Admiralty Law in Bangladesh and Ship Arrest in Bangladesh in 2023
24 Jan 2022
Barrister Tahmidur Rahman
Director, The Law Firm in Bangladesh
This article will explain in details about admirlty law in Bangladesh and ship arrest procedure with details.
Nature of Admiralty law in Bangladesh
The Admiralty Court Act of 2000 (which revoked the Admiralty Court Act).The High Court Act (1891) confers original jurisdiction on the High Court Division for accepting cases in the first instance. Chapter 3 of the 2000 Admiralty Act. The statute specifies that the High Court Division shall serve as the Court of Admiralty. Cases under the statute are decided by a special statutory procedure.
The Court has exclusive jurisdiction under the Act itself. Nonetheless, there is a There is a misunderstanding among attorneys regarding the correct terminology. should be assigned to the High Court’s admiralty jurisdiction. Division. There is a common misconception that lawsuits are decided by the Different statutes designate the High Court Division as a court of initial instance.
Ordinary Civil Original Jurisdiction is exercisedA sectional bench ofThe former Dhaka High Court, commenting on such a case, stated: This jurisdiction opined that it would be a misnomer to refer to it in this manner. as Original Civil Jurisdiction Ordinary.
The Honorable Mr. Justice Ruhul Islam accurately recognized the legal position upon observation: “Admiralty jurisdiction differs significantly from both ordinary original civil jurisdiction and extraordinary original civil jurisdiction of the United States.” the Supreme Court.
Admiralty Suits and Admiralty law in Bangladesh:
The High Court Division of the Supreme Court of Bangladesh is vested with admiralty jurisdiction. Article 101 of the Constitution of the People’s Republic of Bangladesh provides that the High Court Division shall have such jurisdiction as are conferred on it by the Constitution and by other laws.
Section 3 (1) of the Admiralty Court Act, 2000 proclaims that the High Court Division of the Supreme Court shall be the Court of Admiralty.
Sub-section (2) narrates the jurisdiction of the Court in details. Section 8 of the Act permits the hearing and disposal of admiralty suits by a single bench of the High Court Division. However, the Chief Justice may constitute a Division Bench comprising two or more judges for hearing and disposal of such suits.
Nature of Admiralty Action in Bangladesh:
Maritime law has long allowed a plaintiff to proceed not only in persona (e.g. against a shipowner) but also in rem (against the thing itself, e.g. the ship). Therefore, admiralty action is an action in rem as well as in personam. Admiralty suit is an action in rem generally and cause of action arises due to collision of ships in the seas and/or for causing damage to cargo.
Thus, in admiralty law in Bangladesh, the remedy in an admiralty suit is essentially a remedy by way of compensation in money and that is why the Act of 2000 and Admiralty Rules provide for arrest of ships when it is within the territorial limits of Court.
The Act also provides for the release of an arrested ship on furnishing of adequate security for the claim amount. An action in rem is directed against the ship itself to satisfy the claim of the plaintiff out of the res. The ship is for this purpose treated as a person.
Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court, thereby making himself liable to be proceeded against by the plaintiff in personam.
Proceeding For Ship Arrest in Bangladesh
In admiralty law in Bangladesh, It is however, imperative in an action in rem that the ship should be within jurisdiction at the time the proceedings are started. It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff.
The arrest of the foreign ship by means of an action in rem is thus a means of assuming jurisdiction by the competent court.
A suit against a foreign ship owned by a foreign company not having a place of residence or business in Bangladesh is liable to be proceeded against on the admiralty side of the High Court Division by an action in rem in respect of a cause of action alleged to have arisen by reason of a tort or a breach of obligation arising from the carriage of goods from a port in Bangladesh to a foreign port.
A personal action may be brought against the defendant if he is either present in the country or submits to jurisdiction. If the foreign owner of an arrested ship appears before the court and deposits security as bail for the release of his ship against which proceedings in rem have been instituted, he submits himself to jurisdiction.
