In rem action in the admiralty Jurisdiction in pakistan

IN REM ACTION IN THE ADMIRALTY IN REM ACTION IN THE ADMIRALTY JURISDICTION IN PAKISTAN By Muhammad Shamim, B.A., LL. B., Barrister‑at‑Law (Lincoln's Inn), Lahore In rem action is designated proceedings or actions instituted against "the thing" in contradistinction to personal actions. Such proceedings encompass any action brought against person in which essential purpose of suit is to determine title to or to affect interest in specific property located within territory over which Court has jurisdiction. In rem actions are routinely and frequently brought in the High Courts acting under its admiralty jurisdiction. Admiralty jurisdiction is an essential aspect of judicial sovereignty, which under the Constitution and the laws is exercised by the High Court as a Supreme Court of record administering justice in relation to persons and things within its jurisdiction. Not every High Court is vested with admiralty jurisdiction. In Pakistan for instance this jurisdiction is extended to the High Courts under‑the‑provisions of "Admiralty Jurisdiction of High Courts Ordinance, 1980 (Ordinance XLII of 1980) ('the Ordinance'). By virtue of section 3(1) it is provided "The Sindh High Court and the High Court of Balochistan shall have and exercise, within their respective jurisdictions, Admiralty jurisdiction as is in this Ordinance provided and the Lahore High Court and the Peshawar High Court shall within their respective territorial jurisdiction, have and exercise the said jurisdiction in cases in which any question or claim relating to aircraft is to be determined". The Sindh High Court has indeed, very frequently exercised the jurisdiction over ships which have entered or have berthed within the territorial waters of Karachi Port or Port Muhammad Bin Qasim. 'Admiralty jurisdiction extends to maritime transactions and incidence in which this jurisdiction may be invoked is provided for in section 3(2) of the Ordinance. Section 3(2) provides: "The Admiralty jurisdiction of the High Court shall be as follows, that is to say, jurisdiction to hear and determine the following causes, questions or claims‑‑ (a) any claim to the possession or ownership of a ship or to the ownership of any share therein or for recovery of documents of title and ownership of a ship, including registration certificate, log book and such certificates as may be necessary for the operation or navigation of the ship; (b) any question arising between the co‑owners of a ship as to possession, employment or earnings of that ship; (c) any claim in respect of a mortgage of or charge on a ship or any share therein; (d) any claim for damage done by a ship; (e) any claim for damage received by a ship; (f) any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or of the wrongful act, neglect or default of the owners, charterers or persons in possession or control of a ship or of the master or crew thereof or of any other person for whose wrongful acts, neglects or defaults, the owners, charterers or persons in possession or control of a ship are responsible, being an act, neglect or default in the navigation or management of the ship, in the loading, carriage or discharge of goods on, in or from the ship or in the embarkation, carriage or disembarkation of persons on, in or from the ship; (g) any claim for loss of or damage to goods carried in a ship; (h) any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; (i) any action or claim in the nature of salvage of life from a ship or cargo or any property on board a ship or the ship itself or its apparel, whether services rendered in the high sea or within territorial waters or internal waters or in a port, including any claim arising by virtue of the application by or under section 12 of the Civil Aviation Ordinance, 1960 (XXXII of 1960), of the law relating to salvage to aircraft and their apparel and cargo; (j) any claim in the nature of towage in respect of a ship or an aircraft, whether services were rendered on the high sea or within territorial waters or internal waters or in a port; (k) any claim in the nature of pilotage in respect of a ship or an aircraft; (l) any claim in respect of necessaries supplied to a ship; (m) any claim in respect of the construction, repair or equipment of a ship or dock charges or dues; (n) any claim by a master of members of the crew of a ship for wages and any claim by or in respect of a master or member of the crew of a ship for any money or property which, under any of the provisions of the Merchant Shipping Acts or the Merchant Shipping Act, 1923 (XXI of 1923), is recoverable as wages or in the Court and in the manner in '' which wages may be recovered; (o) any claim by a master, shipper, charterer or agent in respect of disbursements