Lloyd's Maritime and Commercial Law Quarterly
ARREST OF SHIPS OWNED BY CHARTERERS
S. J. Tabbush
Barrister, formerly of the West of England Shipowners’ Insurance Services Ltd.
It is well known that when an Admiralty claim arises in connection with a ship, it is often possible to enforce that claim by bringing an action in rem against that ship. In most cases it is also possible, instead of bringing an action against the ship in connection with which the claim arises (which I shall call ship A), to bring an action against another ship owned by the person liable for the claim (ship B).
Where both ships are wholly owned by the person liable, no problem arises: the claimants can choose which of them to arrest. But one problem that has arisen frequently in the last few years is: if the person liable (“the relevant person”) is not the owner of ship A, in connection with which the claim arises (for instance, if he is the charterer), but is the owner of ship B, can an action be brought against ship B?
This question has been answered in three ways. One view is that in the case described no action can be brought against ship B: for either ship to be arrested, both must be wholly owned by the person liable. The opposing view is that regardless of the ownership of ship A, any ship owned by the person liable may be arrested, provided only that at the time of the casualty he was the owner or charterer or in possession or control of ship A; so that in the case described, it is possible to bring an action against ship B. The middle view is that there is no need for the person liable to be the owner of ship A, but at the time of the casualty he must have been either the owner or the demise charterer of ship A.
The statutory position
Section 3(4) of the Administration of Justice Act 1956 reads:
“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 … may … be invoked in 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”,
585