LMJ International Ltd (the plaintiff), a voyage charterer, instituted an admiralty suit in the High Court of Calcutta following a dispute arising out of the carriage of iron ore from Indian ports to China on the OSM Arena. The vessel was owned by Shinhan Capital Co Ltd of Seoul, Korea, and was under a time charter granted by the financial lessee, Sunwoo Merchant Marine, to Seoil Shipping, which in turn granted a voyage charter to the plaintiff. Pursuant to a fixture note dated 1 August 2009, approximately 43,000 mt of iron ore were to be loaded at Haldia and other Indian ports and carried to a discharge port in China. A bill of lading was issued on 13 October 2009 by an agent of the master, describing the goods as 'clean on board' and with freight prepaid. The plaintiff had sold the shipment to Express Well, which in turn resold it to Tangshan Ganglu Iron and Steel Co Ltd (Tangshan Ganglu). The bill of lading was endorsed in favour of the ultimate purchaser. Disputes arose regarding the delivery of the cargo, and parallel proceedings were initiated in the Calcutta High Court and the Tianjin Maritime Court in China. The vessel was arrested by order of the Calcutta High Court on 23 February 2010. The shipowners applied for dismissal of the admiralty suit and vacation of the arrest order, contending that there was no privity of contract between the owners and the plaintiff, and that no valid maritime claim existed.

Held: Application partly allowed. Arrest to continue unless owners furnish security of INR 5,000,000 and pay INR 500,000 towards receiver costs; claim for value of goods not established at prima facie stage; claims for freight refund, loss of profit, and costs to stand trial.

The Court held that the shipowners were bound by the bill of lading issued under the authority of the master, and that the absence of direct privity between the shipowner and the voyage charterer did not insulate the vessel from a maritime claim. The Court affirmed that under s 1 of the Bills of Lading Act 1856, rights vest in an endorsee only where property in the goods passes unconditionally; an endorsement for the purpose of delivery through an agent does not divest the original holder of title. The Court relied on the Arrest Convention 1999, as recognised in Indian maritime common law through MV Elizabeth v Harwan Investment and Trading Pvt Ltd AIR 1993 SC 1014, noting that failure to deliver cargo constitutes a maritime claim under arts 1.1.f and 1.1.h of that Convention. The Court affirmed, applying the principles recognised in MV Elizabeth, that international maritime Conventions, even where not enacted into Indian domestic law, form part of Indian common law as embodying the necessities of international trade, and are applicable to enforcement of maritime claims against foreign ships.

The claim for value of goods was not established at this prima facie stage, given delivery to Tangshan Ganglu in China, but residual claims for freight refund, loss of profit, and costs were held to warrant trial.