the Admiralty Bill, 2016 brings along with it. Further, if we take a look onto Section 9 of the Admiralty Bill, 2016, this provision brings in another drawback to the implementation of the bill in the nation in resolving maritime disputes. 

Section 9(1) and (2) states the reduction in the limitation period for a maritime lien from 3 years to that of 1 year is supposed to exist for all vessels that do not withstand any change in ownership or in the registration of the vessel or change in the flag that the vessel bears. All such vessels will be extinguished within a span of 1 year before within that time frame the vessel has not been arrested. These provisions have been a major drawback for the fact that the claimants will be restricted from getting access to justice with the bill favouring the ship owners more. The bill has been brought about in order to remove hindrance in the governance of the law of seas but by some of its provisions, it is, in turn, creating hindrance to the access of justice for the petitioners or the claimants who have suffered due to the ship or the vessel. It is, therefore, necessary for the bill to revisit some of its provisions in order to bring in effectivity in its implementation. At present, the majority of the international trade of India is carried out by the seas. Role of the ports and the shipping industry as a whole is immense in the development of international trade. Thus being one of the vital industries, the shipping sector requires a set of laws that can with proper procedure resolve issues associated and remedy injustice. 

                    

The arrest of ships under Admiralty Bill, 2016

Section 2(1) of the International Convention Relating to the Arrest of Sea-Going Ships, 1952  defines the word arrest. It says that arrest symbolises detention or a kind of prohibition for removing any vessel by seizing it in order to extend security towards a maritime claim as having been directed by the High Court having jurisdiction over the matter. The word arrest according to this bill does not only mean taking away the security of the vessel and its owner but just as a mere seizure of the ship according to the High Court’s directive. The term vessel has been explained under the provision of Section 2(1)I of the bill. Previously there was no such term as a ship or a vessel but this 2016 bill explains vessel in form of several other objects which stand synonymous with the term vessel. These are:

  1. A ship
  2. A boat
  3. Any sailing vessel
  4. Offshore industry mobile unit
  5. Hovercraft
  6. Any floating vessel
  7. A barge that might be sunken or have been left abandoned 

This Section therefore categorically excludes those vessels that are so destroyed that it cannot be brought back to use. This provision, therefore, acts as clarity for several cases in which offshore units have been claimed to be not coming under the ambit of a vessel and therefore several pending cases in the High Courts associated with maritime claims and pleas have been resolved easily. The High Courts of Calcutta, Karnataka, Hyderabad, Bombay, Kerala, Madras, Telangana and Odisha have been provided with the authority to exercise admiralty jurisdiction under The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2016. This statute has codified the heads of the claims arising from maritime for which a ship can be subject to arrest on the direction of the appropriate High court. The application that is to be made for the arrest of the ships is made ex parte unless against any arrest a Caveat has been filed. It is on the court’s discretion to be either prima facie satisfied or not regarding the arrest of the vessel. If the court is satisfied by the grounds that have been laid down by the claimant, then the procedure for the arrest of the ship will be carried out and the quantum of security that is provided will be based on the case that can be best arguable by the claimant.  The ship or the vessel that has been arrested under the directive of the concerned High Court will be set to release only if security in form of bank guarantee is provided or by deposition of cash to the registry have been made. The other way in which a ship or a vessel can be released is by an application that has been provided by the ship or the vessel itself and the court agrees that the claim against the sip is not maintainable.

If a security has not been furnished for the ship under arrest, the High Court can auction the vessel within a period of 45 days starting from the day the ship or the vessel was arrested. If all the sale proceeds associated with the auction has failed or have proved to be insufficient in satisfying the claims made by all the concerned claimants, it will on the court’s discretion to priorities the fate of such ship as have been provided under The Admiralty (Jurisdiction and Settlement of Maritime Claims), 2016. 

