Admiralty and Maritime Law

Navigating Admiralty: Roles and Responsibilities of Key Actors

Applicable laws and rules

Documentary – The entire contract is based on documents.
Credit – The contract operates on credit, with no monetary payment exchanged upfront.
The main parties involved in the order are:
1.    Seller/Exporter
2.    Buyer/Importer
3.    Buyer’s Bank
4.    Seller’s Bank
5.    Carrier/Vessel

1.    Proforma Invoice (PI) – This is the primary sales contract between the Exporter (Seller) and the Importer (Buyer). After initial negotiations, the Exporter makes a final offer, which the Importer accepts. The PI represents the final agreement between the seller and the buyer.
2.    Letter of Credit (LC) – This is the second contract in the process, between the buyer’s bank and the seller’s bank. The contract operates on credit. The LC is issued following the terms agreed upon by the seller and buyer in the PI. Only documents will be examined by the banks of the exporter and importer as per the terms of the LC. After the LC is issued, the banks are no longer concerned with the PI. The seller’s bank will submit the documents mentioned in the LC and request payment. Money can only be transferred when it is claimed by the exporter’s Bank for a specific bank account. Any transfer before knowing the bank account could be considered money laundering.
3.    Bill of Lading (BL) – This is the third contract in the process, a contract of carriage between the carrier/vessel and Exporter. The Importer is the beneficiary of this contract. The Master must deliver goods to the consignee/beneficiary without asking any questions regarding payment, as payment is made through the banks. He is not a party to the LC. He will only deal with the BL and deliver the goods to the consignee mentioned in the BL.
4.    Charter Party Contract – This is an additional contract outside of the sales contract, between the seller/exporter and a carrier. If the seller is the charterer, he cannot act as a seller but must act as a charterer and must deliver the goods to the consignee mentioned in the BL. The carrier cannot refuse delivery under any circumstances – refusal would be illegal. In this case, the exporter is also the charterer/not the actual owner of the vessel but will be termed as owner under admiralty law.
A suit under Admiralty Jurisdiction is mainly in Rem against the vessel. Under no circumstance can the vessel refuse delivery, even if the seller owns it (as charterer).
Parties in the contracts:

1.    PI – Exporter/Seller (makes the offer) & Importer/Buyer (gives acceptance).
2.    LC – Importer’s Bank & Seller’s Bank (deals with the documents only and not concerned with the goods)
3.    BL – Shipper & Consignee (Importer) (must deliver goods to the importer without asking anything about payment)
4.    Charter Party – Carrier and Exporter. This is outside of the sales contract.
Steps/Responsibilities:

 

1.    Importer’s Bank will issue LC following the PI.
2.    Exporter will place documents to their bank as per the LC.
3.    Exporter’s Bank will claim payment from the importer’s bank by submitting documents mentioned in the LC.

4.    Importer’s bank must pay without askingany question when they have received the documents mentioned in the LC. This is why it is called a documentary credit contract under a Letter of Credit. The importer cannot stop payment under any circumstances. The documents will be the deciding factor.

All about admiralty jurisdiction in Bangladesh

Admiralty law in Bangladesh is governed by the Admiralty Court Act of 2000, which revoked the previous Admiralty Court Act. The High Court Division of the Supreme Court of Bangladesh exercises Admiralty Jurisdiction under the Admiralty Court Act, 2000 and the Admiralty Rules, 1912.

The High Court Division serves as the Court of Admiralty. Cases under the statute are decided by a special statutory procedure¹. The Court has exclusive jurisdiction under the Act itself.

The High Court Division’s admiralty jurisdiction can be exercised in two ways: in personam and in rem, subject to certain conditions. In personam jurisdiction involves legal action against a specific person, while in rem jurisdiction allows the court to act against the ship, aircraft, or property itself.

