Shipping 2023 - Marine/ Shipping

Law and Practice

1. Maritime and Shipping Legislation and Regulation

1.1 Domestic Laws Establishing the Authorities of the Maritime and Shipping Courts

In India, the main domestic laws establishing the jurisdiction and powers of the maritime and shipping courts are:

the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017;
the Merchant Shipping Act, 1958;
the Carriage of Goods by Sea Act, 1925; and
the Marine Insurance Act, 1963.

Common maritime and shipping claims filed in India include:

charterparty disputes: disputes arising from the performance of charterparty contracts, including disputes relating to demurrage, laytime and hire;
marine insurance claims: claims arising from marine insurance policies, including claims for loss or damage to vessels and cargo;
collision claims: claims arising from collisions between vessels, including claims for damages and personal injury;
towage claims: claims arising from the provision of towage services, including claims for damages, loss of income and demurrage;
salvage claims: claims arising from the recovery of vessels or cargo in distress, including claims for remuneration and salvage awards; and
general average claims: claims arising from the contribution of ship-owners, cargo-owners and insurers to cover expenses incurred in saving a vessel and its cargo in a general average situation.

The competent courts in India for hearing maritime and shipping claims are the High Courts, as specified under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. The jurisdiction of the courts depends on the location of the vessel.

1.2 Port State Control

The office of the Directorate General of Shipping and the Mercantile Marine Departments form the Port State Control (PSC). Together, these agencies are tasked with inspection of foreign flagged ships in Indian ports and ensuring compliance with mandatory IMO Conventions, such as the International Safety Management (ISM) Code, the International Ship and Port Facility Security (ISPS) Code, the International Convention for the Safety of Life at Sea, 1974 (SOLAS 74), MARPOL 73/78, COLREGs 72, etc. The Merchant Shipping Act, 1958, is the umbrella statute, which gives the PSC powers to enforce the various IMO conventions to which India is a party.

1.3 Domestic Legislation Applicable to Ship Registration

The Merchant Shipping Act, 1958 and the Registration of Ships Rules, 1960 are applicable to ship registration.

A central register is maintained by the Director General of Shipping through the Mercantile Marine Department, which contains all the entries recorded in the register books kept by the registrar at the port of registry in India.

1.4 Requirements for Ownership of Vessels

The requirements for ownership of vessels registered in India are as follows:

vessels can be owned by a citizen of India;
vessels can be owned by a company or body that is established by or under any central or state act and has its principal place of business in India; and
vessels can be owned by a co-operative society that is registered or deemed to be registered under the Co-operative Society Act, 1912, or any other law relating to co-operative societies in force in any state.

It is not possible to register a vessel that is still under construction.

1.5 Temporary Registration of Vessels

The Merchant Shipping Act, 1958 provides for a "Temporary pass in lieu of certificate of registry". The statute provides that, where it appears to the central government that it is desirable for permission to be granted to any Indian ship to pass from one port to any other port in India without being previously registered, due to special circumstances, the central government may authorise the registrar of the first-mentioned port to grant a pass that shall have the same effect as a certificate of registry, for the time and within the limits mentioned therein.

1.6 Registration of Mortgages

The Mercantile Marine Department maintains the register of mortgages.

In order to register a mortgage with the Mercantile Marine Department, the following documents must be submitted:

a duly filled-in Form 11 for the registration of a mortgage;
proof of the payment of mortgage registration fees;
a Deed of Mortgage/Hypothecation Deed; and
a Letter/Board Resolution from the owner authorising a signatory to lodge Form 11 with the Mercantile Marine Department, along with all documents.

1.7 Ship Ownership and Mortgages Registry

Registrations and mortgages are available to the public and can be viewed upon making an application to conduct a search of the registry. Obtaining information on the registration and mortgages on a vessel incurs a nominal fee.

2. Marine Casualties and Owners' Liability

2.1 International Conventions: Pollution and Wreck Removal

India has acceded to the Nairobi International Convention on the Removal of Wrecks, 2007, but it has not yet been incorporated into domestic law. Wreck removal is currently dealt with under the Provisions of the Merchant Shipping Act, 1958, the Merchant Shipping (Wrecks and Salvage) Rules, 1974 (as amended in 1975) and, to some extent, the Indian Ports Act, 1908.

