Newbuilding contracts

Transfer of title

When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass?

There are essentially three ways by which the title in the ship passes from the shipbuilder to the shipowner:

  • an agreement for sale entered into by the parties;
  • the consideration for the ship or vessel is paid; and
  • the bill of lading (B/L) is issued.

Pursuant to the issuance of the B/L in favour of the shipowner, the title in the ship passes from the shipbuilder to the shipowner. Last, the said transfer of title of the ship is entered in the registry.

Refund guarantee

What formalities need to be complied with for the refund guarantee to be valid?

There are no set formalities or forms prescribed for a refund guarantee to be valid. The terms of the refund guarantee are subject to the agreement entered into by the shipbuilder and the shipowner. The terms of the agreement should provide a valid consideration for the refund guarantee to be enforceable.

Court-ordered delivery

Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so?

In the event the yard refuses to deliver the vessel, the delivery of such vessels could be compelled to be made by the local courts by way of a lawsuit on the grounds of breach of contract and by seeking specific performance of the said contract.

Defects

Where the vessel is defective and damage results, would a claim lie in contract or under product liability against the shipbuilder at the suit of the shipowner; a purchaser from the original shipowner; or a third party that has sustained damage?

A lawsuit could be filed against the shipbuilder on the grounds of breach of contract at the instance of a shipowner. However, a purchaser from the original shipowner shall not have any remedy available since the liability of the shipbuilder shall be towards the original shipowner. As for a claim by a third party sustaining damages, a claim for damages would lie on the basis of tort.

Ship registration and mortgages

Eligibility for registration

What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under construction under the flag of your country?

Any merchant vessel, bulk carrier, tankers, barges, tugs, dredgers, etc, can be registered under the India flag as per the procedures and requirements enlisted in Part V of the Merchant Shipping Act 1958.

Only completed vessels can be registered under the Indian flag.

Who may apply to register a ship in your jurisdiction?

The following persons are eligible to register a ship in India:

  • a citizen of India;
  • a company or a body established by or under central or state enactments that has its principal place of business in India; and
  • a cooperative society that is registered or deemed to be registered under the Co-operative Societies Act 1912.
Documentary requirements

What are the documentary requirements for registration?

The following documents are required for registration:

  • the surveyor’s certificate;
  • the builder’s certificate;
  • any instrument of sale by which the ship was previously sold;
  • all declaration of ownership including statutory declaration of ownership;
  • forms: application to register a ship, declaration of ownership and nationality; and
  • the instrument of sale under which the property of the ship was transferred to the applicant who requires it to be registered in his or her name (required only in case of second-hand ships).

All the said documents and supplementary documents should be in the format as prescribed under the Part V of the Merchant Shipping Act 1958.

Dual registration

Is dual registration and flagging out possible and what is the procedure?

Neither dual registration nor flagging is permitted in India.

Mortgage register

Who maintains the register of mortgages and what information does it contain?

The Mercantile Marine Department maintains the register of mortgages. The register of ship mortgages includes the following information, among others:

  • the basic information of the ship (eg, name);
  • the basic information of the mortgagee and the mortgagor (eg, name and contact details); and
  • the amount of the debt, date of repayment, interest, payment date of interest, ranking of the mortgage, former registered mortgage, etc.

Limitation of liability

Regime

What limitation regime applies? What claims can be limited? Which parties can limit their liability?

  • The Limitation of Liability for Maritime Claims 1976 applies to claims raised thereunder;
  • the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims of 19 November 1976; and
  • the Merchant Shipping Act 1958 (Part X-A).
Procedure

What is the procedure for establishing limitation?

The procedure for establishing limitation is as per the procedure prescribed in Part X-A of the Merchant Shipping Act 1958.

Break of limitation

In what circumstances can the limit be broken? Has limitation been broken in your jurisdiction?

The limitation cannot be broken for any damage except for damage caused by pollution or when the damage is of such nature where the International Convention on Civil Liability for Oil Pollution Damage would apply. The Merchant Shipping Act 1958 (Part X-A), which governs the statue on the limitation of liability, does not incorporate the principles of article 4 of the Limitation of Liability for Maritime Claims Act 1976.

Passenger and luggage claims

What limitation regime applies in your jurisdiction in respect of passenger and luggage claims?

The following regimes apply in respect of passenger and luggage claims in India:

  • Limitation of Liability for Maritime Claims Act 1976;
  • Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims Act of 19 November 1976;
  • Merchant Shipping Act 1958 (Part X-A); and
  • in cases of oil pollution the International Convention on Civil Liability for Oil Pollution Damage would apply.

The Athens Convention is not applicable in India.

Port state control

Authorities

Which body is the port state control agency? Under what authority does it operate?

The Directorate General of Shipping is the port control agency in India. It operates the Mercantile Marine Department.

Sanctions

What sanctions may the port state control inspector impose?

The port state control inspector may impose any permissible sanctions in accordance with the Safety of Life at Sea Convention.

