This case concerned the plaintiff’s claim for monies due under a contract for the supply of bunkers to the MV Flag Mersinidi (first defendant, Greek vessel) at Tianjin, China. The contract was made between the plaintiff and the second defendant (time charterer of the first defendant, Korean company). It was common knowledge that the charterer would provide and pay for all the fuel whilst on hire under a time charter.

In any case, the plaintiff obtained an arrest order for the first defendant. The arrest was made pursuant to art 3.1 of the International Convention on Arrest of Ships 1999 (Arrest Convention 1999), which permits the arrest of a ship in respect of a maritime claim falling within certain categories. The first defendant’s Chinese owner, the third defendant, furnished bank guarantee security and obtained the first defendant’s release on a without prejudice basis. Thereafter, the third defendant filed a suit in Seoul Central District Court, 46^th Civil Division, South Korea against the plaintiff, a Korean company. The Seoul Central District Court decided that the third defendant had no obligation to pay the money in respect of the bunkers which had been supplied to the plaintiff, but was silent on the maritime lien issue. This ruling was not challenged in Korea, and attained finality.

Additionally, the third defendant made the present application to set aside/vacate the order of arrest. Consequently, the present application would also seek the return of the bank guarantee. The third defendant relied on the decision of the Korean court that the third defendant was not liable in personam. However, the plaintiff argued that the judgment of the District Court in Korea was not conclusive, and that the third defendant was liable in personam. This involved the question of contractual privity between the plaintiff and the first defendant, and between the plaintiff and the third defendant. For the former, the plaintiff argued that the moment the supply was effected, a contract between the plaintiff and the first defendant sprang into existence. For the latter, there was an email confirmation at the center of the dispute. The plaintiff provided the email confirmation to the second defendant confirming the details of the bunker supply. It referred to the plaintiff’s general terms and conditions of sale and delivery and the provisions therein on governing law, jurisdiction, non-effect of disclaimer stamps and maritime lien appeared to improve the plaintiff’s legal position. Notwithstanding this, the third defendant was not a party to this confirmation. On the other hand, there was a stamped bunker delivery acknowledgment receipt by the first defendant’s master. The contents of the stamp would make it clear that the bunkers were accepted solely for the account of the second defendant, who placed an order for bunker supply, and not for the account of the first defendant or the third defendant, and that no lien or other claim against the first defendant or her owners could arise due to the supply of bunkers.

Held: The application was successful and the notice of motion was disposed of.

The judge was of the view that the judgment delivered by the District Court in Korea was conclusive and had attained finality. Therefore, the third defendant was not liable in personam to the plaintiff. There was an argument before the Court in Korea made by the plaintiff that the sale of the bunkers was on terms similar to a pledge. However, the person who had pledged his property to secure other’s obligation had no obligation to make payment of debts and hence the allegations were groundless and thus dismissed. Furthermore, even if there were such a pledge, a third party pledger took no personal liability for the underlying debt which meant he did not guarantee the payment but only pledged the vessel and therefore not personally liable.

An action in rem against a vessel could be maintained only if there were an underlying obligation of the owner and an action in personam was maintainable against the owner. While an owner or person authorised by the owner could enter into a contract and bind the vessel, a vessel could not enter into any contract with anybody. Notwithstanding that a vessel might, in law, be looked at as an independent juridical personality, it was incorrect to say that there was privity of contract with the vessel but not with the owners. Accordingly, the law said to govern the underlying contract, US aw, was not applicable vis-a-vis the plaintiff and the third defendant.

Additionally, there was no connection whatsoever with US law.

Furthermore, the law in India did not recognise the maritime lien on a vessel for a claim for supply of bunkers or necessaries. Accordingly, the plaintiff had no maritime lien on the MV Flag Mersinidi.

It was clear that the plaintiff was demanding payment from the third defendant only because the second defendant was not paying. The only option left for the plaintiff was to proceed against the second defendant for misrepresentation.