Lloyd's Maritime and Commercial Law Quarterly
SLOT CHARTERS AND “SISTER-SHIP” ARRESTS
The Tychy
“Slot charters” are a comparatively new but, nonetheless, important development in the dry cargo container trade. Dry cargo ships have been adapted for the carriage of container boxes in Twenty Foot or Equivalent Units (“TEUs”) in “slots” or “cells”. Instead of chartering the whole or part of a specific vessel, a container operator will instead book a set number of TEUs on sailings by ships of a particular operator. In The Tychy
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the question arose as to how this form of charter could be accommodated into the arrest structure provided by the Supreme Court Act 1981, s. 21(4).
Mediterranean Shipping Corporation (“MSC”) entered into an agreement with a container operator, Polish Ocean Lines (“POL”) under which POL would charter a specified amount of space in MSC vessels for container carriage, payment to be made whether or not the space was used. POL got into arrears under the agreement and negotiated an addendum with MSC whereby POL would clear the arrears by selling their vessel, the Tychy,
and using the proceeds of sale to this end. In the meantime, they would pay MSC a minimum of £100,000 per week. No payments were made under the addendum apart from one initial payment and accordingly MSC arrested the Tychy.
POL then applied to set aside the arrest but their application was refused by Mr Peter Gross, Q.C., sitting as a Deputy Judge of the Admiralty Court. The matter than came before the Court of Appeal.
Clarke, L.J., gave the principal judgment and summarized the issues as follows. For MSC to maintain the arrest they had to show that the arrest was justified by the Supreme Court Act 1981, s. 21(4)(ii), the so-called “sister-ship” provision, which reads as follows:
In the case of any such claim as is mentioned in section 20(2)(e) to (r) where—
(a) the claim arises in connection with a ship; and
(b) the person who would be liable on the claim in an action in personam (“the relevant person”) was, when the cause of action arose, the owner or charterer of, or in possession or in control of the ship,
an action in rem may…be brought in the High Court against…
(ii) any other ship of which, at the time when the action is brought, the relevant person is the beneficial owner as respects all the shares in it.
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