FEDERAL COURT OF AUSTRALIA

Transfield ER Futures Limited v The Ship ‘Giovanna Iuliano’ [2012] FCA 548

THE COURT ORDERS THAT:

1.    The time for service of the Notice of Motion dated 21 May 2012 be abridged to 9:30am on 22 May 2012.

2.    The Plaintiff’s Writ dated 17 May 2012 and Arrest Warrant issued on 17 May 2012 be set aside and the Ship “Giovanna Iuliano” be released from arrest forthwith.

3.    The Defendants’ costs of and incidental to the proceedings and the Notice of Motion (including all costs of arrest and the release of the vessel from arrest) be adjourned to a date to be fixed, otherwise costs reserved.

Note:    Entry of orders is dealt with in rule 39.32 of the Federal Court Rules 2011 (Cth).

REASONS FOR JUDGMENT

INTRODUCTION

1    A Writ filed by the plaintiff, Transfield ER Futures Limited (Transfield), in this Court against the M/V “Giovanna Iuliano” (IMO Number 9122576) registered at the Port of Torre de Greco (the Ship) sought:

Security in relation to [Transfield’s] claim against Deiulemar Shipping SpA [(Deiulemar)] as Relevant Person and Beneficial Owner of the [Ship], such claim having been prosecuted in the England High Court of Justice, Queen’s Bench Division (i.e. Case No. 2010 Folio 712) and final judgment entered on 18 April 2012 in favour of [Transfield] for, among others, an order that Deiulemar … pay [Transfield] US$26,710,346.32 plus interest [(the Judgment Sum)].

The Judgment Sum was awarded to Transfield because Deiulemar was found to have breached four freight forward swap agreements (the FFAs). The Writ stated that this Court’s jurisdiction arose under ss 17 and 4(3)(f) of the Admiralty Act 1988 (Cth) (the Act).

2    A warrant for the arrest of the Ship was issued on 17 May 2012 (the Arrest Warrant) and the Ship was arrested on 18 May 2012.

3    At the hearing on 22 May 2012, both the Ship and Deiulemar (collectively the Defendants) appeared and sought to set aside the Writ and Arrest Warrant and sought the release of the Ship from arrest. The Defendants also sought damages under s 34 of the Act.

4    The question which arose on the Defendants’ application was whether the jurisdiction of the Court in rem under ss 17 and 4(3)(f) of the Act was properly invoked. For the reasons that follow, the answer is no. The arrest of the Ship was not justified. On 22 May 2012, the Writ and Arrest Warrant were set aside and the Ship was released from arrest forthwith. These are the reasons for those Orders.

RELEVANT LEGISLATION

5    Section 14 of the Act provides:

In a matter of Admiralty or maritime jurisdiction, a proceeding shall not be commenced as an action in rem against a ship or other property except as provided by this Act.

6    Section 17 of the Act relevantly provides:

Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:

(a)    was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and

(b)     is, when the proceeding is commenced, the owner of the ship or property;

a proceeding on the claim may be commenced as an action in rem against the ship or property.

(Emphasis added.)

7    Three aspects of s 17 should be noted. First, the section concerns a “general maritime claim”. A “general maritime claim” is defined in s 4(3)(a)–(w): see Annexure A. As noted above, the Writ stated that the Court’s jurisdiction arose pursuant to ss 17 and 4(3)(f) of the Act.

8    Second, the general maritime claim cannot be at large. Section 17 directs that the general maritime claim must concern “a ship or other property”. Third, where in relation to a general maritime claim concerning a ship or other property, a person was the owner of the ship when the proceeding was commenced or the owner or charterer of or in possession of the ship when the cause of action arose, a proceeding on the claim may be commenced as an action in rem against the ship or other property.

9    It was common ground that Transfield (as the arresting party) bore the onus of establishing on the balance of probabilities that the Court had jurisdiction under the Act: Nautilus Australia Ltd v The Ship ‘Rossel Current’ [1999] QSC 39 at [12].

