Q&A: ship arrest in India

Ship arrest

Which international convention regarding the arrest of ships is in force in your jurisdiction?

Both the International Convention Relating to the Arrest of Sea-Going Ships 1952 and the International Convention on the Arrest of Ships 1999 were predominately the governing conventions applicable regarding the arrest of ships in India. However, the arrest of ships is now strictly governed by the provisions of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017. In case of any inconsistency, the statute will prevail over the conventions.

In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? Can a bareboat (demise) chartered vessel be arrested for a claim against the bareboat charterer? Can a time-chartered vessel be arrested for a claim against a time-charterer?

Vessels can be arrested for Maritime claims. Section 4 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 enlists maritime claims as follows:

1. disputes regarding the possession or ownership of a vessel, or the ownership of any share therein;
2. disputes between the co-owners of a vessel as to the employment or earnings of the vessel;
3. mortgage or a charge of the same nature on a vessel;
4. loss or damage caused by the operation of a vessel;
5. loss of life or personal injury occurring whether on land or on water, in direct connection with the operation of a vessel;
6. loss or damage to or in connection with any goods;
7. agreement relating to the carriage of goods or passengers on board a vessel, whether contained in a charter party or otherwise;
8. agreement relating to the use or hire of the vessel, whether contained in a charter party or otherwise;
9. salvage services, including, if applicable, special compensation relating to salvage services in respect of a vessel which by itself or its cargo threatens damage to the environment;
10. towage;
11. pilotage;
12. goods, materials, perishable or non-perishable provisions, bunker fuel, equipment (including containers), supplied or services rendered to the vessel for its operation, management, preservation or maintenance including any fee payable or leviable;
13. construction, reconstruction, repair, converting or equipping of the vessel;
14. dues in connection with any port, harbour, canal, dock or light tolls, other tolls, waterway or any charges of similar kind chargeable under any law for the time being in force;
15. claim by a master or member of the crew of a vessel or their heirs and dependents for wages or any sum due out of wages or adjudged to be due which may be recoverable as wages or cost of repatriation or social insurance contribution payable on their behalf or any amount an employer is under an obligation to pay to a person as an employee, whether the obligation arose out of a contract of employment or by operation of a law (including operation of a law of any country) for the time being in force, and includes any claim arising under a manning and crew agreement relating to a vessel, notwithstanding anything contained in the provisions of sections 150 and 151 of the Merchant Shipping Act, 1958 (44 of 1958);
16. disbursements incurred on behalf of the vessel or its owners;
17. particular average or general average;
18. dispute arising out of a contract for the sale of the vessel;
19. insurance premium (including mutual insurance calls) in respect of the vessel, payable by or on behalf of the vessel owners or demise charterers;
20. commission, brokerage or agency fees payable in respect of the vessel by or on behalf of the vessel owner or demise charterer;
21. damage or threat of damage caused by the vessel to the environment, coastline or related interests;
1. measures taken to prevent, minimise, or remove such damage;
2. compensation for such damage;
3. costs of reasonable measures for the restoration of the environment actually undertaken or to be undertaken;
4. loss incurred or likely to be incurred by third parties in connection with such damage; or
5. any other damage, costs, or loss of a similar nature to those identified in this clause;
22. costs or expenses relating to raising, removal, recovery, destruction or the rendering harmless of a vessel which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such vessel, and costs or expenses relating to the preservation of an abandoned vessel and maintenance of its crew; and
23. maritime liens.

For the purposes of clause (17), the expressions ‘particular average’ and ‘general average’ have the same meanings as assigned to them in sub-section (1) of section 64 and sub-section (2) of section 66 respectively of the Marine Insurance Act, 1963 (11 of 1963).

These are the only classes of maritime claims for which vessels can be arrested. The arrest of associate ships is not permissible in India. A bareboat chartered vessel can be arrested, provided the liability is against the bareboat charterer.

A time-chartered vessel cannot be arrested for a claim against the time-charterer. The maritime claim has to be against the owner of the vessel or against the vessel at the instance of the owner.

Does your country recognise the concept of maritime liens and, if so, what claims give rise to maritime liens?

