The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, repealed all the prevalent legislations i. e. the Admiralty Court Act, 1840, the Admiralty Court Act, 1861, the Colonial Courts of Admiralty Act, 1890 and the Colonial Courts of Admiralty (India) Act, 1891 and thereby brought about some significant changes to the manner in which maritime disputes are adjudicated while bringing uniformity with the International Conventions. Prior to the Act of 2017, the Chartered Court in India i. e. Bombay and Calcutta enjoyed PAN India jurisdiction, which meant that the ship within the Territorial waters of any other states was still amenable to the Admiralty Jurisdiction of Bombay and Calcutta High Courts. This changed under the Act of 2017. Now, High Court of Indian Coastal states in whose jurisdiction the vessel is plying will now have Jurisdiction. The Act further designates power to the respective High Courts to frame their own rules and procedures to govern the Admiralty practice in its Jurisdiction.
In view of the new piece of legislation, the Bombay High Court in February 2020 amended the Bombay High Original Side Rules by replacing the earlier Rules with a new chapter i. e. Chapter-LX ("Rules").
In this update, we highlight the procedural changes bought by the amendment:
- PROCEDURE FOR ARREST OF VESSEL
An action in Admiralty jurisdiction is initiated by filing a suit, which is commenced by filing a plaint as per the provisions of the Code of Civil Procedure, 1908 ("CPC"). As per the Rules, all suits filed under admiralty jurisdiction shall be recorded in the Admiralty Suit Register. Along with the Plaint, the Rules also require an application for the arrest of the ship to be made for a suit in rem. The application must be supported by an affidavit and must clearly elucidate the nature of the claim and a statement declaring that such claim has not been satisfied. The affidavit must also mention the nationality of the ship to be arrested, the port at which it is to be arrested and whether or not valid caveat against the arrest has been filed.
The amended Rules, drifts away from the erstwhile procedure of presenting a Judge's Order and Affidavit in Support along with the Suit, which sought similar details of the vessel and particulars of the claim. The amended Rules do not specifically mention a Judge's Order even though Admiralty Form No. 141 sets out the revised format of the Judge's Order. Accordingly, it can be considered that the separate application for the arrest of the ship as mentioned in the amended Rules does not mandate a separate in the form of an Interim Application ("IA") to effect the arrest, but actually refers to the Judge's Order, as per the erstwhile rules.
- UNDERTAKING FOR DAMAGES:
Along with the Plaint, the Plaintiff is mandated to provide an unconditional and irrevocable undertaking in a prescribed format to pay such sum of money or kind of security in such sum and upon such terms as may be determined by the court for any loss or damage which may be incurred by or caused to the defendant or any other party as a result of the arrest of the ship and for which the plaintiff may be found liable. This undertaking shall not stand discharged or released notwithstanding any order permitting the suit to be withdrawn. This requirement gives effect to Section 11 of the Act. In a stark difference from the erstwhile rules, the amended rules now include not only the defendant but also any other party which may suffer owing to wrongful arrest.
- WARRANT OF ARREST AND WRIT OF SUMMONS
Similar to the erstwhile rules, the new Rules also provide for dispensation with the service of the Writ of Summons and warrant of arrest, if the representative for the defendant accepts service having entered a caveat or agrees to give security or to pay money into the court or warrant of arrest/order of arrest is served on the ship. These rules follow the principles laid down by the Bombay High Court in the case of Suresh Exports vs Orient Shreyas Others wherein the court held that "once the warrant of arrest is issued and executed against a vessel, there is no need to again serve a writ of summons separately".
The procedure of effecting the arrest has now been simplified as compared to the earlier rules. Under earlier rules, service would be effected by affixing the original Writ of Summons or the Original Warrant of Arrest (and not the order of arrest) on the mast of the ship or any suitable part of the ship's Superstructure for a short time to be eventually replaced by a duplicate. However, now the service can simply be effected by serving the order of arrest on the Master of the ship. The Plaint along with its annexures and the other ancillary documents must be served upon the Advocates for the Defendants and the Plaintiff must file an Affidavit of Service within two (2) weeks of service of writ of summons.
