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3 Proprietary Maritime Claims

Sarah C. Derrington, James M. Turner

From: The Law and Practice of Admiralty Matters (2nd Edition)

Sarah Derrington, James M Turner QC

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber: null; date: 03 August 2020

(p. 46) Proprietary Maritime Claims

A.  The Jurisdictional Foundation for Proprietary Maritime Claims

3.01  The Senior Courts Act 1981 provides that a claim may be brought as an action in rem against the ship or property to which the claim relates in any of the following cases:1

  1. (a)  any claim to the possession or ownership of a ship or to the ownership of any share therein;2

  2. (b)  any question arising between the co-owners of a ship as to possession, employment, or earnings of that ship;3

  3. (c)  any claim in respect of a mortgage of or a charge on a ship or any share therein;4 and

  4. (d)  any claim for the forfeiture or condemnation of a ship or goods which are being or have been carried, or have been attempted to be carried, in a ship, or for the restoration of a ship or any such goods after seizure, or for droits of Admiralty.5

(p. 47) 3.02  The types of claims encompassed by this section, discussed in more detail below, are concerned with questions of property and possession, and may be regarded as proprietary, or quasi-proprietary, in character. As such, the dispute is about the ship or property itself as opposed to merely being a dispute arising out of the utilization of the ship. Consistently with art 3(1) of the Arrest Convention, the right to proceed in rem is restricted to the ship or property and no action in rem lies against a sister-ship in respect of these types of claims.

Claims to ownership or possession (section 20(2)(a))

3.03  This head of claim6 reflects paras (o) and (p) of art 1(1) of the Arrest Convention; the Senior Courts Act 1981 omits the specific reference in the Convention to disputes as to the ‘title’ to any ship, but there is no material distinction between ‘title to’ and ‘ownership of’. This conclusion is supported by the French text of the Convention which refers simply to ‘la propriété contestée d’un navire’.7

3.04  All questions relating to the possession of a ship, both legal and equitable,8 whatever the nationality of the ship, or the domicile or residence of the owner,9 are within the ambit of the jurisdiction. Thus, there is jurisdiction in respect of possession of a ship, including a foreign ship, wrongfully taken on the high seas.10 Consistently with the view of the nature of the action in rem expressed in Chapter 2, a claim for specific performance or some other equitable remedy is no bar to proceeding in rem.11 Thus, the court has power to grant a declaration that the claimant is the legal owner of the ship and is entitled to be so registered,12 to rectify the register of a British ship where an incorrect entry has been made,13 and to order delivery up of a certificate of registry of a British ship.14

3.05  Consistently with the proprietary basis of this head of jurisdiction, a claim for damages arising out of a breach of a contract for the sale of the vessel is not within the jurisdiction conferred by this sub-paragraph. In such a case, there is no claim to (p. 48) ownership or possession; in fact the converse is being claimed.15 Nor does a claim against the shipowner by one of its minority shareholders for damages for breach of the company’s articles of association by selling the ship fall within section 20(2)(a) or (b). That is because such a claim cannot be characterized as a claim to the ownership of the vessel within sub-section (2)(a); and the co-ownership required by sub-section (2)(b) is of the vessel and not of the owning company.16

3.06  Pursuant to para 6 of sch 1 to the Merchant Shipping Act 1995 (MSA), the court may make an order prohibiting for a specified time any dealing with a ship or a share therein. The right to apply for such an order extends only to a person with a proprietary interest in the ship, or at least to a person having a claim against the ship which could lead to such an interest, and does not include a mere personal creditor.17

Questions arising between co-owners (section 20(2)(b))

3.07  This head18 reflects art 1(1)(p) of the Arrest Convention and to some extent overlaps with the previous paragraph. As between co-owners, claims under this head include the arcane and little-seen suits for possession, actions of restraint, and actions of co-ownership. The jurisdiction also includes the power to settle any account outstanding and unsettled between the parties in relation to the ship and to direct that the ship, or any share, be sold, or to make any other order that the court thinks fit.19

