The owners of the Sextum (the defendants) applied for the release of the vessel from arrest at the suit of Ciel y Cia SA (the plaintiff). Writs of summons were issued by the plaintiff on 13 May 1982 in respect of the alleged non-payment of amounts owing by the defendants to the plaintiff under the terms of charterparties in respect of two vessels, namely the Ria Sol and the Ria Mar, owned by the plaintiff and time-chartered to the defendants.

The defendants argued that there was no claim in rem against the Sextum itself, and that the plaintiff could not rely on s 3(4) of the Administration of Justice Act 1956 (UK) (the Act). According to the defendants, s 3(4) intended to allow the arrest only of a sister ship of the vessel against which there was a claim. Both vessels must be owned or controlled by the same person, and a time charter does not provide control of the vessel. The plaintiff beneficially owned both the Ria Sol and the Ria Mar. Clearly, the plaintiff could not arrest its own ships.

Section 3(4) of the Act reads as follows:

In the case of any such claim as is mentioned in paragraphs (d) to (r) of subsection (1) of section one of this Act, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the Admiralty jurisdiction of the High Court and (where there is such jurisdiction) the Admiralty jurisdiction of the Liverpool Court of Passage or any county court may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against -

(a) that ship, if at the time when the action is brought it is beneficially owned as respects all the shares therein by that person; or

(b) any other ship which, at the time when the action is brought, is beneficially owned as aforesaid.

In addition, the defendants argued that if there was any doubt about the meaning of the word 'charterer' in s 3(4) of the Act, the Arrest Convention 1952 should be considered because the Act was based on this Convention. The defendants submitted that art 3.4 of the Convention only referred to demise charterers.

However, the plaintiff argued that s 3(4) of the Act made them sister ships for the purposes of that section, in that a time charter was still a charter and had the same effect for those purposes as a demise charter.

Held: The defendants' application is refused.

Article 3.4 of the Arrest Convention 1952 reads as follows:

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.

The Judge noted that it would seem that under the terms of the Convention the intention was that two ships must be either owned or under demise charter to the same person before one could be arrested for the fault of the other. However, he confessed to some difficulty in understanding the wording of that article.

The Judge preferred the reasoning behind The Permina 108 [1978] 1 Lloyd's Rep 311 (CMI395) and The Span Terza [1982] 1 Lloyd's Rep 225. He considered that he should give the word 'charterer' its ordinary meaning and that it should not be restricted to demise charterer. He did not think that even if the Convention is worded differently from the Act, that is sufficient reason to put such a restrictive meaning on it. Indeed, as the Convention must have been before the House when it was considering the legislation and they apparently declined to use the word 'demise', that is an argument for saying that such a decision must be taken to have been deliberate. Section 3(4) of the Act is clear and unambiguous.