Procedure of an admiralty suit in Bangladesh:
The procedure for commencing an action on a claim under the admiralty jurisdiction of the High Court Division is as like as filing of a civil suit in a court of original jurisdiction.
Institution of Admiralty suits in Bangladesh:
Section 6 of the Admiralty Court Act, 2000 of admiralty law in Bangladesh provides for filing of a suit in the Admiralty Court through a plaint in accordance with the provisions of the Code of Civil Procedure. Section 6 reads as: “suit under admiralty jurisdiction to be instituted by a plaint drawn up, subscribed and verified by the claimant as plaintiff according to the provisions of Code of Civil Procedure 1908 of Bangladesh”. Rule 3 of the Admiralty Rules, 1912 provides:
“In admiralty law in Bangladesh, a suit shall be instituted by a plaint drawn up, subscribed and verified according to the provisions of the Code of Civil Procedure, save what if the suit is in rem the defendants may (subject to such variations as the circurnstances may, require) be described as “the owners and parties interested in” the vessel or other property proceeded against instead of name”.
The plaint must be signed and verified by the plaintiff, if he be an individual, and in the case of a firm by any one of its partners, and, it a corporation, by a director, the secretary or other principal officer. When the claimant seeks to arrest the vessel, the vessel would be named as a defendant. If the owners of the vessel are known they will be impleaded and named as other defendants. In addition, the defendant may also be described as
“the owners and parties interested in the vessel cases, the local agent of the ship is also impleaded as a defendant.
In most the plaint contains the names, description and place of residence of the plaintiff and the defendant/defendants; the statements of facts giving rise to the cause of action to the claimant for the suit and the time when it arose; the nature of claim as well as statements that the suit is maintainable within the admiralty jurisdiction of the court. The plaintiff in the plaint will seek appropriate relief or reliefs, i.e., the decree to be passed in the suit.
Application for arrest of a ship or for injunction in Bangladesh
An application for arrest of a ship in admiralty law in Bangladesh or application for injunction, or direction requires affirmation. Affirmation is made by swearing an affidavit by the claimant or on his behalf by his authorised agent before the Commissioner of Oaths of the High Court Division. Until an affidavit by the claimant or his agent is filed no warrant of arrest shall be issued.
Rule 4 of the Admiralty Rules, 1912 prescribes that in suits in rem a warrant for the arrest of property may be issued at the instance either of the plaintiff or of the defendant at any time after the suit has been instituted, but no warrant of arrest shall be issued until an affidavit by the party or his agent has been filed.
The affidavit shall state the name and description of the party at whose instance the warrant is to be issued, the nature of claim or counter-claim, the name and nature of the property to be arrested, and that the claim or counter-claim has not been satisfied.
How the plaintiff moves the plaint:
Upon filing the plaint, the plaintiff moves the same before the Admiralty Court the concerned bench of the High Court Division assigned to hear admiralty matters) and such court normally orders registration and admission of the suit and gives directions for issuing summons upon the defendants, fixing a date for their appearance and for filing the written statement.
Thereafter, the application for arrest of the vessel is. Moved and, if the court is prima facie satisfied with the submission of the plaintiff in favour of the claims, the Court passes an instant order for arrest of the ship and for keeping the same in the custody of the Marshal of the Admiralty Court.
The Marshal is appointed by the Chief Justice to execute the process of the Admiralty Court. The Court would further order that the vessel, the other defendants and the Port Authority, Customs Authority and the Port Police be informed about the order of arrest of the vessel and would also direct that the Port Authority, Customs Authority and the Port Police Authority render all necessary assistance to the Marshal of the Court in securing the arrest of the vessel.
While passing an order for arrest, it is usual for the Court to pass an order that, in the event of the defendants satisfying the Court that the vessel is under no obligation to pay the claimant or in the event of furnishing such security as against the amount to be determined by the Court, the ship may be released from arrest. The necessary orders of the Court admitting the suit and the arrest would be required to be drawn up by the office.