India recognises the concept of the maritime lien and has incorporated it into its local laws. The claims contemplated under section 9(1)(a)-(e) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 are the only forms of maritime liens existing. They are as follows:

1. claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;

2. claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;

3. claims for reward for salvage services including special compensation relating thereto;

4. claims for port, canal, and other waterway dues and pilotage dues and any other statutory dues related to the vessel;

5. claims based on tort arising out of loss or damage caused by the operation of the vessel other than loss or damage to cargo and containers carried on the vessel.

What is the test for wrongful arrest?

The test for wrongful arrest is malafide intention and bad faith by the arresting party. On an application by owners, the Admiralty Court may declare the arrest of the vessel as wrongful. The shipowner will have to prove the losses suffered on account of wrongful arrest and the court at its own discretion may grant damages in favour of the shipowner.

Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?

The bunker supplier cannot arrest the vessel if the supply is at the instance of the charterer and not at the instance of the owner or bareboat charterer.

Will the arresting party have to provide security and in what form and amount?

The arresting party need not provide any counter-security at the time of filing for the arrest. Such a party will have to provide an undertaking on an affidavit at the time of filing the suit and application for arrest. However, the court may at its discretion or application by the owners, order the arresting party to furnish countersecurity.

How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?

On the basis of the claim made by the arresting party, the court will test whether a claim has prima facie justification and fix the security amount accordingly at its discretion. It may be equivalent to the claim of the plaintiff or less. The owner may apply for a review of such security amount fixed by the court by filing an application for reduction of security.

Security provided is predominantly in the form of a bank guarantee or cash deposits. It can exceed the value of the ship; however, the shipowner can limit his or her liability.

What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of attorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?

The formalities that any claimant is required to undertake to make an application for arrest are as follows:

• A vakalatnama (note of appearance) is required to be executed in favour of the lawyer.
• A power of attorney or board resolution and copies of other documents relied upon in support of the claim are required to be filed in court.
• At the time of filing the arrest application, copies of the documents would suffice.
• However, when the matter goes to trial, original documents are required to be produced in court.
• If a power of attorney is issued in a foreign country, the same will have to be notarised and legalised as per the laws applicable of that country where the power of attorney is executed. Since India is a signatory to the Apostille Convention (Hague Convention), apostilled documents are also accepted by courts.
• A substantive suit is required to be filed in India and therefore all documents in support of the case or in defence are to be annexed or exhibited to the pleadings. In case the documents are not in the English language, the same will be required to be officially translated and the official translation will have to be filed along with the said document.
• In case of any affidavits affirmed by any person based outside India, the same will be required to be notarised and legalised or apostilled in the home country as per the laws applicable of that country.
• In case any of the formalities cannot be complied with, owing to limited time, an undertaking can be given to the court that compliance with the pending formalities shall be completed within a specific time, which the court normally grants.
• At present, the documents can be filed electronically in certain jurisdictions (High Courts), but the same if only for a limited period, following which physical copies will have to be filed before the respective court.
• Once all documents are made available, the arrest application can be made within 24 hours.
• The application for arrest is required to be made to the admiralty court of the coastal state, in whose jurisdiction the vessel is found.

Who is responsible for the maintenance of the vessel while under arrest?

The shipowner is responsible for the maintenance of the vessel while under arrest. In case the owner fails to maintain the vessel or abandons her, the arresting party will be required to maintain the vessel and the cost incurred for maintaining the vessel will be treated as sheriff’s expenses and paid in priority accordingly.

Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?

Parties cannot merely arrest a vessel for the purposes of obtaining security for proceedings elsewhere. The arresting party will have to file a substantive admiralty suit for a maritime claim. However, if there is an arbitration clause arrest is permissible for the security of the award. If the defendant provides security, the dispute may be referred to arbitration and the substantive suit may be adjourned sine die. The security so provided will remain deposited in court bearing interest. If the defendant does not enter an appearance or provide security, the matter will be prosecuted in an Indian court.

Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?

Yes, there are other forms of attachment orders, such as attachment before judgment available to the party for securing its claim. However, the shipowner or defendant must be within the jurisdiction of the court and such a claim is a claim in personam against the shipowner or the defendant.

Are orders for delivery up or preservation of evidence or property available?

Indian courts grant orders or delivery up or preservation of evidence or property by appointing a receiver or a court commissioner on reports of surveyors and assessors.

Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?

Bunkers cannot be independently arrested unless there is a claim against a vessel.