14 June 2012
When can a ship be fixed with claims relating to other vessels in the same fleet?
In The Decurion the Hong Kong Admiralty Court interpreted the statutory expression "in possession or in control" of a ship. The decision will be of wider interest because the statutory provision in question is in the same terms as s.21 of the UK's Senior Courts Act 1981, a source shared with other common law jurisdictions.
The case concerned an attempt by bunker suppliers Chimbusco to claim against The Decurion in respect of supplies made to 10 other ships in the same group. The owners of The Decurion, Maruba, acknowledged that Chimbusco had an in rem claim against The Decurion for bunkers supplied to that ship, but challenged the jurisdictional basis for the in rem claim in respect of the bunkers supplied to the 10 other vessels.
The statute provides that, where goods are supplied to ship X for its operation, the court may exercise in rem jurisdiction against Ship Y if two conditions are met. First, the Defendant was "when the cause of action arose, the owner or charterer of, or in possession or in control" of ship X. Second, at the time when the action is brought, the Defendant is "the beneficial owner as respects all the shares" of ship Y.
Maruba were neither the registered owners nor the charterers of the 10 other vessels. The 10 vessels were in fact under time charter to a company called Clan S.A which, whilst associated with Maruba, was a different legal entity. The time charters in question were all on the NYPE form, which contained the usual provision in clause 8 that "the Captain (although appointed by the Owners), shall be under the orders and directions of the charterers [i.e. Clan] as regards employment and agency."
It was therefore necessary for Chimbusco to show that, at the time when the bunkers were supplied to the 10 other vessels, they were under Maruba's "control". Chimbusco sought to rely on the following:
- Clan was the brand name for the Maruba group;
- Sea-Web described Maruba as being the "operator" of a number of the vessels;
- Maruba guaranteed and paid charter hire due from Clan;
- the logos of both Clan and Maruba were displayed on the name cards of group personnel.
The meaning of "in possession or in control"
Of the limited number of relevant case authorities, the High Court of Australia decision in The Laemthong Pride  149 ALR 675 had pointed out that "there may be control without possession" and "one party may have possession and another control". To come within the expression, it was not necessary for a person to be an owner or charterer; the High Court suggested as an example the situation in which a salvor or mortgagee could take over a vessel and thereby be said to be "in possession or control", to the exclusion of Owners or Charterers.
The Hong Kong court developed its analysis:
"A company can be in possession of a ship if it employs the Master and crew. Something else must be involved when determining whether a person is in control, despite not being in possession. The most obvious scope for that "something else" must be the ability to tell the person in possession of a vessel (for example, the registered owner) what is to be done in relation to the vessel ... Even if (say) Maruba might be treated as the parent of Clan or the individual companies owning the 10 vessels at the relevant times, there is no basis for piercing the corporate veil. To assess "control" one looks to see who is in a position to direct the Master and crew of a vessel in relation to the navigation of the same."
The court concluded that "control" meant the ability to direct the master and crew of a vessel in relation to its navigation. Accordingly, where the vessel was under charter, "control" would generally rest with the charterer.
In reaching its conclusion, the court was concerned not to widen the possibilities for maritime arrest, or to introduce uncertainty as to whether a person involved in some aspect of the vessel's operation could be said to be "in control" of that vessel. The court therefore struck out the Plaintiff's claims in relation to the unpaid bunkers in respect of the 10 other vessels.
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