India is party to the International Convention on Civil Liability for Oil Pollution Damage (CLC) 1992, along with its 1976 and 1992 Protocols, and to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992 (IOPC). The CLC and the IOPC have been statutorily incorporated into Indian domestic law in Part X-B and Part X-C of the Merchant Shipping Act, 1958, respectively. However, India has not ratified the International Oil Pollution Compensation Supplementary Fund, 2003 (Supplementary Fund), nor incorporated its terms into domestic law.

The International Convention for Prevention of Pollution from Ships 1973 and its Protocol of 1978 (MARPOL) have been made a part of Indian domestic law, enacted in Part XI-A of the Merchant Shipping Act, 1958.

Various rules and regulations have been made to enforce the above conventions under the Merchant Shipping Act, 1958.

2.2 International Conventions: Collision and Salvage

The Indian Merchant Shipping Act, 1958 and the Merchant Shipping (Prevention of Collisions at Sea) Regulations, 1975 incorporate the Convention on the International Regulations for Preventing Collisions at Sea, 1972 and its Annexes.

India has ratified the International Convention on Salvage, 1989 but has not yet incorporated it into domestic legislation. The current provisions dealing with salvage fall under Part XIII of the Indian Merchant Shipping Act, 1986 and the Merchant Shipping (Wrecks and Salvage) Rules, 1974 (amended in 1975).

2.3 1976 Convention on Limitation of Liability for Maritime Claims

India is a party to the 1976 Convention on Limitation of Liability for Maritime Claims, which came into force through the Indian Merchant Shipping Act, 1958, with certain reservations expressly excluding claims arising out of loss resulting from contractual rights that occur in direct connection with the operation of a ship.

The subsequent 1996 protocol came into force through the Merchant Shipping (Limitation of Liability for Maritime Claims) Rules, 2015, and the amendment to the 1996 protocol has been brought in through the Merchant Shipping (Limitation of Liability for Maritime Claims) Rules, 2017.

The following entities can rely on such limitation of liability provisions:

the ship-owner (which includes the owner, charterer, manager and operator of a sea-going ship);
the salvor;
any person for whose act, neglect or default the ship-owner or salvor, as the case may be, is responsible; and
an insurer of liability for claims to the same extent as the assured themselves.

However, it is pertinent to note that Section 352E of the Merchant Shipping Act, 1958 specifically provides that "any ship in relation to which the right of limitation is invoked or whose release is sought and which does not at the time specified above fly the flag of the State, which is a party to the Convention, is wholly excluded from the provisions of this Part."

2.4 Procedure and Requirements for Establishing a Limitation Fund

Under the Merchant Shipping Act, 1958, the procedure for establishing a limitation fund in India involves filing a petition with the High Court that has admiralty jurisdiction. The petitioner must be a ship-owner or salvor seeking to limit their liability for certain claims arising out of maritime incidents.

To establish a limitation fund, the petitioner must deposit a sum of money or provide security, which is calculated based on the tonnage of the vessel or the value of the ship-owner's interest in the vessel, whichever is lower. The amount of the limitation fund is determined by the court based on the claims asserted against the petitioner.

Any ship-owner or salvor can set a limitation fund under the Merchant Shipping Act, 1958 in India, provided they meet the requirements for doing so.

A deposit is required to establish a limitation fund, but the petitioner can provide security in the form of a guarantee from an approved financial institution or a letter of undertaking from the petitioner's protection and indemnity club.

3. Cargo Claims

3.1 Bills of Lading

The Indian Carriage of Goods by Sea Act 1925 (COGSA) incorporates the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (the Hague Rules) in its Schedule.

In 1993, India amended COGSA and included certain provisions of the Protocol to amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1968 (the Hague–Visby Rules). Significantly, the legislation increased the limits as prescribed in the Hague–Visby Rules. However, the Rules do not, in themselves, have the force of law in India. The courts have also allowed carriers to take defences enumerated under Article IV of the Hague Rules (eg, fire).

For COGSA to become applicable, the port of loading has to be in India – ie, COGSA applies to ships carrying goods from Indian ports to foreign ports, or between ports in India.

3.2 Title to Sue on a Bill of Lading

Only a consignee of the goods named in a bill of lading or an endorsee to whom the property in the goods has passed by virtue of the bill of lading has title to sue – eg, the Notify Party will be able to sue on a bill of lading contract.

3.3 Ship-Owners' Liability and Limitation of Liability for Cargo Damages

In India, the liability of ship-owners for cargo damages is governed by COGSA, under which ship-owners are liable for damage to or loss of cargo carried on their vessels, subject to certain conditions and limitations.

