On 10 October 2010, the vessels Stolt Kestrel and Niyazi S collided. The claimant was the owner of the Stolt Kestrel, and the defendant was, at the time of the collision, the owner of the Niyazi S. On 8-9 October 2010, the defendant's P&I Club (the Standard Club) agreed a verbal one-year time extension with the claimant's P&I Club (Gard) and indicated a willingness to agree to an indefinite time extension. On 30 October 2010, an LOU was issued by the Standard Club in favour of the claimant. On 8 June 2012, the Niyazi S was sold to a new owner. On 9 October 2012, the claimant issued an in rem claim form. By an application dated 3 October 2013, the claimant applied for an order extending the validity of the claim form by eight months and an order for permission to serve the claim form out of the jurisdiction (first application). On 8 October 2013, the first application was granted. By an application dated 10 December 2013, the claimant applied for permission to amend the claim form to add four sister ship defendants and an eight-month extension of time for service of the amended claim form (second application).

On 11 December 2013, the claimant issued an in personam claim form. By an application dated 13 December 2013, the claimant applied for an order extending the time for commencing the in personam proceedings and for permission to serve the claim form out of the jurisdiction (third application). On 23 January 2014, the second application was granted.

By a cross application dated 4 March 2014, the defendant applied for: (1) an order setting aside (i) each of the orders extending the validity of the in rem claim form (ii) the order giving permission to add the sister ships, and (2) a stay of the in personam claim on the grounds that it was time-barred (fourth application).

This case involved the determination of third and fourth applications.

Held: The statutory provision in issue in these applications was s 190 of the Merchant Shipping Act 1995 (based on art 7 of the Collision Convention 1910). Section 190(3) of the Act imposed a two-year time limit for bringing proceedings, which reflects the time limit internationally agreed upon since the Collision Convention 1910. Section 190 allowed for that time limit to be extended. A mandatory extension may be granted where the requirements of s 190(6) are satisfied. A discretionary extension may also be granted under s 190(5).  Whether a mandatory extension was to be granted depended on whether there had been any reasonable opportunity of arresting the defendant ship during the two-year period allowed for bringing proceedings. It was common ground that the discretion under s 190 (5) should be exercised by applying the two-stage test. At stage one the court must consider whether good reason for an extension has been demonstrated by the plaintiff, which is essentially a question of fact. If, and only if, the plaintiff succeeds at stage one in establishing good reason does the court proceed to stage two, which is a discretionary exercise involving value judgments including, where appropriate the balance of hardship, which then enters the arena for the first and only time: The Al Tabith and Alanfushi [1995] 2 Lloyd's Rep 336 (CA) (CMI2489).

(1) There should be a mandatory extension of time, alternatively a discretionary extension of time, for the bringing of the in rem proceedings.

The Niyazi S remained in the UK waters for four days after the collision. The defendant argued that the claimant had a reasonable opportunity to arrest the Niyazi S while it was in UK waters on 13-14 October. There were particular and understandable reasons for Gard deciding not to seek to commence proceedings immediately, namely that the damage was provisionally considered to be modest, and the defendant was insured by one of the IG Group P&I Clubs. Even if an immediate decision had been taken to instruct admiralty solicitors and to commence arrest proceedings, it would have taken time to prepare any such application. There was no reasonable opportunity to arrest the vessel during the limited window which existed immediately following the collision. Therefore, the claimant was entitled to a mandatory extension of time for service of the in rem claim form. Alternatively, there was good reason for the claimant not to arrest the vessel immediately following the collision, and a discretionary extension would be granted.

The order granting permission for the in rem claim form to be served out of the jurisdiction should be set aside. The Court may order service of an in rem claim form where the property against which the claim was brought, or part of it, was within the jurisdiction, which it was not.

(2) There needs to be an extension of time for the bringing of the in personam proceedings but a mandatory extension cannot be granted and a discretionary extension should not be granted.

The claimant argued that where the underlying cause of action had been brought in time in the in rem proceedings, there was no time limit applicable under s 190(3) to in personam proceedings raising under the same cause of action. The two-year time limit set out in s 190(3) applies to the proceedings that were being brought. The relevant proceedings being brought are those commenced by the in personam proceedings initiated on 11 December 2013. Those were not the same proceedings as the in rem proceedings. The two proceedings were brought at different times, under separate claim forms and using different forms of claim form. The distinction between in rem and in personam proceedings was reflected in s 190 itself. Accordingly, the two-year limit applied to the in personam proceedings, and an extension of time was required.

Section 190 is concerned with the 'Time limit' for both in rem and in personam proceedings. However, that does not in itself mean that 'proceedings' in s 190 must always refer to both in rem and in personam proceedings, regardless of content and context. Section 190 must be interpreted intelligently rather than mechanically. Section 190(6) was clearly concerned only with in rem proceedings. The rationale of the extension granted thereunder is the lack of a reasonable opportunity to arrest the defendant ship. That has no application to an in personam claim. Therefore, the claimant was not entitled to a mandatory extension of time in respect of the in personam proceedings.

No good reason had been shown for the failure to issue the in personam claim form within the known two-year limit or until 14 months later. Had good reason been shown, the Court would likely have exercised its discretion to extend the time because, among other things, the Standard Club indicated a willingness to extend the time.

(3) There needs to be an extension of time for the joinder of the sister ships to the proceedings and a mandatory extension is to be granted.

The claimant submitted that the addition of the sister ships as defendants to the in rem proceedings was not caught by the s 190(3) time limit. The underlying in rem proceedings were commenced in time, and the claim remained one that was, in reality, against the owner, who was also the owner of the sister ships. The logic of the claimant's argument was that there would be no applicable time limit for sister ship proceedings, which could not have been the intention: The Preveze [1973] 1 Lloyd's Rep 202 (CMI2572). Therefore, an extension of time was required for the bringing of proceedings against the sister ships and for any amendment to add them to existing proceedings.

The defendant submitted that the 'defendant ship' meant, and could only mean, the wrongdoing ship. However, in a case in which sister-ship proceedings were commenced from the outset, it would be surprising if a mandatory extension of time could be obtained because there had been no reasonable opportunity to arrest the wrongdoing ship, even though there had been numerous opportunities to arrest sister ships. In relation to sister-ship proceedings, the relevant opportunity was to arrest either the wrongdoing ship or the sister ship. If so, the 'defendant ship' must cover both. In any event, a sister ship can be regarded as being a 'defendant' ship. It is a ship against which claims under s 190 may be brought.

If one wishes to bring sister-ship proceedings in circumstances where there has been no reasonable opportunity to arrest either the wrongdoing ship or any sister ship, a mandatory extension would be both appropriate and indeed required. Such was the case here. In those circumstances the joinder of the sister ships to the action was appropriate and should not be set aside.

In light of the conclusion on mandatory extension of time, it was not necessary to decide the issue of discretionary extension of time. However, since the claimant relied on essentially the same grounds as in relation to the in personam claim form, it would have been likely to face difficulties in establishing good reason.