This is an important question as the advantages and benefits of arrest are manifold. An arrest, which forces the vessel to remain within a jurisdiction, can be exercised based on a prima facie case at the commencement of the in rem proceedings and is relatively easier to obtain than an injunction. The arrest also places pressure on the party whose vessel has been arrested to provide security for the vessel's release and once judgment in an in rem action has been obtained, the arresting party enjoys higher priority from the proceeds of sale of the vessel as compared to certain categories of creditors.
Malaysian Admiralty Jurisdiction
The High Courts in Malaysia have "the same jurisdiction and authority in relation to matters of admiralty as is had by the High Court of Justice in England under the United Kingdom Supreme Court Act 1981", pursuant to section 24(b) of the Courts of Judicature Act 1964. Hence, although Malaysia is not a signatory to the Brussels Arrest Convention 1952, by virtue of section 24(b), the High Courts in Malaysia has the same in rem jurisdiction to arrest seagoing vessels as the High Court of a signatory to the Arrest Convention, namely the UK.
The UK High Court's admiralty jurisdiction is set out in sections 20 to 24 of the UK Supreme Court Act 1981 (since renamed the Senior Courts Act 1981) ("SCA"). These sections provide that, subject to the satisfaction of specified conditions, an in rem action may be brought against a ship (or in certain circumstances, a sister ship), amongst others, when a claim gives rise to a maritime lien1 or a statutory lien under the SCA.
The previously established tide – 'No bar rule'
The bringing of an in rem action against a vessel has been regarded as a separate action to an in personam action. This is so even though it has been decided in The Kusu Island  2 SLR 267 that upon an appearance being entered by the owner/bareboat charterer of the vessel in an in rem action, the in rem action becomes a hybrid action against the property, as well as an in personam action against the defendant entering appearance.
Early cases in the 1800s have held that where an in personam judgment against a shipowner is unsatisfied, the plaintiff is not precluded from bringing an in rem action against the vessel (The "Bengal " (1859) 166 ER 1220; The "John and Mary" (1859) 166 ER 1221; The Cella (1888) 13 P.D. 82).
The most famous application of this principle was in The Rena K  1 QB 377 ("The Rena K") which concerned an arbitration award. This rule formulated in The Rena K (which would later become known as the 'no bar rule') was held to apply to claims involving maritime liens and statutory liens. Brandon LJ's reasoning was that based on the authorities, "a cause of action in rem, being of a different character from a cause of action in personam, does not merge in a judgment in personam, but remains available to the person who has it so long as, and to the extent that, such judgment remains unsatisfied". On that basis, it was held that the same principle must apply to an arbitral award which is based on a cause of action in personam.
This principle also applies conversely – an earlier judgment in rem does not preclude an in personam action against the owner of the vessel on the same cause of action if the judgment in the earlier action remains unsatisfied from the proceeds of judicial sale of the vessel (The Joannis Vatis (No 2)  P. 213; Nelson v Couch (1863) 143 ER 721).
Turning of the tide? – Right to arrest post-judgment threatened
The position in the UK changed following the UK House of Lords' decision in Republic of India And The Government Of The Republic Of India (Ministry Of Defence) v India Steamship Co. Ltd. (The "Indian Grace") (No. 2)  1 Lloyd's Rep 1 ("Indian Grace (No 2)"). In that case, a judgment in personam was entered against the shipowner in India. Subsequently, the plaintiffs proceeded to arrest the defendant's vessel in the UK by invoking her admiralty jurisdiction. The question before the UK Supreme Court was whether the in personam action fell within the prohibition in section 34 of the UK Civil Jurisdiction and Judgments Act 1982 ("CJJA"). Section 34 reads as follows:
Lord Steyn in his speech which was unanimously agreed to by the other judges of the UK Supreme Court held that an action in rem was in reality an action against the shipowner from the moment that the Admiralty Court was seized with jurisdiction, either by service of a writ or when it is deemed served. Hence, the in personam judgment in India fell squarely within section 34 of the CJJA as a judgment that had been given in favour of the plaintiff between the same parties or their privies. The plaintiff was therefore barred from bringing the in rem action in the UK. In his conclusion on the action in rem point, Lord Steyn stated:
It is now possible to say that for the purposes of section 34 an action in rem is an action against the owners from the moment that the Admiralty Court is seized with jurisdiction. The jurisdiction of the Admiralty Court is invoked by the service of a writ, or, where a writ is deemed to be served, as a result of the acknowledgement of the issue of the writ by the defendant before service: The Banco  P. 137. From that moment the owners are parties to the proceedings in rem."