3.08  The minority interests in a ship may bring an action for restraint in circumstances where, without consent, the majority is about to send the ship on a voyage. The minority may take out a warrant of arrest and have the ship detained until security is given for its safe return.20 As soon as the security is given, the ship may sail and it does so wholly at the risk of and for the profit of the majority.21 The question may arise as to whether the security is only required to cover the ship’s safe return to the jurisdiction or whether it can be required to cover return to a particular port. The better view appears to be that it will only be required for the safe return to the jurisdiction.22

(p. 49) 3.09  A suit for possession is effectively an action for restraint in reverse. Where the majority interest in a ship wishes to send the ship on a voyage but is unable to do so because the minority refuses to release possession, the majority may arrest the ship. Upon providing security for the ship’s safe return in an amount sufficient to cover the minority’s interest, the majority will be given possession and the ship may sail.

Claims in respect of a mortgage or charge (section 20(2)(c))

3.10  This head of jurisdiction23 reflects art 1(1)(q) of the Arrest Convention. It relates to all mortgages and charges, whether registered or not and whether legal or equitable, and includes all mortgages and charges created under foreign law.24

3.11  It has been held that the word ‘charge’ in this context means a charge upon the ship as used in the Merchant Shipping Act 1894.25 Thus, it embraces charges that can be considered ejusdem generis with a maritime lien. A possessory lien, however, which does not encompass rights of ownership, is thus excluded.26 This is consistent with the text of art 1(1)(q) of the Arrest Convention, which refers to claims arising out of ‘a mortgage or hypothecation’ of a ship.

Claims for the forfeiture or condemnation of a ship or goods (section 20(2)(s))

3.12  This head of jurisdiction27 provides for Admiralty jurisdiction to be exercised in cases where a ship or goods is condemned or forfeited. It has no equivalent provision in the Arrest Convention but is not inconsistent with art 2 of that Convention which preserves the rights or powers vested in any government under existing domestic laws to arrest or detain vessels within its jurisdiction. Droits of Admiralty are peculiar to the English Admiralty context (see below) and, in most cases, matters of forfeiture and condemnation arise between the State and an individual, and are not the subject of civil proceedings in Admiralty. There are numerous statutory provisions which may lead to the condemnation or forfeiture of a ship or goods, particularly under Customs and Excise legislation, environmental protection legislation, and port state control requirements.

(p. 50) 3.13  Droits of Admiralty encompass certain claims for the return of property or for salvage for recovering property found as wreck at sea, which were perquisites of the Crown and generally were assigned to the Admiral.28 These claims included wreck at sea, pirate goods, and royal fish.29 Wreck, in this sense, included jetsam (shipwreck and cargo and deck gear jettisoned to lighten the vessel), whether found as flotsam (floating on the surface) or as lagan (sunken but buoyed for retrieval), and derelicts (abandoned vessels).30

B.  The Approach to Proprietary Claims in Other Jurisdictions

3.14  The mode of exercise of Admiralty jurisdiction in relation to claims for possession, ownership, mortgages, and the like prescribed in the Supreme Court Act 1981 largely accords with the approach in some other common law countries; Hong Kong,31 New Zealand,32 and Singapore33 all confine the right to proceed in rem in respect of questions and claims relating to possession, ownership, co-ownership, mortgages, forfeiture, and condemnation to the particular ship or property in respect of which the questions or claims arose. Australia, Canada, and South Africa, however, have adopted a different approach.

3.15  In Australia, the Admiralty Act 1988 divides claims that are the subject of Admiralty jurisdiction into proprietary maritime claims and general maritime claims.34 Section 16 confers the right to proceed in rem ‘on a proprietary maritime claim concerning a ship or other property’.35 Such claims can only be brought against the particular ship or property to which the claim relates.36

3.16  The High Court of Australia has held that s 4(2)(a) and (b) of the 1988 Act, which confers jurisdiction in relation to claims ‘relating to … possession … [and] … ownership’, is wide enough to encompass a claim that a third party is or has been entitled to become the owner of the property in question;37 the words ‘relating to’ are to be contrasted with the more narrowly drawn wording in s 20(2)(a) of the (p. 51) Supreme Court Act 1981, which confers jurisdiction in relation to claims ‘to the possession or ownership’ of a ship or property.

