These were claims arising from a charterparty of the vessel Antaios concluded between Maritime Transport Overseas GmbH (MTO) and the plaintiffs, Unitramp. The plaintiffs contended that another vessel, the Maritime Trader, was beneficially owned by MTO, the person liable in personam for their claim. The plaintiffs issued a writ in rem against the Maritime Trader to obtain security and submitted their claim to the arbitral tribunal under the arbitration clause in the charterparty. The registered shipowner of the Maritime Trader, Maritime Trading Ship Holding GmbH (MTS), a wholly-owned subsidiary of MTO, applied to have the writ set aside.

Held: The writ is set aside.

Under s 3(4) of the Administration of Justice Act 1956 (the Act), the admiralty jurisdiction of the High Court may be invoked by an action in rem against the ship in connection with which the claim arose if, at the time when the action is brought, that ship is beneficially owned as respects all the shares therein by the person who would be liable for the claim in personam, or any other ship which at the time when the action is brought is beneficially owned by that person.

The plaintiffs contend that these words are clear and unambiguous, and that there is no reason to look at the Arrest Convention 1952. Parts I and V of the Act stem from the Convention, even if they do not in all respects give effect to it. The plaintiffs referred to the decision of the Singapore Court of Appeal in The Permina 108 [1978] 1 Lloyd's Rep 311 (CMI395), where the Court said:

In our opinion the terms of Section 4(4) of the Act giving them their plain and ordinary meaning are free of any ambiguity and are not reasonably capable of more than one meaning. It follows that it is unnecessary and indeed it would be wrong to look at the International Convention Relating to the Arrest of Sea-going Ships signed at Brussels in 1952 to arrive at the proper construction of our subsection.

The Court went on to make the separate point that Singapore has not acceded to the Convention.

In the UK, Parliament has acceded to the Convention but not given effect to art 3.4 of the Convention. This tends to rebut the presumption that s 3(4) of the Act gives effect to the Convention. Article 3.4 of the Convention deals first with the case in which a demise charterer is liable in respect of a maritime claim relating to a ship on charter by demise, and secondly with 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 (for example, a time charterer). In such cases the signatories of the Convention agreed that a claimant could arrest 'the particular ship' or any other ship in the ownership of the charterer. Parliament has not yet enacted this part of the Convention. The Court can only express the hope that before long Parliament will do so, because it would be a useful addition to the power of this Court to do justice within the world-wide maritime community. There is at present a lacuna in the law of this country which prevents a claimant arresting a ship belonging to a shipowner who has chartered additional tonnage and is liable on a claim relating to a ship on charter. Furthermore the purpose of the Convention was to provide uniform rules as to the right to arrest seagoing ships by judicial process to secure a maritime claim against the owner of a ship. Uniformity has not been achieved because Parliament did not enact the Convention.

In the light of the House of Lords decision in The Eschersheim (CMI2166), the Maritime Trader is not a ship against which the jurisdiction of the Court can be invoked in rem in respect of this claim. MTO is not the registered owner of the Antaios but the charterer of the vessel by demise. Therefore, the Antaios cannot be arrested as a vessel in connection with which the claim arose because MTO did not own it. Consequently, another vessel in the alleged ownership of the charterer, the Maritime Trader, could not be arrested as a sister ship to the Antaios.

MTO also did not beneficially own the Maritime Trader. A parent company has no legal or equitable property in the subsidiary's assets. Therefore, MTO could not be considered the beneficial owner of the Maritime Trader unless the corporate veil was lifted. The Court found that the corporate veil of the shipowners could not be lifted since MTS was not a device or sham designed to defraud the plaintiffs. Sheen J agreed that there is nothing wrong with using company structures to limit liability unless it is a sham. Therefore, MTO could not be considered the beneficial owner of the Maritime Trader.