ISLAMIC REPUBLIC OF IRAN Vs. M V MEHRAB

JUDGEMENT

(1.) This is an appeal by the plaintiffs from an order of Deshmukh J. by which he dismissed the Notice of Motion moved by the plaintiffs for arrest of the ship M. V. Mehrab to provide security for payment of an award which they may obtain in arbitration proceedings instituted in London. The learned Judge was of the opinion that a suit of this nature to arrest a ship in order to force security for a future arbitration award is not maintainable in view of the decision of the Supreme Court in M. V. Elizabeth v. Harwan Investment and Trading Pvt. Ltd. , AIR 1993 SC 1014.

(2.) The matter arises as follows. The plaintiffs were the owners of cargo shipped on the second defendant's vessel M. V. BRAVO under charter party dated 19th June 2000. The vessel M. V. BRAVO loaded cargo at the nominated load port. The second defendant and the said vessel M. V. BRAVO were unable to fulfill the voyage as a result of which the plaintiffs had to discharge the cargo and have it transhipped on another vessel called VAHDAT thereby incurring heavy loss and damage. The charter party contains an arbitration clause. The plaintiffs invoked the arbitration clause on 1/03/2001 and the arbitration proceedings are pending in London. The plaintiffs have filed the present suit for arrest of vessel to secure the enforcement of the award that the arbitrator may pass in the arbitration proceedings. The Notice of Motion moved by the plaintiffs was dismissed by the learned Judge holding that the power of the court to order an arrest of the vessel is for providing a security for the decree that the admiralty court may pass against the defendant and not to secure plaintiffs' claim in arbitration proceedings.

(3.) Mr. Kotwal, learned Counsel appearing for the plaintiffs submitted that the judgment of the learned trial Judge is based on total misreading of the decision of the Supreme Court in M. V. Elizabeth's case, that it is wholly contrary to the manner in which it has been read by the judgments of this Court in M. V. Mainer IV v. Videsh Sanchar Nigam Ltd. , 1998 (1) Mah LJ 751 and M. V. Sea Success I v. Liverpool and London Steamship Protection and Indemnity Association Ltd. (Appeal No. 226 of 2001 decided on 28-11-2001 : (reported in AIR 2002 Bom 151). The learned Judge failed to notice that the question of admiralty court's jurisdiction to order arrest of a vessel in order to force security for future arbitration award was not in issue in M. V. Elizabeth. The issue before the Supreme Court as evident from paragraphs 5 and 6 of the judgment in M. V. Elizabeth was whether the admiralty court in India had jurisdiction to arrest a ship on an action in tort in regard to cargo in a outgoing ship. The judgment in M. V. Elizabeth does not in any manner limit admiralty jurisdiction of the High Court. On the other hand the entire endeavour of the Supreme Court in M. V. Elizabeth was to align and modernize the law by inter alia introducing into admiralty jurisdiction the international law including principles underlying Arrest of Sea going Ships, Brussels, 1952. The learned Counsel submitted that Article 7 (3) of 1952 Convention clearly confers jurisdiction on the admiralty court to order arrest of a vessel to secure the award that may be passed in arbitration proceedings. He submitted that a vast majority of trading nations that is over 70 in number has given effect to 1952 Convention and, therefore, the said Convention has never universal acceptance and can be regarded as international common law, which includes admiralty court's power to arrest a vessel for the purpose of obtaining security for the future arbitration award, which the arbitrator may grant. Although India is not a signatory to the numerous international conventions, in view of the dictum in M. V. Elizabeth, principles can be adopted into our local context. The learned Counsel took us through the relevant portions of the judgment in M. V. Elizabeth to show that the Supreme Court has categorically held that 1952 Convention, though not ratified by India, can be the basis for exercise of jurisdiction by admiralty court in India. The learned Counsel urged that in today's modern shipping context and the expansive jurisdiction trend recommended by the Supreme Court in M. V. Elizabeth the admiralty courts in India can also exercise jurisdiction to arrest ship for the purpose of securing the claim of the plaintiff in future or pending arbitration. The High Court has power to administer general maritime law whether derived by virtue of statute or otherwise. While so administering the maritime law the High Court shall have regard to the International law and comity.