This was an application for the release of the Ledesco Uno and alternatively for a stay of proceedings. Ledesma Overseas Shipping Corporation (the applicant) was the owner of the ship and the defendant in the action in rem.

Antaios Compania Naviera SA (the respondent) issued a writ of summons claiming charterparty freight and other damages on 18 January 1977, and on the same day the ship was arrested. The respondent is the owner of the ship Antaios, which was chartered to the applicant by voyage charter.

A dispute arose to the freight payable in accordance with the terms of the charterparty in March 1976. The respondent claimed approximately USD 800,000 and the applicant counterclaimed for USD 400,000. The claims were referred to arbitration in London.

In the meantime, the respondent instituted admiralty proceedings in Casablanca to have another of the applicant’s ships, the Ledesco Dos, arrested. The Court in Casablanca ordered the release of the vessel and the applicant instituted proceedings in Casablanca for wrongful arrest.

When the ship arrived in Hong Kong on 12 January, the respondent took out a writ of summons to have the ship arrested. The applicant’s claim was that the Court had no jurisdiction to entertain an action in rem in respect of the ship, that the proceedings should be stayed and the vessel unconditionally released because the subject-matter of the action had been referred to arbitration in London.

The respondent asserted that the Court had jurisdiction and that the proceedings in Hong Kong should not be stayed.

Held: The Court does not have jurisdiction to arrest the ship.

The admiralty jurisdiction of the Court is founded on the Administration of Justice Act 1956 (UK) which was extended to Hong Kong by an Order in Council, namely the Admiralty Jurisdiction (Hong Kong) Order in Council 1962, No 1547 of 1962. The provisions are practically adapted and adopted from the Administration of Justice Act 1956 (UK) as applicable to Hong Kong. The Administration of Justice Act 1956 (UK) was enacted in England so as to give effect to the International Convention on the Arrest of Sea-Going Ships 1952 (Arrest Convention 1952). Section 1(1) (art 1.1) sets out the various subject-matters which come within the admiralty jurisdiction of this Court. Section 3(4) (art 3) sets out the circumstances under which the admiralty jurisdiction in rem may be invoked to have ships arrested.

Both counsel agree that by virtue of s 1(1)(h) (art 1.1.e) the Court has admiralty jurisdiction to try the respondent’s claim founded on the charterparty. However, the applicant contends that the admiralty jurisdiction in rem may not be invoked to arrest the ship because by virtue of s 3(4)(b) (art 3.1) the ship liable to arrest must at the time that the action is brought be a ship wholly owned by the same person who was also the owner or demise charterer, or a person in possession or in control at the time the cause of action arose. In other words, a ship other than the ship involved in the admiralty claim can be arrested only if it is a sister ship of the ship involved in the admiralty action or admiralty claim. The Antaios is the vessel involved in the present action. At the time the cause of action arose, the respondent was the owner of the Antaios. The respondent cannot arrest its own ship and the Ledesco Uno is not a sister ship of the Antaios.

The respondent contends that the words in s 3(4) (art 3.1) clearly indicate that a ship wholly owned by a party who would be liable to an admiralty action in personam may be arrested. The applicant was the person who would be liable in personam in the admiralty action. It was the charterer at the time the cause of action arose. It was the owner of the Ledesco Uno when the admiralty action was brought. Thus the Ledesco Uno is liable to arrest.

There is no dispute that the admiralty action which was brought before the Court is an action that this Court has jurisdiction to entertain. Nor is there any dispute that the applicant is the party who would be liable if the respondent should succeed in that action.

Therefore the issue is whether the words 'any other ship ... beneficially owned as aforesaid' in s 3(4)(b) means another ship beneficially owned by the person who would be liable in the action in personam.