10    As the Full Court of the Federal Court stated in Opal Maritime Agencies Pty Ltd v The Proceeds of Sale of the Vessel MV ‘Skulptor Konenkov’ (2000) 98 FCR 519 at [40]–[42] and [46]–[50]:

40    … Section 17 is concerned with giving a right to proceed by an action in rem against a particular ship on a general maritime claim concerning that ship, where there is a person who would be liable on that claim in a proceeding commenced as an action in personam against that person and the conditions in paragraphs 17(a) and (b) are satisfied. The cause of action referred to in s 17(a) is the cause of action in respect of the claim on which the relevant person would be liable in any in personam proceedings.

41    For an action in rem to be commenced against a ship, it is not sufficient that the ship is the property of a person who would be liable on an action in personam on a general maritime claim concerning a ship. The ship against which it is sought to commence in rem proceedings must also be the ship in respect of which the general maritime claim is made. The policy recommendation of the Australian Law Reform Commission (the ALRC) in its Report on Civil Admiralty Jurisdiction and draft Admiralty Bill accompanying the report, which included cl 17 in the form of the present s 17 of the Act, was that the nexus between the ship in respect of which the claim arose, and the ship which may be proceeded against in rem, remain: see Australian Law Reform Commission, Civil Admiralty Jurisdiction, Report No 33 (1986) [(the ALRC Report)], pars 124–125, 136.

42    In coming to the view which it did, the ALRC accepted the approach taken by the House of Lords in The “Eschersheim” [1976] 1 WLR 430. The leading opinion of the House was given by Lord Diplock with whom the other Law Lords who heard the appeal agreed. At issue was the proper construction of s 1(1) of the Administration of Justice Act 1956 (UK) (the 1956 UK Act) which Act implemented as part of the domestic law the treaty obligations of the United Kingdom under the International Convention Relating to the Arrest of Seagoing Ships signed at Brussels on 10 May 1952 (the Arrest Convention).

…

46    Lord Diplock outlined the purpose and effect of the Arrest Convention in The “Eschersheim”. He said (at 434–435):

“The purpose of that Convention was to provide uniform rules as to the right to arrest seagoing ships by judicial process to secure a maritime claim against the owner of the ship. Article 1 defined by reference to their subject matter various classes of maritime claim in respect of which alone a right of arrest was to be exercisable; while articles 2 and 3 granted and confined the right of arrest to either (a) the particular ship in respect of which a maritime claim falling within one or more of those classes arose or (b) any other ship owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship.

The provisions of article 3 represented a compromise between the wide powers of arrest available in some of the civil law countries (including for this purpose Scotland) in which jurisdiction to entertain claims against a defendant could be based on the presence within the territorial jurisdiction of any property belonging to him, and the limited powers of arrest available in England and other common law jurisdictions, where the power to arrest was exercisable only in respect of claims falling within the Admiralty jurisdiction of the court and based upon a supposed maritime lien over the particular ship in respect of which the claim arose.”

47    As to its implementation by the 1956 UK Act, his Lordship said (at 435):

“The way in which the draftsman of Part I of the Administration of Justice Act set about his task of bringing the right of arrest of a ship in an action in rem in English courts into conformity with article 3 of the Convention was (a) by section 1 of the Act, to substitute a fresh list of claims falling within the Admiralty jurisdiction of the High Court, and (b) by section 3, to regulate the right to bring an action in rem against a ship by reference to the claims so listed. […]”

48    As to the operation of ss 1(1) and 3(4) of the 1956 UK Act, his Lordship said (at 436–437):

“It is clear that to be liable to arrest a ship must not only be the property of the defendant to the action but must also be identifiable as the ship in connection with which the claim made in the action arose (or a sister ship of that ship). The nature of the ‘connection’ between the ship and the claim must have been intended to be the same as is expressed in the corresponding phrase in the Convention ‘the particular ship in respect of which the maritime claim arose’. One must therefore look at the description of each of the maritime claims included in the list in order to identify the particular ship in respect of which a claim of that description could arise.”

49    Professor Berlingieri in his commentary on the Arrest Convention, expressed the view that the decision of the House of Lords in The “Eschersheim” reiterated the fundamental rule for the arrest of a ship under the provisions of the Arrest Convention. That was that the right to arrest existed only if the claim arose in respect of a "particular ship" and the owner was liable in respect of a maritime claim relating to that ship (p 59).

