12
May 2000
MORRIS
P
This
matter comes before the Court by way of Notice of Motion dated the 8th May 2000
whereby the Defendants seek an Order.
(1)
Directing the release of the MV Tirgu Frumos arrested pursuant to warrant dated
the 27th April 2000.
(2)
An Order setting aside the said warrant of arrest.
(3)
If necessary or appropriate an Order directing an enquiry as to the damages
suffered by the Defendants by reason of the wrongful arrest of the vessel at
the suit of the Plaintiff.
(4)
Such further or other relief as may be necessary or appropriate.
(5)
An Order providing for the costs of this application and for the costs of the
proceedings.
On
the 27th April 2000 the Plaintiffs applied to the Court ex parte and were
granted an Order directing that the MV Tirgu Frumos be arrested at the port of
Waterford. This application is brought by the owners of that vessel 'Petromin'
seeking its release.
The
basis upon which the Plaintiffs sought to arrest the ship in Waterford was on
the basis of what is sometimes known as a "sister ship" relationship. In simple
terms it is provided that in certain circumstances an Order can be made for the
arrest of a ship in the ownership of an owner against whom the claimant has a
"maritime claim" as defined by the International Convention relating to the
arrest of seagoing ships signed in Brussels on the 10th May 1952 which is
incorporated into Irish law by the
Jurisdiction of Courts (Maritime
Conventions) Act 1989. A "sister ship" arrest may be ordered by the Court where
it is established:
(1)
That the Plaintiff has a maritime claim.
(2)
That the claim arose in respect of another ship which is owned by the person
who was at the time when the maritime claim arose, the owner of that ship.
The
area of contest in the present case centres around two points:
(1)
It is denied by the Defendants that any claim which the Plaintiffs may have is
the "maritime claim."
(2)
It is denied that at the time when this claim was alleged to have arisen they
were the owners of a ship (the MV "Costesti") in respect of which that claim is
said to arise.
The
facts of this case may be briefly summarised as follows: A joint venture
agreement was entered into between the Parties to this action on the 20th July
1992. The agreement recites the wish of the Parties to establish a Maltese
domicile and jointly operate a company known as Gromar Shipping Company Limited
and the object of this company is stated to be to reclass and operate a number
of four vessels ... presently owned and controlled by Petromin and/or their
nominees or other commercial operations for the mutual economic benefit of the
Parties.
In
Annex 1 to that agreement the third vessel named is a bulk carrier called M/V
"Costesti". This was being built in a shipyard in Romania and was due for
delivery to Petromin on the 30th June 1993.
Among
the objects of the joint venture is stated to be that these vessels "will be
entered into bare boat charter between Petromini and/or their nominees and the
subsidiary company. The hire will be US 700$ per day/pro rata".
There
was a failure on the part of Petromin to deliver that ship under the terms of
the agreement and the Plaintiff claims to have suffered loss and damage. It
claims that this claim is a "maritime claim" as divined by the first schedule
to the Brussels Convention in that it relates to the use or hire of a ship in
the ownership of the same company that owns the vessel detained in Waterford
harbour and accordingly is entitled to seek from the Court the warrant of
arrest.
The
definition of a "maritime claim" as set out in Article 1 to the Convention is
as follows: (1) "Maritime claim" means a claim arising out of one or more of
the following (d) agreement relating to the use or hire of any ship whether by
charter party or otherwise.
I
have no doubt whatever that in as much as paragraph 3.4 of the joint venture
Agreement provides that the vessels referred to in Annex 1 "will be entered
into bare boat charter between Petromin and/or their nominees and the
subsidiary company" is clearly at the very minimum an agreement relating to the
use or hire of a ship and insofar as a claim arises out of an alleged default
it is a maritime claim within the meaning of Article 1 of the Convention.