If the ship-owner is the actual carrier, they are responsible for ensuring the safe carriage of the cargo from the port of loading to the port of discharge. In this case, the ship-owner's liability for cargo damages is not limited, unless the damage was caused by an act of God, fire, perils of the sea, or any other cause that is beyond their control.

If the ship-owner is the contractual carrier, meaning that they have entered into a contract with a shipper for the transportation of the cargo, their liability for cargo damages is limited. Under COGSA, the liability of a contractual carrier for loss or damage to cargo is limited to a sum not exceeding 666.67 Special Drawing Rights (SDRs) per package or unit, or 2 SDRs per kilogram of gross weight of the goods lost or damaged, whichever is higher.

It is important to note that COGSA provides for a presumptive limit of liability, which means that the ship-owner's liability for cargo damages is presumed to be limited to the amounts specified under COGSA, unless the shipper can prove that the damage was caused by the fault or neglect of the ship-owner.

In summary, the liability of ship-owners for cargo damages in India is governed by COGSA, and the extent of their liability will depend on whether they are the actual or contractual carrier and on the specific circumstances of the case.

3.4 Misdeclaration of Cargo

A carrier can establish a claim against the shipper for misdeclaration of cargo. The carrier has a right to be fully informed about the nature, quantity and condition of the cargo being carried, as this information is necessary for the carrier to assess the risk and make proper arrangements for the transportation of the cargo. If the shipper misdeclares the cargo, and the carrier incurs damages or losses as a result, the carrier may be able to recover those losses from the shipper through a claim.

In India, COGSA governs the liability of carriers in the event of misdeclaration of cargo. According to COGSA, the shipper is responsible for declaring the nature and quantity of the goods being shipped, and the carrier is entitled to rely on the accuracy of that declaration unless it has knowledge to the contrary.

There have been several recent judgments in India regarding claims for misdeclaration of cargo. In one case, the Supreme Court of India held that a carrier is entitled to recover damages from the shipper for misdeclaration of cargo if the carrier can show that it relied on the shipper's declaration and suffered damages as a result. In another case, the Bombay High Court held that a carrier can claim damages from the shipper for misdeclaration of dangerous goods, even if the carrier was aware of the nature of the goods but relied on the shipper's declaration regarding their safe carriage.

It is important to note that each case involving a claim for misdeclaration of cargo will be determined based on its own facts and circumstances. It is advisable to seek the assistance of a qualified legal professional in determining whether a claim for misdeclaration of cargo can be established in a particular case.

3.5 Time Bar for Filing Claims for Damaged or Lost Cargo

The time bar for filing a claim for damaged or lost cargo in India is governed by the Limitation Act, 1963, which sets out the time limits within which a claim must be brought in order to be considered valid.

For claims based on breach of contract, the time limit is three years from the date when the cause of action arose. For claims based on liability in tort, the time limit is three years from the date when the cause of action arose or when the claimant became aware of the injury, whichever is later.

It is important to note that the time limit for filing a claim for damaged or lost cargo is a procedural limitation, and not a substantive limitation on the right to bring a claim. This means that the time limit for filing a claim is a procedural requirement and does not affect the validity of the claim itself.

In India, the time limit for filing a claim can be extended or sustained under certain circumstances. For example, the Limitation Act provides for the extension of the time limit in cases where the claimant was prevented by sufficient cause from filing the claim within the prescribed time limit. In such cases, the time limit may be extended by a period equal to the length of the disability.

If the contract of carriage is governed by the Hague–Visby Rules, the time bar for filinga claim is within one year from the day on which the goods are delivered or should have been delivered by the carrier.

4. Maritime Liens and Ship Arrests

4.1 Ship Arrests

The arrest of ships in India was previously governed by the International Convention Relating to the Arrest of Sea-Going Ships 1952 and the International Convention on the Arrest of Ships 1999. However, the arrest of ships is now strictly governed by the provisions of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017. If there is any inconsistency, the statute will prevail over the conventions.

4.2 Maritime Liens

Section 9 of the Admiralty Act recognises the following maritime liens in India in order of inter se priority:

claims for wages and other sums due to the Master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;
claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;
claims for reward for salvage services, including special compensation relating thereto;
claims for port, canal and other waterway dues and pilotage dues, and any other statutory dues related to the vessel; and
claims based on tort arising out of loss or damage caused by the operation of the vessel other than loss or damage to cargo and containers carried on the vessel.

