The Nasco Diamond, owned by YDM Shipping Company Ltd, was time chartered to Da Sin Shipping Pte Ltd (disponent owner), who sub-chartered it to Great Pacific Navigation (Holdings) Corp Ltd (plaintiff), who sub-chartered it to Tongli. The Nasco Diamond proceeded to Kolonodale, Indonesia, to load a cargo of nickel ore under Tongli’s orders pursuant to a fixture recap, but it sank and 22 crew members died. The plaintiff attributed the cause of the incident to Tongli’s wrongful and negligent act or omission. Tongli loaded the cargo in wet conditions (and so prone to liquefaction). This was contrary to the express warranty in the fixture recap to load the cargo harmless or safe. The plaintiff was saddled with a claim of an estimated USD 42 million and sought to recover from the defendant.

The disponent owner filed Admiralty Suit No 3 of 2011 and arrested the MV Tongli Yantai (defendant), whose purported registered owner was Halcyon Ocean Shipping Ltd (Halcyon) and demise charterer was Eastshine Ltd (Eastshine). Halcyon applied to vacate the order of arrest (which application was granted) and claimed damages for wrongful arrest. The plaintiff challenged the order of release of the vessel in Appeal No 559 of 2011. The appeal was allowed and the order of arrest was reinstated.

Halcyon counter claimed and sought damages of USD 13.282 million for wrongful arrest (Counter Claim No 19 of 2012). Separately, Eastshine sought to enforce the plaintiff’s undertaking to compensate any party prejudiced by the order of arrest and filed Admiralty Suit No 66 of 2015 (companion suit) against the plaintiff for damages for wrongful arrest of the MV Tongli Yantai.

Three articles in the Schedule to the Limitation Act 1963 may apply to a compensation suit for wrongful arrest: 80, 90 and 113. Article 80 deals with compensation suits for wrongful seizure of movable property under the legal process and the limitation period is one year, beginning from the date of the seizure. Article 90 deals with compensation suits for injury caused by an injunction wrongfully obtained and the period is three years, beginning when the injunction ceases. Article 113 - the residuary article - also has a limitation period of three years, but it begins running when the right to sue accrues.

The defendant argued that arrest was a seizure. Thus art 80 applied and the counter claim and companion suit should be time-barred. The plaintiff contended that arrest was not seizure and the applicable article could be either art 90 or art 113.

Held: The counter claim was within time and so allowed to proceed to trial. However, the companion suit was time-barred and dismissed.

An arrest is considered a seizure of property enforced against the world at large and the court has full dominion and control over the arrested ship. The Arrest Convention 1999 is part of Indian admiralty law (MV Nordlake v Union of India and JS Ocean Liner LLC v MV Golden Progress MANU/MH/0026/2007; 2007(2) ARBLR 104 Bom). Article 1.2 of the Arrest Convention 1999 defines arrest as 'any detention or restriction on removal of a ship by order of a court to secure a maritime claim but does not include the seizure of a ship in execution or satisfaction of a judgment or other enforceable instrument', and detention implies a restraint or custody. The power of seizure does not necessarily involve the physical possession of the person having the right to seize, though it implies putting the thing seized into legal possession. Accordingly, any grievance of wrongful arrest attracts the operation of art 80, which provides for a one-year limitation period from the date of the arrest, and any suit filed after one year of arrest would be barred by limitation.

An arrest is also not considered an injunction, which is a command to an individual that is enforceable against that person and no other person.

Additionally, this court can determine the extent of liability for wrongful arrest (art 6.2 of the Arrest Convention 1999) and can order the claimant to put up security as a condition of the arrest (art 6.1).