The plaintiff entered into two time charterparties with the defendant regarding the tug ASL Courageous and the barge ASLCO 3008, operating under the Singapore flag. The plaintiff brought a claim in rem under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 (the Act). The plaintiff also applied for the arrest of the tug and barge and for their judicial sale. A warrant of arrest was issued. The defendant provided security. A warrant of release was issued.

The time charterparties provided for arbitration by the Singapore Chamber of Maritime Arbitration, governed by Singapore law. On the release of the tug and barge by providing security, the suit was converted from an action in rem to an action in personam. Reliance was placed on MV Elisabeth v Harwan Investment & Trading Pvt Ltd 1993 Supp (2) SCC 433 [83] (CMI883). Reliance was also placed on the judgment of the Division Bench of the Bombay High Court in Angsley Investments Ltd v Jupiter Denizcilik Tasimacilik Mumessillik San Ve Ticaret Ltd Sirketi 2023 SCC OnLine Bom 559 [11]-[12] (CMI2117). The judgment of the Division Bench of the Bombay High Court in OSV Crest Mercury 1 v Vision Projects Technologies Pvt Ltd [15] (CMI2462) was to the effect that an action in rem is converted into an action in personam only upon the defendant providing security for the suit claim and not merely upon the defendant entering appearance in the suit. Since security was provided in this case and the tug and barge were released, the suit is now an action in personam.

Article 7 of the Arrest Convention 1999 provides that courts of the State in which arrest was effected may direct parties to arbitration, if the parties have agreed thereto. The Full Bench of the Bombay High Court in JS Ocean Liner LLC v MV Golden Progress 2007 (3) CTC 113 recognised the applicability of art 7 of the Convention. The Full Bench concluded that an action in rem under the admiralty jurisdiction for recovery of a money claim and for the arrest of the vessel may be proceeded with in accordance with art 7 of the Convention after security is provided for the release of the vessel.

The plaintiff argued that the charterparties were incapable of being performed. Without abiding by the instructions of the charterer, the tug and barge deviated from course in spite of the plaintiff providing requisite bunkers. The defendant's tug and barge entered and exited from the territorial waters of India without obtaining requisite permission from the customs authorities. The charterparties were vitiated by fraud perpetrated by the defendant

Held: Judgment for the defendant.

It cannot be said that the contract is incapable of being performed at the time of contract formation or that it was frustrated in terms of s 56 of the Contract Act or even common law. The plaintiff has also failed to place on record any material to support a prima facie finding that the agreement is either null and void or inoperative.

The suit was admittedly instituted as an action in rem. In the specific context of an admiralty claim, the re[s] refers to the vessel. Upon the defendant providing security for the suit claim, the tug and barge were directed to be released. No other maritime claim was lodged in respect of the vessel. In the judgments cited by the defendant it was concluded that the action in rem is converted into an action in personam upon the defendant providing security and obtaining release of a vessel. Thus, in this case, the action in rem has been converted into an action in personam. Being an action in personam, it clearly does not fall within any of the categories of non-arbitrable disputes.

The allegations of fraud here pertain to the alleged blatant breach of the terms of the charterparties. These allegations are controverted by the defendant by referring to documents indicating that performance of obligations was affected by adverse weather conditions. From the nature of allegations, it is evident that such allegations do not pertain to the execution of the charterparties and are confined to performance of obligations thereunder. Even otherwise, the arbitration laws in most jurisdictions, including Singapore, recognize the Kompetenz-Kompetenz principle by treating the arbitration clause in a contract as separate from the rest of the contract so as to enable the arbitral tribunal to rule on all allegations with regard to execution and validity of such contract. In the facts and circumstances outlined above, the allegations of fraud by the plaintiff are insufficient to meet the exacting standard for the Court to decline the reference on that basis.