Appeal

What is the appeal process against detention orders or fines?

An aggrieved party shall have to file a writ petition appealing against the detention orders or fines.

Classification societies

Approved classification societies

Which are the approved classification societies?

The International Association of Classification Societies and the Indian Register of Shipping.

Liability

In what circumstances can a classification society be held liable, if at all?

A classification society may be held liable for breach of its contract or for violation of the regulations in respect of the duties (eg, survey, inspection) commissioned by the government authorities.

Collision, salvage, wreck removal and pollution

Wreck removal orders

Can the state or local authority order wreck removal?

Yes.

International conventions

Which international conventions or protocols are in force in relation to collision, wreck removal, salvage and pollution?

The Nairobi International Convention on the Removal of Wrecks 2007 and the International Convention on Civil Liability for Oil Pollution Damage 1969 (CLC Convention) (as amended by the CLC Protocol of 1992) are applicable in India. However, India is only a signatory to the CLC Convention but has not yet statutorily incorporated it.

The Merchant Shipping Act 1958 is the statute governing the issues related to collision, wreck removal, salvage and pollution.

Salvage

Is there a mandatory local form of salvage agreement or is Lloyd’s standard form of salvage agreement acceptable? Who may carry out salvage operations?

There is no mandatory local form of salvage agreement in India. The Lloyd’s standard form of salvage agreement is acceptable.

Ship arrest

International conventions

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 applicable in India. Both are no longer applicable in light of the enactment of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017. With any inconsistency the statute will prevail over the conventions.

Claims

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?

Maritime claims are defined under section 4 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017. These are the only classes of maritime claims for which vessels can be arrested. Associate ship arrest is not permissible in India. A bareboat chartered vessel cannot be arrested unless there is a maritime claim against the ship or the shipowner. For a claim against a charterer, the ship of the owner cannot be arrested. Also, 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.

Maritime liens

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

Yes, India recognises maritime liens. 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.

Wrongful arrest

What is the test for wrongful arrest?

The arrest of the vessel has to be declared as wrongful by the Admiralty Court or any appellate court. Further, the shipowner has to prove the losses suffered by him or her on account of the arrest. The court has the power to grant a reasonable amount of legal expenses.

Bunker suppliers

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?

There are contrary views taken by various High Courts in India. As per the judgments of the Bombay High Court, a bunker supplier cannot arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer. However, the same is adjudicated in the affirmative by the Gujarat High Court.

Security

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

Only an undertaking is required to be provided on an affidavit by the party arresting the ship. However, in any given case, the court may order the party to furnish counter-security.

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?

The court will prima facie test whether a claim is justified at the time of arresting the ship. Subsequently, each claim has to be proved by filing of the respective lawsuit. It can receive security that is predominantly in the form of B/L or cash deposits. It can exceed the value of the ship. However, the shipowner may limit his or her liability.

Formalities

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?

A vakalatnama (note of appearance) is required to be executed in favour of the lawyer. A power of attorney 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 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 cannot be filed electronically. Once all documents are made available, the arrest application can be made within 24 hours.

Ship maintenance

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.

Proceedings on the merits

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?

Arrest can be made in the High Court. However, if there is an arbitration clause and if the defendant provides security, the dispute may be referred to arbitration. However, if the defendant does not provide security, the matter shall be prosecuted in court.

Injunctions and other forms of attachment

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

Yes, there are other forms of attachment such as attachment before judgment However, the shipowner or defendant must be within the jurisdiction of the court. Such a claim is a claim in personam.

Delivery up and preservation orders

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

Inspection by a court commissioner or surveyor are the different modes available for the same.

Bunker arrest and attachment

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

No. Unless there is no claim against a vessel, bunkers cannot be independently arrested.

Judicial sale of vessels

Eligible applicants

Who can apply for judicial sale of an arrested vessel?

A party arresting through court or other statutory authorities can apply for judicial sale of an arrested vessel.

Procedure

What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale? How are these costs calculated?

A vessel is surveyed and a valuation of the vessel is undertaken. Thereafter, the price of the vessel is determined and fixed. Further, an advertisement for sale is published. The vessel is then sold by a bidding process. The expenses incurred by the sheriff (ie, costs incurred by a court) are calculated and settled from the amount obtained from the sale of the vessel.

Claim priority

What is the order of priority of claims against the proceeds of sale?

Liens, mortgage, maritime claims.

Legal effects

What are the legal effects or consequences of judicial sale of a vessel?

A vessel is sold free from all encumbrances including liens and mortgages.

Foreign sales

Will judicial sale of a vessel in a foreign jurisdiction be recognised?

Yes, judicial sale of a vessel in foreign jurisdiction is recognised in India.

International conventions

Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993?

Yes, India is a signatory to the International Convention on Maritime Liens and Mortgages 1993.

Carriage of goods by sea and bills of lading

International conventions

Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?

