Bombay High Court Lays Down Guidelines For Abandoned Vessels Under Arrest

By Vikrant Shetty

May 23, 2022

On the last day of Hon’ble Mr. Justice S.J. Kathawalla’s tenure as judge of the Hon’ble Bombay High Court, the Division Bench comprising of him and the Hon’ble Mr. Justice Milind N. Jadhav, provided a huge relief to crew members who remain on abandoned vessels that are under arrest, by providing guidelines that would have to be followed by the owner, arresting party, Sheriff of Mumbai and the concerned P&I Club. In the matter of The Swedish Club vs V8 Pool Inc &Ors. and Pradeep &Ors. Vs. M.T. GP ASPHALT the Hon’ble Court considered the following questions:

Brief Background of Facts:

The subject Vessel M.T. GP ASPHALT I was arrested on 22^nd December, 2020, by V8 Pool Inc.

Swedish Club was the Protection and Indemnity Club (“P&I Club”) with which the vessel was entered.On 22^nd December, 2020, after receipt of emails from the crew informing that the vessel supplies were running low, FTI Consulting, the company undertaking restructuring of the owner of the Defendant vessel, arranged for enough supplies to last a month.

On 7^th January, 2021, the Crew addressed an email to the Swedish Club informing them that the salaries for the month of November and December 2020 were overdue and that arrangements would have to be made for food and water.  The Swedish Club, on 21^st January, 2021 filed an Interim Application,seeking leave of the Ld. Single Judge to make certain payments in respect of maintenance of the vessel and well-being of the crew and that the same be treated as “Sheriff’s Expenses”, which would allow the amounts to be reimbursed as a first charge from the eventual sale of proceeds from the Vessel. The Ld. Single Judge disallowed the application and held that the Swedish Club was obligated under the Maritime Labour Convention (“MLC”) to make the payment of the wages and was not a Volunteer. The Ld. Judge held that if the Swedish Club makes payment for the expenses post arrest (including wages), it will not be treated as Sheriff’s expenses. The Swedish Club would have to file a suit, for the recovery of the same.

Both the Swedish Club and the Crew Members appealed from the respective orders which were allowed by the Hon’ble Bombay High Court[1].

Guidelineslaid down:

For the benefit of the crew the Hon’ble Court found it necessary to frame some guidelines to be followed in the case of abandoned vessels that are under arrest. However, the Hon’ble Court clarified that these are only guidelines, and the Admiralty Court is at its liberty to use its discretion in any given case.

1. A vessel under arrest / its crew will be considered abandoned if:

a. After the arrest of the vessel, the crew addresses a communication to the owner with a copy to the P&I club, the demise/bareboat charterer (if any), the arresting party and the Sheriff of Mumbai stating that the vessel requires supplies (food/ provisions/ bunkers/ other necessaries)and/ or one or more of the crew’s wages remain unpaid for at least 2 months, with details of when the supplies are expected to run out and of the outstanding wages; and

b. The owner and the demise/bareboat charterer (if any) fails to make the necessary supplies to the vessel and make payment of the said outstanding wages within 10 days or responds stating its inability to maintain the vessel and crew.

2. The arresting party shall bring the crew’s communication to the attention of the Admiralty Court within 4 days of such communication.

a. If the owner of arrested vessel has not entered appearance in the suit, the Admiralty Court shall pass an order calling upon the owner and such demise/bareboat charterer (both) to remain present in court within 3 days. The order shall be communicated to the owner by the arresting party. If the owner remains absent, the Admiralty Court shall record that the vessel and crew have been abandoned.

b. If the owner or demise/bareboat charterer (if any) of the arrested vessel has entered appearance in the suit or appears pursuant to the order above specified, the Admiralty Court shall direct the owner and such demise/bareboat charterer (both) to make the necessary supplies to the vessel and make payment of the said outstanding wages within a further 3 days, failing which the vessel and crew shall be considered abandoned.

3. If the owner or demise/bareboat charterer (if any) of the arrested vessel has entered appearance in the suit or appears pursuant to the order above specified, the Admiralty Court shall direct the owner and such demise/bareboat charterer (both) to make the necessary supplies to the vessel and make payment of the said outstanding wages within a further 3 days, failing which the vessel and crew shall be considered abandoned.

