1. In Navigation Key Inc. vs. MV Manticore, the Gujarat High Court (“Court”) in a recent judgement refused to arrest the vessel on finding that there was no concluded/binding fixture/ charter party.1 The arrest was sought by the plaintiff claiming to be the charterer of the ship.
  1. The judgement is noteworthy not because it breaks new ground or lays down new law, but due to the change in approach adopted by the Ahmedabad High Court to arresting ships. The Gujarat High Court has historically been a claimant friendly jurisdiction in the extreme and this recent ruling is a rare instance where the court refused to order the arrest of a ship. Whether this heralds a permanent shift or change in approach by the court to arresting ships remains to be seen. But what is encouraging is that the court had comprehensively read the papers, understood the case and declined to mechanically grant the arrest of the ship.

Difference between negotiations and acceptance of a Charter Party

  1. The plaintiff claimed that it had a concluded charter of the vessel and sued the owner for allegedly failing to deliver the vessel within the contractually agreed laycan. The Court thought otherwise, as it held that the ‘subs' were never finalized/lifted and that the negotiations never fructified into a binding agreement. The Court observed that there was no material on record establishing the acceptance and finalization of terms between the parties.

Whether any real loss suffered by the Charterer

  1. The Court further found that the charterer had suffered no loss from the alleged breach of charter party. The charterer claimed that it had already finalized the sub-charter of the vessel and sought to recover the alleged loss of hire from the sub-charter agreement, that it claimed to have entered into. The Court was unpersuaded and ruled that an examination of the correspondence produced by the charterer revealed that the alleged sub-charter had not been finalized and remained at the stage of negotiation. The Court accordingly concluded that the loss being claimed by the charterer was illusory.

Significance of this Ruling

  1. This ruling provides valuable commentary on the difference between a binding agreement and negotiations by emails between shipowners, charterers and brokers of a charter party fixture. But what is of greater significance is the welcome change in approach by the local court to arresting ships. It indicates that the Ahmedabad High Court will rigorously scrutinize the claim before granting an order for arrest of the vessel. It is hoped that this approach is continued by the Ahmedabad High Court which has historically been a favoured forum for arresting ships on doubtful claims.

Footnote

1. Judgement and order of Justice Bhargav D. Karia dated 11 February 2022. ZBA successfully represented the owners in resisting grant of order for arrest of the vessel.

The above is a generic analysis and should not be regarded as a substitute for specific advice based on the facts of a client's objectives and specific commercial agreements reached. Please do reach out to us at mail@zba.co.in for any queries.