made on account of a ship; (p) any claim arising out of an act which is or is claimed to be a general average act; (q) any claim arising out of bottomry or respondentia; (r) any claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried, in a ship as a Naval Prize or in violation of customary law of the sea or otherwise, or for the restoration of a ship or any such goods after seizure, or for droits of Admiralty, together with any other jurisdiction for the grant of such reliefs as are provided under the Merchant Shipping Acts or the Merchant Shipping Act, 1923 (XXI of 1923), any other jurisdiction which was vested in High Court as a Court of Admiralty immediately before the commencement of this Ordinance or is conferred by or under any other law and any other jurisdiction connected with ships or aircraft in respect of things done at sea which has by tradition or custom of the sea been exercised by a Court of Admiralty apart from this section. Mr. Justice Thommen of the Supreme Court of India, in the case of "m.v. Elisabeth" commented that the admiralty jurisdiction of the High Court is dependant on the presence of foreign ships in Indian Waters and founded on the arrest of the Ship. The honourable justice further observed that the power to enforce claims against foreign ship is an essential attribute of admiralty jurisdiction and it is assumed over such ships while they are within the jurisdiction of the High Court by arresting and detaining them". In Pakistan admiralty jurisdiction of the High Court may in all cases be invoked by an action in personam, this is done so by virtue of section 4 of the Ordinance subject to the provisions of section 5 thereof. Section 5 of the Ordinance provides for in personam action in cases of collision and other similar cases. Jurisdiction in personam of Courts in collision and other similar cases:‑‑ (1) No Court shall entertain an action in personam to enforce a claim to which this section applies unless‑‑ (a) the defendant has his ordinary residence or a place of business within Pakistan: or (b) the cause of action arose within the internal or territorial waters of Pakistan: or (c) an action arising out of the same incident or series of incidents is proceedings in the Court or has been heard and determined in the Court. (2) No Court shall entertain an action in personam to enforce a claim to which this section applies until any proceedings previously brought by ,4 the plaintiff in any Court outside Pakistan against the same defendant to respect of the same incident or series of incidents have been discontinued or otherwise come to an end. (3) The preceding provision of this section shall apply to counter‑claims, not being counter‑claims in proceedings arising out of the same incident or series of incidents, as they apply to actions in personam, but as if the references to the plaintiff and the defendant were respectively reference to the plaintiff on the counter‑claim and the defendant to the counter claim. (4) The preceding provision of this section shall not apply to any action or counter‑claim if the defendant thereto submits or has agreed to submit to the jurisdiction of the Court. (5) Subject to the provisions of subsection (2), the High Court shall have jurisdiction to entertain an action in personam to enforce a claim to which this section applies whenever any of the conditions specified in clauses (a) to (c) of subsection (1) are satisfied. (6) The claims to which this section applies are claims for damage, loss of life or personal injury caused by ships or arising out of collision between ships or out of the carrying out of or omission to carry out a manoeuvre in the case of one or more of two or more ships or out of non‑compliance, on the part of one or more of two or more ships, with the regulations made under section 214 of the Merchant Shipping Act, 1923 (XXI of 1923). It is respectfully suggested that in personam action under the Ordinance extends to (a) Collision and similar other cases and (b) all other cases. In personam action in "all other cases" is invoked under section 4 of the Ordinance, it is appropriate at this stage to reproduce the provision of section 4 of the Ordinance: "4. Mode of exercise of Admiralty jurisdiction.