Several parties had brought claims against the owners of the Motor Vessel Michail Arhangelos which was docked at Mombasa Port, leading to repeated orders of arrest. In the run-up to the latest rearrest, the intervener, Star Matrix Ltd, came forward as the ship's new owner, with the ship now re-named Star 7. The intervener applied for the release of the vessel, the striking out or dismissal of the relevant claims against the vessel, a declaration that the court had no jurisdiction to hear the claims against the vessel and damages for wrongful arrest. 

The two relevant claims before the Court were Admiralty Claim No 3 of 2010 which was classified as an admiralty claim in rem for bunkers consumed by the motor vessel, food and water used by the vessel’s crew and essential expenses of the motor vessel; and Admiralty Claim No 8 of 2010 which was an in rem claim related to mortgages over the vessel. 

Held: Intervener's applications granted.

As to Admiralty Claim No 3 of 2010, the owners of the Michail Arhangelos, Michail Arhangelos SA, had entered into a settlement agreement with the supplier, Phaedra Maritime SA, in terms of which the latter would be paid out of the proceeds of sale of the vessel to Star Matrix Ltd. Although Phaedra Maritime SA had had a claim in rem against the vessel, that was superseded by the settlement agreement and consent judgment based on the settlement agreement. Although counsel for Phaedra Maritime SA submitted that the vessel had been rearrested because the owners had not complied with 'some' of the terms of the judgment, a fair construction of the same would not favour arrest of the motor vessel. Any substantive dispute arising from the terms of the settlement agreement has been committed to New York arbitration, subject to US law. It followed that with the consent judgment the matter was res judicata, and it was improper to reactivate the Court’s powers to make orders rearresting the motor vessel. The Court had no jurisdiction to rearrest the motor vessel on Admiralty Claim No 3 or to restrain the ship from departing the Port of Mombasa.

As to Admiralty Claim No 8 of 2010, counsel for the mortgagee contended that under the International Convention on Maritime Liens and Mortgages 1993 (MLM Convention 1993) the mortgages were still valid and the process of purchase, transfer and registration of the vessel was a nullity. Counsel relied on art 3 of the MLM Convention 1993:

With the exception of the cases provided for in articles 11 and 12, in all other cases that entail the deregistration of the vessel from the register of a State Party, such State Party shall not permit the owner to deregister the vessel unless all registered mortgages, ‘hypothèques’ or charges are previously deleted or the written consent of all holders of such mortgages, ‘hypothèques’ or charges is obtained. However, where the deregistration of the vessel is obligatory in accordance with the law of a State Party, otherwise than as a result of voluntary sale, the holders of registered mortgages, ‘hypothèques’ or charges shall be notified of the pending deregistration in order to enable such holders to take appropriate action to protect their interest: unless the holders consent, the deregistration shall not be implemented earlier than after a lapse of a reasonable period of time which shall be not less than three months after the relevant notification to such holders.

Counsel for the mortgagee submitted that the foregoing provision applied in Tanzania, Kenya and Panama, as these countries had acceded to the MLM Convention 1993; and it was therefore not possible for the Michail Arhangelos to be registered in Tanzania as the Star 7 without a 'certificate of deletion' from Panama or St Kitts and Nevis. Thus Michail Arhangelos SA must be regarded as still being the owner of the vessel and the two existing mortgages in favour of the claimant in Admiralty Claim No 8 of 2010 survived, as they were protected under the MLM Convention 1993, as well as under the laws of St Kitts and Nevis, Tanzania, and Kenya.

Counsel for the intervener submitted that the High Court had no jurisdiction, not only because the mortgages were unregistered and so were not enforceable by action in rem, but also because the mortgagee's claims were also included in the settlement agreement and consent judgment following rearrest.

The Court held that the vessel had been registered in St Kitts and Nevis, but that registration expired on 30 November 2009 and was not renewed. Instead, the vessel was given temporary registration on the Panamanian registry on 30 December 2009. The vessel was, in the meantime, registered at the Port of Zanzibar, and the Panamanian registration was deleted on 11 June 2010. These processes of registration, deletion, sale, transfer of title, registration in Tanzania, were all contested as invalid by the claimant, who urged that the status of the two mortgages of 2007 and 2008 should be determined on the basis of the law of St Kitts and Nevis. Apart from the fact that there was conflicting evidence on the state of registration of the mortgages in the registry of St Kitts and Nevis, there was ascertained evidence that, between 30 December 2009 and 11 June 2010 the ship was registered at the Port of Panama but the two mortgages were not registered in Panama. Without such registration, any claim which a mortgagee might have is only a claim in personam against the shipowner rather than in rem against the ship.