Indian Admiralty courts follow the Hague Rules and the Hague-Visby Rules. However, they are yet not statutorily incorporated or ratified.

Multimodal carriage

Are there Conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?

The Carriers Act 1965, the Carriage of Goods by Road Act 2007, the Carriage by Air Act 1972 and the Multimodal Transportation of Goods Act 1993 (as amended in 2000) are the laws applicable to the different modes of transport other than sea.

Title to sue

Who has title to sue on a bill of lading?

For a person to sue on the bill of lading (B/L), the title and property should be passed a per section (1) of the Bills of Lading Act 1955. Normally, the consignee or the holder of a B/L duly endorsed is entitled to sue on a B/L.

Charter parties

To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?

The terms of the charter party can be incorporated in a B/L, including the arbitration clause to the extent that the reading of the same does not lead to an absurd and unworkable situation. But the reference to an arbitration clause has to be a specific reference. If it is specific then the arbitration clause can be incorporated.

Demise and identity of carrier clauses

Is the ‘demise’ clause or identity of carrier clause recognised and binding?

Yes, subject to the contract.

Shipowner liability and defences

Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers?

The contract between the shipper and shipowner is under the master B/L. However, a B/L issued by a freight forwarder or a non-vessel operating common carrier (house bill of lading) cannot foist liability on the shipowner. Such a shipowner can use the defence of absence of privity of contract.

Deviation from route

What is the effect of deviation from a vessel’s route on contractual defences?

The effect of deviation from a vessel’s route on contractual defences would depend on the content of the contract.

Liens

What liens can be exercised?

Liens can be exercised on cargo and freight.

Delivery without bill of lading

What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?

The shipowner is liable for damages for the loss in delivery and in some cases the entire cost of the assignment.

Shipper responsibilities and liabilities

What are the responsibilities and liabilities of the shipper?

It depends on the nature of the contracts (cost, insurance and freight or free on board).

Shipping emissions

Emission control areas

Is there an emission control area (ECA) in force in your domestic territorial waters?

No.

Sulphur cap

What is the cap on the sulphur content of fuel oil used in your domestic territorial waters? How do the authorities enforce the regulatory requirements relating to low-sulphur fuel? What sanctions are available for non-compliance?

The current global limit set by the International Maritime Organization (of which India is a member state) for sulphur content of ships’ fuel oil is 3.5 per cent mass by mass, which is followed by India.

Ship recycling

Regulation and facilities

What domestic or international ship recycling regulations apply in your jurisdiction? Are there any ship recycling facilities in your jurisdiction?

The state of Gujarat has the largest ship recycling industry in India, and has its own Ship Recycling Regulations 2015, issued by the Gujarat Maritime Board.

Jurisdiction and dispute resolution

Competent courts

Which courts exercise jurisdiction over maritime disputes?

The High Courts of Bombay, Kolkata, Orissa, Kerala, Andra Pradesh and Madras exercise jurisdiction over maritime disputes in India.

Service of proceedings

In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction?

Where there is a maritime claim against vessel or its owner, service is by warrant of arrest being effected on a vessel. In personam claims are governed by the Civil Procedure Code.

Arbitration

Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration?

Yes, the Indian Council of Arbitration.

Foreign judgments and arbitral awards

What rules govern recognition and enforcement of foreign judgments and arbitral awards?

The Arbitration and Conciliation Act 1996 (as amended in 2015). The New York and Geneva Conventions are also applicable.

Asymmetric agreements

Are asymmetric jurisdiction and arbitration agreements valid and enforceable in your jurisdiction?

Yes. However, in a situation where both parties are Indian, they cannot opt out of Indian laws. Also, if the award is going to be enforced in India then the test in sections 47 and 48 of the Arbitration and Conciliation Act 1996 has to be satisfied.

Breach of jurisdiction clause

What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere?

An application to stay the proceeding and file proceedings before the appropriate courts having jurisdiction.

What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction?

An application to stay the proceeding and file proceedings before the appropriate courts having jurisdiction.

Limitation periods for liability

Time limits

What time limits apply to claims? Is it possible to extend the time limit by agreement?

  • Breach of contract - three years;
  • inward cargo - three years; and
  • outward cargo - one year.
Liability in tort
  • Collision - three years;
  • malicious prosecution - one year; and
  • cargo damage - one year.
Court-ordered extension

May courts or arbitral tribunals extend the time limits?

No.

Miscellaneous

Maritime Labour Convention

How does the Maritime Labour Convention apply in your jurisdiction and to vessels flying the flag of your jurisdiction?

The Maritime Labour Convention 2006 is applicable in India.

Relief from contractual obligations

Is it possible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping contract where economic conditions have made contractual obligations more onerous to perform?

Yes, by way of specific performance.

Other noteworthy points

Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above?

The enactment of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics that may affect shipping law and regulation in your jurisdiction in the foreseeable future?

No updates at this time.