This was an appeal against the judgment of a single Judge on 27 July 2022 refusing the release of the arrested OSV Crest Mercury 1. Vision Projects Technologies Pvt Ltd (the plaintiff) had instituted an action in rem against the vessel for USD 1,873,082.32 plus interest. The plaintiff claimed that under the terms of the BARECON 2001 charterparty entered into between itself and Continental Radiance, the shipowner, it had carried out a special survey, drydocking, and various repairs to the vessel. Its invoices remained unpaid.

Concerned that the vessel might be re-exported out of Indian waters, the plaintiff applied successfully for its arrest. The shipowner argued that the arrest order should be vacated on, among other grounds, that: a false case of urgency had been made out to obtain the arrest order; the arrest order was obtained without the owner's notice, despite the owner having lodged a caveat under s 148A of the Code of Civil Procedure 1908 (the PCP); and since the charterparty provided for arbitration, security for an arbitration proceeding in personam could not have been taken in the form of an admiralty action in rem.

The single Judge heard and rejected these defences. The shipowner appealed, arguing that the single Judge had failed to appreciate that the arrest of the vessel was solely designed to secure the claim in arbitration proceedings between the parties. The shipowner submitted that once it had entered an appearance, the admiralty action could no longer be regarded as in rem but was in personam. Once that was the case, the dispute was capable of being resolved through arbitration. The shipowner relied upon the decision of the House of Lords in Republic of India v Indian Steamship Co Ltd (The Indian Grace No 2) [1998] AC 878 to contend that the personification theory in admiralty had now been replaced by the procedural theory. The present action could not proceed as the shipowner had already invoked arbitration under the provisions of the Arbitration Act.

Held: Appeal dismissed.

The Court finds no merit in the shipowner's contention. The single Judge correctly relied on Siem Offshore Redri AS v Altus Uber 2018 SCC OnLine Bom 2730 (CMI377) and the decision of the Division Bench in Altus Uber v Siem Offshore Rederi AS 2019 SCC OnLine Bom 1327 (CMI511). Relying on these decisions, the single Judge correctly came to the conclusion that merely because the dispute is amenable to arbitration does not necessarily imply that the vessel cannot be arrested in an action in rem.

An action against the vessel is an action in rem. An action against the owner of the vessel (which forms the subject matter of the arbitration) is an action in personam. It is well settled in law that an action in rem is converted into an action in personam only when the defendant: (a) enters an appearance; (b) submits to the jurisdiction of the court; and (c) furnishes security for release of the vessel. Until these three conditions are fulfilled, the question of an action in rem being converted into an action in personam does not arise.

It is also well settled that an action in rem is not an action that can be referred to arbitration. The action in rem in the present case is an action against the vessel. This is clear from s 5 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 (the Act). If an action in rem against the vessel cannot be referred to arbitration, this cannot be circumvented by merely invoking arbitration, and thereafter contending that now there is an action in personam against the owners of the vessel, and therefore, the action in rem cannot lie. An action in rem is an action against the vessel. In the admiralty jurisdiction, the vessel is treated as a separate juristic entity, and can be sued, even without suing its owners.

The reliance placed by the shipowner on The Indian Grace is misplaced. This judgment was considered by the English Court of Appeal in Stolt Kestrel BV v Sener Petrol Denizcilik Ticaret AŞ [2015] EWCA Civ 1035 (CMI20), where it was held that the observations in The Indian Grace were limited to the consideration and interpretation of s 34 of the Civil Jurisdiction and Judgments Act 1982 (UK). The Indian Grace has also been considered by another single Judge of this Court in Raj Shipping Agencies v Barge Madhwa 2020 SCC OnLine Bom 651 (CMI782).

Section 148A of the CPC does not apply to the admiralty jurisdiction at all. The admiralty jurisdiction is a special jurisdiction, for which special Rules have been framed in the Bombay High Court, with particular regard to filing of a caveat and the consequences thereof.

Another argument canvassed by the shipowner was that the plaintiff approached this Court with a false case of urgency. This argument is also without merit. When obtaining an arrest order, the only test that the plaintiff has to satisfy is that it has a maritime claim which is the subject matter of the admiralty proceedings, and the Court has reason to believe that the person who owns the vessel at the time when the maritime claim arose is liable for the claim, and is the owner of the vessel when the arrest is effected. This is clear from s 5 of the Act. It goes without saying that the ship that is to be arrested has to be within the jurisdiction of the Court. When these tests are satisfied, the Court can arrest the vessel. There is no question of any urgency to be made out in a matter like this, as the principles for arrest of the ship are very different from the principles envisaged under the provisions of the CPC. Ship arrest in an admiralty claim in rem is 'sequestration' and not 'execution'. The term 'sequestration' has no particular technical meaning. It simply means detention of property by a Court of Justice for the purpose of answering a demand which is made. That is exactly what ship arrest is. Ship arrest cannot be equated with an attachment under the CPC. Every maritime claimant has a right in rem which it is entitled to exercise by seeking an arrest of the ship. The only test the claimant has to satisfy is to show that it has a maritime claim and establish the identity of the ship. As against this, an attachment before judgment is a discretionary interim order that any type of claimant would be entitled to apply, upon satisfying the requirements of the CPC. It is not entitled to an attachment as a matter of right or as a matter of enforcement of a right. Here, it is not in dispute that the vessel was in the control of the owners. Once this is the case, to simply say that the vessel was imported into India by the plaintiff, and therefore could not have left the territorial waters until the re-export formalities were completed, is wholly irrelevant. It is not unknown that even after arrest orders, ships have jumped arrest and have left the territorial waters. There was no false case of urgency made out to obtain the order of the arrest.