Friday, December 17, 2010

Surrogacy – Action ‘in rem’ and Admiralty Law

"As a result of aggressive marketing by cola companies, people have stopped drinking healthy drinks like fruit juices and people in the villages have actually begun to believe that soft drinks are good for health. Aerated drinks are not only bad for health, they are also bad for local industry. Thanks to aerated drinks, it's becoming more and more difficult to find nimbu sherbet and coconut water."

The little master Sachin sets high standards on the field and off it too – recently he was in the news for turning down a liquor advertisement contract reportedly a whopping 20 Cr.  Before him there was another noble person, who did not receive this much attention……..

Even at the time when liquor advertisement were banned, you could have seen no. of commercials wherein popular (read cinema artistes) recommending a brand, make a pause and adding soda or club soda.  It was the way of marketing by alcohol companies – have not you observed that all alcohol brands have a bottled water brand too ?

There are surrogate ads – surrogate means substitute.  In medical parlance, it is an arrangement where a woman agrees to undergo pregnancy, and delivery for somebody else who either cannot or chooses not to.

Marine is deep as ocean, complex and interesting.  Besides the various enactments there are many conventions and there is Admiralty Law.    There could be Proprietary marine time claim relating to : possession of a ship, title or ownership or a share of a ship, mortgage of ship or its freight, claim between the co owners, claim for satisfaction of a judgment.   There would also be general maritime claim such as claim for damage done by a ship, liability o the owner of a ship, claim for loss or life or for personal injury sustained in a ship,  an act of omission in connection with loading or unloading of goods,  towage, pilotage, salvage and much more. 

Admiralty law is that body of law governing maritime offences and activities.  It would encompass marine commerce, navigation, shipping, sailors and transportation of passengers and goods by sea.

Marine or for that matter Law is all about terminology.  In rem is Latin for “in a thing”  - an action ‘in rem’ is towards some specific property rather than being a claim for monetary compensation against a person, which would be ‘in personam’.  Rem would be on property – land could be an example, so also a ship ie., the ownership fight.  The jurisdiction of Court would also be different – in rem action, it would be where the property actually is. 

In maritime disputes, quite often to enforce their right of compensation,  whether arising out of maintenance and cure.  The ship owner is obliged to provide medical care to sea man and provide basic living expenses during the period of convalescence.   They owe a duty of reasonable care to passengers  as also to goods. On a simpler note, the party which has advanced money for purchase fo the ship, vendors who had supplied necessities, seamen and many others could have a lien on the ship to the extent of their dues.  Quite often we have claims where the voyage is imperilled  and salvors are to the fore in saving the ship laden with cargo. Mariners have a duty to save the lives but they are entitled to reward for saving the property.  Such parties in trying to recover their dues, can seek arrest of the ship in which the cause of action arose or any other ship under the same management.

An interesting case involving arrest of ship Gem of Safaga has been reported in the Federal Court of Australia.  In that case under section 19 of the Admiralty Act 1988 relating  to the right of a creditor, attempt was made  to proceed in rem against a surrogate ship.

The case expanded new horizons as the owing party had only one-tenth share over Gem of Safaga.    The Sec 19 provides right to proceed in rem on owner’s liabilities where a general maritime claim concerning a ship or other property, a relevant person – was the owner or charterer of in possession or control of the ship or property (when the cause of action arose) or is when the proceeding is commenced, the owner of the ship or property.

The plaintiff owned two ships, time chartered these ships to a Singapore based company which was a subsidiary of another Company.  This company defaulted its payment for hire to the Shipping company.  The vessel that was brought in rem action was owned jointly by  the holding company with some other company.  By institution of action, Gem of Safaga was arrested in Sydney

It was argued that when the cause of action arose, the holding company was in control of the two ships as they were on time charter.   The Court went into the aspect of determining whether despite having less than 10% share of ownership would still constitute having control over the ship’s operations.   Incidentally, Gem of Safaga is a bulk carrier with IMO No. 8022444 registered in India and flying Indian flag.


The vessel after months at Sydney harbour was eventually released and the ruling makes it clear that surrogate ship could be arrested only when it is wholly owned by the debtor.

Gopichand receiving Dronacharya award

The quote that was at the start was that of Pullela Gopichand, the star Badminton player who won the All England Open Badminton Championship in 2001 who spurned down a lucrative offer from a soft drink giant for endorsement.


Regards – S. Sampathkumar.

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