Siva Bulk DMCC (Siva Bulk) arrested the MV Global Diamond for claims arising from breaches of a charterparty of another vessel, the MV Morning Orchid, to Ray Group Lines Co Ltd (Ray Group). Ray Group's performance under the charterparty was guaranteed by World Way Marine Transportation & Logistics Co Ltd (World Way) and by Chou Ching-Hui, a director of World Way. The guarantee stated that World Way was the owner of the MV Global Diamond and the MV Global Dream. Siva Bulk argued that although Grand Pacifica Navigation Corp (GPNC) was the registered owner of the MV Global Diamond, GPNC was a sham company without any independent existence and World Way was the actual beneficial owner of the MV Global Diamond. Siva Bulk argued that World Way and Chou Ching-Hui had created a web of entities designed to confuse and conceal the actual ownership of their vessels, to insulate themselves and their vessels from claims and thereby defeat the claims of legitimate maritime creditors. Siva Bulk pointed to the fact that all the companies shared a common Panamanian commission agent and a common Taiwanese management company.

GPNC applied to have the MV Global Diamond released from arrest on the basis that GPNC and the MV Global Diamond were not connected to World Way or Chou Ching-Hui. When the performance guarantee was executed, neither World Way nor Chou Ching-Hui had any control over the vessel, which was owned by GPNC. Chou Ching-Hui had not incorporated GPNC merely as a front company in order to defraud creditors. GPNC was not controlled by World Way or Chou Ching-Hui. The vessel could not be arrested only on the basis that it had earlier been purchased under the signature of Chou Ching-Hui while he was still a director of GPNC.

Held: Application for release from arrest granted. 

The performance guarantee did declare World Way to be the owner of the Global Dream and the Global Diamond. It was signed by Chou Ching-Hui as if he was the managing director of GPNC as well as on behalf of World Way as one of its directors. However, the evidence indicated that Chou Ching-Hui had already resigned from the board of directors of GPNC and therefore had no authority to enter into the guarantee on behalf of GPNC. Siva Bulk ought to have examined relevant records regarding the current managing directors/directors of GPNC. Therefore, GPNC could not prima facie be held liable to pay the damages alleged to have been suffered by Siva Bulk.

In Croft Sales & Distribution Ltd v MV Basil (Admiralty Suit No 10 of 2010, 24 January 2011) this Court observed:

That 'sister ship' of a sister company and 'sister ship' of 'particular ship' on the basis of ownership both are different concepts. The person who would be liable on the claim in a claim in personam must have been owner or the charterer or in possession or control of 'particular ship' when the cause of action arose and, at the time when the claim is brought i.e. when the claim form is issued, the person who would be liable on the claim in a claim in personam must be the beneficial owner of all the shares in the ship against [which] the claim is brought [sister ship]. ... Unless the particular person is liable for the claim towards 'particular ship', he cannot be made liable for the claim of 'sister ship'. Further, arrest of sister ship of Ex-owner of particular ship is not permissible under the Arrest Convention. Admittedly, the owner of the sister ship at the time of its arrest was not the owner of the particular ship when the claim arose.

This decision was confirmed on appeal by the Division Bench of this Court (OJ Appeal No 6 of 2011, 17 February 2011):

The aforesaid article provides for the arrest of any other ship, and it expressly provides that the other ship must be owned by the person, who is liable for the maritime claim. It is not the case of the plaintiff that the available ship is owned by the company, which owned the particular ship. Therefore, the language, if considered as it is, since the available ship is owned by respondent No. 18, a different company, the arrest of available ship is not provided, even as per 1999 Convention.

In this case, Siva Bulk failed to establish on a prima facie basis the connections between the different companies controlled by Worldway Marine Group as alleged and, therefore, the decision relied upon in Bhatia Industries & Infrastructure Ltd v Asian Natural Resources (India) Ltd 2016 SCC Bombay 10695, MANU/MH/1827/2016, as well as the decision in Liverpool & London S P & I Association Ltd v MV Sea Success I (2004) 9 SCC 512, MANU/SC/0951/2003 (CMI884) were not applicable.

As far as Siva Bulk's submission about the common agent was concerned, when different companies are working independently in a similar business and prima facie there is no material about the connection between them, the mere existence of a common agent of all these companies would not entitle Siva Bulk to interim relief or to continue the arrest of the vessel. Therefore the decision relied upon in MSC Mediterranean Shipping Company v MV MSC Clementina 2015 SCC Bombay 4224 was not applicable.