This was an appeal brought by B&A Marine Co Inc against the decision of the Court of first instance to lift the arrest of the ship Anax Puma on the application of its owner, Cairel Overseas Corp.

Held: Appeal upheld. The ship arrest is ratified.

The appellant insisted that it had the right to arrest the ship, because it had a maritime lien in accordance with the Arrest Convention 1952, read with the MLM Convention 1926. In addition, its maritime lien had been recognised and judicially declared by a judgment of the District Court for the Eastern District of New York, and an affidavit signed by two lawyers of the same city.

The above Conventions, and not domestic legislation, govern the substantive requirements of the ship arrest when the arresting party it is a non-resident in the State that effects the arrest (the contrary situation to that provided for by art 8.4 of the Arrest Convention 1952: 'Nothing in this Convention shall modify or affect the rules of law in force in the respective Contracting States relating to the arrest of any ship within the jurisdiction of the State of her flag by a person who has his habitual residence or principal place of business in that State'), without prejudice to the application of the procedural rules of the State in whose jurisdiction the arrest has been carried out (art 6: 'The rules of procedure relating to the arrest of a ship, to the application for obtaining the authority referred to in Article 4, and to all matters of procedure which the arrest may entail, shall be governed by the law of the Contracting State in which the arrest was made or applied for').

But in the present case, the appellant itself recognises that there is a real obstacle, which may perhaps be insurmountable, in the fact that the ship Anax Puma is registered in a Panamanian port and flying the Panamanian flag. Panama has not signed the MLM Convention 1926, so it would not apply here. Certainly, a universal norm would be desirable, especially in the maritime sector, which is by its very nature international, so that using ships flagged in non-signatory States would be a fraudulent way of circumventing international maritime law. The appellant argues that there are exceptions to the general rule, and in this case there is the Arrest Convention 1952, which is directly applicable, and allows its universalisation to all States, even non-signatories, as indicated in its Preamble. This Court reaches the same conclusion in favour of the possibility of allowing ship arrest when applying domestic law exclusively.

The appellant contends that its maritime claim falls within art 1.1.k of the Arrest Convention 1952. The appellant is right. The judgment below rejected this argument because it said that the claim would not fall within the closed relationship contained in art 2.5 of the MLM Convention 1926. But it does have a place in art 2.5 among 'contracts entered into or acts done by the master, acting within the scope of his authority away from the vessel’s home port, where such contracts or acts are necessary for the preservation of the vessel or the continuation of its voyage', as it involved a repair made in New York to one of the ship's engine generators, which is essential for both ends: the preservation of the ship and the continuation of the voyage.