Navigating an admiralty case in Bangladesh involves the following steps:

  1. Identifying the maritime claim
  2. Selecting the appropriate jurisdiction
  3. Engaging legal representation
  4. Filing a suit in the Admiralty Court
  5. Obtaining an arrest warrant if necessary
  6. Serving summons
  7. Participating in court appearances
  8. Engaging in preliminary proceedings
  9. Gathering evidence
  10. Exploring mediation or settlement options
  11. Proceeding to trial if needed
  12. Awaiting the court’s judgment
  13. Enforcing the judgment
  14. Potentially appealing the decision if dissatisfied with the outcome

To ensure an equitable and expeditious resolution, the parties involved must adhere to strict timelines and procedures. Admiralty court proceedings frequently involve the appointment of an expert maritime law judge or tribunal. These justices have the knowledge required to interpret the complex legal principles unique to Admiralty cases.

Bangladesh offers several advantages for ship arrests:
– It is not bound by any international arrest conventions.
– Ships can be arrested in actions in rem and in personam.
– Arrests can be made for security reasons.
– Ships can be attached even after losing navigability.
– Both maritime liens and claims support ship arrests.
– Arrests are applicable for up to nineteen different types of claims.
– The arrest process is straightforward and efficient.
– Courts have jurisdiction around the clock, 24/7.
– Arrest procedures are known for being quick and cost-effective.
– Counter security is not required for initiating ship arrests.
– There is no provision for awarding damages for wrongful arrests.
– P & I Club’s Letters of Indemnity or Letters of Undertaking (LIU/LOI) are not accepted for releasing vessels; instead, vessels are released upon furnishing a Bank Guarantee. The High Court Division of the Supreme Court of Bangladesh exercises Admiralty Jurisdiction under the Admiralty Court Act, 2000, and the Admiralty Rules, 1912. These rules stipulate that a warrant for the arrest of property in suits in rem may be issued upon application by either the plaintiff or defendant after filing an affidavit detailing the claim or counter-claim, the property to be arrested, and confirming the claim’s unsatisfaction.

To apply to arrest a ship, the plaintiff must start a court case and pay a court fee of Tk. 100,000. For cases about wages, the fee is Tk. 100. They submit their complaint and documents to the court office, and file the ship arrest request in court. Usually, the court lists the request for the next working day. If urgent, the court may list it sooner. If the court sees enough evidence to support the claim, it accepts the case and orders summonses. Then, it hears the arrest request. If the court finds enough merit, it orders the ship arrested to secure the claim amount. The arrest request is usually heard without the defendants present unless they file a caveat. The court’s marshal serves the ship arrest order to the defendants after the plaintiff pays the fees. The Admiralty Court can also arrest cargo or other property owned by parties involved.

The order for arrest can be vacated by the same court upon an application filed by the defendant on the ground that the ship was wrongly arrested and the defendants can also file an application for reduction of the quantum of security, but hearing of these kinds of application takes 1 or 2 weeks. When the ship is in a hurry, this kind of application is not generally advised. A ship is released from arrest upon deposit of the amount of claim in the Court or upon furnishing a local bank guarantee. An LOU issued by P & I Club is not accepted in Bangladesh. After release of the ship upon furnishing bank guarantee an application for reduction of Bank guarantee can also be moved by the defendants and, if allowed, a revised Bank guarantee would be furnished. The release order is also served by the Marshal upon receipt of Marshal’s fee.

A ship could also be arrested by the plaintiff in execution of decree passed by the High Court Division or a judgment passed by a foreign Court against the Owner of the ship. A ship can also be attached before judgment in a suit in personam. In a suit in rem a ship can be attached if the ship is beached for scrap before institution of suit. Under the Bangladesh Merchant Shipping Ordinance (MSO) 1983 the Principal Officer, Mercantile Marine Department can detain an unseaworthy ship. Under the MSO the High Court Division can detain a foreign ship for damage caused in any part of the word to the Government of Bangladesh or any Bangladeshi citizen or company and the Principal Officer or Collector of Customs can detain a ship before such application has been made to the High Court Division. Under the Regulations for Working of Chittagong Port (Cargo and Container) 2001the Chittagong Port Authority can detain a vessel until security has been given for the amount of damage caused and the Cost involved in removing the blockade of navigational channel or the total amount is paid.

International Maritime Organization (IMO)

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Maritime law Bangladesh

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Defective Product

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Admiralty courts

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Maritime industry

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