3.17  The High Court went on to hold that the in personam nature of the primary relief sought, namely specific performance, did not prevent the bringing of an action in rem pursuant to s 4(2)(a) or (b).38 Although not necessary for its decision, the Court also expressed the opinion that it was wrong to approach the Act on the basis that it is concerned only with title and ownership at common law and not with equitable interests.39

3.18  The scope of the wording ‘relating to’ was considered by the Federal Court of Australia in an action seeking a declaration that no agreement to purchase a vessel had been made and the return of monies paid into a solicitor’s trust account pending the making of an agreement to purchase the ship. Finkelstein J held40 that there was a ‘reasonably direct connection’ between the claim and the ownership of the vessel—in that the claim depended upon whether there was a valid sale pursuant to which ownership of the ship had passed to the plaintiff—and that the claim was therefore one ‘relating to title to, or ownership of, a ship or a share in a ship’.41

3.19  Australia did not include in its Admiralty Act a provision equivalent to s 20(2)(s) of the Senior Courts Act 1981. It was considered that there was no need to confer Admiralty jurisdiction in respect of the droits of Admiralty as the category was a ‘virtually vestigial’ residual jurisdiction.42 Issues relating to wreck are dealt with primarily by the Navigation Act 2012 (Cth), although some provisions relating to the removal of wrecks and derelicts can also be found in various pieces of State legislation.43 Similarly, it was considered that questions relating to forfeiture, which is in any event a penal jurisdiction rather than one belonging within the scope of civil admiralty jurisdiction, were best left to the relevant pieces of legislation dealing with forfeiture.44 There has never been any provision in Australian legislation relating to royal fish.

3.20  Section 22 of the Federal Courts Act of Canada grants jurisdiction in all cases in which a claim for relief is made or a remedy sought under Canadian maritime law or any other law of Canada relating to any matter coming within the class of subject of navigation and shipping, except to the extent that jurisdiction has been (p. 52) otherwise specifically assigned. A non-exclusive list of maritime claims is provided in s 22(2)(a)–(s).45 Nonetheless maritime jurisdiction is expressly conferred in relation to claims with respect to title, possession, or ownership of a ship (or the proceeds of sale of a ship), or part interests in them;46 questions arising between co-owners of a ship with respect to its possession, employment, or earnings;47 and claims in respect of mortgages or hypothecations of, or charges on, a ship or part interests in them.48 By s 22(3), this jurisdiction applies regardless of the nationality or registration of the ship (or aircraft), the residence or domicile of her owners, or the place where the cause of action arose or its governing law.

3.21  The jurisdiction conferred pursuant to these paragraphs may be exercised in personam 49 or in rem 50 and, in contrast to the position in England, Australia, Hong Kong, New Zealand, and Singapore, it may be exercised in rem against any ship which, at the time when the action is brought, is beneficially owned by the person who is the owner of the ship that is the subject of the action.51

3.22  In Antares Shipping Corp v The Capricorn,52 the Supreme Court of Canada held that the words ‘any claim as to title, possession or ownership of a ship’53 extended to a claim for specific performance. By extension, the Federal Court sitting in admiralty could order damages for breach of a contract for the sale of a ship in lieu of specific performance.54 Similarly, where a seller is entitled to rescind the contract or to exercise an unpaid seller’s lien, he would then have a claim for ownership or possession. The Canadian position is thus closer to the Australian than the English ambit of this head of jurisdiction.

3.23  There is no separate head of jurisdiction in the Federal Courts Act in relation to forfeiture, condemnation, or seizure, or in relation to droits of Admiralty. The Canadian definition of maritime claims is, however, inclusive and does not purport to provide an exhaustive list. It is thus likely that any such claims which might arise and which are not governed by specific legislation55 would fall within the Federal Court’s maritime jurisdiction.