On the part of the claimant, an arrest against a ship or a vessel can be made in execution of a decree passed by any superior court originated in any reciprocating territory of some foreign country against the ship or the vessel owner but in such cases, it is to be noticed that the claim that has been brought to a superior court is a maritime claim by nature. The High Courts have the authority to decide whether to arrest the ship or the vessel or release it. There is no other alternative like a separate freezing zone to arrest a ship. 

Claims for which a ship can be arrested

There are certain claims that have been provided by the bill based on which a ship or a vessel can be subjected to arrest under the directive of the concerned High Court exercising admiralty jurisdiction as have been provided under Section 4 of the Admiralty Bill, 2016. These grounds have been listed below:

  1. Presence of dispute of either possession or ownership of the ship or the vessel or ownership of any other share that is associated with it in concern.
  2. Presence of dispute between the joint owners of the ship or the vessel in matters of employment or earning from the vessel or the ship.
  3. There is a mortgage or charge or anything of a similar nature that is associated with the vessel.
  4. Any loss or any kind of damage that has been caused because of the operation of the vessel.
  5. There has been a loss of life or any kind of injury that has happened either inland or in the water and is directly connected with the ship or the vessel.
  6. There has been a loss or damage to any goods that were in connection with the vessel or present in the vessel.
  7. There was a presence of an agreement related to the passage of goods or people that were carried by vessel whether were contained in the charter party or otherwise will be a ground for arresting the vessel.
  8. There was an agreement relating to the hiring and using the vessel for a purpose.
  9. If the vessel consisted of wrecked services along with services that are harmful to the environment if found in the vessel will be a ground for arrest.
  10. In the case of towage that is pulling of one ship by another, a claim for arrest can be made
  11. In the case of pilotage that is when a pilot is used to navigate a ship. Claim arising from such cases can also be a ground for the arrest of vessels or ships.
  12. Claim on different types of goods both perishable and non-perishable, fuel equipment, bunker, that are supplied to the vessel for rendering services like management of the vessel, the operation of the vessel or the ship that includes any fees that are leviable can be a ground for arrest.
  13. Claim on construction, remodification, repair, conversion or utilization of the vessel can be grounds for arrest of the ship or the vessel.
  14. A claim regarding dues involved in construction, modification of any harbour, port, dock, light tolls, waterway, canals or any other charges that are chargeable under any statute that is in force in the time being.
  15. Claims by the master of a crew of a ship or a vessel or their legal heirs and dependants with respect to wages or any sum that has been due out of wages which is recoverable in nature in form of social insurance from the employee according to the terms of the contract they had entered into or the law in operation during that time can also be ground for arrest.
  16. Disbursements that have been incurred on behalf of the owner of the vessel or the ship or the vessel itself.
  17. Claims related to particular average which means a partial loss that has been caused only to the owner due to the damage of the vessel or the ship.
  18. Claims related to general average which means that if any loss has occurred in the vessel then the same is equally distributed among all the shareholders in a sea venture. 
  19. Claims for disputes arising in a contract that was meant for selling of the vessel.
  20. Claims related to payment of insurance premiums on behalf of the owners of the vessel.
  21. Claims related to payment of brokerage or agency fees on behalf of the owner of the vessel.
  22. Claims related to a maritime lien
  23. Claims related to the payment of cost that was spent in recovering a vessel that was left abandoned or is wrecked along with the cost that is necessary for the maintenance of the crew.
  24. Claims related to damage or a threat to cause damage that resulted from the vessel towards the environment which involves the cost that had to be incurred to recover the damages that have already been caused to the environment.

These are some of the claims that can be brought to the court for which a ship or a vessel can be arrested under the directive issued by the concerned High Court. If the claims are analysed, it can be seen that they are mostly pecuniary in nature. This, therefore, says that as the shipping industry is one of the greatest contributors to the economy, the claims under which a ship can be arrested will also be of economic nature only. This shows as to how laws are being regulated to boost the economy of the nations. A ship in Indian territorial waters can be arrested irrespective of the flag she possesses. This is to ensure enforcement of uniformity in the law that is in force and thereby treat everyone equally. 

