The Bo Shi Ji 393

Court of First Instance
Admiralty Action No. 44 of 2014
Peter Ng J
3 June 2015

Action in rem – jurisdiction – claim by cargo owners for loss of cargo – in rem action against sister ship – whether requirements of s. 12B(4) satisfied

In March 2013, the vessel “Bo Shi Ji 393” (the “Claim Vessel”) sank in Chinese waters. In March 2014, Ps issued an in rem writ (the “Writ”) for the loss of two cargoes on board the Claim Vessel. The bills of lading contained a demise clause which provided that if the ship was not owned by or chartered by demise to the corporation by whom the bills were issued, the bills would take effect as contracts with the shipowner or demise charterer as the case might be as principal. Ps’ original case was that the person who would be liable in respect of an action in personam was C, whom they believed to be the sole registered owner of the Claim Vessel. On 6 March 2015, Ps obtained a warrant of arrest against the vessel “Bo Shi Ji 838” (the “Arrest Vessel”) on the basis of s. 12B(4) of the High Court Ordinance (Cap. 4) that C, being the “relevant person”, was its sole beneficial owner. After the Arrest Vessel was arrested on 18 March 2015, Ds provided to Ps, inter alia, the Vessel Ownership Registration Certificates (the “VORCs”) of: (a) the Claim Vessel, which showed that it had been co-owned by C (51 percent) and an individual X1 (49percent) since December 2010; and (b) the Arrest Vessel, which showed that it was solely owned by C between June2008 and September 2014. The VORCs were not formal documents from the shipping registry of Hui Zhou, which was not open for public inspection. In light of the VORCs, Ps now claimed that both C and X1 were the “relevant person”. Ds contended that X1 and another individual, X2, was the sole beneficial owner and operator of the Claim Vessel and the Arrest Vessel respectively; and that C was only their agent for the purpose of handling all documentation matters for the vessels under two management agreements. Ds submitted therefore that (a) only X1, and not C, was the “relevant person” under s.12B(4)(b); and (b) the Arrest Vessel was not at the time of the Writ a sister ship of Claim Vessel for the purposes of s. 12B(4)(ii) because C was not the beneficial owner of all its shares. Ps applied for the appraisal and sale of the Vessel pendente lite. Ds cross-applied to set aside the service of the Writ on the Vessel on the ground that the requirements of s.12B(4) were not satisfied, to strike out P’s claims, and to set aside the warrant of arrest.

Held, dismissing Ds’ applications, that:

  • “Relevant person” in s.12B(4)(b) meant the person who would be liable in an action in personam on the assumption that the action succeeded. It was not necessary for Ps to establish, in order to found jurisdiction, that that person was in fact liable on the claim.
  • Here, the requirements under s.12B(4) were satisfied.
    • As for s. 12B(4)(b), in the absence of any contrary suggestion, the Court would proceed on the basis that C and X1 were the registered owners of the Claim Vessel as shown in the VORC. Since the Claim Vessel was not under demise charter when the cargoes were lost, prima facie, they as owners would be liable to the shippers and/or cargo owners for the loss of cargo shipped under the bills of lading. It was untenable to suggest that only X1 was the “relevant person” as this was in substance asking the Court to accept the evidence adduced by Ds, including in particular the effect of the management agreement, while ignoring the VORC.
    • In respect of s. 12B(4)(ii), Ds adduced no expert evidence as to whether the requirements of a trust of ships, if any, under PRC law had been met and how trusts of ships interacted with the shipping registration laws in the PRC. The Court was not prepared to overlook the VORC and was not satisfied that C was not the beneficial owner of all shares in the Vessel at the time of the Writ.
  • The Court would not strike out the claims.

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