In India, the High Courts may exercise jurisdiction on maritime claims arising out of the following conditions:

disputes regarding ownership of a vessel;
disputes between co-owners of a vessel regarding employment or earnings of the vessel;
a mortgage on a vessel;
the construction, repair or conversion of the vessel;
disputes arising out of the sale of a vessel; and
environmental damage caused by the vessel, etc.

The Bill defines a vessel as any ship, boat or sailing vessel that may or may not be mechanically propelled. While determining maritime claims under the specified conditions, the courts may settle any outstanding accounts between parties with regard to the vessel. They may also direct that the vessel or a share of it be sold. With regard to a sale, courts may determine the title to the proceeds of such sale.

In Saba International Shipping and Project Investment Private Limited v Owners and parties interested in the Vessel M.V. Brave Eagle, previously known as M.V. Lima-I and others ((2002) 2 CHN 280 at 287-288 and 289-290), the High Court differentiated between a maritime claim and a maritime lien and held as follows: "All cases of maritime lien are based on maritime claims but all maritime claims do not give rise to a maritime lien on the ship. Normally a lien in the general law is a rather limited right over someone else's property. It is a right to retain possession of that property usually to receive a claim."

Admiralty jurisdiction can be invoked and a ship arrested in respect of any claim for building, equipping or repairing said ship.

4.3 Liability in Personam for Owners or Demise Charterers

Section 5(1) of the Admiralty Act, inter alia, provides that a vessel may be arrested where the court has reason to believe that the person who owned/demise chartered the vessel at the time when the maritime claim arose is liable in personam for the claim and is the owner/demise charterer of the vessel when the arrest is affected. However, in the case of maritime liens, there is no requirement for in personam liability of the owner/demise charterer and the claimant can proceed in rem against the vessel, regardless of her ownership.

The Supreme Court has held that the supply of necessaries and/or bunkers does not constitute a maritime lien under Indian law (Chrisomar Corpn. v MJR Steels (P) Ltd. (2018) 16 SCC 117). Therefore, in order to effect the arrest of a vessel for necessaries or bunkers, privity of contract (ie, in personam liability of the owner or demise charterer of the vessel) will have to be made out.

4.4 Unpaid Bunkers

The bunker supplier cannot arrest the vessel if the supply is at the order of the charterer and not at the order of the owner or bareboat charterer.

In the case of Dan Bunkering Pte. Ltd v Best Excellence Corporation Ltd (Civil Application No.1 of 2019 in Admiralty Suit no.8 of 2019), the court held that Section 9 of the Admiralty Act, 2017, which codifies maritime liens and restricts them to only five categories of claims, does not extend to claims for unpaid bunker supplies. The court ruled that a contractual lien could not bind the owner of the vessel, particularly when there was no privity of contract between it and the bunker supplier. The court also held that the bunker supplier was a maritime claimant under Section 4 of the Act and could only arrest a ship if it were satisfied that the owner was liable for the supply.

4.5 Arresting a Vessel

A claimant is required to satisfy the following formalities in order to make an application for arrest:

a vakalatnama (note of appearance) is required to be executed in favour of the lawyer;
a power of attorney or board resolution and copies of other documents relied upon in support of the claim are required to be filed in court (copies would suffice at the time of filing the arrest application, but the original documents must be produced in court when the matter goes to trial);
if a power of attorney is issued in a foreign country, it will have to be notarised and legalised as per the laws applicable in that country – since India is a signatory to the Apostille Convention (Hague Convention), apostilled documents are also accepted by courts;

if there are any affidavits affirmed by any person based outside India, they will need to be notarised and legalised or apostilled in the home country, as per the laws applicable in that country;

if any of the formalities cannot be complied with, owing to limited time, an undertaking can be given to the court that compliance with the pending formalities shall be completed within a specific time, which the court normally accepts;
at present, the documents can be filed electronically in certain jurisdictions (High Courts), but only for a limited period, following which physical copies will have to be filed before the respective court;

once all documents are made available, the arrest application can be made within 24 hours; and
the application for arrest is required to be made to the admiralty court of the coastal state in whose jurisdiction the vessel is found.

The most important requirement for ship arrest is that the claimant needs to issue a power of attorney in favour of local attorneys other than the lawyers instructed, who will have the power to sign all the necessary court documents. The attorney then has to sign a Vakalatnama (note of appearance) authorising a lawyer to act, appear and plead the case in court on behalf of the claimant. At the time of filing the arrest application, copies of the documents would suffice, but original documents are required to be produced in court when the matter goes to trial.