The Banco [1971] P 137 (CMI2156) laid down the principle that only one ship at a time may be arrested. If there is any doubt, and even if the Act does not refer to the Arrest Convention 1952, the court is entitled to look at the terms of the Arrest Convention 1952. At p 142, Lane J said (when referring to s 3(4)):

I am bound to say, reading the subsection, that I do not find it of such sparkling clarity that it can be interpreted without hesitation, and I am therefore glad to look, as I am invited to do, at the Convention. The most important article, so far as affording assistance is concerned in this case is article 3. Paragraph 1 thereof reads:

'Subject to the provisions of para. (4) of this article and article 10, a claimant may arrest either' – I stress that word – 'the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time that the maritime claim arose, the owner of the particular ship ...'.

At p 152, Lord Denning MR said:

The important word in that subsection is the word 'or'. It is used express an alternative as in the phrase 'one or the other'. It means that the Admiralty jurisdiction in rem may be invoked either against the offending ship or against any other ship in the same ownership, but not against both.

In The Andrea Ursula [1973] 1 QB 265 it was held that a demise charterer was in the same position as that of the owner. Brandon J took the terms of the Arrest Convention 1952 as a guide for the interpretation of the provisions of the Act. He said:

As already stated, s 3(4) of the Act of 1956 is apparently intended to give effect to these provisions of article 3 of the [Arrest] Convention. It provides by subsection (2) for jurisdiction in rem against the ship to which the claim relates in respect of claims (a), (b) and (c) in s 1(1), which correspond to claims (o), (p) and (q) in article 1.1 of the [Arrest] Convention. It provides further by subsection (4) for jurisdiction in rem against either the ship to which the claim relates or a sister ship in respect of claims (d) to (r) in s 1(1), which correspond with claims (a) to (n) in article 1.1 of the [Arrest] Convention. If s 3(4) is to give full effect to article 3, including in particular paragraph (4) of that article, the expression ‘beneficially owned’ must be given the second of the two meanings which I suggested earlier that it was capable of having, and not the first. In other words ‘beneficial owner’ must be given a meaning which includes not only a demise charterer, but also any other person with similar complete possession and control who may thereby become liable on a claim within paragraphs (d) to (r) of s 1(1) of the Act.

In The Eschersheim, (CMI2166) Lord Diplock said at p 436:

It is clear that to be liable to arrest a ship must not only be the property of the defendant to the action but must also be identifiable as the ship in connection with which the claim made in the action arose (or a sister ship of that ship). The nature of the 'connection' between the ship and the claim must have been intended to be the same as is expressed in the corresponding phrase in the [Arrest] Convention 'the particular ship in respect of which the maritime claim arose'. One must therefore look at the description of each of the maritime claims included in the list in order to identify the particular ship in respect of which a claim of that description could arise.

At p 439, when he was considering the subject-matter of s 1(1), whether the claim came within the jurisdiction of the Court, he made it clearer as far as s 3(4) is concerned. He said:

The cargo owners' claim clearly falls within the description in paragraph (g) which reproduces in terms that are practically identical paragraph (f) of article 1.1 of the [Arrest] Convention: but, as I have already pointed out, the right of arrest conferred by section 3(4) is confined to the ship in connection with which the claim arose (or a sister ship). The claims to which section the right of arrest is confined are those mentioned in paragraphs (d) to (r) of s 1(1). With three exceptions, each of those paragraphs contains an express reference to 'a ship'. The ship referred to in each of these paragraphs is the ship in connection with which a claim under that paragraph arises. The three exceptions relate to claims in respect of salvage, general average and bottomry where there can be no doubt as to the ship in connection with which claims of that nature arise. Paragraph (g) therefore permits the arrest of the ship in which the goods which have been lost or damaged were carried, in an action in rem by cargo owners against the owner of the carrying vessel. It does not authorise the arrest of any other ship: authority for that must be found under some other paragraph. So the arrest of the Rotesand as security for the cargo owners' claim was not authorised under paragraph (g) of section 1(1).

