Lloyd's Maritime and Commercial Law Quarterly
THE DE FACTO DEMISE CHARTERER
The Giuseppe di Vittorio
A potential lacuna in English law exists in relation to the right to arrest State-owned vessels which are operated by a separate management company. If the management company incurs personal liability in respect of its operation of the State’s vessels, those persons with claims against it might reasonably expect to be able to arrest any vessel in the State fleet which called at a port in England or Wales. However, such expectations would be disappointed unless a court were prepared to find either that the management company was the owner or the demise charterer of the vessel in respect of which the claim arose,1 or else was the owner of another vessel in the same fleet.2
This problem has recently come before the Admiralty Court on two separate occasions in connection with attempts to discharge arrests of vessels owned by the Republic of the Ukraine and managed by Black Sea Shipping Co. (BLASCO), which is a State enterprise. Although the Republic of the Ukraine retains ownership of its fleet, substantial management autonomy has been devolved to BLASCO.
1. The Nazym Khikmet
The relationship between the Republic and BLASCO first came under scrutiny in The Nazym Khikmet,3 where the Republic applied to set aside the arrest of its vessel, the Zorinsk, in respect of a claim for damage to cargo carried on board a sister-ship, the Nazym Khikmet. It was accepted that BLASCO was the person liable in personam by reason of the possession and control it exercised over the vessel in which the cargo in question had been carried. To justify the arrest, the plaintiff had to show that BLASCO was the beneficial owner of the Zorinsk under the “sister-ship” provisions of the Supreme Court Act 1981, s. 21(4)(ii).
On the evidence before him Clarke, J., found that this had not been established and his decision was upheld by the Court of Appeal. Despite the devolution of a wide measure of commercial discretion to BLASCO, Sir Thomas Bingham, M.R., stated that “the State has retained its ownership of the income-earning assets of enterprises such as BLASCO and has retained the right and power of ultimate decision over the use and exploitation of those assets … Even if in practice BLASCO enjoyed a wide measure of commercial discretion,
1. So as to justify an arrest under the Supreme Court Act 1981, s. 21(4)(i).
2. So as to justify an arrest under the “sister-ship” provisions of the Supreme Court Act 1981, s. 21(4)(ii).
3. [1996] 2 Lloyd’s Rep. 362 (C.A.).
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