A substantive suit is required to be filed in India and therefore all documents in support or defence of the case are to be annexed or exhibited to the pleadings. If the documents are not in the English language, they will need to be officially translated and the official translation will have to be filed along with the document.

The arresting party need not provide any counter-security at the time of filing for the arrest. Such a party will have to provide an undertaking on an affidavit at the time of filing the suit and application for arrest. However, the court mayorder the arresting party to furnish counter-security, either at its discretion or upon application by the owners.

4.6 Arresting Bunkers and Freight

Bunkers and freight can be arrested, provided they are not arrested independently unless there is a claim against a vessel.

4.7 Sister-Ship Arrest

Section 5 (2) of the Admiralty Act permits the arrest of any other vessel for the purpose of providing security against a maritime claim (subject to the test of ownership/ privity as set out in Section 5(1) being satisfied), and thus Indian law allows sister-ship arrests.

4.8 Other Ways of Obtaining Attachment Orders

Other forms of attachment orders are available to the party for securing its claim, such as attachment before judgment. However, the ship-owner or defendant must be within the jurisdiction of the court and such a claim is a claim in personam against the ship-owner or the defendant.

4.9 Releasing an Arrested Vessel

A party seeking release of the vessel is required to furnish security for the plaintiff's claim (inclusive of interest and costs), by way of either cash deposit or a bank guarantee. Indian courts do not accept letters of undertaking issued by P&I Clubs as security as a right. However, if the plaintiff consents or if the parties can agree to such letter of undertaking as security, the courts may accept them.

4.10 Procedure for the Judicial Sale of Arrested Ships

Under Section 11(3) of the Admiralty Act, the court has the power to pass an order for sale of an arrested vessel, and the sale proceeds are deposited in court to the benefit of the maritime claims.

The judicial sale of arrested vessels is by way of public auction, and the vessel is sold to the purchaser free of all encumbrances and liens. Proceedings for the sale of a vessel under arrest can be initiated three days after the date of arrest if the owner fails to enter an appearance and/or furnish security for the plaintiff's claim. The sale order would set out timelines for:

valuation by a court-appointed surveyor, on the basis of which a reserve bid price may be set;
settling the terms of the auction;
the publication of an advertisement in newspapers inviting bids;
the submission of bids in sealed envelopes to court, along with the Earnest Money Deposit (EMD) as set in the terms of auction; and
the date for the opening of bids in court and the awarding of the sale to the highest bidder, subject to the contents of the Valuation Report.

If the court does not receive a satisfactory bid, it will direct that the vessel be put up for re-auction.

Under the admiralty (jurisdiction and settlement of maritime claims) bill, 2016, the order of maritime claims determining the inter se priority in an admiralty proceeding shall be:

a claim on the vessel where there is a maritime lien;
registered mortgages and charges of the same nature on the vessel; and
all other claims.

The following principles shall apply in determining the priority of claims inter se:

if there is more than one claim in any single category of priority, they shall rank equally; and
claims for various salvages shall rank in inverse order of time when the claims thereto accrue.

4.11 Insolvency Laws Applied by Maritime Courts

In India, the Insolvency Law is analogous to Chapter 11 of the United States Bankruptcy Code. Under the Companies Act, 1956, the High Court can issue a winding-up order against a ship-owner. The National Company Law Tribunal can also initiate bankruptcy proceedings against a ship-owner, and maritime courts can order the arrest and judicial sale of a vessel owned by that owner.

A person having a maritime claim (which includes the higher subset of maritime lien) could proceed against the vessel independent of the owner. Unless the owner entered an appearance and deposited security, the vessel could be sold and the proceeds appropriated amongst different categories of claimants, as per a predetermined waterfall.

India codified admiralty law for the first time through the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 ("the Admiralty Act"), largely following extant international conventions and the position in common law. Significantly, this Act continued the treatment of vessels as independent juristic persons, allowed those vessels to be proceeded against independently, and prescribed a waterfall for treatment of claimants vis-à-vis the sale proceeds.

