Societé Anonyme des Petroles Mory (the plaintiff) sued the owners of the vessel Union Darwin for money owed in respect of fuel oil and diesel oil supplied to the vessel at Jeddah in August 1982. The vessel was arrested on 8 April 1983 in Hong Kong. On 13 April 1983, the defendants took out a motion asking that the vessel be unconditionally released from arrest on the grounds that the Admiralty Court in Hong Kong does not have any jurisdiction in rem over the vessel under s 3(4) of the Administration of Justice Act 1956 (UK) (the Act) as applied in Hong Kong.

Visco Line SA (a Panamanian company) was the owner of the vessel. Visco Line SA demise chartered the vessel to the Union President Marine Corporation SA (HK). The demise charter was for a period of 54 calendar months, at a rent of USD 42,370 per month with the exception of the fifth month, when the rent was USD 222,370.

The issue was whether the matter was governed by s 3(4) of the Act. This section provided that where the person who would be liable in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the Admiralty jurisdiction of the High Court may be invoked by an action in rem against that ship, if at the time when the action is brought it is 'beneficially owned as respects all the shares therein' by that person. Therefore the court had to determine whether the vessel was 'beneficially owned as respects all the shares therein' by the demise charterer.

Held: Motion allowed. The vessel is ordered to be unconditionally released from arrest.

Brandon J dealt with this issue in the Andrea Ursula [1973] 1 QB 265. He considered that the words 'beneficially owned' were capable of referring to parties other than an equitable owner. In his view they were capable of 'a different and more practical meaning related not to title, legal or equitable, but to lawful possession and control with the use and benefit which are derived from them'. Having decided that they were capable of another meaning, he considered that it was proper to look at the Arrest Convention 1952. On the basis of the Arrest Convention 1952 he found that this was the proper meaning to be given to the words 'beneficially owned' and was satisfied that the meaning was wide enough to include not only a demise charterer but any other person with similar complete possession and control.

However, in the I Congreso del Partido [1978] 1 QB 500, Goff J said that 'the natural and ordinary meaning of these words is that they refer only to such ownership as is vested in a person who, whether or not he is the legal owner of the vessel, is in any case the equitable owner, in other words, the first of the two meanings of which Brandon J thought the words to be capable. Furthermore, on the natural and ordinary meaning of the words, I do not consider them apt to apply to the case of a demise charterer or indeed any other person who has only possession of the ship, however full and complete such possession may be, and however much control the ship he may have.'

The Act was, for some purposes, brought into being in order to give effect to the Arrest Convention 1952. The words used in the statute are awkward words, both because they do not give effect to the Convention and because they, at times, work against what many would consider a just solution to a claim made by a supplier of goods. Nonetheless, the Court is concerned with whether the words, when given their natural and ordinary meaning, express a clear and unequivocal intention. The Arrest Convention 1952 cannot be called in aid to interpret the words and, when given their ordinary meaning, they cannot apply to a demise charterer.