Under the Rules, three types of caveats could be lodged with validity only for a period of six months from the date of its entry in the Caveat Register. The validity of any caveat cannot be extended but nothing prevents a party from filing new caveats upon expiry of the previous caveats. There has been no change in the procedure to lodge a caveat. The types of caveats are as follows:
- Caveats against Arrest:
The fact that there is a caveat against arrest in force shall not keep a party from applying for a warrant or order of arrest and the ship to which the caveat relates to be arrested without notice to the Caveator.
In the event, any ship with respect to which a caveat against arrest is in force is arrested in pursuance of a warrant or order of arrest, the person at whose instance the caveat has been entered may apply to the court by way of an interim application for an order under this rule and, on the hearing of the application, the court, unless it is satisfied that the person procuring the arrest of the ship had a good and sufficient reason for so doing, may order discharge of the warrant or order of arrest and may also order such person to pay to the applicant, damages in respect of the loss suffered by the applicant as a result of the arrest.
- Caveats against Release:
Any person desiring to prevent the release of any ship under arrest shall file in the registry a praecipe, signed by himself or his advocate, who may be acting for him, requesting for entering caveat against the release of such ship. The caveat shall contain all the details of either the party or his Advocate, and the nature and amount of the claim of the Caveator. Caveat against the release of the ship shall thereupon be entered in a book to be kept in the registry, called "Caveat Release Book" containing details referred to above. In a welcome move, the Rules sets a timeline and provides the Caveator for notice of two (2) working days before the order of release of the vessel is passed.
A Caveat against Release would stand discharged/ set aside upon:
(a) the ship being released by an order of release; or
(b) An application to set aside a caveat may be made by an interim application supported by an affidavit.
Any party delaying the release of any ship by entry of a caveat shall be liable to be pay costs and damages in respect of the loss suffered by the applicant by reason of the delay caused due to the entry of the caveat, unless he demonstrates, to the satisfaction of the court, good and sufficient reason for having entered the caveat.
- Caveats against Payment Out of Sale Proceeds
A party desiring to prevent payment out of court of any money in court representing the proceeds of sale of any ship shall file in the registry a praecipe signed by himself or his advocate who may be acting for him, requesting for entering caveat against payment out of court of such proceeds of sale. Caveat against payment out of court of such sale proceeds shall thereupon be entered in a book to be kept in the registry, called the "Caveat Payment Book". The caveat shall mention the amount, nature and details of the claim of the Caveator and details of any suit or proceedings in respect thereof. Such details shall be entered in the Caveat Payment Book. . The Rules clarify that money shall not be paid out of Court except by an order of the Court.
- SHERIFF'S EXPENSES
In a much-needed addition, the new Rules specifically provide for monies disbursed towards maintenance of the vessel during arrest to be reimbursed as Sheriffs expense as first priority from the sale proceeds. Additionally, even in cases where the vessel is not sold but is released, the Court may order reimbursement of these expenses towards maintenance by the party seeking to release the vessel.
Another addition in the Rules is specific provision for the reimbursement of the expenses incurred by the Sheriff in the period of the arrest for the safety and preservation of the ship and its crew. Such expenses shall be paid in priority to the Sheriff from the sale proceeds of the ship or by the defendant or other party seeking release of the ship as the case may be, and the same shall be reimbursed to the parties who have paid the amounts to the Sheriff in the first instance.
- APPLICATION FOR SALE OF ARRESTED SHIP
As per the new Rules an IA for sale of the vessel can be taken upon service of writ of summons or warrant of arrest or order of arrest upon the defendant as opposed to the erstwhile rules wherein such an application could only be preferred upon service of writ of summons on the defendant. This substantially reduces the overall time for making such an application and is in consonance with the Act, which specifies that the auction of a vessel which has been abandoned must be conducted within a period of forty-five (45) days (this can be further extended by a period of thirty (30) days at the discretion of the High Court) from the date of the abandonment or order of arrest.
