This was an appeal from two admiralty matters decided in the High Court of Sindh, Karachi, by common judgment. In both matters the parties were the same and the vessels involved were the Fu Yuan Yu 235 and the Fu Yuan Yu 236. The petitioner, Masoomi Enterprises Pakistan (Pvt) Ltd, entered into an agreement with the respondent, Pin Tan Fishery Co, whereby the latter was authorised to operate its trawlers for the development of ocean fishery production within the Pakistan Exclusive Economic Zone (EEZ) on the petitioner's licence. The agreement remained operative for a period of one year, and the authorised representative of the respondent was required to pay the petitioner USD 70,000 per trawler per year as co-operative expenses in the business. It was alleged that the respondent defaulted in payment of the agreed amount and committed various other breaches of contract.

Initially, other vessels were arrested, but on being informed that those vessels were owned by another Chinese company, CNFC International Fisheries Corp, and not by the respondent, it was ordered that the suit be treated as an ordinary suit on the original side (ie in the general civil jurisdiction) and the order of arrest was recalled. In a later admiralty suit, the two trawlers in question were sought to be arrested as being owned by the respondent, or by an associated company.

The Division Bench observed that the petitioner's claim did not arise from an agreement for hire of the ships, and that no ship belonging to the petitioner was hired by the respondent. The Division Bench also held that the agreement envisaged that the respondent was entitled to ply its ships on the licence of the petitioner and was liable to pay certain amounts for this. The Division Bench reached the conclusion that, at best, the agreement could be termed as one for hire or use of a licence, and did not fall under s 3(2) of the Admiralty Jurisdiction of High Courts Ordinance 1980 (the Ordinance). Even if it was assumed that the respondent was a sister concern and held majority shares in the shipowning company, no action in terms of s 4(4)(b) of the Ordinance could be brought against those vessels, as the petitioner's claim did not arise from those vessels.

The petitioner appealed, arguing that an action in rem was maintainable against the ships under s 3(2)(h) of the Ordinance, and that the High Court erred by transferring the suits to be dealt with on its original side.

Held: Appeal dismissed.

A perusal of s 3(2)(h) of the Ordinance unequivocally shows that the High Court has admiralty jurisdiction over any claim based on any agreement relating to the carriage of goods in a ship or to the use or hire of a ship. It means that the above provision is attracted on three conditions: first, if the agreement relates to the carriage of goods in a ship; secondly, to its use; and thirdly to its hiring. None of the conditions is attracted to the instant case. The agreement in question was basically for the use of a licence, and that condition is not covered by s 3(2)(h). It is a proven fact that the two arrested vessels were not the trawlers that were being used in performance of the contract. The respondent was only to ply its own ships on the licence of the petitioner and to pay a certain amount in that regard. The petitioner's suits were rightly transferred to the original side.