4. If a vessel is so abandoned, and pending the sale of the vessel, any party (including a P&I club which has humanitarian obligations to the crew on board the vessel at the time of abandonment) is desirous of rendering supplies or funding expenses for the safety and/or preservation of such vessel and/or subsistence of the crew and/or payment of wages and/ or repatriation of crew and/ or reducing the crew on board to a skeleton crew and claiming the same as Sheriff’s expenses is required to do either of the following:

a. Approach the office of the Sheriff of Mumbai to urgently file a report to seek directions from the Admiralty Court for such steps to be taken as may be required and for leave of the Admiralty Court to permit that party to put the office of the Sheriff in funds for such steps and for such expenses to be Sheriff’s expenses. The office of the Sheriff shall immediately file a report before the Admiralty Court. All expenses and payments shall be routed through the Sheriff’s office.

b. Approach the Admiralty Court directly with prior notice to the arresting party concerned as well as the office of the Sheriff of Mumbai seeking leave to do any of the above for the safety and/or preservation of the vessel and/or subsistence of the crew and/or payment of wages. In such case all expenses and payments shall be routed through the office of the Sheriff of Mumbai.

c. If such an application is made, the Admiralty Court shall hear the same on an urgent basis and pass necessary orders. Unless there are serious doubts about the expenses, in the interests of the well-being of the abandoned crew members on board the arrested vessel, leave shall generally be granted for such expenses to be Sheriff’s Expenses and recoverable from the sale proceeds on an immediate basis.

d. If such an application is made, the Admiralty Court shall hear the same on an urgent basis and pass necessary orders. Unless there are serious doubts about the expenses, in the interests of the well-being of the abandoned crew members on board the arrested vessel, leave shall generally be granted for such expenses to be Sheriff’s Expenses and recoverable from the sale proceeds on an immediate basis.

5. In case of an emergent situation where the situation on board the vessel is precarious, any party may after giving at least 24 hours’ prior notice in writing to the parties to the suit as well as the office of the Sheriff may render the supplies/ incur expenses for a limited period of time i.e. 7 days. Such party must thereafter at the earliest make an application to the Admiralty Court to declare such payments made as Sheriff’s Expenses and for any further expenses it desires to incur as per the procedure laid out above.

a. Any party seeking reimbursement of such payments made, shall file an application with all relevant documents in support including proof of payments.

b. The Admiralty Court shall refer the claim of such party to the Commissioner for taking accounts or such other officer of the Court to examine and scrutinize the claims. The officer so appointed shall give a hearing to the parties and examine and scrutinize the documentation and shall prepare a Report for the Admiralty Court.

6. In the event, crew on board an arrested vessel have not been paid their wages, all such crew members shall also be entitled to approach the Admiralty Court to treat their wages accrued post arrest as Sheriff’s Expenses. The Admiralty Court shall refer the crew’s claim to the Commissioner for Taking Accounts or such other officer of the Court to examine and scrutinize the crew’s claims. The Commissioner for Taking Accounts or such other officer so appointed shall give a hearing to the parties and shall prepare a Report for the Admiralty Court.

7. There may be situations where the vessel and crew have already been abandoned prior to the arrest. A vessel/ crew will be considered to have already been abandoned before the time of arrest if the crew has addressed a communication to the owner with a copy to the P&I club stating that the vessel requires supplies (food/ provisions/ bunkers/ other necessaries) and/ or one or more of the crew’s wages remain unpaid for at least 2 months, with details of when the supplies are expected to run out and of the outstanding wages and the owner has failed to supply the vessel or make payment of the outstanding wages within ten days thereof or has responded stating its inability to maintain the vessel and crew. If an abandoned vessel is arrested, for all expenses post the arrest, the procedure above said shall be followed.

8. It is expected that the P&I clubs with which such vessels (whether abandoned before or after the arrest) are entered will promptly approach the Admiralty Court for appropriate orders. The same procedure as stated above for reimbursement of payments made above will apply.

9. The Admiralty Court shall, as far as possible, expeditiously pass orders on all applications including for immediate reimbursement of any such payments as above specified first in terms of priority from the sale proceeds of the vessel.

Implication of the Guidelines:

It is yet to be seen whether courts will apply similar principles to those who provide salvage services to arrested vessels. However, the aforesaid guidelines have brought much required clarity with respect to the rights of the crew members of an abandoned vessel under arrest and the steps that can be taken for maintenance of the vessel and its crew, including payment of wages during the period of arrest of such vessel.

The above Article is written by Vikrant Shetty, Partner of DhruveLiladhar& Co. with assistance from Associate Sakina Electricwala.

[1]Order dated 23^rd March 2022, passed in Comm. Appeal No. 108 of 2021 and Comm. Appeal No. 111 of 2021

Disclaimer: The views or opinions expressed are solely of the author.