Arbitration Vs. Maritime Claim – Admiralty Act 2017 – Distinction between action in rem and in personam – Interim order for Arrest and Detention of Ship for non-payment of Dues of plaintiff
Plaintiff – Vision Projects Technologies Pvt Ltd filed commercial admiralty suit against the Defendant Vessel (tug/offshore with Indian flag) for decree of USD 1,873,082.32 with interest, for arrest & sale of the vessel and to apply for sale proceeds to its claim.
On 19.10.2015 there was Bareboat Charterparty Barecon executed between the plaintiff and Continental Radiance registered owner of the vessel, for a period of five years. The plaintiff carried out the special survey, dry docking and various repairs to the vessel. However, the dues were not paid giving rise to the suit and the reliefs.
On 21.6.2021, the learned Single Judge passed the interim arrest of the vessel was granted on the application of the plaintiff that the vessel would be re-exported out side the Indian international waters.
This was challenged in appeal on various grounds as mentioned in para 9 of the judgment, including that the agreement provided for arbitration, that security for an arbitration proceeding in personam could not have been taken in the form of an Admiralty action in rem.
HELD that merely because the dispute is amenable to arbitration does not ipso facto imply that the Defendant Vessel cannot be arrested in an action in rem. It cannot be said that the Court has no jurisdiction to arrest the Vessel or to maintain an arrest where the purpose of the plaintiff is simply to obtain security for the award in arbitration proceedings.
The action against the Vessel is an action in rem. The arbitration against the owners is an action in personam. The action in rem is not an action that can be referred to arbitration.
It is now well settled that an action in rem is converted into an action in personam only when – (a) Defendant enters an appearance; (b) submits to the jurisdiction of the Court; and (c) furnishes security for the release of Vessel. Until these conditions are fulfilled, the question of an action in rem being converted into an action in personam does not arise.
Judgment dated 7.5.2024 of the Division Bench of the Bombay High Court in Commercial Appeal (L) No.30604 of 2022 in Interim Application No.3510 of 2022 in Commercial Admiralty Suit No.47 of 2022 of OSV Crest Mercury 1 (IMO 9724398) Vs. Vision Projects Technologies Pvt Ltd