Signing of the Order by the judge:
Thereafter, the order would be signed by the judge presiding over the Admiralty Court and the party at whose instance the arrest order is passed would take out the necessary warrant and summons which shall be served by the Marshal of the Admiralty Court on the vessel, other defendants and the Port and Customs Authorities.
Sometimes the Admiralty Court, instead of passing an instant order of arrest, will direct the defendants to show cause within a certain period of time, say within three or four days from the date of service of the order, as to why on the allegations of the plaintiff contained in the application for arrest, the vessel should not be arrested, and similar procedures, like those for the service of the warrants of arrest order will be folfowed in respect of the service of the said “show cause” notice on the defendants.
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- Step by Step Process
Execution of warrant of arrest:
Service of a warrant against a ship is to be effected by nailing or affixing the original writ or warrant for a short time on the main mast or on the single mast of the vessel and by taking off the process, leaving a true copy of it nailed or affixed in its place.
Normally, upon a warrant of arrest, the Marshal along with his assistants will proceed towards the Port where the ship is anchored for service of the same and the Marshal will go on board the ship and call the Master or in his absence the Officer-in- Charge of the ship and inform him by handing over the warrant of arrest that the vessel is under arrest of the Admiralty Court.
If the Master of, in his absence, the Officer-in-Charge of the ship refuses to accept the warrant, the Marshal will leave the warrant of arrest on board and will submit his report to the Court stating either that the writ has already been served or about the refusal to accept the writ of arrest and the fact of leaving the writ on the vessel because of refusal by the Master to accept it.
If a writ of arrest is left on board by the Marshal because of the Master’s refusal to accept it, this would be deemed by the Court to amount to a good service of the arrest order. The Port having jurisdiction over the vessel will also be informed and served with the writ of arrest for the purpose of information and, upon receipt of the same, the Port Authority will not give any port clearance to the vessel until a release order is served upon them for the purpose of information.
Similarly, the Commissioner of Customs having jurisdiction over the vessel would also be informed about the arrest of the vessel and be served with the writ of arrest. He also will not grant any clearance to the vessel until a writ of release order is served on him for the purpose of information. The other defendants will also be served with the order of arrest of the vessel.62
Custody of the ship while under arrest
From the time of arrest the ship will be under the custody of the Marshal of the Admiralty Court and any interference with the same might be regarded as contempt. The Marshal requests the Port Authority to keep watch over the ship.
Appearance of defendants:
The defendants immediately upon receipt of the arrest order may cause their appearance in the suit through advocates and file written objections (W.O.) against the order of arrest, giving the grounds in favour of vacating such an order, or may furnish security by way of a Bank Guarantee executed by a local scheduled bank to the extent of the claimed amount, or such amount as determined by the Court for immediate release of the vessel, and file written objections in due course. Written objections are required to be affirmed by an affidavit on behalf of the defendants before the Commissioner of Oaths of the High Court Division.
Statement showing the extent of interest.
In an admiralty suit where a ship has been arrested any person not named in the writ but interested in the vessels may intervene and appear on the filing of an affidavit showing that he is interested in the vessel and may tille a statement showing the extent of his interest. Upon hearing of, the written objections filed by the defendant, if the Court is satisfied that the vessel has no obligation to pay the claimant of that the vessel is not liable to be arrested, the Court may set aside the order of arrest and order the release of the vessel.
If the defendants furnish a Bank Guarantee through a local scheduled bank, for the immediate release of the vessel, the vessel will be released.
Upon the furnishing of the Bank Guarantee, the maintainability of the arrest order can be challenged by filing written objections, and the Court may hear such objections and, if satisfied that the vessel is not under any obligation to satisfy the claims of the claimants, may return the Bank Guarantee to the bank concerned for cancellation.