(p. 53) 3.24  Like the Canadian approach, s 2(1) of the South African Admiralty Jurisdiction Regulation Act 105 of 1983 confers admiralty jurisdiction in relation to ‘any maritime claim’. A list of maritime claims is contained in s 1(1)(a)–(ff) of the Act and jurisdiction extends to ‘any other matter which by virtue of its nature or subject matter is a marine or maritime matter, the meaning of the expression marine or maritime matter not being limited by reason of the matters set forth in the preceding paragraphs’.56 Nevertheless, claims arising out of or relating to ownership, possession, employment or earnings, mortgages and charges, and bottomry and respondentia are specifically made the subject of admiralty jurisdiction.57 Such claims may be enforced in personam 58 or in rem, provided that the claimant has a maritime lien over the property to be arrested or the owner would be liable on the action in personam.59 With the exception of claims relating to any mortgage, hypothecation, right of retention, pledge or other charge on or of a ship, and any bottomry or respondentia bond, any maritime claim, including those relating to possession and ownership as mentioned in s 1(1)(a)–(c), may be brought in rem against a ship other than the ship in respect of which the claim arises (an ‘associated ship’).60

3.25  Jurisdiction, which may be enforced in personam and in rem, also exists in relation to any claim arising out of or relating to the forfeiture of any ship or any goods carried therein or the restoration of any ship or any such goods forfeited.61 There is, however, no head of jurisdiction with respect to droits of Admiralty except to the extent that s 6 preserves the pre-existing English Admiralty jurisdiction.

Footnotes:

1  s 21(2).

2  s 20(2)(a).

3  s 20(2)(b).

4  s 20(2)(c).

5  s 20(2)(s).

6  s 20(2)(a) makes provision for ‘claims to ownership or possession of a ship or a share in a ship’.

7  F Berlingieri, Arrest of Ships (5th edn, 2011) 4.09.

8  Foong Tai & Co v Buchheister & Co [1908] AC 458, 467–468.

9  s 20(7)(a); in the absence of any substantial connection to England a claim relating to title to a foreign vessel is likely to be vulnerable to being stayed on the grounds of forum non conveniens, The Lakhta [1992] 2 Lloyd’s Rep 269.

10  Baxter v Blanshard (1823) 23 Dow & Ry KB 177, 107 ER 374; The Pitt (1824) 1 Hag Adm 240, 166 ER 86; The Beatrice (1866) 36 LJ Adm 9; The Annette: The Dora [1919] P 105.

11  The Conoco Britannia [1972] 2 QB 543, 554–555; The Owners of the Ship Shin Kobe Maru v Empire Shipping Company Inc (1994) 181 CLR 404 (High Court of Australia); Antares Shipping Corp v The Capricorn [1977] 2 SCR 422, (1980) 111 DLR (3d) 289 (Supreme Court of Canada).

12  The Bineta [1966] 2 Lloyd’s Rep 419.

13  The Rose (1873) LR 4 A & E 6; Brond v Brommhall [1906] 1 KB 571; The Ocean Enterprise [1997] 1 Lloyd’s Rep 449.

14  The Frances (1820) 2 Dods 420; The St Olaf (1877) 2 PD 113.

15  The Pal Marinos (Admiralty Court, 5 August 1991, unreported); a similar construction was adopted by the Supreme Court of Tasmania in Paul Allison & APAI Pty Ltd v The Ship Greshanne (1996) 6 Tas R 137, (1996) 125 FLR 342.

16  The Uranus [2015] EWHC 1269 (Admlty), [54] and [57], [2015] 2 Lloyd’s Rep 175.

17  The Mikado [1992] 1 Lloyd’s Rep 163; The Siben [1994] 2 Lloyd’s Rep 420.

18  s 20(2)(b) makes provision for claims involving ‘Questions arising between co-owners as to possession, employment or earnings’.

19  s 20(4); The Vanessa Ann [1985] 1 Lloyd’s Rep 549.

20  The Apollo (1824) 1 Hag Adm 306.

21  Ibid 311.

22  The Margaret (1829) 2 Hag Adm 275; The Regalia (1884) 5 Asp 338; The Robert Dickinson (1884) 5 Asp 341; The Vivienne (1887) 6 Asp 178, cf The Cawdor [1900] P 47.

23  s 20(2)(c) makes provision for ‘Claims in respect of a mortgage of or a charge on a ship or any share in a ship’.

24  s 20(7)(c): for a detailed treatment of the law relating to ship mortgages see Nigel Meeson QC and John Kimbell, Admiralty Jurisdiction and Practice (4th edn, 2011) Chapter 10.

