The plaintiffs carried out repairs on the Andrea Ursula, which was registered at the port of Bremen, at their dock at Sheerness. The repairs were carried out at the request of Anglo-Med Shipping & Transport Management Ltd (Anglo-Med). Anglo-Med was in full possession and control of the ship due to a demise charter agreement with the legal owners, which was fixed for a period of 18 months. This agreement also included a contract of sale, through which the ship's ownership was to transfer to Anglo-Med at the end of the period. The repairs were not carried out on the vessel, because Anglo-Med repudiated the contract. The plaintiffs accepted the repudiation and retained the Andrea Ursula at their dock, exercising their possessory lien. Subsequently, the plaintiffs arrested the Andrea Ursula.

The Court was satisfied that the plaintiffs had, when the writ was issued, a valid cause of action against Anglo-Med for GBP 5,180.15, which represented the price of the repairs completed before the contract repudiation. The Court was also satisfied that Anglo-Med was in possession and control of the Andrea Ursula as demise charterers when the cause of action arose, and at the time of the writ's issuance. Consequently, the Court needed to consider whether it had jurisdiction to entertain the action in rem against the Andrea Ursula, or whether the plaintiffs could only pursue their claim through an action in personam against Anglo-Med.

Held: Judgment on the action in rem for the plaintiffs for the sum claimed.

The Court found that the plaintiff's claim unquestionably fell within the admiralty jurisdiction of the High Court under s 1(1)(n) of the Administration of Justice Act 1956 (the Act). It also found that the claim arose in connection with the vessel Andrea Ursula, that Anglo-Med would be the liable party in an action in personam, and that Anglo-Med were the charterers of the vessel when the cause of action arose. The relevant question was whether Anglo-Med beneficially owned all the shares in the Andrea Ursula at the time when the plaintiff's action was initiated. This depended on whether a ship that was under the full possession and control of a person as demise charterer beneficially owned all the shares therein within the meaning of s 3(4) of the Act.

The Court acknowledged that the term 'beneficially owned', as used in s 3(4) was not defined in the Act. The term had multiple possible interpretations, so it was necessary to consider the purpose of the provision to determine which meaning should be applied. The purpose of Pt I of the Act was, among other things, to implement the Arrest Convention 1952 and the Collision (Civil Jurisdiction) Convention 1952. Section 1 of the Act was specifically designed to give effect to art 1, and s 3 of the Act to art 3, of the Arrest Convention 1952.

Various recent decisions of the Court of Appeal, including Saloman v Customs & Excise Commissioners [1967] 2 QB 116, and Post Office v Estuary Radio Ltd [1968] 2 QB 740 indicate that when the meaning of an English statute, intended to domesticate an international Convention to which the UK is a signatory, is unclear, the Court can, and should, refer to the terms of the Convention to assist in construing the statute. The Court should construe the Act to give effect, to the greatest extent possible, to the presumption that Parliament intended to fulfill its international obligations rather than break them.

The Court then considered the relevant provisions of the Arrest Convention 1952 as embodied in the Act. Article 1 of the Convention defines the expression 'maritime claim' as meaning any of the 17 kinds of claim lettered (a)-(q). Section 1 of the Act confers admiralty jurisdiction on the High Court in respect of the same claims, despite the wording and the ordering being different. In particular, the last three kinds of claim, art 1.1.o, 1.1.p and 1.1.q of the Convention are the first three kinds of claims, (a), (b) and (c), in s 1(1) of the Act.

The terms of art 3 make it clear that in respect of claims in 1.1.a-n for which the demise charterer is liable, the claimant is entitled to arrest either the ship to which the claim relates (that is the demise-chartered ship) or any other ship of which the demise charterer is the legal owner. The same principle applies, mutatis mutandis, where a party other than the legal owner is liable on the claim, even though in a capacity different from that of the demise charterer.

Section 3(4) of the Act aims to incorporate art 3 of the Arrest Convention domestically. Section 3(4)(2) provides for jurisdiction in rem against the ship to which the claim relates in respect of claims (a), (b), and (c) in s 1(1), which corresponds to art 1.1.o, p and q of the Arrest Convention. Section 3(4) further provides for jurisdiction in rem against either the ship to which the claim relates or a sister ship in respect of claims (d)-(r) in s 2(2), which corresponds with art 1.1.a-n of the Arrest Convention.

If the intention of s 3(4) is to incorporate art 3 of the Arrest Convention, then the expression 'beneficially owned' is to be given a meaning that includes not only a demise charterer but also any other person with similar complete possession and control who may thereby become liable on a claim within s 1(1)(d)-(r) of the Act.

The decision of Hewson J in The St Merriel [1963] P 247 (CMI2279), where the same question arose, is to be distinguished. The Judge was not invited to look at the international Convention in order to assist him in interpreting the Act. The argument based on the presence in s 3(4), after the expression 'beneficially owned', of the words 'as respects all the shares therein', which was accepted by the Judge, is an argument not different in principle from that which was discussed and rejected by Lord Atkinson in The Hopper No 66 [1908] AC 126, 136. In that case the question was whether the word 'owner' in ss 503 and 504 of the Merchant Shipping Act 1893 (which gave the right to limit liability) included 'demise charterer'. The House of Lords held, reversing the decisions of the Court of Appeal, that it did.