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Bombay HC: Recovery Suits is Permitted Even During Pendency of Arbitration Under Maritime Law

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Bombay High court Law Insider

Priya Gour

Published on : July 29 ,2022 at 19:08 IST

The High Court of Bombay held that the pendency of an arbitration proceeding can not be taken as a deterrence for institution of an admiralty suit.

The Bench of Justice N.J. Jamadar held that solely because the vessel owner has filed an arbitration suit against the charterer, it does not bar the charterer from filing an admirality suit for recovery of its dues and arrest of the vessel in an action in rem.

For the term of 5 years, on date 19.10.2015 Bareboat Charterparty BAREON 200 was agreed by the parties where the respondent carried out a special survey, repairs, drydocking. However, due to an arising dispute between the parties, the applicant filed for an arbitration application. On the other hand, a commercial recovery suit was filed by the respondent for claims recovery and arrest of the ship.

The court granted ex- parte ad-interim relief of arrest of the respondent. Lately, an appeal against the relief order for ship vacation was filed by the applicant.

It was submitted by the applicant that admiralty action in rem in aid of security for Indian arbitration proceeding is not permissible under law while the arbitration remains pending. There shall be be no deterrence from filing a suit for recovery of dues and arrest of the vessel.

The Bench stated that, the applicant had misconceptions by courts observation made in ALTUS UBER where the court held that such matters should be evaluated by requirements of Section 4 of the Admiralty Act .”

The Court held that on careful perusal of the entire plaint of the respondent, it cannot be said that the suit is merely filed for the arrest of the ship for securing the claim in the arbitration as the respondent has made a substantive claim for the recovery of its dues.

Further the Court held that the respondent’s maritime claim for recoveries of due is within the reasonable meaning of Section 4 of the Admiralty Act, 2017.

So, the Bench held that that pendency of an arbitration shall not bar the institution of an admiralty suit. Hence the applicant’s objection stands to be rejected .