Exposing a hollow presumption

Exposing a hollow presumption

M Prabhakaran, of Bombay-based Consulta Juris, answers the claim that admiralty law in India is based wholly on English law

AS a lawyer to the largest shipping company in India, I was stunned recently to hear the representative of a P & I club in Mumbai objecting to my appointment as the company's lawyer, on the ground that, in his assessment, I was not as competent as the lawyer he usually engaged. Later, I was amused to learn that the club representative shared the same office premises as the lawyer whose appointment he favoured. The representative said that only a lawyer with an in-depth knowledge of English law could inspire his confidence as he believed admiralty law in India was wholly based on English law. Is he right, and what does this mean for the protection of the interests of the shipowner?

There is a widespread belief that admiralty law in India is steered by developments in the admiralty laws of England, probably due to the enforcement of the provisions of the Colonial Courts of Admiralty Act in India. By Act 16 of 1891, the High Courts of Bengal, Madras, Bombay, Rangoon, Aden and Karachi, in what was then British India, were declared to be colonial courts of admiralty.

After independence, the high courts in Bombay, Calcutta and Madras continued to exercise admiralty jurisdiction under the said act. This gave the impression that only these three high courts could order the arrest of foreign ships in Indian ports.

The Supreme Court of India, in MV Elisabeth v Harwan Investment and Trading Pvt Ltd (AIR 1993 SC 1014) exposed the hollowness of this presumption. It pointed out that, "The judicial power of this country, which is an aspect of national sovereignty, is vested in the people and articulated in the provisions of the constitution and the laws, and is exercised by courts empowered to exercise it. It is absurd to confine that power to the provisions of imperial statutes of a bygone age. Access to court, which is an important right vested in every citizen, implies the existence of the power of the court to render justice according to law. Where statute is silent and judicial intervention is required, courts strive to redress grievances according to what are perceived to be principles of justice, equity and good conscience".

The supreme court, outraged by the suggestion that English law should control the exercise of judicial powers by the Indian courts, noted, "What was surprising to hear, even in 1991, was that the admiralty jurisdiction exercised by the high courts in the Indian Republic is still governed by the obsolete English Admiralty Courts Act 1861, as applied by the Colonial Courts of Admiralty Act".

The principal issue in Elisabeth v Harwan was whether the Indian high courts could be denied jurisdiction to arrest a foreign ship to satisfy the claim of the owner of the bill of lading for cargo taken outside the country. The supreme court found the argument plausible but wrong, and ruled as follows:

"It is within the competence of the appropriate Indian courts to deal, in accordance with the general principles of maritime law and the applicable provisions of statutory law, with all persons and things found within their jurisdiction . The power of the court is plenary and unlimited unless it is expressly or by necessary implication curtailed. Absent such curtailment of jurisdiction, all remedies which are available to the courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the concerned high court. This power of the court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment".

The law relating to shipping in India is contained in the Indian Bills of Lading Act, Indian Carriage of Goods by Sea Act, Merchant Shipping Act, and Marine Insurance Act. It is also contained within other general statutes including the Contract Act, Evidence Act, Indian Penal Code, Transfer of Property Act, Code of Civil Procedure, Criminal Procedure Code, and Companies Act. The Constitution of India is, of course, the Supreme Law.

The Indian Carriage of Goods by Sea Act applies to the carriage of goods by sea under bills of lading, or similar documents of title, from a port in India to any other port in or outside India. The substantive rights, recognised by the statute, are of equal application to foreign merchant ships as they are to Indian merchant ships. However, the Carriage of Goods by Sea Act does not contain any provision for the enforcement of the right by arresting a foreign vessel found in Indian waters.

Cargo recourse

In the absence of arrest, no effective remedy against a foreign owner may be available to the cargo owner, similarly with regard to claims relating to cargo carried under a charter party. The cargo owner, however, has recourse to the remedy available under the Merchant Shipping Act. The Merchant Shipping Act confers the right to arrest a vessel in respect of any damage caused by a ship. If that expression, in the absence of a more appropriate statute, is understood sufficiently broadly to be an enabling provision to assume jurisdiction over a foreign ship, there will be no difficulty in finding a remedy for the right the law has conferred on the cargo owner. The Merchant Shipping Act empowers the concerned high court to arrest a ship in respect of a substantive right.

