Shagang Shipping Co Ltd v Ship “Bulk Peace“(as surrogate for The Ship “Dong-A Astrea“) [2014] FCAFC 48

The case reaffirms the position that ownership means "beneficial ownership" for the purpose of section 19 of the Australian Admiralty Act 1988 (Cth). The right to sell the ship in question and keep the proceeds are elements that must be proven to establish "beneficial ownership". A right of control of the vessel will be insufficient.

Shagang Shipping Co Ltd ("Shagang") had an unpaid hire claim against Grand China Shipping ("GCS") relating to a charter of the vessel "Dong-A Astrea".  Payment of hire under the charter party was guaranteed by the HNA Group Co Ltd ("HNA Group"). Shagang's claim against HNA Group was for approximately $ 66.4 million.

For the purposes of securing its claim against HNA Group, Shagang had arrested several ships that it alleged were owned by HNA Group.  One of those was the "Bulk Peace", which Shagang arrested in Western Australia. The arrest was successfully challenged and the ship was released. The Court held that Shagang had not proved that HNA Group was the owner of the "Bulk Peace" under section 19 of the Admiralty Act 1988 (Cth) as it failed to establish "beneficial ownership", which the Court held required more than merely asserting a high degree of control. The Court held that for beneficial ownership to be established it must be shown that the party has the right to sell the ship and keep the proceeds. The Court held that all that could be established on the facts, was that HNA Group provided command, direction and influence over the "Bulk Peace" through its relationship with Grand China Shipping.