The High Court 

MV Tirgu Frumos; 

Gourdomichalis Maritime SA v The Owners and All Persons claiming an Interest in the MV Tirgu Frumos

2000/4950 P  

12 May 2000 

MORRIS P 

This matter comes before the Court by way of Notice of Motion dated the 8th May 2000 whereby the Defendants seek an Order. 
  
(1) Directing the release of the MV Tirgu Frumos arrested pursuant to warrant dated the 27th April 2000. 
  
(2) An Order setting aside the said warrant of arrest. 
  
(3) If necessary or appropriate an Order directing an enquiry as to the damages suffered by the Defendants by reason of the wrongful arrest of the vessel at the suit of the Plaintiff. 
  
(4) Such further or other relief as may be necessary or appropriate. 
  
(5) An Order providing for the costs of this application and for the costs of the proceedings. 

On the 27th April 2000 the Plaintiffs applied to the Court ex parte and were granted an Order directing that the MV Tirgu Frumos be arrested at the port of Waterford. This application is brought by the owners of that vessel 'Petromin' seeking its release. 

The basis upon which the Plaintiffs sought to arrest the ship in Waterford was on the basis of what is sometimes known as a "sister ship" relationship. In simple terms it is provided that in certain circumstances an Order can be made for the arrest of a ship in the ownership of an owner against whom the claimant has a "maritime claim" as defined by the International Convention relating to the arrest of seagoing ships signed in Brussels on the 10th May 1952 which is incorporated into Irish law by the Jurisdiction of Courts (Maritime Conventions) Act 1989. A "sister ship" arrest may be ordered by the Court where it is established: 
  
(1) That the Plaintiff has a maritime claim. 
  
(2) That the claim arose in respect of another ship which is owned by the person who was at the time when the maritime claim arose, the owner of that ship. 

The area of contest in the present case centres around two points: 
  
(1) It is denied by the Defendants that any claim which the Plaintiffs may have is the "maritime claim." 
  
(2) It is denied that at the time when this claim was alleged to have arisen they were the owners of a ship (the MV "Costesti") in respect of which that claim is said to arise. 

The facts of this case may be briefly summarised as follows: A joint venture agreement was entered into between the Parties to this action on the 20th July 1992. The agreement recites the wish of the Parties to establish a Maltese domicile and jointly operate a company known as Gromar Shipping Company Limited and the object of this company is stated to be to reclass and operate a number of four vessels ... presently owned and controlled by Petromin and/or their nominees or other commercial operations for the mutual economic benefit of the Parties. 

In Annex 1 to that agreement the third vessel named is a bulk carrier called M/V "Costesti". This was being built in a shipyard in Romania and was due for delivery to Petromin on the 30th June 1993. 

Among the objects of the joint venture is stated to be that these vessels "will be entered into bare boat charter between Petromini and/or their nominees and the subsidiary company. The hire will be US 700$ per day/pro rata". 

There was a failure on the part of Petromin to deliver that ship under the terms of the agreement and the Plaintiff claims to have suffered loss and damage. It claims that this claim is a "maritime claim" as divined by the first schedule to the Brussels Convention in that it relates to the use or hire of a ship in the ownership of the same company that owns the vessel detained in Waterford harbour and accordingly is entitled to seek from the Court the warrant of arrest. 

The definition of a "maritime claim" as set out in Article 1 to the Convention is as follows: (1) "Maritime claim" means a claim arising out of one or more of the following (d) agreement relating to the use or hire of any ship whether by charter party or otherwise. 

I have no doubt whatever that in as much as paragraph 3.4 of the joint venture Agreement provides that the vessels referred to in Annex 1 "will be entered into bare boat charter between Petromin and/or their nominees and the subsidiary company" is clearly at the very minimum an agreement relating to the use or hire of a ship and insofar as a claim arises out of an alleged default it is a maritime claim within the meaning of Article 1 of the Convention. 