‑‑(1) Subject to the provisions of section 5, the Admiralty Jurisdiction of the High Court may in all cases be invoked by an action in personam. (2) The Admiralty Jurisdiction of the High Court may in the cases mentioned in clauses (a) to (d), (i) and (r) of subsection (2) of section 3 be invoked by an action in rem against that ship, aircraft or property in question. (3) In case in which there is a maritime lien or other charge on any ship, aircraft or any property of the amount claimed, the Admiralty Jurisdiction of the High Court may be invoked by an action in rem against that ship, aircraft or property. (4) In the case of any such claim as is mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section 3, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner of charterer of, or in possession or in control of the ship, the Admiralty Jurisdiction of the High Court may, whether the claim gives rise to a maritime lien on the ship or not, be invoked by an action in rem against‑‑ (a) that ship, if at the time when that action is brought it is beneficially owned as respects majority shares therein by that person ; or (b) any other ship which, at the time when the action is brought, is beneficially owned as aforesaid. (5) In the case of a claim in the nature of towage or pilotage in respect of an aircraft, the Admiralty Jurisdiction of the High Court may be invoked by an action in rem against that aircraft if at the time when the action is brought it is beneficially owned by the person who would be liable on the claim in an action in personam. (6) In the case of a claim in the nature of a maritime lien, other than a claim on a bottomry or respondentia bond or to the possession of the ship, the Admiralty Jurisdiction of the High Court may be invoked by an action in personam against the owners of the property which would have been arrested if the proceedings had been in rem. (7) Notwithstanding anything in the preceding provisions of this section, the Admiralty Jurisdiction of the High Court shall not be invoked by an Action in rem in the case of any such claim as is mentioned in paragraph (n) of subsection (2) of section 3 unless the claim relates wholly or partly to wages, including any sum allotted out of wages or adjudged by competent authority under the relevant law to be due by way of wages. (8) Where, in the exercise of its Admiralty Jurisdiction, the High Court orders any ship, aircraft or other property to be sold, the Court shall have jurisdiction to hear and determine any question arising as to the title to, or priorities of claims in, the proceeds of sale. (9) In determining for the purposes of subsections (4) and (5) whether a person would be liable on a claim in an action in personam it shall be assumed that he has his ordinary residence or a place of business within Pakistan. " It has been observed that under the Admiralty Jurisdiction of the High Courts Ordinance 1980, in rem action may be invoked under subsections (2), (3), (4), (5), (6) and (7) of section 4 of the Ordinance. Although these subsections are invoked from time to time, it has been seen that section 4(4) has been very frequently used for the purpose of arresting foreign ships under the admiralty jurisdiction, As such the approach and the logic of the Courts in relation to section 4(4) is of significance to legal practitioners engaged in the practice of maritime law. Section 4(4) as quoted above provides: "In the case of any such claims mentioned in clauses (e) to (h) and (i) to (q) of subsection (1) of section 3, being a claim arising in connection with a ship, where the person who would be liable on the claim 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, whether the claim gives rise to a maritime lien on the ship or not, be invoked by an action in rem against‑‑ (a) that ship, if at time when the action is brought it is beneficially owned as respects majority share therein by the person: (b) any other ship which, at the time when the action is brought is beneficially owned as aforesaid." In the case of V. N. Lakhani Company v. m.v. Lakatoi Express and 2 others (PLD 1994 SC 894). The Supreme Court has observed: "In applying section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980 one has to take into consideration the existing facts at the time when cause of action arose in connection with the offending ship. In order to invoke the jurisdiction, the plaintiff has to establish that: (1) The claim falls in any of the clauses as mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section 3 and arises in connection with a ship. (2) When the cause of action for action in personam arose. (3) The person liable in an action in personam at the time when cause of action arose, was owner or charterer of or in possession or in control of the offending ship. (4) The offending ship or any other ship which is sought to be arrested at the time action is brought is beneficially owned as respect majority shares by the person liable on the claim in an action in personam. The two ingredients which are of utmost importance in order to press into service section 4(4) of the Ordinance are (a) that the claim of the plaintiff should fall within one of the clauses of subsection (2) of section 3 of the Ordinance and (b) that the offending ship or the sister ship should be beneficially owned by the person against whom