The aim of this report is to explore the concept of an Action in Rem as a procedural principle; with the objective of establishing that a claim made as an Action in Rem, is a procedure designed to get a liable defendant to court under the England and Wales Supreme Courts act of 1981.
The report will also show the difference between a maritime lien and an action in rem, and relate the case study of the Indian grace (1997) as well as other cases, to support the development of the procedural principle as an Action Rem, in contrast with the personification principle; an analysis of the problems encountered with both principles will be made, particularly in the cases of foreign flag ship disputes, principally borne from issues arising from the Jurisdiction of the English Admiralty Court in such cases, and the requirement of an ‘in personam link’ as an evidence used to establish a liable defendant for the admiralty courts in entertaining any claim.
And in the conclusion, the issue of an action in rem being an action in personam dressed differently, will be acknowledged to be challenging, particularly when arresting a sister ship of a liable owner not domiciled within the Admiralty court’s jurisdiction.
Table of Content
Executive Summary…………………………………………………………………………..page 1
Table of Contents……………………………………………………………………………..Page 2
Action in Rem: The Personification Theory………………………………………….Page 4 & 5
Action in Rem: The Procedural Principle Theory………………………………….Page 6
Challenges of the Procedural Principle…………………………………………………Page 7 & 8
An Action in Rem is a claim made against a ship by a plaintiff, upon satisfying stipulated conditions contained within the Supreme Court Acts (1981) s. 20(2) (g) and (h); The Supreme Court Act (1981) indicates that this claim can be made in the event of loss or damage of ship cargo, as well as in the event of breach of contract between the parties involved; and it can only be regarded as served, once a writ has been physically issued to the offending ship, or acknowledged by the defendant; upon which it can then be enforced by the admiralty Marshal by arresting the offending vessel, or its sister ship if within the English admiralty jurisdiction.
However, a maritime lien is a more powerful claim than an ordinary action in rem, and can be issued in favour of the claimant without necessarily having the property of the defendant within the Jurisdiction of the Admiralty court; furthermore, the Supreme Court Acts (1981) s.20 (2) J-R indicates that, a vessel against which a maritime lien has been issued can be arrested in any country, under the International Convention on the Arrest of ships (1999).
Furthermore, Tetley (1998) suggested that the difference between an action in rem and a maritime lien is that fact that the lien exists against the ship even after being sold, while an action is rem is a statutory right of claim arising from trade disputes, initiated by the plaintiff against a ship; for this reason, in the event of a judgement on a case of a ship already having a maritime lien, the holder of the maritime lien has more priority from the proceeds generated from the security over any other claimant. Wilson (2004) further suggested that, a lien can also be made on the cargo as a form of security over freight or other charges.
ACTION IN REM; THE PERSONIFICATION THEORY
The personification theory considers an action in rem as a statutory maritime claim against a ship alone. It recognises the fact that a ship has rights and obligations different from the owner and based on this principle, a ship can be sued and held as the defendant and liable to a claim in court; the ship is recognised to have separate statutory rights like its registered beneficial owner; this principle is supported in the United States of America’s admiralty legal system, by recognising the ship as the offender and liable to be taken to court in the event of a claim. Based on this concept, separate claims can be taken against the ship in an action in rem and the owner in an action in personam (The Nordglimt, 1987).
The personification principle behind an Action in Rem was supported in The Nordglimt (1987), in which the ‘Nordglimt’ was arrested because of a claim arising out of a charter agreement on its sister vessel the ‘Nordkap’. This case involved an action in personam against the defendants in Belgium, and an attempt to arrest a sister ship in England under an action in rem.
Lloyds Law report 1987 The Nordglimt s.8 states;
‘Under article 21 of the 1968 Brussels convention, the proceedings were brought within the jurisdiction of the court, but the court must decline jurisdiction because of the lis pendens in another court; as a matter of construction art.21 did not require the whole proceedings in England to be treated as nullity and so long as these proceedings had the character solely of proceeding in rem they did not come within the scope of art.21 in relation to pending Belgian proceedings in personam’
Challenges of the personification principle
Challenges related to any form of action in rem proceedings, occurs mainly in cases involving foreign ships with a Law clause other than English law; this problem arises as a result of Jurisdiction of the court; the English admiralty court has to make sure it is not bar from presiding over the disputes, by interpreting existing international shipping laws in relation to its courts’ Jurisdiction without any form of conflict, as stipulated in the Brussels convention (1968).
Extent of Liability: The main challenge of the personification theory is the fact that the beneficial owner cannot be held liable under the claim, and if the plaintiff makes a claim against the owner in another country, its jurisdiction might be more favourable to the owner. Furthermore, due to the fact that the beneficial owner is not liable in Rem, the arrested vessel, depending on the size of the claim, might not be a very suitable form of security if it has a low sale value, for example the salvage case of The Bluebird (1971).
Wrongful Prosecution: An Action in Rem under the personification principle can lead to the arrest of an innocent 3rd party’s ship, because there are no special requirements in place, to get the liable owner of the ship to defend the vessel; so if the ship is sold to another person or company prior to exercising the writ in rem, the 3rd party would have to bear the challenges involved with the arrest of the vessel.
On the other hand, if the beneficial owner was within the Jurisdiction of the English Admiralty court before the ruling on the Indian grace (1997), a claim could have been made against the plaintiff in an action in personam, prior to the clear distinction of the procedural principle of an action in rem.
3. ACTION IN REM; THE PROCEDURAL PRINCIPLE THEORY
The Dictator, (1892) established that procedural principle involves an action in rem being issued against a ship, in a bid to make a claim against the liable owner of the ship in personam; The case showed that once the owner makes an appearance in defence of the arrested vessel, the proceeding is done in personam as well as in rem, and the defendant is held personally liable; the extent of liability in the event of a favourable Judgement to the claimant is not limited to just the arrested vessel.