A more substantial point is secondly made by the Defendants. They deny that they were the owners of the vessel in the circumstances described in Article 3 of the Convention. Article 3 provides as follows: "(1) subject to the provisions of paragraph 4 of this Article and of Article 10 a claimant may arrest the particular ship in respect of which the maritime claim arose or any other ship which is owned by the person who was at the time when the maritime claim arose the owner of the particular ship even though the ship arrested be ready to sail ... " 

It becomes necessary to identify when the claim, be it a maritime claim or otherwise, arose. In my view this must be when there was a failure on the part of the Defendants to deliver the Costesti in accordance with the agreement. I am confirmed of this by a consideration of the amended points of claim advanced for the purposes of an arbitration held in this matter when at revised paragraph 9 of these points it is stated "In breach of the agreement the Respondents failed to deliver the "Costesti" and the "TBN", Order number 864 to the first claimants, their nominees and/or the second claimants. In the premises the claimants themselves and/or their nominees and/or the second claimants for whom the first claimants by reason of the Management Agreement and/or their duties (fiduciary or otherwise) have suffered loss and damage as particularised in Schedule 1 attached hereto." 

That failure arose when the time for the delivery of the vessel provided for in the joint venture namely the 30th June 1993 passed. 

I am satisfied that the onus lies on the Plaintiff to establish to the satisfaction of the Court that on the balance of probabilities the two vessels were in fact in the ownership of the same company at the relevant time. Having considered the documents exhibited in the Affidavit of Mr David O'Donoghue dated the 5th May 2000 (commented upon but not objected to by the Plaintiff) I am of the view that they have not discharged this onus of proof. I think that the high probability is that job 863 (which was the Costesti) was delivered to other owners by the shipyard as a result of the order being cancelled by Petromin. I reject the submission that the ownership in the vessel whilst under construction passed piece meal to the building owner. I am satisfied that logically whilst staged payments were required during the construction of the vessel which would give the building owner rights in the vessel, the ownership of the finished product would pass only on the completion of the contract and the payment of the final instalment. 

If therefore the breach of the agreement and the maritime claim arose on the failure of Petromin to deliver the vessel as required under the joint venture and if by then the contract for the construction of the vessel had already been rescinded, I am satisfied that the vessel was not in the ownership of Petromin and accordingly there is no entitlement in the Plaintiffs to the Order of the 27th April 2000. 

Accordingly I discharge the Order and direct the release of the vessel in accordance with paragraphs 1 and 2 of the Notice of Motion. MV Tirgu Frumos; Gourdomichalis Maritime SA v The Owners and All Persons claiming an Interest in the MV Tirgu Frumos 

The High Court 

2000/4950 P (Transcript) 

12 May 2000 

PANEL: Morris P 

JUDGMENTS: 
MORRIS P 

This matter comes before the Court by way of Notice of Motion dated the 8th May 2000 whereby the Defendants seek an Order. 
  
(1) Directing the release of the MV Tirgu Frumos arrested pursuant to warrant dated the 27th April 2000. 
  
(2) An Order setting aside the said warrant of arrest. 
  
(3) If necessary or appropriate an Order directing an enquiry as to the damages suffered by the Defendants by reason of the wrongful arrest of the vessel at the suit of the Plaintiff. 
  
(4) Such further or other relief as may be necessary or appropriate. 
  
(5) An Order providing for the costs of this application and for the costs of the proceedings. 

On the 27th April 2000 the Plaintiffs applied to the Court ex parte and were granted an Order directing that the MV Tirgu Frumos be arrested at the port of Waterford. This application is brought by the owners of that vessel 'Petromin' seeking its release. 

The basis upon which the Plaintiffs sought to arrest the ship in Waterford was on the basis of what is sometimes known as a "sister ship" relationship. In simple terms it is provided that in certain circumstances an Order can be made for the arrest of a ship in the ownership of an owner against whom the claimant has a "maritime claim" as defined by the International Convention relating to the arrest of seagoing ships signed in Brussels on the 10th May 1952 which is incorporated into Irish law by the Jurisdiction of Courts (Maritime Conventions) Act 1989. A "sister ship" arrest may be ordered by the Court where it is established: 
  
(1) That the Plaintiff has a maritime claim. 
  
(2) That the claim arose in respect of another ship which is owned by the person who was at the time when the maritime claim arose, the owner of that ship. 

The area of contest in the present case centres around two points: 
  
(1) It is denied by the Defendants that any claim which the Plaintiffs may have is the "maritime claim." 
  
(2) It is denied that at the time when this claim was alleged to have arisen they were the owners of a ship (the MV "Costesti") in respect of which that claim is said to arise. 