In appropriate cases the Admiralty Court may consider to reduce the quantum of security to be furnished by way of Bank Guarantee for the release of the vessel. Hearing of such application for reduction of security amount may take some time.
Normally, written objections are taken up for hearing by the Court in due course and, unless there appears to be a very strong case in favour of the defendants and for release of the vessel, the Court would order that the objections be taken up at the time of the final hearing.
In a suit where only a notice to show cause as to why the vessel would not be arrested is passed by the trial Court, the defendants would appear and file written objections against such order and, upon hearing, if the Court is satisfied that the vessel is not liable to be arrested, the Court would reject the petition for arrest.
In the event the Court is satisfied that the vessel would be out of jurisdiction without satisfying the claims of the plaintiff, when a decree may be passed in his favour, the Court would order the arrest of the vessel.
Defendants possession as evidence in support of the defence
The defendants are required under the law to file a written statement in their defence in, reply to the allegations contained in the plaint. Where the defendants rely upon documents in their possession as evidence in support of the defence, they can produce and file the same in Court.
The defendants may also file such documents as they consider necessary for the defence before commencing the hearing of the suit. The Court also has the power to direct either the plaintiffs or defendants at any time during the pendency of the suit to produce such documents as are in their possession relating to any matter in question in the suit.
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Court fee for admiralty suits in Bangladesh:
Court fee for admiralty suit is an important issue. The Admiralty Court Act, 2000 provides for the application of the Court Fees Act, 1870 in an admiralty suit. First Schedule to the Court Fees Act prescribes the rate of advalorem fees payable on the valuation of a suit.
Where the suit is valued to an amount below Tk 2 lakh or where the claim amount as stated in the plaint does not exceed the said limit, the court-fee is fixed at Tk 7,100.00. For any amount exceeding taka 2 lakh court fee would be 1% of the exceeding amount plus [15% VAT]° (value added tax) on the total court fee calculated as such.
Maximum advalorem court fee in Bangladesh Admiralty Law
Proviso to section 7 of the Admiralty Act, 2000 provides for a maximum advalorem court fee of taka one lakh for the enforcement of maritime claim or questions. The same proviso provides that, the fees chargeable on a plaint in case of a claim by a master or member of the crew of a ship for recovery of wages shall be taka one hundred.
Enforcement of judgment and decree:
When a suit is decreed in favour of the claimant and if there is no Bank Guarantee or security in substitution of the vessel, a sale by public auction of the arrested vessel would be ordered by the Court. An order for sale pendente lite of a ship under arrest is very exceptional but can be made in certain serious situations.
Sale by public auction is conducted by the Marshal of the Admiralty Court. The Marshal of the Admiralty Court for this purpose prepares an inventory of the said vessel and puts the vessel in public auction at a date and time fixed by him.
Notices for auction sale
Notices for such auction sale is generally published in two national dailies one in English and the other in Bengali and also in local papers’ where the ship is arrested. The decree-holder pays the necessary expenses for the preparation of the said inventory by the Marshall and his team, the cost of advertisement in the papers and all other incidental expenses.
All such costs and expenses in connection with or relating to the auction sale of the vessel are considered as the first charge on the sale proceeds of the vessel. The highest bidder at a public auction will be allowed to purchase the vessel. The sale proceeds of the auction sale is deposited in the account of the Court/Marshall as per rules.
However, such a sale is to be confirmed by the Admiralty Court. If the Court finds that the bid offer is very low, then it may set aside the auction and may direct a fresh auction and, upon sale, the Court will disburse the amount of the claimants. If there is a Bank Guarantee substituting a vessel the decretal amount will be satisfied out of the Guarantee.