- NOTICE INVITING CLAIMS AND DETERMINATION OF PRIORITY OF CLAIMS
Section 9 and 10 of the Act sets out the order of priorities of claims. The amendment has sought to integrate the order of priorities as set out in the Act. As per the rules, and IA for determination of priorities shall be filed by a party who has obtained a decree against the vessel or sale proceeds thereof, after the sale proceeds of the vessel are deposited in Court. The Rules further state that all persons who have filed Caveats against Payment out of Sale Proceeds of the ship are to be joined as a party to the IA for such determination of priorities.
Upon such application, the Court shall direct the Sheriff to publish a Notice Inviting Claims as per the procedure laid down in the Rules. Unlike the erstwhile rules, the amended Rules states that such Notice Inviting Claims may be made by any party having a claim against the vessel or the sale proceeds thereof without first having to obtain a decree for causing such notice to be published and the court now has discretion to fix a time period for lodging such cases.
- RELEASE OF ARRESTED SHIP
A ship arrested under an order of arrest shall only be released by an order of the court and upon notice to the Sheriff of Mumbai and to all parties who may have filed a caveat against release of the arrested ship.
As per the new Rules, a vessel may be released upon;
(a) at the request of the Plaintiff, and after notice to all persons whose caveats entered in the Caveat Release Book are valid before an appearance in person or a Vakalatnama is filed by the defendant; or
(b) on the defendant or an intervenor who has interest in the arrested ship, furnishing security
(i) by paying into court the amount ordered by the court to be deposited by way of security in the suit; or
(ii) by providing a bank guarantee in the suit in accordance with Rule 1102 for such amount as may be ordered by the court; or
(iii) in such amount or in such manner as may be agreed between the parties.
(c) On any other ground that the court may deem just and proper on an application made for release of the arrested ship.
Upon obtaining the order of release, the same shall be lodged in the office of the Sheriff by the party obtaining the same and the Sheriff shall thereupon release the ship by taking all necessary steps in that regard and Communicate the order of release to the relevant port and customs authorities.
- RULES REGARDING SECURITY TO BE FURNISHED-
The security furnished should be by way of payment into court or bank guarantee unless otherwise ordered by the Court. The Rules further provides that a defendant can make an application to the court at any stage for return and/or reduction of any amount deposited in court or for return and/or reduction of security provided for release of the arrested ship.
As per the former rules, poundage that was to be paid to the Sheriff of Bombay was calculated at 1% of the claim amount or if the matter was settled then at 1% of the settlement sum the amended Rules have done away with such calculation and have capped the poundage payable at INR 500/- for each service provided by the Sheriff.
- CLAIM FOR SALVAGE OF CARGO
In case of a suit for salvage, if there is a claim against cargo on board the ship or onshore, it shall be open to the claimant to institute a suit in rem against the cargo and the provisions of these rules shall apply mutatis mutandis to such suit as if the property to be arrested is cargo in place of the ship.
The Rules particularly specify that in case of a suit for salvage, if there is a claim against cargo on board the ship or onshore, it shall be open to the claimant to institute a suit in rem against the cargo and the provisions of these rules shall apply mutatis mutandis to such suit as if the property to be arrested is cargo in place of the ship. However, in any case, the Bombay High Court in the case of Pacific Gulf Shipping Pte. Ltd. V. S.R.K. Chemicals Ltd & Anr. held that arrest of cargo is not permissible de hors a claim against the vessel.
- RULES FOR LIMITATION OF LIABILITY
The new Rules are applicable to actions under the Merchant Shipping Act, 1958. The rules provide for procedure in respect of actions under Limitation of Liability (as per Part XA of the Merchant Shipping Act, 1958) This is one of the most noteworthy aspects as it is the first time that an Admiralty High Court in India has considered and framed rules in respect of limitation of liability claims.
The amendment to the Bombay High Court Rules is a step towards further strengthening the codified Admiralty Laws in India. It can be said that this amendment was the need of the hour after the legislation promulgated the new Act. This amendment sought to strike a balance between the Act and the procedural aspect of the Admiralty Jurisdiction in Bombay. While certain provisions remain untouched, the rules have entered into certain areas which were never previously covered under the rules for e. g. extending the rules to actions instituted for limitation of liability and provides clarity in various aspects which were unclear under the previous regime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.