Case Note & Summary
The case involves a Notice of Motion filed by the Applicant, the owner of the vessel M.V. AODABAO (Defendant No. 1), seeking to vacate the order of arrest dated 7th March 2016 and to direct the Plaintiff to deposit USD 250,000 as security for damages. The Plaintiff, Siva Bulk Limited, a Singapore-based shipping company, had chartered Defendant No. 2 vessel M.V. AO HONG MA from Cross Ocean Shipping Limited. The Plaintiff sub-chartered the vessel to Al Ghurair Resources LLC for carrying wheat from Canada to the Persian Gulf. While en route, the vessel was arrested at Singapore by the Bank of Communication Co. Ltd., Hong Kong, claiming $13 million under a mortgage. The Plaintiff's English solicitors issued a notice to Cross Ocean putting the vessel off-hire and reserving rights. Al Ghurair Resources chartered another vessel to transfer the cargo and raised an invoice for US $379,337.20 on the Plaintiff. The Plaintiff terminated the charter party with Cross Ocean and filed an admiralty suit against both vessels, obtaining an arrest order for Defendant No. 1 vessel. The Applicant argued that the Plaintiff's claim does not constitute a maritime claim under the Admiralty Act, 2017, and that the arrest was wrongful. The court analyzed the nature of the claim and held that the Plaintiff's claim for damages arising from the sub-charterer's expenses due to the arrest of Defendant No. 2 vessel by a third party is not a maritime claim under the Admiralty Act, 2017. The court set aside the arrest order and directed the Plaintiff to deposit USD 250,000 as security for the loss and damage sustained by the owners of the arrested vessel.
Headnote
A) Admiralty Law - Maritime Claim - Arrest of Vessel - Sections 4, 5 Admiralty Act, 2017 - The court considered whether a claim for damages arising from a sub-charterer's expenses due to arrest of the chartered vessel by a third party constitutes a maritime claim. The court held that such a claim does not fall within the definition of maritime claim under the Admiralty Act, 2017, and therefore the arrest of the vessel is not valid. (Paras 1-10) B) Admiralty Law - Arrest of Vessel - Security for Damages - Section 5 Admiralty Act, 2017 - The court held that even if the arrest was valid, the Plaintiff must provide security for damages caused by the arrest. The court directed the Plaintiff to deposit USD 250,000 as security for the loss and damage sustained by the owners of the arrested vessel. (Paras 11-15)
Issue of Consideration
Whether the claim of the Plaintiffs against the Defendant No. 1 vessel for damages incurred due to the arrest of Defendant No. 2 vessel by a third party constitutes a maritime claim under the Admiralty Act, 2017, and whether the arrest of Defendant No. 1 vessel is valid.
Final Decision
The court allowed the Notice of Motion, set aside the order of arrest dated 7th March 2016, and directed the Plaintiff to deposit USD 250,000 as security for the loss and damage sustained by the owners of the arrested vessel.
Law Points
- Maritime claim
- Arrest of vessel
- Admiralty jurisdiction
- Charter party
- Sub-charter
- Maritime lien
- Off-hire
- Notice of Motion
- Security for damages
