The issue in this matter was whether the Court, in the exercise of its admiralty jurisdiction, had the power to arrest and order sale of the bunkers on board a ship.

The owners of the Dalmatia G chartered the vessel to Mansel Ltd (Mansel) under a time charterparty dated 25 June 2010 for a period of 36 months. Mansel in turn sub-chartered the vessel under a voyage charter dated 17 April 2012 to the third respondent for a voyage carrying of nickel ore from Indonesia to China. Disputes arose under the voyage charter, which were referred to arbitration.

To secure its arbitration claim against the third respondent, Mansel sought to arrest the bunkers on board the Giovanna Iuliano when the ship entered an Indian port, alleging that the bunkers were owned by the third respondent. Mansel's ex parte application was granted, and the bunkers on board the Giovanna Iuliano were arrested on 22 August 2012. This arrest order was vacated on 30 August 2012 when the Giovanna Iuliano vessel interests put up security without prejudice to their rights.

The Giovanna Iuliano vessel interests subsequently brought a claim against Mansel for the loss and damage suffered as a result of the arrest.

The trial Judge, relying on Peninsula Petroleum Ltd v Bunkers on board the vessel MV Geowave Commander (Notice of motion no 385 of 2014 in Admiralty suit no 85 of 2013 MANU/MH/2269/2014), held that the court did not have jurisdiction to arrest bunkers independent of a vessel. He also found that attempting to arrest a ship in an in rem action with a view to obtaining security for an award that may be made in arbitration proceedings was not possible. The trial Judge therefore found the entire bunker arrest to be wrongful.

Mansel appealed to the High Court of Bombay. Mansel’s primary submission was that the court in exercise of its admiralty jurisdiction should adopt a liberal interpretation of the expression ‘property’ which can be arrested, and that, as there was no express curtailment or bar on arrest of bunkers, it would be equitable for the Court to exercise jurisdiction to allow such an arrest in India.

Held: Appeal dismissed.

The High Court agreed with the trial Judge's conclusion that, as the Bombay High Court (OS) Rules 1980 do not provide for arrest of bunkers, but refer only to property such as ship, cargo or freight, these were the only types of property against which a suit in rem could be brought. The trial Judge had also held the only place where bunkers could be arrested and stored was South Africa, as there was a specific statute conferring jurisdiction to arrest bunkers there. Contrasting the position in South Africa to the position in India, and having regard to the Supreme Court of India's decision in MV Elisabeth, the trial Judge had held that, whilst freight and cargo were considered maritime property, bunkers were not. In addition, arresting bunkers effectively results in the arrest of the ship although there is no claim against the ship owner. This results in serious prejudice to a third party. Further, discharge, storage and transportation of bunkers from a vessel would require permissions, licences and approvals under the Petroleum Act and customs rules. Attempting to unload bunkers from a ship would contribute to congestion in ports, cause difficulty to the crew if they were without fuel to run generators, and expose any cargo on board to the risk of deterioration and damage. In short, there would be serious enforcement difficulties in arresting bunkers in Indian ports. The High Court endorsed these findings by the trial Judge.

The High Court then discussed the Supreme Court's judgment in MV Elisabeth (CMI883). In para 77 of its judgment, the Supreme Court had discussed the High Court's territorial jurisdiction under s 3(15) of the Merchant Shipping Act 1958 and noted that subject matter jurisdiction was based on the provisions of (a) the Arrest Convention 1952, (b) the Collision (Civil Jurisdiction) Convention 1952; (c) the Collision (Penal Jurisdiction) Convention 1952; and (d) the MLM Conventions 1926 and 1967. The High Court noted that the focus of the decision in MV Elisabeth was whether there was admiralty jurisdiction to arrest a foreign ship. The issue of arresting bunkers did not arise. The High Court was also not convinced that a decision of the Division Bench of the High Court of Bombay in MV Mariner IV, a Foreign Flag Vessel v Videsh Sanchar Nigam Ltd (MANU/MH/0484/1998, 1998 (1) Mh LJ) which stated that 'every person, thing and foreign vessel entering Indian waters comes within the jurisdiction of the High Court of coastal state by the very act of its entering the Indian territorial waters' should be interpreted so broadly as to allow for the arrest of bunkers. The Division Bench had observed that 'any other property or ship can be attached or arrested'. The High Court concluded that the court in MV Mariner IV had meant to refer to attachment in respect of any other property, and had meant to refer to arrest in respect of the ship and not in respect of any other property.

The High Court quoted paras 83 and 85 of the judgment in MV Elisabeth, where the Supreme Court discussed the Arrest Convention 1952, which had not been ratified by India. The Supreme Court noted that 'It is important to remember that the Brussels Convention on Arrest of Ships merely restricts or regulates the power of the coastal States and is not intended to confer power which they did not otherwise have as sovereign States. "Arrest" to which the convention refers is detention of a ship to secure a maritime claim, and not seizure of a ship in execution or satisfaction of judgment.'

The High Court also quoted in full para 89 of the judgment in MV Elisabeth, where the Supreme Court discussed the importance and relevance of the international maritime Conventions:

All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law. The power to arrest a foreign vessel, while in the waters of a coastal State, in respect of a respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty. This power is recognised by several international conventions. These conventions contain the unified rules of law drawn from different legal systems. Although many of these conventions have yet to be ratified by India, they embody principles of law recognised by the generality of maritime States, and can therefore be regarded as part of our common law. The want of ratification of these conventions is apparently not because of any policy disagreement, as is clear from active and fruitful Indian participation in the formulation of rules adopted by the conventions, but perhaps because of other circumstances, such as lack of an adequate and specialised machinery for implementation of the various international conventions by coordinating for the purpose the concerned Departments of the Government. Such a specialised body of legal and technical experts can facilitate adoption of internationally unified rules by national legislation. It is appropriate that sufficient attention is paid to this aspect of the matter by the authorities concerned. Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence, as is the position in England, can render valuable help in this regard. Delay in the adoption of international conventions which are intended to facilitate trade hinders the economic growth of the nation.