The plaintiff imported various quantities of shredded iron scrap from England to Pakistan. The cargo was loaded on board the vessel on 10 December 1991 and the vessel sailed from Newcastle, UK, on 17 December 1991. The plaintiffs argued that, in the normal course of events, the vessel with cargo should have reached Karachi within 15-20 days ie at the latest by 6 January 1992, but in fact did so on 7 February 1992. It was alleged that the delay in arrival was caused by the unseaworthiness of the vessel at the commencement of the voyage and that the master/shipowner failed to exercise due diligence to make the vessel seaworthy before and at the commencement of the voyage and further failed to take proper safety precautions against the ordinary perils of sea. It was further alleged that, as a result of the delay, the plaintiff was entitled to recover various amounts from the defendants.

The defendants submitted that the plaintiff's claims did not fall within the admiralty jurisdiction of the High Court and were not covered by s 3(2)(h) of the Admiralty Jurisdiction of the High Courts Ordinance 1980, which confers admiralty jurisdiction on the Court in respect of 'any claim arising out of any agreement relating to the carriage of the goods in a ship or to the use or hire of a ship'. The defendants argued that, as the plaintiff's claims were based on tort, they did not come within this head of jurisdiction.

Held: The plaintiff has established a prima facie claim to damages from the defendants that falls within the admiralty jurisdiction. The vessel is thus liable to be arrested. The orders arresting the vessel are confirmed.

The defendants relied on the case of Compagnie Continentale (France) SA v Pakistan National Shipping Corp PLD 1986 Kar 447. In that case, the plaintiff's ship was arrested in admiralty but subsequently the order of arrest was recalled and the plaintiff claimed that it had suffered loss due to the unlawful arrest of its ship. The contention of the defendants that the claim was in tort and this Court therefore had no jurisdiction was rejected, but it was held on the facts of the case that the claim did not arise from the agreement and had no nexus with it. The decision, therefore, does not support the defendants' case. In the case of The Antonis P Lemos [1985] 1 All ER 695, the primary contention on behalf of the defendants was that s 20(2)(h) of the UK statute applied only to claims of a purely contractual character, founded on some agreement of the kind referred to in it and made directly between the two parties to an action, and that the paragraph did not extend to other claims founded on tort, even though such claims were connected, directly or indirectly with such an agreement. The contention was rejected by Sheen J, who heard the case in the first instance and by the Court of Appeal. In the appeal before the House of Lords, it was contended that the expression 'arising out of' on its ordinary and natural meaning was equivalent of 'arising under'. This contention was not accepted and Lord Brandon held that on the true construction of s 20(2)(h) the expression 'arising out of' was to be given the wide interpretation of meaning 'connected with' in accordance with the principle that a domestic statute designed to give effect to an international Convention was in general to be given a broad and liberal construction, and because that was clearly the meaning indicated by art 1.1. of the Arrest Convention 195, to which s 20(2) was intended to give effect.

The authorities therefore establish that the expression 'arising out of' in s 3(2)(h) of the Ordinance of 1980 is the equivalent of the expression 'connected with'; and that a claim, whether founded in contract or tort, notwithstanding that there is no contract directly between the parties to an action, falls within the admiralty jurisdiction provided that it arises out of, in the sense of being connected with, an agreement of the kinds specified in para (h) viz an agreement relating to the carriage of goods in a ship or to the use or hire of a ship.

In the circumstances, the plaintiff has set up a case of lack of due diligence on the part of the defendants to make the vessel seaworthy (art 3.1 of the Hague-Visby Rules) and, having produced prima facie proof to support its case, the burden of proving that they exercised due diligence is on the defendants (art 4.1 of the Hague-Visby Rules).