The plaintiff claimed for the recovery of USD 377,560.96 for salvage services against the defendant vessel, the Kaptan Yusuf Kalkavan. Following the salvage of the defendant vessel, its then owners failed to meet their financial obligations to Port Suez. On account of their continued defaults and abandonment of the vessel, the defendant vessel was disposed of by Port Suez authorities in March 1987. The plaintiff learned that the vessel had subsequently been bought and imported into Pakistan to the Gadani Ship Breaking Yard and beached for breaking. The plaintiff therefore applied for the arrest of the vessel so that it be sold for the recovery of the plaintiff's unsatisfied salvage award. The two main preliminary issues for the Court were:

1. Whether the Court has jurisdiction to adjudicate upon and entertain the suit; and
2. Whether the sale of the defendant vessel by the Ministry of Maritime Transport Red Sea Port Authority 'free from all encumbrances, debts and rights' wiped the defendant vessel clean of the plaintiff's claim.

Held: Judgment for the defendant.

Under the Admiralty Jurisdiction of High Courts Ordinance 1980 the Court has jurisdiction to entertain a suit pertaining to remuneration of salvage services or maritime liens on the salved property. In the instant case the claim of the plaintiff relates to remuneration for salvage services of the defendant vessel. Therefore, there is no doubt that the Court has jurisdiction to adjudicate upon the issue.

The evidence on Egyptian law indicates that the sale of the defendant vessel by the Ministry of Maritime Transport Red Sea Port Authority was stated to be free from all encumbrances, debts and rights incurred prior to its sale in March 1987. The relevant Egyptian statute is based on art 2 of the International Convention for Unification of Rules relating to Maritime Liens and Mortgages 1926 (MLM Convention 1926), which Egypt has incorporated into its domestic law even though it is not a party to the Convention. The statutory sale has the same effect as that of a court sale. A salvor who has a maritime lien on a vessel can only file a case by way of administrative attachment against the sale proceeds of the vessel once it has been sold. It cannot bring a case or file a case for arrest of the vessel after sale.

The defendant purchaser therefore obtained the ship free from all encumbrances. The statutory sale has wiped the defendant vessel clean of the plaintiff's claim according to Egyptian law. However, as per Egyptian law, the plaintiff as a salvage claimant was entitled to approach the Egyptian Court where the money was deposited for satisfaction of its claim. The plaintiff has no legal claim against the defendant ship after its sale in March 1987.