Further, a ship can be arrested irrespective of the debtor of the ship. The bill says that as long as the maritime claims are arising from commercialized dealings, the ship can be subjected to arrest even if it belongs to the Government or belongs to any foreign State. This ensures that there is no form of injustice that is rendered while dealing with maritime claims and disputes. There is also a necessity to be aware of the arrest of sister ships. Under the bill, a sister ship is any shape belonging to the same owner and therefore is subject to arrest. But ships that are from the associated ownership cannot be held for arrest. 

Therefore arrest of ships is to be carried out without infringing anybody’s rights. In case of a Bareboat chartered vessel, an arrest can take place only if the court has enough reason to believe that the chartered vessel during the time of the maritime claim was liable for such claim. Similarly, in the case of a Time-chartered vessel, an arrest warrant can be issued if the claimant has already asserted a maritime claim against the registered owner of the ship or the vessel. In India, the arrest of ships takes place by asking for a counter-security from the claimant in the form of monetary terms. To sum up, an analysis of arrest of ships has been provided above.

                   

Procedure of arrest

There is a procedure that the court has to follow in order to arrest a ship. Under Section 5 of the Admiralty Bill, 2016, the procedure relating to arrest of vessel or ship in rem that the High Court needs to follow have been laid down. The arrest of the vessel will take place if the court believes:

  1. The owner of the vessel is responsible for the claim that has arisen
  2. The claim is based on a mortgage or any other similar kind of charge
  3. The claim is related to either ownership or possession
  4. The claim is against the operator or the owner of the vessel

After a claim has been decided, it is the responsibility of the claimant to clearly specify the facts in the court of law  and should also have made an application for the admiralty suit which should be inclusive of the following items:

  1. The claimant name
  2. The vessel or the ship’s name
  3. Details of the owner of the vessel or the ship
  4. The flag that the vessel bore
  5. Actual facts of the dispute
  6. The grounds for the claims
  7. A prayer for the court of law

After the issuance of the arrest warrant upon the vessel, the owner of the vessel should come either to settle the claim that has been existing against him or challenge the arrest of his vessel in the High Court. The court may order for the release of the ship or may direct that the ship can be used for a sail if the security claim has been furnished by the owner. The court may release the ship from arrest on two grounds which are:

  1. If there is a security in the form of bank guarantee
  2. Deposition of cash needs to be made along with which order of release needs to be obtained from the court.

The original order that is passed by the court relating to the release of the ship needs to be served for the port and customs authority also. In case the owner fails to carry out the responsibilities on his part, the vessel will be sent for getting sold and the sale proceeds can be used further to bring in a settlement in the claim. The High Courts of India does acknowledge wrongful arrest. If the court discovered that the claimant has made itself available to an excessive amount of security which he is not supposed to, then the claimant will be held liable for damages caused to the owner of the vessel. 

Conclusion

The arrest of ships under the Admiralty Bill, 2016 is a huge subject-matter to discuss and talk about. This is because a major aspect of the bill deals with arresting ships. The maritime route is of immense necessity to carry out international trade. In order to avoid any kind of mismanagement and loopholes, the law of seas is necessary for every nation so as to regulate the movement of ships within its territorial waters. The arrest of the ships under the bill as having been provided is good in one way while comes along with several drawbacks also. As has been discussed above, the bill is tricky in the sense that it weights more towards the owners rather than the claimants. A lot of burden lies on the claimants, therefore. Whatever be the structure and the framework of the bill, it aims to provide a comprehensive set of rules for the Indian seas so as to carry out arrest procedures in a smooth way. The procedure for the arrest of ships under the bill as a whole is a well-defined process and therefore currently India is considered to be one of the best jurisdictions for activities related to ships arrest and has therefore been successful in attracting claimants from all over the world to proceed with legal action in India.

References 

 


LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Did you find this blog post helpful? Subscribe so that you never miss another post! Just complete this form…

LEAVE A REPLY