Resisting the turn of the tide
The decision in the Indian Grace (No 2) has been met with resistance in other common law jurisdictions, The 'no bar rule' formulated by Lord Justice Brandon in The Rena K, or its underlying principles has been consistently preferred over the Indian Grace (No 2) in these jurisdictions, with the Indian Grace (No 2) found to be limited to issues arising out of section 34 of the CJJA.
In the Australian case of The Comandate  1 Lloyd's Rep 119, the question the Federal Court had to deal with was whether the filing of an in rem action amounted to an abandonment of the right to arbitrate. It was held that bringing an in rem action is not inconsistent with the right to arbitrate and the court favoured the procedural theory, i.e., an in rem proceeding does not merge with or become, in personam proceedings once the defendant enters an appearance. The court distinguished the Indian Grace (No 2) and confined Lord Steyn's decision to one concerning section 34 of the CJJA only, which is not applicable in Australia.
The New Zealand High Court in The Irina Zharkikh  2 Lloyd's Rep 319 rejected the defendant shipowners' argument that if an arbitral award was made, it would result in the underlying cause of action merging in the award. The court held that an arbitration award determining the amount owed by the defendant shipowners does not exhaust the underlying cause of action and hence would not preclude the plaintiffs from continuing to prosecute in rem proceedings. The court held that the rule that an unsatisfied in personam judgment does not exclude a subsequent in rem claim applies in the case of an unsatisfied arbitral award – effectively upholding the 'no bar rule' expounded by Lord Justice Brandon.
In Kuo Fen Ching v Dauphin Offshore Engineering & Trading Pte Ltd  2 SLR(R) 793, the Singapore Court of Appeal analysed the nature of an admiralty action in rem and found that:
- An in rem action continues to proceed against the res even though the real party to the action is the shipowner. Therefore, the action against the ship and against the defendant are considered different actions (applying the decision in The August Eighth  1 Lloyd's Rep 351).
- The Indian Grace (No 2) is distinguishable as it concerns section 34 of the CJJA and the principle of res judicata that it invoked.
In Hong Kong, the Court of Appeal in The Alas  6 HKC 557 had to deal with the situation where a warrant of arrest was issued against a vessel for unpaid hire even though the plaintiff had obtained an arbitral award. Hong Kong has an equivalent to section 34 of the CJJA in the form of section 5(1) of the Foreign Judgments (Restriction on Recognition and Enforcement) Ordinance (Cap 46) which provides as follows:
What is noteworthy is that the court dismissed the application to set aside the warrant of arrest as the claim was made for unpaid hire and was not for the enforcement of an award. On that ground, the Hong Kong Court of Appeal distinguished the Indian Grace (No 2) as that decision was concerned with a foreign judgment while this case was dealing with an arbitral award. At the same time while not making a final decision on this point, the court stated its approval for the 'no bar rule' in The Rena K. Hence, by that rationale, notwithstanding that it was not the point in question, it would appear that even in the case where there was a foreign judgment in personam, the court has left open the likelihood that an in rem claim may be brought against a vessel in Hong Kong.
Wither the tide flows in Malaysia?
The Malaysian court has not expressly decided whether the 'no bar rule' applies in Malaysia. However, it is our view that the 'no bar rule' in The Rena K is likely to be accepted by the Malaysian courts notwithstanding the decision in Indian Grace (No 2) for the following reasons:
- Under section 24(b) of the CJA 1964, the High Courts in Malaysia have the same jurisdiction and authority in relation to matters of admiralty as is had by the High Court of Justice in England under the SCA 1981. Section 34 of the CJJA, has no application or equivalent in Malaysia. Hence, the Malaysian jurisdiction is limited to what is conferred in the SCA and does not import any limitation to that jurisdiction provided under other statutes such as the CJJA. In the circumstances, in our view, the Indian Grace (No 2), being a case which decided the point under section 34 of the CJJA, will not limit the admiralty jurisdictions of the High Court of Malaysia in relation to in rem claims, even when there is a judgment in personam or an arbitral award which has decided the matter whether in a local or foreign court, on the merits.
- The Rena K applied in the UK before section 34 of the CJJA and Indian Grace (No 2). It has received judicial recognition in other common law jurisdictions. Conversely, the Indian Grace (No 2) has either been criticised or has been confined or distinguished on grounds that it involves section 34 of the CJJA.
- bring execution proceedings on the judgment, for Malaysian judgments;
- in the case of a foreign judgment given by any of the courts/jurisdictions listed in the First Schedule of Reciprocal Enforcement of Judgments Act 1958 ("REJA"), seek registration of the judgment, and thereafter enforcement; or
- for non-REJA courts/jurisdictions, bring a common law action pursuant to the foreign judgment in a Malaysian court.
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.