A
more substantial point is secondly made by the Defendants. They deny that they
were the owners of the vessel in the circumstances described in Article 3 of
the Convention. Article 3 provides as follows: "(1) subject to the provisions
of paragraph 4 of this Article and of Article 10 a claimant may arrest the
particular ship in respect of which the maritime claim arose or any other ship
which is owned by the person who was at the time when the maritime claim arose
the owner of the particular ship even though the ship arrested be ready to sail
... "
It
becomes necessary to identify when the claim, be it a maritime claim or
otherwise, arose. In my view this must be when there was a failure on the part
of the Defendants to deliver the Costesti in accordance with the agreement. I
am confirmed of this by a consideration of the amended points of claim advanced
for the purposes of an arbitration held in this matter when at revised
paragraph 9 of these points it is stated "In breach of the agreement the
Respondents failed to deliver the "Costesti" and the "TBN", Order number 864 to
the first claimants, their nominees and/or the second claimants. In the
premises the claimants themselves and/or their nominees and/or the second
claimants for whom the first claimants by reason of the Management Agreement
and/or their duties (fiduciary or otherwise) have suffered loss and damage as
particularised in Schedule 1 attached hereto."
That
failure arose when the time for the delivery of the vessel provided for in the
joint venture namely the 30th June 1993 passed.
I
am satisfied that the onus lies on the Plaintiff to establish to the
satisfaction of the Court that on the balance of probabilities the two vessels
were in fact in the ownership of the same company at the relevant time. Having
considered the documents exhibited in the Affidavit of Mr David O'Donoghue
dated the 5th May 2000 (commented upon but not objected to by the Plaintiff) I
am of the view that they have not discharged this onus of proof. I think that
the high probability is that job 863 (which was the Costesti) was delivered to
other owners by the shipyard as a result of the order being cancelled by
Petromin. I reject the submission that the ownership in the vessel whilst under
construction passed piece meal to the building owner. I am satisfied that
logically whilst staged payments were required during the construction of the
vessel which would give the building owner rights in the vessel, the ownership
of the finished product would pass only on the completion of the contract and
the payment of the final instalment.
If
therefore the breach of the agreement and the maritime claim arose on the
failure of Petromin to deliver the vessel as required under the joint venture
and if by then the contract for the construction of the vessel had already been
rescinded, I am satisfied that the vessel was not in the ownership of Petromin
and accordingly there is no entitlement in the Plaintiffs to the Order of the
27th April 2000.
Accordingly
I discharge the Order and direct the release of the vessel in accordance with
paragraphs 1 and 2 of the Notice of Motion. MV Tirgu Frumos; Gourdomichalis
Maritime SA v The Owners and All Persons claiming an Interest in the MV Tirgu
Frumos
12
May 2000
PANEL:
Morris P
JUDGMENTS:
MORRIS
P
This
matter comes before the Court by way of Notice of Motion dated the 8th May 2000
whereby the Defendants seek an Order.
(1)
Directing the release of the MV Tirgu Frumos arrested pursuant to warrant dated
the 27th April 2000.
(2)
An Order setting aside the said warrant of arrest.
(3)
If necessary or appropriate an Order directing an enquiry as to the damages
suffered by the Defendants by reason of the wrongful arrest of the vessel at
the suit of the Plaintiff.
(4)
Such further or other relief as may be necessary or appropriate.
(5)
An Order providing for the costs of this application and for the costs of the
proceedings.
On
the 27th April 2000 the Plaintiffs applied to the Court ex parte and were
granted an Order directing that the MV Tirgu Frumos be arrested at the port of
Waterford. This application is brought by the owners of that vessel 'Petromin'
seeking its release.
The
basis upon which the Plaintiffs sought to arrest the ship in Waterford was on
the basis of what is sometimes known as a "sister ship" relationship. In simple
terms it is provided that in certain circumstances an Order can be made for the
arrest of a ship in the ownership of an owner against whom the claimant has a
"maritime claim" as defined by the International Convention relating to the
arrest of seagoing ships signed in Brussels on the 10th May 1952 which is
incorporated into Irish law by the
Jurisdiction of Courts (Maritime
Conventions) Act 1989. A "sister ship" arrest may be ordered by the Court where
it is established:
(1)
That the Plaintiff has a maritime claim.
(2)
That the claim arose in respect of another ship which is owned by the person
who was at the time when the maritime claim arose, the owner of that ship.
The
area of contest in the present case centres around two points:
(1)
It is denied by the Defendants that any claim which the Plaintiffs may have is
the "maritime claim."
(2)
It is denied that at the time when this claim was alleged to have arisen they
were the owners of a ship (the MV "Costesti") in respect of which that claim is
said to arise.