an action in personam would lie. In Atlantic Steamer Supply Co v. m.v. Titsee (PLD 1993 Karachi 88) the plaintiff's claim was founded on the facts that they supplied to the vessel the necessaries including provisions and articles/parts and tools which were used in the vessels engine the articles supplied by the plaintiff were duly received, acknowledged and accepted by the persons in charge of the vessel. The issue before the Court was inter alia whether the supplies to the vessel created a maritime lien in favour of the plaintiff warranting enforcement of the same under Admiralty Jurisdiction of High Courts Ordinance, 1980. It was held that the appellants' claim falls within clauses (i) and (m) of subsection (2) of section 3 of the Ordinance, namely, "any claim in respect of necessaries supplied to a ship" and any claim in aspect of the construction, repair or equipment of a ship or dock charges or dues" respectively. None of the above two clauses has been mentioned in subsections (2), (3), (6) and (7) of section 4. However, they are covered by subsection (4) of section 4 but in order to press into service above subsection (4), it is incumbent to show that the vessel in question at the time of the commencement of the action was beneficially owned as respects majority shares therein by the person against whom action in personam could have been maintained. As stated above section 4(4) of the Ordinance has been frequently invoked in order to arrest foreign ships. Consequently the Courts have had the opportunity to consider and interpret the various expressions and terms used in the subsection. One of such expression used is ... ... "where the person who would be liable on the claim in an action in personam was, when the action arose the owner or charterer of, or in possession or in control of the ship... " In this contest in the case of Sun Line Agencies Ltd. v. m.v. Psiloritis (1984 CLC 1553). The plaintiff contended that the defendant No. 2 as charterers of defendant No. 1 shall be deemed to be owning beneficially defendant No. 1. However on behalf of the defendant No. 1 it was contended that the expression "beneficially owned as respect majority shares therein" means only the real owners of the ship and does not include a time charterer. The Court held that a time charterer or a charterer by demise, do not fall in the category of a person who beneficially owned as respect majority shares of the ship, as they only beneficially possess the ship for the time being subject to the validity of the Charter Party Agreement and by that reason they do not acquire any right of ownership in the majority shares of that ship. In arriving at this decision the Court looked for English cases on the point in issue as the present section 4(4) of Ordinance XLII of 1980 appears to be almost a reproduction of section 3(3) of the English Administration of Justice Act, 1956, with the only variation that in the English Act of 1956 the expression used is "beneficially owned as respect all the shares therein" while in section 4(4) of Ordinance XLII of 1980 it is beneficially owned as respect majority shares therein". Therefore the difference in the two sections is only to the extent of expression "all the shares" and "majority share", which in any view will make no material difference on the decision of the application before the Court. The expression "beneficially owned as respect all the shares therein" used in section 3(3) of the English Administration of Justice Act, 1956 which is equivalent of section 4(4) of Ordinance XLII of 1980 came up for consideration in the following three cases:‑‑ (i) The St. Merriel's case.(1963) 1 Lloyd's List Law Reports 63. (ii) Medway Drydock and Engineering Company Ltd. v. The Andrea Ursula (1971) 1 Lloyd's Law Reports 145. (iii) I Congreso del Partido's case (1978) 1 All England Law Reports 1169 (QBD). In the first mentioned case of St. Merriel, a suit in rem was filed by Smith Cock Company Ltd. against the ship on the ground that they had carried out repairs to the ship at the request of a demised charterer. The owners of the ship opposed the writ issued in the case inter alia on the following grounds:‑‑ (i) The charterer of ship by demise were not and never had been, beneficial owner in respect of all the shares in the ship. (ii) The action was brought against a wrong person and proceedings in rem were not allowable. The learned Judge who decided St. Merriel's case after examining in detail the provision of section 3(3) of Administration of Justice Act, 1956, reached the conclusion that a charterer by demise is not included in the expression "beneficially owned as respect all shares therein", which means the true owner of the ship. The view expressed in St. Merriel's case was however, departed in the second noted case of