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Ciel Y Cia S.a. v The Owners Of The Vessel "Sextum" Ex "Ercole Lauro"

Judgment Cited authorities 7 Cited in Precedent Map Related
Vincent
Judgment Date28 May 1982
Year1982
Judgement NumberHCAJ132/1982
Subject MatterAdmiralty Action
CourtHigh Court (Hong Kong)
HCAJ000132/1982 CIEL Y CIA S.A. v. THE OWNERS OF THE VESSEL "SEXTUM" EX "ERCOLE LAURO"

HCAJ000132/1982

Headnote

Admiralty - power of arrest - action in rem - construction of Section 3(4) of the Administration of Justice Act 1956 and Article 3 of the Convention Relating to the Arrest of Seagoing Ships 1952 - whether "charterer" means only "demise charterer" - power to arrest ship which is not a sister ship of offending ship.

IN THE SUPREME COURT OF HONG KONG

1982, No. 132
(Admiralty Jurisdiction)

Admiralty Action in rem against the vessel
"SEXTUM" ex "ERCOLE LAURO" (Italian Flag)

BETWEEN

CIEL Y CIA S.A. Plaintiffs

AND
THE OWNERS OF THE VESSEL "SEXTUM"
ex "ERCOLE LAURO" (Italian Flag)		 Defendants

--------------

Coram: Penlington J.

Date: 28 May 1982

___________

JUDGMENT

___________

1. This was an application by the Defendants, the owners of the vessel "SEXTUM" ex "ERCOLE LAURO" (Italian Flag) for the release of that vessel from arrest at the suit of the Plaintiffs, CIEL Y CIA S.A. Writs of Summons were issued by the Plaintiffs on the 13th May in Actions 132 and 138 of 1982 in respect of alleged non-payment of amounts owing by the Defendants to the Plaintiffs under the terms of Charterparties in respect of two vessels namely the "RIA SOL" and the "RIA MAR", owned by the Plaintiffs and time-chartered to the Defendants.

2. The matter was one of urgency due to the very cost of keeping the vessel in detention and time for serving the motion was abridged by consent. Certain matters were also agreed for the purposes of this motion which may not be so agreed or conceded in other proceedings. It was also agreed that I should not concern myself at this stage with the question of damages.

3. The matter raised are by no means the easiest to decide and I am most grateful for the very helpful and able arguments addressed to me by Counsel for both parties.

4. It is the case for the Defendants, as I understand it, that the "SEXTUM" has been arrested under an action in rem. There is no claim against that ship itself and the Plaintiffs must therefore rely on Section 3(4) of the Administration of Justice Act 1956 ("Section 3(4)"). It reads as follows :

"(4) In the case of any such claim as is mentioned in paragraphs (d) to (r) of subsection (1) of section one of this Act, 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 and (where there is such jurisdiction) the Admiralty jurisdiction of the Liverpool Court of Passage or any county 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 the action is brought it is beneficially owned as respects all the 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. It is the Defendants' case that the Plaintiffs cannot so rely. Section 3(4) was, they say, intended to allow the arrest only of the sister ship of a ship against which there is a claim. Both ships must be owned or controlled by the same person and control is not given by a time-charter. A time-charter, it is submitted, is nothing more than the transfer of the cargo space in a ship to a purchaser of that space. The responsibility for the payment of all the expenses of running the ship and all other matters relating to the actual running of the ship remains the responsibility of the owner. A demise-charter on the other hand means that virtual ownership of the ship is transferred to the charterer. It is not disputed that the "RIA SOL" and the "RIA MAR" are beneficially owned by the Plaintiffs themselves. Clearly the Plaintiffs could not arrest their own ships. If that is the case the Defendants argue that it must be quite wrong to allow non-offending ships owned by the Defendants to be arrested when there is no offending ship owned by the Defendants which is so liable to arrest. Counsel for the Plaintiffs prefers the phrase "claim ship" but I do not think there is any great difference in the terminology. In either case it is the ship in respect of which the claim has arisen. Counsel for the Defendants submits that an action in rem is against the offending ship. It was only after the passing of the 1956 Act that there could be any question of such an action being brought against any other ship apart from the offending ship. Section 3(4) allows, in certain circumstances, for that right to be extended to sister ships of the offending ship but if the power of arrest cannot be exercised against the offending ship then it cannot be exercised against any other ship whether or not it is a sister ship.

6. Mr. Waung submits that you cannot go straight to sub-clause (b). You must go to sub-clause (a) first and see if there is a right of arrest there. If there is then you may go further to see if there is a similar right under sub-clause (b). Here there is clearly no claim under (a) because the ship is the Plaintiffs' own ship. Therefore you cannot go any further and seek to use sub-clause (b). He says that such would be totally contrary to the whole history of actions in rem. An action in rem is essentially one against the ship itself. Here the action is not against the ship but it is against the parties who have chartered that ship i.e. it is an action in personam.

7. It is not disputed that the "SEXTUM" is not a sister ship of the "RIA SOL" or the "RIA MAR" in the normal meaning of that phrase and that, it is argued, is fatal to the Plaintiffs' claim.

8. There have been some persuasive authorities cited on both sides. Most of those were considered in a Hong Kong decision of Li J. in "The Ledesco Uno" (1) when he decided, on very similar facts, in favour of the defendants. There have, however, been two recent decisions, one which favours the defendants and one the plaintiffs. I will refer to those decisions later.

9. The decision on which the defendant places considerable reliance, as did Li J., is "The Eschersheim" (2). That was an unanimous decision of the House of Lords delivered by Diplock L.J. There are dicta in it...

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