Admiralty Law Part 1

Pursuant to the earlier topic of Introduction to Maritime Law in Malaysia, published on 22 February 2021, in the coming series, as restated by Chakra Thillainathan, the basis and elements of Admiralty Law will be explored in the following 16 parts.

The Nature Of Admiralty Jurisdiction

1. Statutory rights in rem and maritime liens
   The Senior Court Act 1981 (hereinafter known as SCA 1981) provides the means for the enforcement of all claims under the Admiralty jurisdiction of the High Court. The SCA 1981 does not create a cause of action. Thus, the legal right must be based on other grounds. A breach of duty of care, a breach of statutory provisions which may govern the relationship of the disputing parties or a breach of contract are some examples of legal bases on which claims can be made.
   The SCA 1981 establishes statutory rights for the enforcement of the specific claims that fall under the Admiralty jurisdiction. While the action in personam is equivalent to any general claim against a wrongdoer it is the enforcement action in rem which distinguishes the SCA 1981 because it enables the arrest of the ship. It is then important for a claimant to be able to demonstrate that their claim falls under the provisions of the SCA 1981 and entitles the claimant to an action in rem and the possibility of arresting the property of the defendant, usually a ship.
   A question which has arisen several times concerns the strength of the statutory right in rem created by the SCA 1981 where, for example, the defendant has sold the ship to a third party. Would the action in rem and the option to arrest have then been lost for the claimant?
   The answer provided under English law is that from the time the claim form in rem is lodged with the court, the statutory right (otherwise known as statutory lien) crystallises on the property (The Monica S). The effect of this is that the claimant would be able to enforce the claim against the relevant ship even if the ship was transferred to an innocent purchaser after the time of the issue of the in rem proceedings.For a sub-category of claims under the SCA 1981 – namely those which have been characterised under case-law as maritime liens – the claimant’s rights attach to the property from the moment the maritime lien is created, and this attachment does not depend on the issue of the in rem claim form. Having been so attached, it travels with the property, even if the property is sold to an innocent purchaser.The claims supported by maritime liens are those that arise from:
   • damage done by a ship (e.g. caused by a collision between ships)
   • the entitlement to a salvage reward
   • outstanding wages, or damages for unfair dismissal, owed to the master and crew of a ship
   • a financial undertaking by the master to ensure the continuation of the voyage in the form of master’s disbursements

   In some other jurisdictions there are also other claims that attract a maritime lien, such as ship repairers’ claims.

   The nature of maritime liens can be looked at in the leading case such as The Bold Buccleugh and The Tolten.

   There are also other types of liens which must not be confused with the maritime lien. Such liens are:

   • Statutory liens as provided by a statute (e.g. a lien on goods by an unpaid seller).
   • The statutory rights in rem, as you have read already, which become statutory liens upon the issue of the proceedings.
   • Common law possessory liens which depend on possession of the property (e.g. a ship repairer can keep possession of the ship, which they have repaired, in their shipyard until they are paid).
   • Contractual common law rights to lien property as provided by a contract.

   Although the maritime lien attaches on the property from the moment it has arisen, it needs to be enforced by proceedings in rem against that property. Thus, the procedural enforcement is identical to that of statutory rights in rem.

   It is also important to note that the claims supported by a maritime lien also attract statutory rights in rem when exercised against a sister ship (this will be discussed further below). For example, a claimant for a salvage award can enforce its maritime lien by an action in rem against the ship it salved or it can proceed against a sister ship exercising its statutory right in rem. In the first case the right has attached at the time the salvage claim arose, while in the second case the issue of a claim form in rem is needed to protect the claim in rem against the transfer of the targeted sister ship. The claimant’s choice of how to proceed will also affect the priority of the claim

2. Types of claims enforceable in the Admiralty court

   The Admiralty jurisdiction of the High Court under the SCA 1981 is set out under section 20. This includes claims under section 20(2) or described under section 20(3), as well as claims which have been subject to such jurisdiction by earlier or later laws and decisions. The most important provision is section 20(2), which contains an extensive list of claims that covers most shipping claims. If a claim does not fall within the wording of section 20(2) of the SCA 1981, the chances are that it will not be subject to the Admiralty jurisdiction of the High Court: an action in rem will not be available for its enforcement and therefore the arrest of a ship will not be an option through which the claimant can obtain security for its claim.
   Disputes in relation to ownership or shares in a ship are nowadays governed by special agreements which will invariably provide the jurisdiction of a court for the enforcement of the parties’ rights. So there have not been many developments in so far as sub-paragraphs (a) and (b) of section 20(2) are concerned. The court has the powers to determine ownership of a ship and this was done in the case of Smith v All Other Persons Claiming to be Interested in the MV ‘Ross Revenge’.
   Under sub-paragraph (c) a mortgagee can enforce their rights whether they are registered or not. Under English law, if a mortgagee is not registered, their right will be an equitable mortgage enforced in the same way. But if a foreign mortgage is not registered, some foreign legal systems will not recognise the concept of an equitable mortgage, so such a mortgage will not be enforceable against the ship by an in rem claim in the English court under section 20(2)(c), but instead by a claim against the person (in personam), the debtor (The Angel Bell).A claim for damage done by a ship is enforceable under sub-paragraph (e). Such claims, which include consequential loss flowing from the damage to property and caused to the person who has property rights on that property, attract a maritime lien. Note that s.20(5) extends the application of s.20(2)(e) to claims under the MSA 1995, Chapter VI Part III, liability for oil pollution claims. The extension concerns the statutory rights in rem only and does not extend to maritime liens.
   Sub-paragraph (h) is defined quite widely and includes charterparty claims. In The Antonios P Lemos, the claim in rem was by the sub-sub charterer against the shipowner. As there was no contract between the two parties the shipowner’s defence was that such a claim did not fall under this section. However, it was held that the words used in the sub-paragraph, namely ‘arising out of’, are wide enough to include claims in tort. These words have been interpreted to mean ‘connected with’ an agreement which relates to the carriage of goods or the use or hire of a ship. You will find that the ambit of s.20(2)(h) is wide enough to include the arrest of the ship by the receivers of goods which have been detained on board by the shipowner for the purpose of obtaining payment of freight (The Gina).In The Antonios P Lemos it was clarified that the court does not examine the merits with regard to liability when arrest is made. The only question is whether the wording of the SCA 1981 includes such a claim.

   Other maritime claims enforceable in the Admiralty court are those under sections 20(3) and (5) of the Senior Courts Act 1995 ,which deal with claims under the MSA 1995, such as collisions, limitation actions and claims relating to pollution liability.

   The provisions of the SCA 1981 with regard to enforcement of maritime claims apply to all ships or aircraft (water-borne), whether British or not and wherever the residence or domicile of their owners may be (section 20(7)).

If you have any questions or require any additional information, please contact our lawyer that you usually deal with.

This article is written by our Principal Associate, Chakaravarthi