Andrea Ursula which was decided by another English Judge, Brandon, J. In Andrea Ursula's case also the action in rem was brought against the ship by the Company on account of repairs carried out to ship at the request of the demised charterer. It was found in Ursula's case that at the time the action in rem was commenced against the ship it was still under the possession and control of the same charterer as a demised charterer, at whose instance repairs were carried out to the ship. The learned Judge came to the conclusion in Ursula's case that the ship which is in full possession and control of that person as a demised charterer was beneficially owned as respect all the shares therein by that person within the meaning of section 3(4) of the Administration of Justice Act, 1956. Both St. Merriel's case and Ursula's case were considered in the last mentioned case of I Congresodel Partido. This case was decided by yet another English Judge Robert Goff, J. of Queen's Bench Division (Admiralty Court) who after considering the views expressed in St. Marriel and Ursula's cases and referring to several other decisions came to the following conclusions. The expression "beneficially owned as respect all the shares therein" refers only to cases of equitable ownership, whether or not accompanies by legal ownership and are not wide enough to include cases of possession and control without ownership, however full and complete such possession and control may be. The Court was unable to agree with the conclusions of Brandan, J. on the interpretation of section 3(4) of the English Act of 1956 preferred the interpretation adopted in St. Merriel and I Congresodel Partido's cases by Hewson and Robert Goff, JJ. respectively which was more in accord with the plain language of the statute. The term "beneficially owned" as provided by in section 4(4) (a) of the Ordinance carne under judicial scrutiny in the case of Al‑Yousaf Baghpati & Co. and others v. m.v. Naran and 3 others (1992 CLC 833). The question in issue here was whether the vessel was "beneficially owned" by the defendant No. 2. It was observed that there is no definition in the Ordinance of the expression "beneficially owned" as used in section 4(4). It could mean owned by someone who, whether he is the legal owner or not, is in any case the equitable owner. That would cover both the case of a ship the legal and equitable title to which are in one person. Section 4, subsection (4) clearly indicates that a ship wholly owned by a party who would be liable to an admiralty action in personam may be arrested. Last but not the least the Courts considered the term "maritime lien". Maritime lien is a substantive right. It is distinct from common law or equitable lien. It does not depend upon possession but arises independent of agreement or possession. Maritime lien is an invisible and indelible right which attaches with the res in respect of which the claim arises. Under the Admiralty Jurisdiction of the High Court Ordinance, 1980 in rem action on the basis of maritime lien may be invoked under subsections (3), (4) and (6) of section 4. The Ordinance itself does not define the term "maritime lien". In the case of Hong Leong Finance, Ltd. v. Asian Queen (PLD 1991 SC 1021) the term "maritime lien" was considered in connection with the wages of crew members and master. In this case section 4(6) of the Ordinance was invoked and it was held that crew members and master of the ship have a maritime lien on the res i.e. the vessel. It is a right in rem enforceable by an action in rem against the res. The concept of maritime lien is not alien to jurisprudence its peculiarities, characteristic, effects and application are universally accepted and have attained judicial maturity. In British Shipping Laws, Vol. 14. Maritime Lien by Thomas. 1980 Edition it has been observed that 'The maritime lien represents contemporary maritime law and has in recent times been described as "one of the first principles of the law of the Sea: 'Whereas it is clear that a maritime lien does not entail the transfer of title or possession it is however less easy to comprehend that the right of a maritime lienee is to be analysed as a bare right in rem. Whereas this would clearly appear to be the case with regard to a statutory right of action in rem, that it is equally true of the legal nexus between a maritime lienee and an incumbranced res is more doubtful. When the developed law is viewed in its entirety it is hard to resist the conclusion that a maritime lienee enjoys a proprietary interest in the incumbranced res. A maritime lien may be rationally viewed as being composed of two distinct facets, the first a proprietary charge which incumbrances the res from the moment of the circumstances which give rise to the lien, the second a right in rem whereby the charge is crystallised or perfected. Such an analysis is at least consistent with the essential characteristic of a maritime lien, that is, a charge which accrues and thereafter runs unconditionally with the res and which is enforceable in rem.'