The right to arrest a sister ship:
The admiralty jurisdiction of the High Court Division may be invoked by an action in rem not only against the offending ship in question but also against a “sistership’, i.e., a ship in the same beneficial ownership as the ship in regard to which the claim arose. Section 4 (4) of the Admiralty Act, 2000 specifically provides:
In the case of any such claim as is mentioned in clauses (d) to (g) of sub-section 2 of section 3 of the Act, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the Admiralty jurisdiction of the High Court Division as the Court of Admiralty may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against-
(a) that ship, if at the time when action is brought it is beneficially owned as respects all the shares therein by that person; or
(b) any other ship which, at the time when action is brought, is beneficially owned as aforesiad.
However, before the enactment of the Act of 2000 the High Court Division in exercising admiralty jurisdiction decided against proceeding in rem where the sister ship of the same owner was not concerned with the cause of action. In Kings Shipping Trading Co. vs. Ms. L.S. Lines & Other of the High Court Division observed:
“Admiralty Court in Bangladesh has been exercising the same jurisdiction as was conferred upon the High Court of Admiralty in England under the provision of Colonial Court of Admiralty Act 1890 and Colonial Courts of Admiralty (India) Act 1891. The High Court Division of the Supreme Court of Bangladesh never exercised Admiralty jurisdiction on the basis of practices of the English Court of Admiralty.
The principles of Administration of Justice Act 1956 extending Admiralty jurisdiction in England cannot be followed in Bangladesh, as the said Act is not applicable in Bangladesh. This Court exercising admiralty jurisdiction has no power to arrest any property or ship of the defendant other than the one which was concerned in the cause of action. The suit in rem is not maintainable, but in personam is maintainable.
“In appropriate cases the Admiralty Court may consider to reduce the quantum of security to be furnished by way of Bank Guarantee for the release of the vessel. Hearing of such application for reduction of security amount may take some time. Normally, written objections are taken up for hearing by the Court in due course and, unless there appears to be a very strong case in favour of the defendants and for release of the vessel, the Court would order that the objections be taken up at the time of the final hearing.”
Admiralty Suits in Bangladesh and Ship Arrest at Tahmidur Rahman Remura: TRW: The Law Firm in Bangladesh:
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Why should you a arrest a Ship in Bangladesh?
Bangladesh is one of the most favorable arrest jurisdictions for the following reasons: a) Bangladesh is not a signatory to any arrest convention; b) ship can be arrested in an action in rem; c) vessel can be arrested in an action in personam; d) ship can be arrested for security; e) ship can be attached even after loss of navigability; f) ship can be arrested for maritime lien as well as maritime claim; g) arrest lies for as many as nineteen claims; and The High Court Division of Bangladesh's Supreme Court exercises Admiralty Jurisdiction in accordance with the Admiralty Court Act of 2000 and the Admiralty Rules of 1912. Admiralty Rules provide that in suits in rem a warrant for the arrest of property may be issued at the instance of either the plaintiff or the defendant at any time after the suit has been commenced, but no warrant of arrest shall be issued until an affidavit by the party or his agent has been filed, and the following provisions have been complied with:- a) The affidavit shall state the name and description of the party at whose instance the warrant is to be issued, the
b) In a case involving the distribution of salvage, the affidavit must include the amount of salvage money awarded or agreed to be accepted, as well as the name, address, and description of the party holding the funds.
How to file an application for ship arrest in Bangladesh?
To file an application for ship arrest, the plaintiff/claimant must file a lawsuit and pay a court fee of Tk 1,000,000.00. In an action for wages, a court fee of Tk 100.00 must be paid. The complaint and accompanying documents must be filed with the section/office of the Court, and the application for arrest of the ship must be filed with the Court.
Typically, the application appears on the court's Daily Cause List the following business day. Nonetheless, if the Court is convinced of the matter's urgency, it prepares a supplemental cause list and hears the case on the same day. If a prima facie case is established in support of the claim, the court will admit the case and issue summons.
The application for arrest is then heard, and if the court is initially convinced of the application's merit, it issues an order for the arrest of the ship as security for the claim amount.