25  The St Merriel [1963] P 247, [1963] 2 WLR 488, [1963] 1 All ER 537, [1963] 1 Lloyd’s Rep 63; The Acrux [1965] P 391, [1965] 3 WLR 80, [1965] 2 All ER 323, [1965] 1 Lloyd’s Rep 565.

26  Ibid.

27  s 20(2)(s) makes provision for ‘Claims for the forfeiture or condemnation of a ship or goods which are being or have been carried, or have been attempted to be carried, in a ship, or for the restoration of a ship or any such goods after seizure, or for droits of Admiralty’.

28  R v Forty Nine Casks of Brandy (1836) Hag Adm 257, 280.

29  Lord Warden of the Cinque Ports v The King in His Office of Admiralty (1831) 2 Hag Adm 438, 439–440; 166 ER 304 refers to ‘all royal fishes, such as sturgeons, grampuses, whales, porpoises, dolphins, riggs and generally all other fishes of very large bulk or fatness’.

30  Part IX, Chapter II of the MSA 1995 now contains mandatory procedures relating to wreck.

31  High Court Ordinance, s 12B(2).

32  Admiralty Act 1973, s 5(2)(a).

33  High Court (Admiralty Jurisdiction) Act, s 4(2).

34  Admiralty Act 1988 (Cth), s 4(1).

35  The definition of a proprietary maritime claim is to be found in s 4(2) of the 1988 Act.

36  Admiralty Act 1988, s 19.

37  Owners of Shin Kobe Maru v Empire Shipping Co Inc [1994] HCA 54, [22], (1994) 181 CLR 404, 418; followed in Beluga Shipping GmbH & Co Ks ‘Beluga Fantastic’ v Headway Shipping Ltd (No 2) [2008] FCA 1770, [12], (2008) 251 ALR 620, [12].

38  Owners of Shin Kobe Maru v Empire Shipping Co Inc [1994] HCA 54, [35], (1994) 181 CLR 404, 422.

39  Ibid [37], 423.

40  Deriving support for his approach from the House of Lords’ decision (and the speech of Lord Keith in particular) in Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance Co [1985] AC 255.

41  Caravelle Investments Ltd v Martaban Ltd (1999) 95 FCR 85.

42  Civil Admiralty Jurisdiction, ALRC No 33 (1986) para 51.

43  Navigation Act 2012 (Cth), ss 227–239.

44  eg, Fisheries Acts of each State and Territory; Shipping Registration Act 1981 (Cth); the various State and Territory Acts relating to marine safety and marine pollution.

45  A detailed treatment of the Canadian position is contained in W Tetley, Maritime Liens and Claims (2nd edn,1998).

46  Federal Courts Act, s 22(2)(a).

47  Federal Courts Act, s 22(2)(b).

48  Federal Courts Act, s 22(2)(c).

49  Federal Courts Act, s 43(1).

50  Federal Courts Act, s 43(2).

51  Federal Courts Act, s 43(8); this sub-section is discussed in more detail at para 5.19.

52  Antares Shipping Corp v The Capricorn [1977] 2 SCR 422, (1979) 111 DLR (3d) 289; Gleason v The Ship Dawn Light (1997) 223 NR 155.

53  Federal Courts Act, s 22(2)(a) RSC 1970.

54  Beauchamp v Coastal Corporation [1984] 1 FC 833.

55  Examples of such specific legislation include the Canada Shipping Act 2001, the Fisheries Act 1985, the Coastal Fisheries Protection Act 1985, and the Customs Act 1985.

56  Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(1)(ee).

57  Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(1)(a)–(d).

58  Admiralty Jurisdiction Regulation Act 105 of 1983, s 3(1) and (2).

59  Admiralty Jurisdiction Regulation Act 105 of 1983, s 3(4); except where the owner is seeking to vindicate possession of his own ship, in which case he does not have the underlying personal liability required but can still proceed in rem, The Great Eagle 1992 (2) SA 87.

60  Admiralty Jurisdiction Regulation Act 105 of 1983, s 3(6).

61  Admiralty Jurisdiction Regulation Act 105 of 1983 s 1(v); see Chapter 1, para 1.24.