On 4 April 2021, the Dolphin Star was arrested for an alleged breach of a charterparty evidenced by a fixture note of 19 January 2021, and entered into between ET Timbers Pte Ltd (ET) and Starryway Trading & Shipping Co Ltd (Starryway), described as the 'disponent owners' of the vessel, with Defang Shipping Co Ltd (Defang) described as the 'head owners'. ET claimed that the vessel had carried other cargo in addition to its cargo of timber logs, and had made an unauthorised deviation, both in breach of the charterparty. Defang applied for the warrant of arrest to be set aside and the claim brought against the Dolphin Star to be struck out for lack of jurisdiction, non-disclosure of material facts, and abuse of process.

Defang argued that it was not a party to the voyage charterparty entered into between ET and Starryway, the latter being the time charterer of the vessel. ET had thus failed to bring its claim within the ambit of ss 20 and 21 of the Senior Courts Act (UK) (the Act), which provided for the admiralty jurisdiction of the High Court, pursuant to art 165(3)(e) of the Constitution and s 4 of the Judicature Act, Cap 8, Laws of Kenya. ET's claim was specifically brought under s 20(2)(h) of the Act, which relates to a claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship. Section 21(4)(b)(i) of the Act is directed to the jurisdictional requirement that an action in rem can only be brought against a ship if the person who would be liable in a claim in personam, defined as 'the relevant person', was, 'when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship', and 'at the time when the action is brought ... is either the beneficial owner of that ship as respects all the shares in it or the charterer of it under a charter by demise'. Here, ET’s claim arose out of the voyage charterparty entered into between ET and Starryway. ET had thus not established that the claim arose out of an agreement between ET and Defang relating to the carriage of goods in a ship or the use or hire of a ship. There was no evidence that Starryway beneficially owned all the shares in the Dolphin Star at the relevant time. The registered shipowner was Defang. That fact was uncontroverted. There was also no evidence that Starryway was a demise charterer of the vessel at the time that the claim in rem was filed.

ET argued that the evidence established that ET had a contract of carriage with both Defang as well as with Starryway, and as such had a dual cause of action in personam against both parties. ET stated that the contract of carriage between it and Defang was evidenced by an agreed draft bill of lading, which was reasonably contemplated by the parties for issuance by the master of the Dolphin Star, who had authorised OBT Shipping Ltd of Liberia, as his agent, to sign and issue the same. Therefore, the claim in rem arose out of an agreement relating to the carriage of goods in a ship as stipulated in s 20(2)(h) of the Act.

Held: Application denied. ET to be granted 21 days to amend, file, and serve amended pleadings. The warrant of arrest against the Dolphin Star to be lifted as soon as the sum of USD 3,000,000 has been deposited in Court.

Section 4 of the Judicature Act of Kenya confers on the High Court jurisdiction to hear admiralty matters in the following terms -

(1) The High Court shall be a court of admiralty, and shall exercise admiralty jurisdiction in all matters arising on the high seas, or in territorial waters, or upon any lake or other navigable inland waters in Kenya.

(2) The admiralty jurisdiction of the High Court shall be exercisable -

(a) over and in respect of the same persons, things and matters; and

(b) in the same manner and to the same extent; and

(c) in accordance with the same procedure, as in the High Court in England, and shall be exercised in conformity with international laws and the comity of nations.

(3) In the exercise of its admiralty jurisdiction, the High Court may exercise all the powers which it possesses for the purpose of its other civil jurisdiction.

(4) An appeal shall lie from any judgment, order or decision of the High Court in the exercise of its admiralty jurisdiction within the same time and in the same manner as an appeal from a decree of the High Court under Part VII of the Civil Procedure Act (Cap. 21) [Emphasis added by the Court].

