The applicant, Nippon Yusen Kabushiki Kaisha (NYK Line), applied to dismiss the suit of the plaintiff, Aurobindo Pharma Ltd, and return the security furnished by the applicant for the release of the defendant vessel, the NYK Theseus. The plaintiff instituted an admiralty claim against the applicant, the defendant vessel, and NYK Line (India) Pvt Ltd, a 100% owned subsidiary of the applicant in India. The registered owner of the defendant vessel was a one-ship Panamanian company. The defendant vessel was, however, entirely managed and controlled by the applicant.

The plaintiff entrusted the applicant with the carriage of pharmaceutical cargo from the port of Nhava-Sheva, India, to London Gateway Port, UK. The cargo was shipped on the CCNI Arauco. However, this vessel caught fire at Hamburg Port. Eventually, the plaintiff's goods were transhipped on another vessel, and were delivered to the consignee, GlaxoSmithKline plc, on 3 November 2016. However, the consignee rejected the cargo and returned it to the plaintiff.

The plaintiff claimed that it had a maritime claim under s 4(1)(f) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 (the Act) for loss or damage in connection with the cargo. The plaintiff sought the arrest of the defendant vessel, and a money decree in the sum of USD 825,600 plus interest.

NYK Line (India) Pvt Ltd filed a caveat against the arrest of the vessel. The applicant furnished security in the form of cash deposit without prejudice. The applicant argued that the Court lacked jurisdiction to hear and determine the suit, as under the bill of lading exclusive jurisdiction was conferred on the Tokyo District Court. The applicant further asserted that the defendant vessel was not a sister ship of the CCNI Arauco in which the plaintiff's cargo was carried. No case for lifting the corporate veil was made out. The applicant claimed to be merely the time charterer of the defendant vessel. Finally, the tenability of the plaintiff's suit was also assailed on the ground that it was time-barred by the Hague Rules and the Carriage of Goods by Sea Act 1925 (the Act).

Held: The application is partly allowed to the extent of the refund of the security deposit along with interest. No case to proceed against the defendant vessel in rem has been prima facie made out. However, the suit should proceed in personam against NKY Line and NYK Line (India) Pvt Ltd.

Recourse to a few provisions of the Act may be apposite. Section 2(1)(f) of the Act defines 'maritime claim' to mean a claim referred to in s 4. Section 4(1) of the Act, in turn, contains a list of the claims which are designated as maritime claims. In the context of the transaction at hand, s 4(1)(f) is relevant.

For the arrest of a sister ship under s 5(2) of the Act, the commonality of ownership of both vessels is required to be established. In other words, is it incumbent upon a person moving for the arrest of a vessel, being the 'other vessel', to establish the nexus between the vessel against which the maritime claim exists, and the other vessel as the 'sister ship'.

Indian law views each company incorporated under the Companies Act as a separate and legal entity from its shareholders and other companies. The fact that two companies have common shareholders or a common board of directors will not convert them into a single entity. It is also trite that Indian law does not permit one to ignore the independent corporate identity of a limited company and to lift the corporate veil to identify the shareholder as owner of the property of the limited company in the absence of fraud.

Indian law further says that shareholders are not the owners of the assets of the company. Therefore, to arrest a ship which is not owned by the person liable for the claim, ie the arrest of a ship under common beneficial ownership, is not permissible unless fraud is established.

In some cases the Court can look behind the registered owner to determine beneficial ownership. It can lift the corporate veil, but the necessary ingredient for doing so is that the independent companies are nothing but sham to defraud creditors. For two or more ships to be called sister ships, they have to be registered under the same ownership. For two ships owned by different entities to be called sister ships, the corporate veil has to be pierced. To deploy the 'alter ego' doctrine justifying a piercing of the corporate veil, the defendant or debtor must, to use a Dickensian phrase, be shown to be an 'artful dodger'. Otherwise, the very essence of corporate/company law and its fundamental precept that every company is a distinct legal entity would be effaced. The mere commonality or common directorships or interlocking shareholding are, by themselves, not even prima facie evidence of one being the alter ego of the other.

On the aspect of limitation, the applicant argues that in view of art 3.6 of the Hague Rules, the carrier stands discharged from all liability unless the suit was brought within one year after the delivery of the goods or the date when the goods should have been delivered.

This issue hinges upon the question as to whether the bill of lading was subject to the provisions of the Hague Rules or the International Carriage of Goods by Sea Act 1957 of Japan. This question merits determination at the trial. It would therefore be appropriate to decide the question of jurisdiction after a proper issue is raised on pleadings.