The
facts of this case may be briefly summarised as follows: A joint venture
agreement was entered into between the Parties to this action on the 20th July
1992. The agreement recites the wish of the Parties to establish a Maltese
domicile and jointly operate a company known as Gromar Shipping Company Limited
and the object of this company is stated to be to reclass and operate a number
of four vessels ... presently owned and controlled by Petromin and/or their
nominees or other commercial operations for the mutual economic benefit of the
Parties.
In
Annex 1 to that agreement the third vessel named is a bulk carrier called M/V
"Costesti". This was being built in a shipyard in Romania and was due for
delivery to Petromin on the 30th June 1993.
Among
the objects of the joint venture is stated to be that these vessels "will be
entered into bare boat charter between Petromini and/or their nominees and the
subsidiary company. The hire will be US 700$ per day/pro rata".
There
was a failure on the part of Petromin to deliver that ship under the terms of
the agreement and the Plaintiff claims to have suffered loss and damage. It
claims that this claim is a "maritime claim" as divined by the first schedule
to the Brussels Convention in that it relates to the use or hire of a ship in
the ownership of the same company that owns the vessel detained in Waterford
harbour and accordingly is entitled to seek from the Court the warrant of
arrest.
The
definition of a "maritime claim" as set out in Article 1 to the Convention is
as follows: (1) "Maritime claim" means a claim arising out of one or more of
the following (d) agreement relating to the use or hire of any ship whether by
charter party or otherwise.
I
have no doubt whatever that in as much as paragraph 3.4 of the joint venture
Agreement provides that the vessels referred to in Annex 1 "will be entered
into bare boat charter between Petromin and/or their nominees and the
subsidiary company" is clearly at the very minimum an agreement relating to the
use or hire of a ship and insofar as a claim arises out of an alleged default
it is a maritime claim within the meaning of Article 1 of the Convention.
A
more substantial point is secondly made by the Defendants. They deny that they
were the owners of the vessel in the circumstances described in Article 3 of
the Convention. Article 3 provides as follows: "(1) subject to the provisions
of paragraph 4 of this Article and of Article 10 a claimant may arrest the
particular ship in respect of which the maritime claim arose or any other ship
which is owned by the person who was at the time when the maritime claim arose
the owner of the particular ship even though the ship arrested be ready to sail
... "
It
becomes necessary to identify when the claim, be it a maritime claim or
otherwise, arose. In my view this must be when there was a failure on the part
of the Defendants to deliver the Costesti in accordance with the agreement. I
am confirmed of this by a consideration of the amended points of claim advanced
for the purposes of an arbitration held in this matter when at revised
paragraph 9 of these points it is stated "In breach of the agreement the
Respondents failed to deliver the "Costesti" and the "TBN", Order number 864 to
the first claimants, their nominees and/or the second claimants. In the
premises the claimants themselves and/or their nominees and/or the second
claimants for whom the first claimants by reason of the Management Agreement
and/or their duties (fiduciary or otherwise) have suffered loss and damage as
particularised in Schedule 1 attached hereto."
That
failure arose when the time for the delivery of the vessel provided for in the
joint venture namely the 30th June 1993 passed.
I
am satisfied that the onus lies on the Plaintiff to establish to the
satisfaction of the Court that on the balance of probabilities the two vessels
were in fact in the ownership of the same company at the relevant time. Having
considered the documents exhibited in the Affidavit of Mr David O'Donoghue
dated the 5th May 2000 (commented upon but not objected to by the Plaintiff) I
am of the view that they have not discharged this onus of proof. I think that
the high probability is that job 863 (which was the Costesti) was delivered to
other owners by the shipyard as a result of the order being cancelled by
Petromin. I reject the submission that the ownership in the vessel whilst under
construction passed piece meal to the building owner. I am satisfied that
logically whilst staged payments were required during the construction of the
vessel which would give the building owner rights in the vessel, the ownership
of the finished product would pass only on the completion of the contract and
the payment of the final instalment.
If
therefore the breach of the agreement and the maritime claim arose on the
failure of Petromin to deliver the vessel as required under the joint venture
and if by then the contract for the construction of the vessel had already been
rescinded, I am satisfied that the vessel was not in the ownership of Petromin
and accordingly there is no entitlement in the Plaintiffs to the Order of the
27th April 2000.
Accordingly
I discharge the Order and direct the release of the vessel in accordance with
paragraphs 1 and 2 of the Notice of Motion.
