This was an appeal against the High Court decision in Jade International Shipping Line DMCC v The Owner of the Motor Vessel 'Mirembe Judith' [2022] KEHC 17110 (KLR) (CMI2297) which refused to strike out in rem proceedings in Kenya because of lack of jurisdiction, failure to comply with procedure, and ongoing in personam arbitral proceedings in London.

The appellant contended that the Court ought to have divested the respondent of any advantage it had secured by reason of material failures to comply with the mandatory requirements of the law. Reliance was placed on Pembe Flour Mills Ltd v The Owners of the Motor Vessel 'Ioannis G' [2017] eKLR (CMI2299). The Court was urged to set aside the warrant of arrest so that the pending London arbitral proceedings could determine the existence of the charterparty.

The respondent submitted that its claim was brought pursuant to s 20(2)(h) of the Senior Courts Act 1981 (UK) (the Act), being a sum arising out of an agreement relating to the carriage of goods in a ship or the use or hire of a ship. Based on Lydgett v Williams [1845] 14 CJ 459, ET Timbers v Dolphin Star [2021] eKLR (CMI1525), Mamta Peeush Mahajan v Yashwant Kumari Mahajan [2017] eKLR, and E-Star Shipping & Trading Co v Nabiha Queen [2021] eKLR (CMI1373), charterparties need not be signed.

Held: Appeal allowed. The High Court decision is set aside, the warrant of arrest is set aside, and the respondent's claim is struck out. The alternative order regarding the deposit of USD 16,000,000 by the appellant for security is also struck out.

The determination of this appeal revolves around these issues: whether the respondent complied with procedural requirements when it applied for a warrant of arrest; whether it was proper for the trial Judge to determine an application for security when what was before her was an application seeking to set aside the warrant of arrest; and whether in the light of the pending arbitral proceedings in London, the High Court had jurisdiction to deal with the matter.

It was the appellant's case that the respondent failed to establish that the appellants, as the owners of the vessel, would be liable in an action in personam in terms of s 21(4) of the Act. The respondent contended in response that although the charterparty was not signed, it was a fixture through email correspondence, and the terms had been agreed upon by the boards of both parties leading to the notice of delivery of the vessel by the appellant. Since there are pending arbitral proceedings, this Court will refrain from dealing with that issue, so as not to prejudice the outcome of the arbitration.

As to security, the trial Judge simply had no reason to give gratuitous orders which none of the parties had sought before her. The High Court had not yet benefited from arguments from the parties regarding the nature and amount of security, and in any case the application was seeking security in the sum of USD 15,870,000, not USD 16,000,000, which seems to have been plucked from the air. Accordingly, that part of the order cannot stand.

One of the requirements before a warrant of arrest is issued, as provided in Pt 61.5(3)(a) of the Civil Procedure Rules (UK), is that a party making an application for arrest must request a search to be made in the Register before the warrant is issued to determine whether there is a caution against arrest in force. That is a condition precedent which must be complied with before a warrant of arrest can issue. It is clear that it was not complied with in this case. Being a condition precedent, and considering the drastic consequences that follow upon the issuance of a warrant of arrest of a ship, it cannot be wished away by simply being termed as a 'discrepancy in the dates' as it was in the impugned High Court ruling. A rule of procedure, particularly where the procedure in question is a special procedure as in cases where what is sought is the arrest of a ship, ought to be taken seriously.

On the issue of jurisdiction, the parties agreed that there were ongoing arbitral proceedings. However, the respondent took the view that since the proceedings before the High Court were proceedings in rem intended to secure the subject of the arbitral dispute, it was proper for the respondent to move the High Court for relief. This submission was based on s 7 of the Arbitration Act which provides that:

1. It is not incompatible with an arbitration agreement for a party to request from the High Court, before or during arbitral proceedings, an interim measure of protection and for the High Court to grant that measure.

2. Where a party applies to the High Court for an injunction or other interim order and the arbitral tribunal has already ruled on any matter relevant to the application, the High Court shall treat the ruling or any finding of fact made in the course of the ruling as conclusive for the purposes of the application.

However, an application under s 7 of the Arbitration Act must be expressly stated to be so, and must seek interim proceedings meant to protect the applicant pending the determination of the arbitral proceedings. In other words, the Court in granting an order under s 7 of the Arbitration Act plays a facilitative role. It does not, under the guise of exercising that jurisdiction, usurp the role of the arbitral tribunal.

The proceedings before the High Court were not brought pursuant to s 7 of the Arbitration Act. Being a substantive action, the High Court ought not to have entertained, or continued to entertain, the proceedings once the parties brought to its attention the existence of the arbitral proceedings. Section 10 of the Arbitration Act bars the Court from intervening in matters governed by that Act. The proceedings commenced before the High Court were not expressed to be facilitative in nature, but were completely separate proceedings. One cannot commence or maintain proceedings which run concurrently with arbitral proceedings. To do so amounts to an abuse of process.

[See further Owner of Motor Vessel 'Mirembe Judith' v Jade International Shipping Line DMC [2023] KECA 1046 (KLR) (1 September 2023).]