This was a claim brought by the plaintiff charterer for losses and damages of USD 905,000 due to the alleged repudiation of a charterparty by the owners of the defendant vessel, plus USD 30,000 for legal costs. The plaintiff sought the arrest of the defendant vessel docked at Haldia Port, West Bengal, India. In July 2022, this Court initially directed arrest of the vessel. Thereafter, the shipowners entered appearance and furnished security. As a result, the defendant vessel was released.

The relevant arbitration clause in the Vegoilvoy charterparty provided: '32. General Average/ Arbitration General Average and Arbitration, if any, to be in Singapore with English law to apply. York/Antwerp rules 1974 as amended 1994 to apply.' The defendant argued on the basis of cl 32 that there was a valid and binding arbitration agreement between the parties, and applied for an order that the parties be referred to arbitration under s 45 of the Arbitration and Conciliation Act 1996.

The plaintiff submitted that the use of the words 'if any' in cl 32 rendered it vague and unenforceable, and indicated only a possibility of referring the parties to arbitration in the future. The plaintiff also contended that the subject matter of the disputes between the parties was not arbitrable.

Held: The defendant's application is allowed. Both parties shall be at liberty to seek modification of the security amount before the arbitral tribunal.

The crux of any arbitration clause is an agreement to refer disputes or differences to arbitration which is expressly or impliedly spelled out in the arbitration clause. What is of essence is the intention of the parties to settle their disputes through arbitration. A contract ought to be interpreted to give effect to the agreement of the parties rather than invalidate it. A charterparty, being a commercial document, should be interpreted as commercial people would have intended, and should not be nullified nor thwarted by a pedantic or legalistic interpretation. No party can be allowed to take advantage of inartistic drafting of an arbitration clause in any agreement.

The parties consciously agreed to incorporate a specific clause providing for arbitration in Singapore with English law to apply. The clause must be read in the context of an international transaction for the sale of oil. The words 'if any' are at best to be treated as surplusage, or as a short form for the words 'if any dispute arises'. Mere brevity in terminology used in the clause cannot be a ground for refusing a reference to arbitration.

The plaintiff also contended that since this is an action in rem, the arbitration clause cannot be invoked and the disputes between the parties are not arbitrable. This argument is also untenable. The owners have entered an appearance and furnished security to the satisfaction of the Court. Thereafter, the vessel stood released from arrest. Thus, the action ceases to be an action in rem and becomes an action in personam against the owners. Significantly, the full security in the suit had been furnished in terms of the orders of Court. In such circumstances, there is no merit in the argument that full security has not been furnished and that the action continues to be an action in rem.

MV Elisabeth v Harwan Investment & Trading (Pvt) Ltd 1993 Supp (2) SCC 433, 474 (CMI883) held:

The admiralty jurisdiction of the High Court is dependent on the presence of the foreign ship in Indian waters and founded on the arrest of that ship. This jurisdiction can be assumed by the High Court concerned, whether or not the defendant resides or carries on business, or the cause of action arose wholly or in part, within the local limits of its jurisdiction. Once a foreign ship is arrested within the local limits of the jurisdiction of the High Court, and the owner of the ship has entered appearance and furnished security to the satisfaction of the High Court for the release of the ship, the proceedings continue as a personal action.

In this context, the judgments in Siem Offshore Redri AS v Altus Uber (2018) SCC Online Bom 2730 (CMI377) and Owners and Parties Interested in the Vessel MV Polaris Galaxy v Banque Cantonale De Geneve (2022) SCC Online SC 1293 (CMI2000) do not advance the plaintiff's case. The decision cited in Angsley Investments Ltd v Jupiter Denizcilik Tasimacilik Mumessillik San Ve Ticaret Ltd Sirketi 2023 SCC OnLine Bom 559 (CMI2117) is also distinguishable. In that decision, the defendant vessel had not entered appearance, furnished security, or submitted to the jurisdiction of Court. The vessel had not only jumped arrest and escaped from the port of Kandla but had also failed to furnish security in terms of the orders of Court. Accordingly, that decision is inapposite.