4.12 Damages in the Event of Wrongful Arrest of a Vessel

The test for wrongful arrest is malafide intention and bad faith by the arresting party. Upon an application by the owners, the Admiralty Court may declare the arrest of the vessel wrongful. The ship-owner will have to prove the losses suffered on account of wrongful arrest, and the court at its own discretion may grant damages in favour of the ship-owner. If it appears that there was not reasonable and probable cause for the provisional detention of a ship, by reason of the condition of the ship or the act or default of the owner or the Master, the Central Government shall be liable to pay the costs of and incidental to the detention and survey of the ship to the owner of the ship, and also compensation for any loss or damage sustained by said owner by reason of the detention or survey.

5. Passenger Claims

5.1 Laws and Conventions Applicable to the Resolution of Passenger Claims

The following international conventions apply to the resolution of maritime passenger claims in India.

The Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea 1974 and 1990 Protocols

This Convention lays down the liability of ship-owners for death or personal injury to a passenger, and also for loss of or damage to passengers' luggage if the incident causing such damage was due to the fault or neglect of the carrier or their servants or agents.

It could be stated that the Merchant Shipping Act, 1958 already provides for the liability of owners for personal and property claims, which is lower than the liability under the Athens Convention. Furthermore, there was a proposal to incorporate specific provisions into the Merchant Shipping Act, 1958 for placing liability on ship-owners to pay compensation for death or injury to passengers up to INR1 lakh, regardless of whether the owner is at fault or not.

The Convention on Limitation of Liability for Maritime Claims, 1976

This Convention replaced the International Convention relating to the Limitation of Liability of Owners of Sea-Going Ships, 1957, and came into force on 1 December 1986. The provisions of the 1957 Convention have already been incorporated into the Merchant Shipping Act, 1958. The 1976 Convention mainly increases the limit of liability for the loss of life or damage to property by almost two to four times the limits prescribed by the 1957 Convention. It has also specific provisions for compensation to be given for the death or injury of a passenger and loss or damage to passengers' luggage, equivalent to the provisions of the Athens Convention.

6. Enforcement of Law and Jurisdiction and Arbitration Clauses

6.1 Enforcement of Law and Jurisdiction Clauses Stated in Bills of Lading

In general, Indian courts will give effect to express governing law clauses in contracts, including bills of lading. The choice must be bona fide and legal, and not against public policy. Under Section 57 of the Indian Evidence Act, 1872, foreign law is a question of fact and would have to be proved by both parties proffering evidence, without which the court would presume that foreign law is the same as Indian law. In British India Steam Navigation Co., ltd. v Shanmughavilas Cashew Industries and ors, 1990 SCC (3) 481, the Supreme Court of India rejected the argument of lack of jurisdiction even though clause 3 of the bill of lading stated that the court at Cochin had no jurisdiction and only English courts had jurisdiction.

6.2 Enforcement of Law and Arbitration Clauses Incorporated Into a Bill of Lading

To incorporate an arbitration or dispute resolution clause, the bill of lading will be required to specify that the arbitration or dispute resolution clause is incorporated per the judgment of the Supreme Court in MV 'Baltic Confidence' v The State Trading Corporation of India Ltd (2001) 7 SCC 473.

In British India Steam Navigation Co Ltd v Shanmughavilas Cashew Industries, (1990) 3 SCC 481, the Supreme Court of India expressed the opinion that a consignee or an endorsee may be bound by the terms of the charterparty terms incorporated into the bill of lading contract even when the consignee or endorsee is unaware of those terms.

6.3 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Although India is party to the New York Convention, which has been incorporated into the Indian Arbitration and Conciliation Act, 1996 ("the Arbitration Act"), a foreign arbitral award can be enforced in India only if the government declares the country in which the award was passed to be a "reciprocating territory" under Section 44 or 53 of the Act. India has currently notified 48 New York Convention territories of the 164 contracting states to the Convention. Article V of the New York Convention, which sets out the grounds for refusal to enforce an arbitral award, has been incorporated into Section 48 of the Arbitration Act.

The 2015 amendment to the Arbitration Act narrowed the scope of challenge of a foreign award, especially on the ground of public policy, by inserting a specific clarification that the test of whether there is a contravention with the fundamental policy of Indian Law cannot entail a review on the merits. In a series of judgments (most recently Vijay Karia and Ors v Prysmian Cavi E Sistei SRL, 2020 SCC Online SC 177), the Supreme Court has held that an enforcing court cannot go behind the award and/or the arbitrator's interpretation on the ground of public policy.