In The Permina 108 (CMI395), decided in Singapore, the Court of Appeal held that s 4(4) of the Singapore Act, which is the equivalent to s 3(4) of the Administration of Justice Act 1956 (UK), is not ambiguous, and the Court refused to look at the terms of the Arrest Convention 1952 because Singapore is not a party to the Arrest Convention 1952. At p 4 of the judgment, their Lordships say:

In our opinion the terms of Section 4(4) of the Act, giving them their plain and ordinary meaning are free of any ambiguity and are not reasonably capable of more than one meaning. It follows that it is unnecessary and indeed it would be wrong to look at the International Convention Relating to the Arrest of Seagoing Ships signed at Brussels in 1952 to arrive at the proper construction of our subsection.

In the present case, had the applicant been a demise charterer of the Antaios, there would have been no question and no argument on the part of the applicant that the Ledesco Uno was liable to arrest in rem. There is no dispute that the applicant is the person who would be liable to the respondent’s claim in personam if successful; that the claim is in connection with the ship Antaios; that the applicant was the charterer of the Antaios at the time the cause of action arose; and that the Ledesco Uno is wholly owned by the applicant at the time when the action was brought. In that sense there can be no question whether the Ledesco Uno is a sister ship of the Antaios. If the applicant were the demise charterer, it would be put in the same position as a person in possession or in control or the owner of the Antaios at the time when the cause of action arose.

The word 'charterer' is not 'of such sparkling clarity that it can be interpreted without hesitation'; therefore it is necessary to have to look at the Arrest Convention 1952. The word 'charterer' is a generic term covering demise charterers, time charterers and voyage charterers. It is plain that a demise charterer is similar to a lessee who is in a very different position as that of a time charterer or voyage charterer. Their position is more similar to a person who is in possession and in control. When the provisions of s 3(4) were considered by the English courts, the term 'sister ship or ships in the same ownership' or 'ship in like ownership' was mentioned in the description of 'the other ship' as provided in s 3(4) that was liable to arrest. The admiralty jurisdiction was enlarged only by the Administration of Justice Act 1956 (UK), which was enacted to give effect to the Arrest Convention 1952. The term 'charterer' of 'sister ship' and 'ship in like ownership' or 'same ownership' were referred to in The Eschersheim, The Banco, The Andrea Ursula and The Elefterio.

In construing the word 'charterer' in this context, a charterer was put in as a group of persons who would be in possession and control, that is, namely to a demise charterer only. This is in accord with the English authorities in the sense that the other ship in the like or the same ownership as a ship in connection of a claim of an action in personam.

This view is supported by the Arrest Convention 1952. In art 3.1 it provides:

Subject to the provisions of para. (4) of this Article and of Article 10, a claimant may arrest either the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship, even though the ship of which the maritime claim arose, the owner of the particular ship, even though the ship arrested be ready to sail; but no ship, other than the particular ship in respect of which the claim arose, may be arrested in respect of any of the maritime claims enumerated in Article 1.1.o, p or q.

It makes it quite clear that either the ship - the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was at the time when the maritime claim arose the owner of the particular ship, could be arrested. But that is subject to the provision of paragraph 4. Article 3.4 provides:

When in the case of a charter by demise of a ship the charterer and not the registered owner is liable in respect of a maritime claim relating to that ship, the claimant may arrest such ship or any other ship in the ownership of the charterer by demise, subject to the provisions of this Convention, but no other ship in the ownership of the registered owner shall be liable to arrest in respect of such maritime claims.

The provisions of this paragraph shall apply to any case in which a person other than the registered owner of a ship is liable in respect of a maritime claim relating to that ship.

It clearly shows as far as art 3 is concerned, it supports the view that the word 'charterer' meant, in s 3(4) of the Administration of Justice Act (UK), a demise charterer. Since in the present case the applicant is not a demise charterer of the Antaios, the admiralty jurisdiction in rem of this Court may not be invoked to arrest the ship Ledesco Uno.