The facts of this case may be briefly summarised as follows: A joint venture agreement was entered into between the Parties to this action on the 20th July 1992. The agreement recites the wish of the Parties to establish a Maltese domicile and jointly operate a company known as Gromar Shipping Company Limited and the object of this company is stated to be to reclass and operate a number of four vessels ... presently owned and controlled by Petromin and/or their nominees or other commercial operations for the mutual economic benefit of the Parties. 

In Annex 1 to that agreement the third vessel named is a bulk carrier called M/V "Costesti". This was being built in a shipyard in Romania and was due for delivery to Petromin on the 30th June 1993. 

Among the objects of the joint venture is stated to be that these vessels "will be entered into bare boat charter between Petromini and/or their nominees and the subsidiary company. The hire will be US 700$ per day/pro rata". 

There was a failure on the part of Petromin to deliver that ship under the terms of the agreement and the Plaintiff claims to have suffered loss and damage. It claims that this claim is a "maritime claim" as divined by the first schedule to the Brussels Convention in that it relates to the use or hire of a ship in the ownership of the same company that owns the vessel detained in Waterford harbour and accordingly is entitled to seek from the Court the warrant of arrest. 

The definition of a "maritime claim" as set out in Article 1 to the Convention is as follows: (1) "Maritime claim" means a claim arising out of one or more of the following (d) agreement relating to the use or hire of any ship whether by charter party or otherwise. 

I have no doubt whatever that in as much as paragraph 3.4 of the joint venture Agreement provides that the vessels referred to in Annex 1 "will be entered into bare boat charter between Petromin and/or their nominees and the subsidiary company" is clearly at the very minimum an agreement relating to the use or hire of a ship and insofar as a claim arises out of an alleged default it is a maritime claim within the meaning of Article 1 of the Convention. 

A more substantial point is secondly made by the Defendants. They deny that they were the owners of the vessel in the circumstances described in Article 3 of the Convention. Article 3 provides as follows: "(1) subject to the provisions of paragraph 4 of this Article and of Article 10 a claimant may arrest the particular ship in respect of which the maritime claim arose or any other ship which is owned by the person who was at the time when the maritime claim arose the owner of the particular ship even though the ship arrested be ready to sail ... " 

It becomes necessary to identify when the claim, be it a maritime claim or otherwise, arose. In my view this must be when there was a failure on the part of the Defendants to deliver the Costesti in accordance with the agreement. I am confirmed of this by a consideration of the amended points of claim advanced for the purposes of an arbitration held in this matter when at revised paragraph 9 of these points it is stated "In breach of the agreement the Respondents failed to deliver the "Costesti" and the "TBN", Order number 864 to the first claimants, their nominees and/or the second claimants. In the premises the claimants themselves and/or their nominees and/or the second claimants for whom the first claimants by reason of the Management Agreement and/or their duties (fiduciary or otherwise) have suffered loss and damage as particularised in Schedule 1 attached hereto." 

That failure arose when the time for the delivery of the vessel provided for in the joint venture namely the 30th June 1993 passed. 

I am satisfied that the onus lies on the Plaintiff to establish to the satisfaction of the Court that on the balance of probabilities the two vessels were in fact in the ownership of the same company at the relevant time. Having considered the documents exhibited in the Affidavit of Mr David O'Donoghue dated the 5th May 2000 (commented upon but not objected to by the Plaintiff) I am of the view that they have not discharged this onus of proof. I think that the high probability is that job 863 (which was the Costesti) was delivered to other owners by the shipyard as a result of the order being cancelled by Petromin. I reject the submission that the ownership in the vessel whilst under construction passed piece meal to the building owner. I am satisfied that logically whilst staged payments were required during the construction of the vessel which would give the building owner rights in the vessel, the ownership of the finished product would pass only on the completion of the contract and the payment of the final instalment. 

If therefore the breach of the agreement and the maritime claim arose on the failure of Petromin to deliver the vessel as required under the joint venture and if by then the contract for the construction of the vessel had already been rescinded, I am satisfied that the vessel was not in the ownership of Petromin and accordingly there is no entitlement in the Plaintiffs to the Order of the 27th April 2000. 

Accordingly I discharge the Order and direct the release of the vessel in accordance with paragraphs 1 and 2 of the Notice of Motion.