6.4 Arrest of Vessels Subject to Foreign Arbitration or Jurisdiction

Indian courts generally recognise the enforceability of forum selection clauses in contracts. In British India Steam Navigation Co Ltd v Shanmughavilas Cashew Industries (1990) 3 SCC 481, the Supreme Court held that such clauses bind consignees/holders of bills of lading and are enforceable as a matter of Indian law.

However, should the cause of action be shown to be in India, or if India is shown to be the more natural or appropriate forum for determining disputes, Indian courts may hold that they are seized of jurisdiction, regardless of the exclusive jurisdiction clauses in the bills of lading. In this regard, Indian courts would apply the same principles as set out by the House of Lords in the case of Spiliada Maritime Corporation v Cansulex (1987) 1 AC 460, in considering whether India is the more appropriate forum for determining disputes under the bills of lading.

6.5 Domestic Arbitration Institutes

At present, there is no arbitration centre specifically for maritime claims, but the Gujarat Maritime University and the International Financial Services Centres Authority have signed a Memorandum of Understanding (MoU) at GIFT City to launch the Gujarat International Maritime Arbitration Centre (GIMAC).

6.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses

Interim measures granted by India-seated tribunals are automatically enforceable in India under Sections 17(2) and 9(3) of the Arbitration and Conciliation Act 1996, which are expressly related to India-seated arbitrations, as evidenced by the reference to Section 17 of the Act, but the principle enshrined in it is equally applicable when interim measures are sought in the Indian courts in connection with a foreign-seated arbitration.

The 2015 amendments of the Arbitration and Conciliation Act 1996 brought about significant changes to the arbitration laws in India. The insertion of Section 9(3) served to reduce the role of the court in relation to the grant of interim measures once the Arbitral Tribunal has been constituted.

Therefore, parties to foreign-seated arbitrations can obtain interim relief (under Section 9) from Indian courts, unless there is an agreement excluding such remedy.

7. Ship-Owner's Income Tax Relief

7.1 Exemptions or Tax Reliefs on the Income of a Ship-Owner's Companies

In India, certain tax benefits are available for shipping companies incorporated in India for the income earned by their vessels.

Tonnage Tax: this is a special tax regime applicable to shipping companies, under which the income of the company is taxed at a fixed rate based on the tonnage of the vessels owned by the company rather than the actual income earned by the company.
Accelerated Depreciation: shipping companies incorporated in India are eligible for accelerated depreciation on the vessels owned by them. This means that the cost of the vessels can be written off over a shorter period of time, thus reducing the taxable income of the company.

It is important to note that the availability of these tax benefits is subject to certain conditions and the provisions of the Income Tax Act, 1961, and the relevant rules and regulations. Companies are advised to seek professional tax advice to determine their eligibility for these benefits and the exact provisions applicable to them.

8. Implications of the Coronavirus Pandemic, Environmental Legislation and Trade Sanctions

8.1 COVID-19-Related Restrictions on Maritime Activities

In view of the COVID-19 pandemic, the Indian authorities have imposed certain restrictions on maritime activities in India, including the following

The entry of foreign-flagged vessels into Indian waters and the arrival of crew members from abroad into India are subject to certain restrictions. All incoming crew members are required to undergo a COVID-19 test and quarantine for a period of 14 days.
Loading and discharging operations at Indian ports are allowed to continue with the implementation of strict health and safety protocols, including regular sanitisation and mandatory use of face masks and other personal protective equipment.
Crew changes at Indian ports are permitted, subject to compliance with the health and safety protocols and the guidelines issued by the relevant authorities. Crew change restrictions have fluctuated from state to state and port to port at various times during the pandemic. Crew, ship-owners and ship managers should check with their local agents for guidance on the restrictions being imposed at a particular state or port.

It is important to note that these restrictions and guidelines are subject to change, based on the evolving situation of the pandemic, and shipping companies are advised to keep themselves updated on the latest developments.

8.2 Non-performance of a Shipping Contract

In India, the non-performance of a shipping contract due to the implications of the COVID-19 pandemic, such as late delivery, non-arrival of a chartered vessel, or a slow rate of loading or discharging, may be considered as either force majeure or frustration, depending on the specific circumstances of each case.

Force Majeure

The Indian Contract Act, 1872 provides for the doctrine of force majeure, which excuses a party from performance of its contractual obligations if the non-performance is due to an event beyond the control of the party. The COVID-19 pandemic may be considered as a force majeure event if the contract specifically includes a force majeure clause covering pandemic-related circumstances.