The Dictator 1892, (p. 320) judgement states;
‘An action in rem…not only determines the amount of liability, and in default of payment enforces it on the res, but is also a means of enforcing against the appearing owners, if they could have been made personally liable in the Admiralty Court, the complete claim of the plaintiff so far as the owners are liable to meet it’.
The establishment of the procedural principle for an action in rem in the Dictator (1892) case, acted as the main basis on which subsequent English Admiralty cases such as the Indian Grace II (1997) was judged. For this reason, most Action in Rem brought under the Jurisdiction of the English Admiralty Judicial system is based on the procedural principle.
The conflict between an Action in Rem being regarded as personification or procedural principle was addressed in the ruling of the Indian grace (1997); establishing that an action in rem is an action in personam against the recognised liable beneficial owner of the vessel, against which the writ is issued; this is the basis for addressing an action in rem within the Admiralty Court jurisdiction of England and Wales.
Furthermore, the supreme Courts act (1981) s.21 (4bi and ii) requires the plaintiff to establish that the defendant is the beneficial owner of the vessel, before a court action can be carried. This clause creates a challenge for the plaintiff to prove, by means of recognised evidence, that the defendant is the relevant person to be issued a writ before it can be authorised by the court against the defendant. This point further supports the fact that an action rem is actually an action in personam ‘dressed up’; the action in rem is recognised as a proceeding against the defendant, and for this reason a separate claim in personam against the defendant, based on the same cause of dispute will not be entertained, as observed in the Judgement of the Indian grace II (1997).
Challenges of the procedural principle
3.1.1 Evidence of Ownership: The challenge generated from establishing that the operator of the arrested vessel is the liable defendant, stems from the fact that the plaintiff will be required to get evidence proving that the operator is really the liable defendant. This issue is made more complicated with sister ship arrests, because in today’s modern shipping industry, the true owner of the vessel might not be the demise chatterer, or the managing company. It is difficult to establish the genuine ownership of a vessel if the plaintiff does not have readily available proof, which is generally difficult to find. As illustrated in the Evpo Agnic (1988), proceedings could not be made against an alleged sister ship, because the registered owners of both ships at the time of issuing the writ where different, although they were the same share holders; If the claimant does not have any tangible evidence showing the defendant is the liable owner, it becomes difficult for the courts to hear and determine the case. This problem is more pronounced in foreign flag shipping disputes, if the claimant challenges the Admiralty court’s Jurisdiction under the Civil jurisdiction and judgements act (1991) when the case has been judged under an action in personam in another country; especially when English law was not the choice of law in the charter agreement; the Supreme Court Act 1981 s.20(2) a, b, c clearly indicates when the English admiralty court has jurisdiction over the claim; but if the defendant can prove that he/she is not liable, the arrested sister ship can be released.
3.1.2. : The dilemma of deciding which jurisdiction to make a claim: The procedural principle implies that, no other claim can be taken in personam, against the defendant in relation to the same case once it has been issued in Rem; this was the judgement in proceedings of Indian grace II (1997); the Indian government lost the case against the Indian steam shipping company, because the court recognised the fact that a competent junior court in India had presided, and found the defendant liable to a claim in personam on the same case, although brought before the English admiralty court in rem. However, this issue brings about the dilemma of making sure a writ is served as an action in rem against the defendant’s asset, where he/she has enough property to serve as security upon service of the writ; this is equally important if the defendant is not domiciled within the Jurisdiction of the court.
3.1.3. Third Party Interests: A further challenge relating to an action in rem as a procedural principle, is that fact that, if the liable defendant not domiciled within the jurisdiction of the admiralty court, sells his vessel or shares to another party before the plaintiff applies for the writ, there would be nothing to arrest as security to flush out the liable owner in the dispute, unlike in the personification principle; furthermore, the procedural principle also allows 3rd party interests, like underwriters and mortgage firms to protect their investments, and if the defendant is held liable, priority from the proceeds has to be first given to them (the 3rd party) before the claimant.
In the event of the defendant not making an appearance against the claim, the primary purpose of the action in rem as a procedural principle would be defeated, and the plaintiff would be limited to the proceeds from the sale of the arrested vessel; this is not really favourable in cases where the value of the claim is more than the value of the ship (The Bluebird, 1971).
The procedural principle regarding an action in rem as an action in personam is highly effective against large shipping cooperate bodies attempting to protect their reputation, when not domiciled within the Jurisdiction of the English admiralty court. Based on the Indian grace (1997), England and Wales admiralty court regard an action in rem as a procedural principle designed to flush out the beneficial owner of the vessel, and once he makes an appearance the court proceedings would be in rem and personam, with full liability against the owner and not just the ship. A writ initiating an arrest is regarded as served once it has been attached to the liable defendants’ ship, but before it can be approved under the English admiralty Jurisdiction, the ‘in personam link’ has to be established by the plaintiff as stipulated in the Supreme court Act (1981) s.20 and 21. For these reason, an action in rem under the English admiralty jurisdiction is an action in personam dressed differently.
On the other hand, some countries like the United States of America still regard an action in rem under the personification principle, so great care has to be considered before making a claim in different Jurisdictions to avoid conflict of the country domestic admiralty laws and international laws like the Brussels convention (1968).
Cite This Work
To export a reference to this article please select a referencing stye below:
Related ServicesView all
DMCA / Removal Request
If you are the original writer of this essay and no longer wish to have your work published on LawTeacher.net then please: