This was an application brought by the defendant shipowner to set aside the warrant of arrest of, and strike out the in rem claim brought against, the MV Mirembe Judith.

The claimant brought this claim pursuant to s 20(2)(h) of the Senior Courts Act 1981 (UK) (the Act) for the alleged loss of USD 15,870,000 arising from the cost of cancellation of carriage of cargo from Mundra, India, and from Jebel Ali, UAE, and damages suffered as a result of the termination of a service agreement with the claimant's client, Feeder Logistics, caused by the defendant's failure to deliver the vessel on the due date, in breach of a charterparty entered into between the claimant and the defendant.

The defendant argues that the action in rem does not fall within this Court's admiralty jurisdiction in rem under s 21 of the Act, because the alleged charterparty contains an English arbitration agreement, pursuant to which the claimant had already referred the dispute to an arbitral tribunal in London for determination. The defendant also contends that the warrant of arrest was an abuse of the Court's process, as it did not comply with the mandatory requirements of Pt 61 of the Civil Procedure Rules 2010 (UK) (the CPR) and the Act. According to the defendant, the arrest is wrongful and highly prejudicial.

Held: The in rem proceedings should not be struck out because there are ongoing in personam arbitral proceedings. The defendant's application is dismissed. The defendant may deposit USD 16,000,000 into Court to secure release of the vessel.

On the issue of whether there was a valid charterparty that entitled the claimant to invoke this Court’s jurisdiction under s 20(2)(h) of the Act, this Court finds that the email correspondence culminated in a charterparty. It is the duty of this Court to give an intelligible meaning to documents surrounding commercial transactions. It must also be appreciated that, despite the inconsistent realities of commercial transactions, it is usually convenient and rather common that parties negotiate by modifying standard charterparty forms. The advantage in doing so is that such forms include arrangements on the obligations and the general risk allocation, which minimises the possibility of omission. Also, relevant standard form terms have often benefitted from the interpretation of their terms in Court. Thus, they provide, if not amended, more certainty concerning their meaning.

As to procedure, it is evident from the CPR that an application for arrest should be accompanied by Form ADM4 which must also contain an undertaking as to the arrest and expenses of the Admiralty Marshal, and Form ADM5 which is a declaration in support of an application for warrant of arrest. The defendant's case is that ADM4 and ADM5 were not properly drafted and executed here. In regard to ADM4, the defendant's case is that a request for a search of the Register was conducted after the warrant of arrest was issued, which is in contravention of Pt 61.5(3)(a) CPR. It is not contested that the Admiralty Marshal searched the Register after the warrant of arrest was issued. The search, however, indicated that there was no caveat registered against the arrest of the vessel. Hence, even if the search was done before the warrant of arrest was issued, the outcome would have been the same. The vessel would have still been liable for arrest. To prove wrongful arrest of a vessel, the defendant was required to prove that the discrepancy in the dates was done in bad faith or gross negligence. Whichever way this Court looks at it, it does not see any ulterior motive that would compel it to set aside the order for the warrant of arrest for the vessel. In this Court's view, the defendant can be compensated by an award of costs for the prejudice occasioned to the defendant by the arrest of the vessel on 10 August 2022-5 September 2022 when the endorsement was made by the Admiralty Marshal on ADM4 on the non-existence of a caveat against arrest of the vessel.

On whether this claim should be struck out, the claimant notes that there are arbitral proceedings pending in the arbitral tribunal in London, and that the defendant would be liable in an action in personam in terms of s 21(4) of the Act.

The claimant brought this claim pursuant to the provisions of s 20(2)(h) of the Act, for any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship. In ET Timbers v The Dolphin Star (CMI1525) this Court addressed the difference between actions in rem and in personam. This Court placed reliance on the case of Republic of India v India Steamship Co Ltd [1996] 2 Lloyd's Rep 12 (The Indian Grace (No 2)) where the House of Lords stated that:

an action in rem is an action against the owners from the moment that the Admiralty Court is seized with jurisdiction. The jurisdiction of the Admiralty Court is invoked by the service of a writ, or where a writ is deemed to be served, as a result of the acknowledgement of the issue of the writ by the defendant before service … .

Should this in rem claim be struck out due to the ongoing arbitration proceedings? In MacAndrews & Co Ltd v Global Containers Lines Ltd-MSA HCCC No 328 of 1987 (Unreported), this Court issued injunctive orders on the basis that the vessel and cargo were in the Court's jurisdiction. This Court held as follows:

The charter party which is the basis of the claim was made in Hamburg. The charter party provides that, should any dispute arise between the owners and charters the matter in dispute shall be referred to arbitration in New York. The plaint does not show where the breach of Contract was committed but the breach is not said to have been committed in Kenya. The only indication of jurisdiction of this Court is that the vessel is in Kilindini Harbour with bunkers on board belonging to the charterers, so the jurisdiction is founded on the presence of the vessel and bunkers at Kilindini Harbour.

[For the successful appeal to the Court of Appeal at Mombasa, see Owner of Motor Vessel 'Mirembe Judith' v Jade International Shipping Line DMC [2023] KECA 452 (KLR) (CMI2298).]