A ship arrest application is heard ex parte unless the defendants have filed a caveat. The Marshal of the Court serves the defendants with the arrest of ship order upon receipt of the claimant's fee and charge.
Similarly, the Admiralty Court has the authority to seize cargo on board or any property belonging to any party.
How an order for a ship arrest works?
The order for arrest may be vacated by the same court upon an application filed by the defendant on the grounds that the ship was wrongfully arrested, and the defendants may also file an application for a reduction in the amount of security, but hearings for such applications take one to two weeks.
When the ship is in a hurry, this type of application is typically not recommended. A ship is released from arrest upon depositing the claim amount with the court or providing a local bank guarantee. In Bangladesh, P & I Club's LOU is not recognized.
After the ship is released in exchange for a bank guarantee, the defendants may move for a reduction in the bank guarantee, and if granted, a revised bank guarantee will be provided. The Marshal also serves the release order upon receipt of the Marshal's fee.
If the ship has not been released by the defendants, the plaintiff may request the sale of the ship pendente lite.
The court then sells the ship at auction and holds the proceeds, which are paid to the plaintiff if he wins the case. If there are multiple claimants and the proceeds are insufficient to cover their claims, the Court applies the English Law of Priorities.
Which International Convention applies to arrest of ships in Bangladesh?
Both the International Convention relating to Arrest of Seagoing Ship 1952 and the International Convention of the Arrest of Ships 1999 have not been ratified yet by Bangladesh.
Is there any other way to arrest a ship in Bangladesh?
A ship could also be seized in execution of a decree issued by the High Court Division or a judgment issued by a foreign court against the ship's owner. Additionally, a ship can be attached prior to judgment in a suit in personam. A ship can be attached to a suit in rem if it is beached for scrap prior to the institution of the suit.
The Bangladesh Merchant Shipping Ordinance (MSO) of 1983 permits the Principal Officer of the Mercantile Marine Department to seize an unseaworthy vessel. Under the MSO, the High Court Division can detain a foreign ship for damage caused in any part of the world to the Government of Bangladesh or any Bangladeshi citizen or company, and the Principal Officer or Collector of Customs can detain a ship before an application to the High Court Division has been made.
In accordance with the Regulations for Working of Chittagong Port (Cargo and Container) 2001, the Chittagong Port Authority may detain a vessel until security has been provided for the amount of damage caused and the cost of removing the blockage of the navigational channel, or until the full amount has been paid.
Is saisie conservatoire or an freezing order applicable in Bangladesh Admiralty law?
Other than the arrest of a ship in an Admiralty proceeding or an execution proceeding to enforce a decree, there is no separate freezing order. The court may, however, grant an application for an injunction prohibiting a party from scrapping or removing a vessel.
For which types of claims can you arrest a ship?
In an action in rem, a ship could be arrested for any of the following claims:
(a) any claim to the possession or ownership of a ship or to the ownership of any share therein or for recovery of documents of title and ownership of a ship, including registration certificate, log book and such certificates as may be necessary for the operation or navigation of the ship; (b) any question arising between co-owners of a ship as to possession, employment or income of that ship; and (c) any claim in respect of a mortgage or charge on a ship or any share therein.
(d) any claim pertaining to towage of a ship or aircraft; (e) any claim pertaining to pilotage of a ship or aircraft; (f) any claim pertaining to goods or materials supplied to a ship for her operation or maintenance; and (g) any claim pertaining to construction, repair, or equipment of a ship or dock charges or dues.
(h) any claim for wages by a master or member of a ship's crew, or any claim for money or property recoverable as wages of a master or member of a ship's crew under the Merchant Shipping Ordinance, 1983, or in court; charterer or agent of the ship;
(i) any claim for forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried, or for the restoration of a ship or any such goods after seizure, or for droits of admiralty together with any other jurisdiction to grant reliefs as are provided under the provisions of this title.
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Barrister Remura Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.
Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
Work highlights
Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:
⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.
⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group
⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio
⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector
⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia
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