A cargo of RBD palm olein edible oil was shipped from Dumai, Indonesia, on the MT Titan Vision under tanker bills of lading dated 22 July 2014, for discharge at Karaikal and Chennai, India. The vessel suffered main engine failure, was towed into Karaikal, and berthed only on 20 August 2014, 20 days late. As the vessel remained under repair and could not proceed to Chennai, the plaintiff buyer agreed to take delivery of the Chennai parcel at Karaikal itself and transported it onward by road. The plaintiff sued for INR 51,419,114.50 (USD 845,570) in damages for unseaworthiness and delay, and on 25 September 2014 obtained an ex parte order of arrest of the vessel at Karaikal.

The defendant applied to vacate the arrest, to reject the plaint, and to refer the dispute to arbitration, contending that: the plaintiff had no title to sue, having taken delivery against letters of indemnity without surrendering the original bills of lading; the bills of lading incorporated the charter party arbitration clause (Singapore, English law), which the plaintiff had suppressed; unseaworthiness and delay gave rise to no maritime claim justifying arrest; and, relying on the caveat in Liverpool and London SP & I Association Ltd v MV Sea Success I 2004 (9) SCC 512 (CMI884) concerning the Arrest Convention 1999, arrest could be ordered only to enforce a contract involving a public law character, whereas this was a purely commercial transaction.

Held: Defendant's applications dismissed; interim order of arrest made absolute.

The plaint discloses a cause of action. The charterparty itself provided for delivery against letters of indemnity, and the endorsement on the third original bill of lading, read with s 1 of the Bills of Lading Act 1856 (India), conferred the right to sue on the plaintiff. Non-production of the original bills at filing was no ground for rejection of the plaint, and there was no suppression of material facts: 'the non-disclosure ought to be of a fact which vitiates the very existence of a Maritime claim i.e., the cause of action'.

Following MV Elisabeth v Harwan Investment and Trading 1993 Supp (2) SCC 433 (CMI883), 'damage done by a ship' in s 443 of the Merchant Shipping Act 1958 (India) is 'so elastic as to include even the breach of obligations created by Contracts'. Arrest can therefore be ordered even for a simple breach of contract, and the plaintiff's claim for losses from the delayed delivery was a maritime claim entitling it to arrest.

The public law limitation on the Arrest Convention 1999 does not assist the defendant. Following Great Pacific Navigation (Holdings) Corporation Ltd v MT Tongli Yantai 2011 113(4) Bom LR 2441 (CMI2827), the words 'public law character' do not restrict the Convention to contracts involving governmental interests; they 'refer only to the restricted cases which do not involve maritime claims and hence do not permit the invocation of the Admiralty jurisdiction', such as matters affecting only the internal order and economy of the ship, which are left to the flag State. As held in MV Nordlake v Union of India 2012 (114) 93 Bom LR 1420 (CMI2814), where a Convention merely adopts pre-existing international common law, the caveat does not apply. The suit being founded on s 443 of the Merchant Shipping Act 1958 (India), neither the public law limitation nor the Convention itself applied to the domestic legislation.

The claim is an action in rem against the vessel, converted into an action in personam only if the owner submits to the jurisdiction and secures release by depositing security; only then will the question of arbitration arise. The arrest having been sustained, the reference to arbitration does not arise at this stage.