SGB Finance SA (the plaintiff) part-financed the purchase by Conway Club Ltd (the defendant) of a pleasure craft named Connoisseur (the vessel) via a loan agreement whereby the plaintiff agreed to lend GBP 822,250.00 to the defendant to assist in the purchase of the vessel.

The defendant fell into arrears in relation to the payment of monthly installments under the loan agreement. The plaintiff issued a plenary summons and arrested the vessel. The endorsement of claim on the summons referred to the loan agreement but there was no express reference to a mortgage. However, the endorsement of claim did set out the basis on which the jurisdiction of the Court would be invoked and referred to art 1.1.q of the Brussels Convention Relating to the Arrest of Seagoing Ships 1952 (Arrest Convention 1952). Under art 1.1.q of the Arrest Convention 1952, a ship can be arrested in respect of a claim arising out of the mortgage or hypothecation of a ship.

The defendant made an application to set aside the proceedings and argued that because the endorsement of the claim made no express reference to a mortgage, it did not disclose a valid maritime claim. The arrest of the vessel was therefore invalid and there was no basis to secure the Court’s jurisdiction.

Held: The defendant’s application is refused. The Court has jurisdiction to hear the claim.

If an endorsement of claim does not disclose the maritime claim within one of the categories under art 1.1 of the Arrest Convention 1952, there can be no basis for arrest of a vessel and no basis to secure jurisdiction. This is supported by art 7.1 of the Arrest Convention 1952 which states that the courts of the country in which the arrest is made have jurisdiction to determine the case on its merits.

Notwithstanding the above, if one reads the endorsement in the summons as a whole, it suggests that the plaintiff had properly made out its claim to be under one of the categories of art 1.1 of the Arrest Convention 1952 (in this case art 1.1.q). This is because there was an express reference to art 1.1.q of the Arrest Convention 1952. The reference to this article makes it clear to the reader that the claim is not simply one based on a loan agreement, but a loan agreement that is secured by a mortgage over the vessel.

In coming to the above conclusion, the Court relied on Berlingieri on Arrest of Ships, which is an authoritative commentary on the Arrest Convention 1952.  Berlingieri opined that the wording of art 1.1.q was not entirely correct because a claim does not arise out of a mortgage per se, but out of a contract (eg a loan agreement) in respect of which the mortgage is executed. This can be seen from the French version of the Arrest Convention 1952, which text is equally authentic. Hence, a claim secured by a mortgage would come within the meaning of art 1.1.q.