The appellant sought to arrest the MV Infinity for satisfaction of its claim against the second respondent for the balance of the purchase price of the ship. The appellant had handed over possession of the ship to the second respondent on the promise of deferred payment of the remaining amount.

The respondents raised a preliminary objection, relying on Croft Sales and Distribution Ltd v MV Basil [2011] GLHEL 224598 (HC) (Croft Sales) that the dispute was purely in connection with a commercial transaction for a ship sale. The contract did not involve any public law character and, therefore, a claim thereunder could not be termed a ‘maritime claim’ and the ship could not be arrested. The Judge below agreed.

The appellant contended that Croft Sales does not lay down the correct legal position and its reliance on Liverpool & London S P & I Association Ltd v MV Sea Success I (2004) 9 SCC 512 (Liverpool) (CMI884) was misplaced, as the Supreme Court in Liverpool did not advocate such a restricted meaning of a ‘maritime claim’. The view adopted in Croft Sales would unduly restrict the admiralty jurisdiction of the High Court, contrary to Liverpool and contradict the expansive view of the Supreme Court in MV Elisabeth v Harwan Investment and Trading Pvt Ltd (1993) SCC 433 (CMI883) (MV Elisabeth).

Held: Appeal allowed. The admiralty jurisdiction of the High Court can be exercised for arresting a ship for any ‘maritime claim’ defined under art 1.1 of the Arrest Convention 1999 and the Convention’s application is not restricted to contracts involving a public law character.

The Court found the respondent’s view to involve an overly restrictive and literal reading of Liverpool. Liverpool involved the issue of whether unpaid insurance premiums would be considered as a ‘necessary’ (within s 5 of the Admiralty Court Act 1861); a claim which did not have any public law character. In Liverpool the Supreme Court did not restrict the Arrest Convention 1999’s application to enforcement of a contract involving a public law character, but instead upheld the admiralty jurisdiction. The observation in Liverpool relied upon by the respondent cannot be seen as its ratio. It was made in the context of expanding the concept of ‘necessaries’ in the public interest and applying the Arrest Convention 1999 in the process. The Supreme Court weighed the growing importance of insurance premiums for ships to anchor at Indian ports against the inclusion (in the Arrest Convention 1999) of claims for insurance premiums into the definition of ‘maritime claims’. An arrested uninsured vessel anchored in port would pose a serious hazard to third parties since their claims would be unsecured in event of loss or damage to life or property.

The Supreme Court in MV Elisabeth had earlier substantially expanded the Indian admiralty jurisdiction by applying the Arrest Convention 1952, even though the Convention had not been ratified by India. The Supreme Court observed that admiralty jurisdiction is an essential aspect of judicial sovereignty, which is exercised by the High Court as a superior court of record. Power to enforce claims against foreign ships is an essential attribute of its admiralty jurisdiction and assumed over such ships. The Supreme Court further suggested that, even though other relevant international maritime Conventions had not been given domestic effect in India, 'the principles incorporated in the conventions are themselves derived from the common law of nations as embodying the felt necessities of international trade and are as such part of the common law of India and applicable for the enforcement of maritime claims against foreign ships'.

Further, virtually all claims under art 1.1 of the Arrest Convention 1999, which exhaustively sets out the ‘maritime claims’ for which a vessel can be arrested as security (see art 2.2), do not involve a public law character but are in the nature of private contractual disputes. The Arrest Convention 1999 would become virtually inapplicable in the context of admiralty jurisdiction if the view in Croft Sales was to be accepted. The Supreme Court in Liverpool did not intend to reverse the trend in MV Elisabeth towards expanding the admiralty jurisdiction by applying all relevant international maritime Conventions.