Saturday, September 30, 2017

Novation of Agreement & Change of Ownership while Vessel is under Arrest [M.V. Nikolaos-S]

Arrest of Vessel - Ship IndiaCertain fundamental principles of maritime law in India were re-visited by the Hon’ble Supreme Court in its Judgment dated 14th September 2017 in Chrisomar Corp. v. MJR Steels Pvt. Ltd. [Civil Appeal No. 1930 of 2008], which can be found here. It is pertinent to note that at the time of passing of the Judgment the Admiralty (Jurisdiction & Settlement of Maritime Claims) Act, 20117 passed by Parliament had not come into force.
Brief Facts:
Without going into the   detailed dates of events, the relevant facts leading to filing of the Civil Appeal are as follows:
The Appellants suppled the Vessel M.V. Nikolaos-S with bunkers and other necessaries. Due to non-payment the Appellants were compelled to obtain an order of arrest, a settlement agreement was entered into between the Appellants & the Owners, and the Ld. Single Judge was pleased to set aside the arrest. Now after entering the settlement agreement but before the order of vacation of arrest was passed the Vessel was sold to the Respondent No. 1. Thereafter, the Appellant applied to the Ld. Single Judge seeking re-arrest on the ground of breach of the settlement agreement. An order of re-arrest came to be passed. According to the learned single Judge, the arrest order made it clear that the Admiralty Suit was kept alive and remained alive on the date of the re-arrest. All that was done by the order of re-arrest was to recall the order of vacation of arrest, and when that was done, the original order of arrest was automatically revived. This being the case, it is clear that the plaintiffs were entitled to recover their dues.
In an appeal filed by the Respondent No. 1 before the Division Bench, the D.B. applied section 62 of the Indian Contract Act, 1872 to the out of court settlement and stated that as there was a novatio of the original agreement in law, the original cause of action pleaded in Admiralty Suit no longer subsisted. Therefore, the claim made in the suit was held to have been abandoned when the settlement was acted upon. In this view of the case, the Division Bench reversed the single Judge’s decision and held that the suit was liable to be dismissed on all these grounds.
1) Whether a settlement agreement would amount to novation of the original agreement, thus defeating the right in rem against the Vessel?
2) Whether necessaries supplied to the Vessel amounted to maritime lien or merely a maritime claim?
The other issues in the Appeal are not being gone into in this article.
Observations of the Court:
a) The Calcutta High Court in Bailey Petroleum Co. v. Owners & parties interested in the vessel M.V. Dignity [(1993) 2 CHN 208] had held that supply of necessaries do not create a maritime lien.
b) The Brussels Convention relating to the Arrest of Sea-Going Ships, 1992 did not list supply and necessaries as ‘maritime liens’.
c) Though India is not a signature of the Brussels Convention by the Supreme Courts’ Judgment M.V. Elisabeth and others v. Harwan Investment and Trading Private Limited, [1993 Supp. (2) SCC 433 at 462], the Convention was incorporated as part of India’s national law.
d) Thus, (as per Article 3(1)(a) of the Convention) a maritime claim can be asserted only at the time the arrest is effected and not at the time of institution of the Suit.
e) The judgment Mona S. [(1967) 2 LLR 113] as followed in Re: Aro Co. Ltd. [1980 1 All ER 1067] could not be followed as they were passed prior to the 1999 Brussels Convention.
f) While distinguishing section 62 and 63 of the Indian Contract Act, the Hon’ble Court held that the word “alter” in Section 62 of the Contract Act. In order that a contract that is altered in material particulars fall under Section 62, it must be clear that the alteration must go to the very root of the original contract and change its essential character, so that the modified contract must be read as doing away with the original contract. If the modified contract has no independent contractual force, in that it has no meaning and content separately from and independently of the original contract, it is clear that there is no new contract which comes into being. The original terms continue to be part of the modified contract except to the extent that they are inconsistent with the modifications made. Thus, in the present case, section 63 was applicable.
Thus, the Division Bench’s decision was set aside and the Single Judge’ decision was upheld.

 admiralty law, maritime, consent terms, settlement agreement, arrest, vacation, re-arrest,

Thursday, June 29, 2017

Is UAE a reciprocating country u/s 44A of Code of Civil Procedure?

A lot of online articles and blog posts mention ‘United Arab Emirates’ as one of the ‘reciprocating countries’ under section 44A of the Code of Civil Procedure,1908 (“CPC”). However, there is a cleavage of opinion among legal experts on this issue.
There is no dispute regarding the other ten countries, viz. United Kingdom, Aden, Fiji, Republic of Singapore, Federation of Malaya, Trinidad and Tobago, New Zealand, the Cook Islands (including Niue) and the Trust Territories of Western Samoa, Hong Kong, Papua and New Guinea and Bangladesh, being reciprocating countries.
The main cause for the confusion is an Agreement between the Republic of India and the United Arab Emirates (UAE) Done at New Delhi on the 25th October, 1999. Article XV (1) of the said treaty states that each of the countries must, in accordance with its laws, recognise and/or execute decrees passed by the Courts of the other country in civil, commercial and personal matters and by criminal courts in civil matters. The exceptions to Article VX are listed in Article XX, the contents of which are similar to Section 13 of the CPC. The text of the treaty can be found here.
The agreement also relates to mutual legal assistance in matters relating to execution of arbitration awards, service of summons, taking of evidence, etc.
In Dr. Devika Damji Shah v. Rashmi Mukesh Shah & Anr. [2012 Vol. 114 (5) Bom LR 2757] it was argued before the Hon'ble Bombay High Court by Mr. Rajesh Shah (appearing for Respondents) that since the agreement was gazette, it the Gazette Notification under which the agreement between the Republic of India and the United Arab Emirates was gazetted. That agreement deals with “Juridical and judicial cooperation in civil and commercial matters for the service of execution of judgments and arbitral awards.”   Mr. Shah argued that the executability of the grant of probate under the judgment of the Court of Dubai   is   also  circumscribed   by   the   same  provisions. The national law in India applicable in such a case would be Section 63 of the Indian Succession Act; the national law of Dubai is the Sharia law which does not recognize any such testamentary disposition.
Ms. Bookwala (appearing for the Appellants) argued   that   the   agreement   does   not   even constitute a notification showing Dubai as reciprocating territory since the notification is required to show that the country so notified is a reciprocating territory under Section 44­A and cannot be taken to be or deemed to be such a territory by virtue of a bilateral treaty or agreement.
On the facts of that case, the question was never finally decided. At present, courts do not enforce judgments of UAE as judgments of a reciprocating State. But is that a procedure or practice followed in error? I have presented to the readers contentions for both sides and leave them to decide which view they find more reasonable.

Friday, June 2, 2017

Homecoming of Terror - Review

You must be wondering what a review of an episode of House of Cards is doing on a legal blog like this one. Well, like everyone else, I too am an ‘Underwood nuts’ and would be remiss in my duties as a lawyer if I didn’t give my fellow lawyers who are buried under tons of paperwork a brief review of the premier episode of Season 5.

Sunday, January 15, 2017

Freedom of Speech and Expression

The below article is written by Nirali Parekh.
Also, read A Clipped Bird.
 Freedom of speech and expression is a fundamental right guaranteed to all the citizens residing within the territory of India[1] .It enables and gives opportunity to all  the  citizens to put forth and express their thoughts and opinions, playing an essential role in enhancing the growth and development of the country.