Frustration

The Indian law of contract recognises the doctrine of frustration, which operates to discharge a contract where the events that have taken place after the contract was made render it physically or commercially impossible for one or both parties to perform the contract. Whether the non-performance of a shipping contract due to the implications of the pandemic would be considered as frustration would depend on the specific circumstances of each case.

There have been some cases in India where the courts have dealt with matters relating to the non-performance of contractual obligations due to the COVID-19 pandemic. In these cases, the courts have considered the provisions of the contract, the force majeure clause and the specific circumstances of each case to determine whether the non-performance can be excused as force majeure or frustration.

It is important to note that the application of the doctrines of force majeure and frustration in the context of the COVID-19 pandemic is a complex and evolving area of law, and shipping companies are advised to seek professional legal advice to determine their rights and obligations in the specific circumstances of each case.

8.3 Enforcement of the "IMO 2020" Rule Relating to Limitation on the Sulphur Content of Fuel Oil

India has incorporated and implemented the IMO 2020 regulations, limiting the sulphur content of fuel oil used on board ships. The office of the Directorate General of Shipping is responsible for the enforcement of the sulphur content limitation in India.

The limit on sulphur content of fuel oil used by vessels when calling at ports in India and when navigating in India's territorial waters is 0.50% mass by mass (m/m). The regulations are enforced by the Indian Coast Guard, the Indian Customs and the Directorate General of Shipping.

No specific enforcement actions have yet taken place in India to enforce the sulphur content limitation, but the Indian government has taken a number of measures to ensure compliance with the regulations, including conducting regular inspections and monitoring of vessels calling at Indian ports.

There have not been any proceedings or sanctions in India due to a violation of the sulphur content limitation or related regulations. However, shipping companies are advised to ensure compliance with the regulations to avoid any penalties or other consequences that may result from non-compliance.

8.4 Trade Sanctions

India has incorporated some of the international trade sanctions imposed by the United Nations into its domestic law. The Indian government has the power to enforce these sanctions under the Foreign Trade (Development & Regulation) Act of 1992, which gives the government the authority to regulate imports and exports.

In recent years, India has been party to some international trade sanctions, such as those imposed on North Korea and Iran. Indian entities that have been sanctioned by trade sanctions include some individuals and organisations suspected of supporting terrorism or violating human rights. In these cases, legal proceedings have been conducted in India in accordance with Indian law.

It is important to note that India has not imposed any trade sanctions on Russia in response to the conflict in Ukraine. However, some Indian companies may have been affected by the sanctions imposed by other countries on Russia, such as the US and the EU.

There are no specific mechanisms within the Indian legal system that allow trade activities otherwise banned by sanctions. However, the government may grant licences or exemptions on a case-by-case basis, in accordance with its obligations under international law and its national interests.

9. Additional Maritime or Shipping Issues

9.1 Other Jurisdiction-Specific Shipping and Maritime Issues

Several important points should be considered in terms of maritime and shipping legal aspects in India, as follows.

Jurisdiction: India has a well-developed maritime and shipping industry, and the jurisdiction of Indian courts extends to Indian vessels and seafarers, regardless of where the vessel may be located or the nationality of the seafarer.
Maritime labour laws: India has ratified several international conventions related to the protection of seafarers' rights, such as the Maritime Labour Convention 2006. Indian seafarers are entitled to fair wages, safe working conditions, and protection against discrimination.
Carriage of goods by sea: the Carriage of Goods by Sea Act, 1925 governs the carriage of goods by sea in India and provides a framework for determining liability in case of loss or damage to goods in transit.
Marine insurance: this is mandatory for all Indian vessels engaged in international trade. The Indian Maritime Insurance Act, 1963 sets out the legal framework for marine insurance in India.
Marine pollution: India has ratified the International Convention for the Prevention of Pollution from Ships (MARPOL), which requires vessels to take measures to prevent and control pollution of the marine environment. The Merchant Shipping Act, 1958 and the Water (Prevention and Control of Pollution) Act, 1974 provide the legal framework for preventing and controlling marine pollution in India.
Salvage operations: the Salvage Convention, 1989 governs salvage operations in India and provides a framework for determining the rights and liabilities of salvors and ship-owners.
Maritime security: India has implemented the International Ship and Port Facility Security (ISPS) Code, which requires ships and port facilities to take measures to enhance security and prevent acts of terrorism and piracy.

Originally published by Chambers and Partners.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

India: Shipping 2023