Caselaw: Arrest of ship to secure claim against different Shipowner yet same P&I Correspondent.

by JC IMPOUTOU - June 2006
To cover a shortage of 4,000 bags, the P&I Club of m/v “S…” provided the receivers with a LOU for EUR 80,000. This LOU was issued through local P&I Correspondent. Few months later, the receivers claimed payment of the full guaranteed amount. The Club together with the Correspondent invited the receivers to present a claim file for assessment of the merits. Arguing that they had a grounded claim in its principle and that the Club had refused to meet its obligation as stated in the LOU, the receivers were authorised to arrest the m/v “C…” by a court order from the President of the Tribunal of First Instance of Lomé in December 2005. The arrest was granted on the basis that the two vessels had been assisted by the same P&I Club correspondent. No objection was made to the fact that these ships belonged to different Owners and entered with different P&I Clubs. Within the scope of proceedings instituted by Owners of m/v “C…” in order to have this ship released, the Tribunal of First Instance ruled a decision at the end of an emergency contradictory hearing in January 2006. Lifting of the arrest was granted against a deposit of EUR 80,000 with the clerk of the Tribunal.

The Owners of m/v “C…” lodged an appeal against this decision before the Court of Appeal of Lomé. The Owners’ main argument was that in accordance with the provisions of article n° 3 of International Convention for unification of certain rules relating to the arrest of sea-going ships, only the ship in respect of which the maritime claim arose, or any other ship which is owed by the person who was, at the time when the maritime claim arose, the owner of the particular ship can be arrested. Additionally, the owners pointed out that the claim against their ship was not grounded in its principle and could not consequently justify application of the article 54 of Uniform Act of UNIDA relating to sureties. The Owners of m/v “C…” asked the Court of Appeal to cancel purely the arrest made on this vessel.

The arresting party pleaded for the arrest to be maintained. They argued that the owners of ships “C…” and “S…” had the same mandatory (P&I correspondent). Owners of “C…” had to meet with undertakings taken by their mandatory.

The Court of Appeal decided on 07.02.06 that the prejudice suffered by the arresting party was due to m/v “S…” which Owner was GS Co Ltd and insurer T….. The arrested ship was the propriety of FES Co and under insurance cover of Y…. It was not contested that the two insurers or the owners had the same mandatory. Although Owners had the same mandatory, each one ran after its own business. The mandate given by one to the correspondent E…engaged itself vis-à-vis this company and people having dealt with this correspondent in its capacity as mandatory. In the wording of LOU issued by E… at the request and on behalf of T…, there was no mention that E… was also acting on behalf of Y….

The owners of m/v “C…” and their insurer Y….could not fulfil undertaking taken by E….on behalf of owner and insurer of “S…”.

The fact that E…acted as mandatory for the owners of “S…” and “C…” did not generate a link between these Owners.

The court stated additionally that in the maritime transport field, only the ship in respect of which the claim arose can be arrested or any other ship which is owed by person who was, at the time when the maritime claim arose, the owner of the particular ship. Lifting of arrest on m/v “C…” was granted purely and simply.

This decision can only be approved by international maritime community. It makes it clear that a mandatory engages only the one on behalf of whom the action has been taken. It is very important for a P&I Correspondent to have the possibility to assist other ships when he has not been given means to comply with its commitments in one specific file.

It is necessary to think about the way the matter would have been appreciated if the two vessels, although belonging to different owners, were entered with the same P&I Club and assisted by the same correspondent. The reasoning of the Court of appeal and the level of judges’ knowledge of International Maritime Law in this area lead to believe that the risk of having the arrest maintained would have been great and serious.

Lesson to be drawn from this matter is that all steps should be taken to comply systematically with all undertakings. It is the necessary prize for building and maintaining confidence in the maritime industry, especially in West Africa.

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