???? The maritime lien continues and travels with the res. Once a Court of competent jurisdiction sells the res to an action in rem, the purchaser gets a clear and un-incumbered title and the sale proceed comes in the hands of the Court. The maritime lien which had attached to the ship does not extinguish with the sale but is transferred to the sale proceed in the hands of the Court. The sale proceed will be subject to the same lien and claim which a lienee had on the ship (res). The Court thus keeps the sale proceeds in its custody for the satisfaction of the claim of the claimants. This is the legal implication of a judicial sale in such cases. In the Optima (1905) 10 ASP Mar Law Cas. 147 it was observed as follows:‑‑ "It is perfectly true that in some cases, where the proceeding are in 4,, rem against the property and where the property has been arrested and sold by the Court having the proceeds in its hands and having, by virtue of the sale, freed the ship from all liens and claims against it in the hands of the purchasers, who take it by virtue of the title confirmed by the Court, the Court retains those proceeds to answer all claims that may be made against the ship. " In the recent case of Sphinx Shipping Agency, P.E.C.H.S. v. m.v. Justice (PLD 1997 Kar. 216) the term ' Maritime lien' came up before the Sindh High Court at Karachi. This case invoked certain disbursement made by the plaintiff as Shipping Agents towards stamp duties, customs manifest, necessaries supplied, accommodation provided and repairs carried out to the vessel m.v. Rhir Transporter. It was argued that the plaintiff's claim fell within the meaning of maritime; lien by virtue of section 3(2) (o) and hence section 4(4) (b) was invoked against m.v. Justice. The defendant refuting the plaintiff's claim contended that the claim did not fall within section 3(2) (o) of the Ordinance because any disbursement made by the agent is not maritime lien. In support of their claim the plaintiff referred to the cases of m.v. Naran (1952 CLC 833), m.v. Ivan (PLD 1992 Kar. 444), m.v. Titsee (PLD 1993 SC 88), m.v. Lakotoi Express (PL1) 1994 SC 894) and m.v. Kaftan Yusaf Kallevan Turkish (1995 MLD 706). However the Honourable Court after consideration found these authorities unhelpful to the plaintiff's case. The Court examined section 3(2) (o) and section 4(4) of the Ordinance and also considered the definition of 'maritime lien' from the following authorities. Admiralty Jurisdiction and Practice by Nigel Messon, provides: "There is no maritime lien of disbursements incurred by a shipper, charterer or agent. The claims which give rise to maritime lien are‑‑ (i) ??????? damage done by a ship; (ii)??????? salvage;??????????? (iii)??????????? seamen's wages; (iv)??????????? bottornry and respondentia. According to British Shipping Laws, Volume 14 by D.R. Thomas the following claims are recognised as maritime liens: (a) ??????????? Damage done by a ship. (b) ??????????? Salvage, (c)??????????? Seamen's wages. (d) ?????? Master wages and disbursements. (e) ??????????? Bottomry and respondentia. Halsbury's Laws of England, Fourth Edition Reissue provides: "342. Disbursements made by a shipper, charterer, or agent on account of a ship.‑‑The Admiralty Jurisdiction of the High Court. Includes jurisdiction to hear and determine any claim by a shipper, charterer or agent in respect of disbursements made on account of a ship. Such claims do not confer a maritime lien." Together with the case‑laws as referred to by the defence counsel namely m.v. Lactor (PLD 1978 Kar. 837), m.v. Monti Cristo (1984 CLC 2265), m.v. Ashar (PLD 1986 Quetta 54) and m.v. Asian Queen (PLD 1991 SC 1021). The Honourable, Mr. Justice Syed Deedar Hussain Shah Court held that 'the above authorities in my humble view are applicable to the case of the defendant. According to the documents filed by the parties referred hereinabove the ship Riha Transporter was sold away in scrap to Abbas Ship‑breaking and Salvage Ltd., Bombay on 15‑12‑1993 I have minutely gone through the material placed with the case. The payments allegedly so made by the plaintiff are not covered by maritime lien as referred and discussed hereinabove. The claim of the plaintiff for disbursement affected is also not covered by clause (o) of section 3(2), Admiralty Jurisdiction of High Courts Ordinance. 1980. REFERENCES PLD 1981 Central Statutes 41. Black's Law Dictionary, Sixth Edition. AIR 1993 Bom. 286. PLD 1991 SC 216. PLD 1993 SC 88. PLD 1994 SC 894. PLD 1997 Kar. 216. 1992 CLC 833.