Maximus Marine Ltd and Keletros Maritime Co Ltd were one-ship companies which owned the MV Arybbas and MV Nephenthe respectively, and the two companies were in turn owned by Probulk Shipping & Trading SA (the holding company), which was, according to the InfoSpectrum report, controlled by one Alexandros Tsakos. OTA Kandla effected supplies to the MV Arybbas, raised invoices on it and its owners, but remained unpaid. The respondent claimed slightly over INR 10,000,000 (one crore) for the supplies.

The MV Nepenthe was arrested as a result of this claim. Article 3.2 of the International Convention on Arrest of Ships 1999 (Arrest Convention 1999), which requires the arrested ship to be owned by the person who is liable for a maritime claim, was relied on by persons interested in the MV Nepenthe (the appellants). The appellants’ argument was that the holding company could not be identified as a person liable for a maritime claim against the MV Arybbas because it was not the owner of either MV Arybbas or MV Nephenthe.

Held: The appeal was successful and the court discharged the order arresting the MV Nephenthe. The holding company could not be liable for a maritime claim against a vessel owned by Maximus Marine Ltd.

The respondent did not have an entitlement to arrest the MV Nephenthe for a maritime claim against the MV Arybbas under the Arrest Convention 1999.

A holding company could not, under Indian law, be held to be liable for the debts of its subsidiary, unless fraud could be proven. However, the respondent, relying on the judgment in MV Elisabeth (CMI883), submitted that the interpretation of ‘owner’ included beneficial ownership. This case, however, was distinguishable. It was the Arrest Convention 1952, and not the Arrest Convention 1999, that was observed at the time of that judgment. It was also confined to well-defined maritime liens or claims and directed against the res (ship, cargo and freight) which was the subject-matter of the dispute or any other ship in the same beneficial ownership as the res in question.

Notwithstanding that the Arrest Convention 1952 prescribed strict tests of ownership, which disappeared in the successor Convention, specifically, art 3.2 of Arrest Convention 1999, this would not assist the respondent’s case, because it would still not show that the beneficial owner was liable; the word ‘person’ was already qualified by ‘who is liable for the maritime claim’ in art 3.2, precluding the beneficial owner of the offending vessel from being regarded as the owner. Such liability could be established if the holding company was, under the law of Liberia, liable for the maritime claim or, alternatively, if the holding company had issued an omnibus guarantee to take responsibility for all liabilities of Maximus Marine Ltd.

The court also found other principles of law, such as lifting the corporate veil and the best arguable case of a plaintiff in an admiralty action, not relatable to the interpretation of art 3.2.