The plaintiff was the disponent owner of the chartered ship the Dong Tanh. The plaintiff chartered the Dong Tanh to the second defendant for the purpose of transporting the first defendant’s cargo to the third defendant. The bill of lading was issued by the shipowner. The second defendant was named as the shipper on the bill of lading and the third defendant was named as the consignee. The bill of lading incorporated all the terms of the charterparty between the plaintiff and the second defendant. An amount of USD 282,007.76 became due and payable to the plaintiff under the charterparty which was initially due from the second defendant. By contending that it had a contractual lien against the said cargo, the plaintiff sought to arrest the cargo to secure its claim.

In order to justify the arrest of cargo, the most substantial argument that had been submitted by the plaintiff’s counsel was that, since the first defendant’s cargo was the subject matter in relation to which the claim arose, the cargo was directly connected to the cause of action and thus could be arrested.

In contrast, counsel for the first and third defendant contended that the arrest of cargo was not permissible in the admiralty jurisdiction since such jurisdiction was founded on the arrest of the ship or vessel. In addition, there is no provision in the Arrest Convention 1999 dealing with the arrest of cargo or providing for any right to proceed in rem against the cargo. The defendants’ counsel further alleged that the plaintiff did not comply with the ownership test which is set out in the Arrest Convention 1999 for the enforcement of the maritime claim since the property of the cargo had been transferred to the third defendant and plaintiff had no claim against it.

The question for the Court was whether the plaintiff could apply for the arrest of the first defendant's cargo in respect of the plaintiff's alleged claims arising out of the claim for demurrage as and by way of an action in rem, though the plaintiff was not a party to the bill of lading which was between the second and third defendant.

Held: The plaintiff’s claim for a lien on the cargo must be rejected.

The reasons for the judgment are as follows:

First, an action in the admiralty jurisdiction has to be against the ship or its owner. Therefore, since there is no maritime claim made by the plaintiff against the vessel, the admiralty jurisdiction of the court against the cargo cannot be invoked.

Second, since the plaintiff was not a party to the bill of lading it cannot claim any alleged contractual lien against the cargo.

Third, the Arrest Convention 1999 does not provide any claim in respect of cargo or provide for any right to proceed in rem against the cargo. Therefore, the plaintiff does not have any claim against the cargo which is now owned by the third defendant.