A right conferred by the Indian Carriage of Goods by Sea Act, in respect of outward cargo, is one of those rights which can be enforced by arrest and detention of the foreign ship. This can be in order to found jurisdiction over the vessel and its owners, just as it can be done in respect of inward cargo by reason of the substantive rights conferred by the Admiralty Court Act 1861, read with the Colonial Courts of Admiralty Act 1890 and other rules of law.

The same principle must hold good for carriage under a charter party. These and other laws, including contract and tort, and civil and criminal procedure codes, together constitute the body of substantive and procedural laws governing claims relating to inward and outward cargo. Such claims are enforceable against foreign ships by recourse to arrest and detention when found within jurisdiction. Viewed in this light, any high court in India will have jurisdiction to arrest a foreign vessel in respect of claims relating to outward cargo.

According to the supreme court, there is no reason why the words 'damage caused by a ship' appearing in Section 443 of the Merchant Shipping Act 1958 should be limited to physical damage and exclude any other damage arising from the operation of the vessel. The expression is wide enough to include all maritime questions or claims.

Liability to detention

If goods or other property are lost or damaged, whether by physical contact or otherwise, at the request of the person aggrieved the vessel is liable to be detained when found within Indian jurisdiction, by recourse to Sections 443 and 444 of the Merchant Shipping Act 1958. This is the case wherever the cause of action has arisen, wherever the ship is registered, or wherever the owner has its residence or place of business. These procedural provisions are but tools for enforcement of substantive rights, which are rooted in general principles of law, apart from statutes, and for the enforcement of which an aggrieved party has a right to invoke the inherent jurisdiction of a superior court.

It is pertinent that the high courts in India are superior courts of record. They have original and appellate jurisdiction. They have inherent and plenary powers. Unless expressly or impliedly barred, and subject to the appellate or discretionary jurisdiction of the supreme court, the high courts have unlimited jurisdiction, including the jurisdiction to determine their own powers.

In Union of India v Khairul Jabbar ((1993) 1 SCC 619), the supreme court held that, in the matter of arrest and confiscation of a vessel by the customs authorities, under Section 115 of the Customs Act, the subsequent admiralty suit should implead the customs department as one of the defendants. In another case, the supreme court pointed out that, where there is a strong triable case against the vessel, the arrest effected under the provisions of the Merchant Shipping Act and the admiralty rules can only be lifted on deposit of a substantial amount in the court by the vessel owner. (Videsh Sanchar Nigam Ltd v MV Kapitan Kud ((1996) 7 SCC 127)).

In a recent admiralty case, the Bombay high court held that, if a suit had already been filed against a vessel in a civil court, but returned by that court for presenting in the court having jurisdiction, a fresh suit could not be filed by the party invoking the admiralty jurisdiction of the high court. (St George Shipping Co Ltd v MV Irene P) (1999(3) ALL MR 130).

Meanwhile, World Tanker Carrier Corporation v SNP Shipping Services Pvt Ltd & Ors (JT 1998 (3) SC 468) is an example of a case where the supreme court held that, as the admiralty suit for limitation of liability was filed in the Bombay high court pending proceedings in foreign courts, and since both vessels were owned by foreigners, the Bombay high court had no jurisdiction to entertain the admiralty suit.

Control of law

So, returning to the comment made by the P&I representative, it is clear that shipping law in India is not controlled by the admiralty law of England. On the practical side, even quasi-judicial bodies such as the District Forum and State Commission, constituted under the Consumer Protection Act 1986, entertain claims relating to shipping matters in India. If the club representative was to be believed, shipowners would face an additional peril - receiving deficient service, despite incurring excessive litigation costs, even by European standards.