A UAE company, Nautical Global Ship Management (the respondent), bareboat chartered the Nautical Global VII and Nautical Global XVI from their owner, Gulf Shipping Services (the appellant). Clause 30 of the bareboat charterparties provided for dispute resolution in terms of English law and London arbitration.

The respondent repeatedly refused to pay hire charges for both vessels. It alleged latent defects of the vessels, claimed that it incurred substantial costs for repairs and sought recovery from the appellant. The respondent also claimed that the defects resulted in lost opportunities, like the possible charter for the Nautical Global VII to carry 2000 tons of base oil from Karachi in Pakistan to Hamriyah in the UAE. The vessel therefore remained at the port in Hamriyah and did not sail to Karachi. Nevertheless, the appellant issued a notice to terminate the charterparties.

The respondent then entered into time charters for both vessels, but they first had to sail to Kandla in India for inspection. The Nautical Global XVI was carrying a cargo of gasoil from Fujairah in the UAE to Aden in Yemen under a time charter with Sea Hub Shipping & Logistics Pvt Ltd (the sub-charterer). It was later redelivered to the respondent and proceeded in the direction of Kandla. Eventually, both the Nautical Global VII and the Nautical Global XVI sailed to and reached the port of Kandla, where they were arrested (Admiralty Suit No 2/7 and Admiralty Suit No 3/17, respectively). The arrests were made to secure the respondent’s maritime claim in litigation or arbitration. The appellant sought to vacate the arrest order on the grounds of wrongful arrest and alleged that the diversion to Kandla was not for inspection, but to secure an arrest, and was therefore dishonest.

The respondent submitted that the admiralty action was sustainable. Even if the claim had been referred to arbitration, the arrest order could remain in force until the time expired as ordered (art 7.3 of the Arrest Convention 1999). The matter could, by way of an interim measure, proceed where the vessels were arrested or security was provided to obtain the release of the vessels pursuant to art 7 of the Arrest Convention 1999. Since the Arrest Convention 1999 applied, the court's admiralty jurisdiction could be exercised for the arrest of the Nautical Global VII for a maritime claim under art 1.1 despite the foreign arbitration clause (S Ocean Liner LLC v MV Golden Progress MANU/MH/0026/2007; 2007 (2) Bom CR 1). An action in rem is maintainable for the recovery of a claim and the arrest of a vessel, even where the parties have agreed to submit the dispute to arbitration (Vital Ventures Ltd v A Motor Vessel Flying 2017 (2) GLH (FB) 1).

Held: Appeal allowed in part. The claim was a maritime claim, and so there was a prima facie case in favour of the respondent. Since the parties had elected for arbitration, the proceedings were stayed in favour of alternative dispute resolution as per cl 30 of the charterparties.

The admiralty jurisdiction of this Court was not ousted even though the parties had resorted to an arbitration clause. As far as the claim raised by the respondent and the evidence on record, thus, constitute a maritime claim and a prima facie case in favour of the respondent. The appellant, however, was free to furnish sufficient security to vacate the arrest order.

Both parties were directed to arbitration and proceedings were stayed until a decision is made (Vinalines Fortuna v Saurashtra Fuels Private Limited OJCA No 29 of 2013).