Article 7 of the Arrest Convention 1952 confers jurisdiction upon the Courts of contracting States to issue warrants of arrest against motor vessels. The applicable provisions for a claim in rem are found in s 20 of the Act. ET's claim was brought under s 20(2)(h) of the Act as a claim arising out of an agreement relating to the carriage of goods in a ship or to the use or hire of a ship. It is evident that the claim rests on the issue of the carriage of the logs loaded on the Dolphin Star at the Port of Greenville, Liberia, which were to be offloaded at the Port of Chittagong in Bangladesh. The issue of breach of the charterparties, and the allegation that the Dolphin Star deviated from the route that it was intended to take to deliver the cargo, are disputes that relate to the agreement of carriage of goods in a ship, use of or hire of a ship. During the subsistence of the time charter, the Dolphin Star was, by way of a charterparty dated 9 February 2021, chartered to load cargo from the Port of Gentil, Gabon, and transport it for offloading at the Port of Mombasa, which it did, and where the vessel was arrested. At the time, ET's logs destined for Chittagong, Bangladesh, were still on board, as they had not been delivered. ET therefore claims that, apart from failing to deliver its cargo, the Dolphin Star deviated from the route it was meant to take to Chittagong. The allegation falls squarely under s 20(2)(h) of the Act.

Applying the provisions of s 21(4)(b)(i) of the Act to the circumstances of this case, it is apparent that ET properly brought the claim in rem against the owners of the Dolphin Star, as the ship is beneficially owned by Defang. The claim in rem could not have been brought against Starryway, as it was not in possession of the vessel under a demise charter, but rather as a time charterer. Unlike a time charterparty or a voyage charterparty, where the registered owner of a vessel retains some degree of control over the vessel, a demise charterparty divests the registered owner of its rights of operation for the duration of the charter. It is for this reason that a demise charterer in an admiralty claim is regarded as a 'relevant person', and by virtue of acting as an owner of the chartered vessel under art 1.a of the Hague and Hague-Visby Rules, it would be regarded as the carrier, just as a registered owner of a vessel is categorised as a relevant person. The charterer by demise would be liable under the bills of lading signed by the master.

The time charterparty in this case had a provision for sub-letting of the vessel to a third party. When ET and Starryway entered into a voyage charter, two independent charterparties were running simultaneously. The foregoing placed the original charterer Starryway in a dual position as against the owners of the vessel with its position being that of a charterer, whereas Starryway's position with ET in regard to the vessel became that of an owner. It was therefore not incorrect for ET to refer to Starryway as the disponent owner, as that aptly describes its relationship with the owners of the Dolphin Star after Starryway sub-let the vessel on a voyage charter.

The evidence leaves no doubt that the 'relevant person' is the owner of the Dolphin Star, namely Defang. Defang is the party who would be liable in personam. It is thus apparent that ET rightly sued Defang, but mixed up the pleadings by stating that Starryway would be liable in personam. The lack of clarity on this issue must have given Defang and its counsel, as it did this Court, some difficulty in comprehending with precision whether ET meant that Defang or Starryway would be liable in personam.

The naming of the wrong party as being the one who would be liable in personam is not a procedural error, and therefore this Court cannot rely on the provisions of the Civil Procedure Rules (CPR), r 3.10. CPR, r 1.1 provides for the overriding objectives of the Court to deal with cases justly at a proportionate cost. CPR, r 3.3(4) gives Courts powers on their own initiative to grant orders for amendment. Apart from the provisions of CPR, r 3.3(4), this Court still retains its inherent powers under s 3A of the Civil Procedure Act, Cap 21, Laws of Kenya, to grant orders in the interest of justice.

The error that was made by ET's counsel in the pleadings can be remedied by amendment. If the claim is struck out at this stage, it will be doing an injustice to ET, as the ship will sail away, whereas the matter in issue under s 20(2)(h) of the Act about a breach of the voyage charter will remain at large, whereas no-one at this moment knows where the ship will sail to with ET's cargo on board, as such information will only be available to the Kenya Ports Authority before the Dolphin Star sets sail.

In the circumstances, and notwithstanding the shortcomings in the statement of case, which can be amended, this Court has jurisdiction to hear the claim in rem, and it had jurisdiction to grant the warrant of arrest, as the claim in issue falls under s 20(2)(h) of the Act, and s 21(4)(b)(i) of the Act applies to the claim.

[See further Owners of Motor Vessel 'Dolphin Star' v ET Timbers Pte Ltd [2023] KECA 437 (KLR).]