50    It was the requirement that there must exist a relationship between the claim and a particular ship which led Professor Berlingieri to conclude (p 59):

“Claims against a shipowner that relate to the maintenance and operation of his ships, but which are not related to a particular ship, cannot be secured by means of the arrest of one of the ships owned by him. If, for example, the owner purchases stores or spare parts for his fleet and uses them for one or more of his ships when the need arises, the claim of the supplier for the payment of such spare parts or stores has not arisen in respect of a particular ship. The same situation would exist in the case of a contract for the lease by a shipowner of a number of containers to be used on board the container ships he operates and of a contract of affreightment, when the ships to be employed by the owner for the carriage of the agreed tonnage of cargo are not specified and the owner does not perform the contract ...”

(Emphasis added.)

11    The Full Court then addressed the applicability of those principles to the Act. The Court concluded that the reasoning in The ‘Eschersheim’ [1976] 1 WLR 430 as to the need for the relationship between claims and particular ships is applicable to all heads of claim under s 4(3) of the Act: The ‘Skulptor Konenkov’ 98 FCR 519 at [51]. Indeed, the Full Court went so far as to say that “the nature of the connection between the claim and the ship which it is sought to arrest as described in The ‘Eschersheim’ must exist for the purposes of s 4(3), s 17 and s 19 of the Act”: at [53].

12    The basis for that conclusion was that (1) the requirement and its application across all classes of maritime claims had been accepted by the ALRC Report and draft legislation (see ALRC Report at para 151 fn 27, 28; paras 125–6) and (2) the Australian Parliament had enacted the draft as the Act: The ‘Skulptor Konenkov’ 98 FCR 519 at [52]–[53].

13    The Full Court summarised the position in The ‘Skulptor Konenkov’ 98 FCR 519 at [54] as follows:

Sections 17 and 19 respectively prescribe the conditions to be satisfied before a proceeding on the claim concerning a ship may be commenced as an action in rem against the ship or against another ship. In respect of each section the claim is limited to a claim concerning the ship identified by the section as being the relevant ship which is the subject of the claim. The type of claim which falls within the description of a general maritime claim is determined by the operation of s 4(3) of the Act. Section 4(3) defines in paragraphs (a) to (w) inclusive the claims which satisfy the requirement of being, for the purposes of ss 17 and 19, a general maritime claim.

(Emphasis added.)

14    The issue here was whether the claim advanced by Transfield (as founding jurisdiction) was a claim which fell within s 4(3)(f) of the Act. What then was the claim?

TRANSFIELD’S CLAIM AGAINST DEIULEMAR

15    As noted above, the application for the Arrest Warrant was made for the purpose of Transfield obtaining security for enforcement of the Judgment Sum. A copy of the reasons for judgment of Mr Edelman QC, sitting as a Deputy Judge in the Commercial Court, Queens Bench Division, High Court of Justice dated 18 April 2012, in relation to the Judgment Sum (the Commercial Court Reasons) were handed to the Court.

16    The Commercial Court Reasons record that the dispute giving rise to the Judgment Sum was between Transfield, Deiulemar and another Deiulemar related entity (the Deiulemar Entities). The dispute arose out of identified FFAs.

17    In general terms, the Commercial Court Reasons record that:

1.    the Deiulemar Entities concluded the FFAs with Transfield on the standard Freight Forward Agreement Brokers’ Association (FFABA) 2007 Terms, incorporating a 1992 ISDA Master Agreement (without Schedule) as modified and supplemented by the FFABA Terms;

2.    Transfield designated an Early Termination Date of 5 July 2010 based on the Deiulemar Entities’ failures to pay Settlement Sums in favour of Transfield for the May 2010 Contract Month;

3.    the Deiulemar Entities disputed the validity of Transfield’s action and commenced the proceeding the subject of the Commercial Court Reasons, originally claiming US$10,385,973.89 plus compound interest and costs;

4.    Transfield counterclaimed for Early Termination Amounts of approximately US$42 million and successfully sought summary judgment on the counterclaims and dismissal of the claim.

18    The Commercial Court Reasons disclose at [6] that each of the FFAs contained provisions described as follows:

(i)    That the obligation of each party to make a payment required by the FFA would be subject to the condition precedent that no Event of Default or Potential Event of Default with respect to the other party had occurred and was continuing; and

(ii)    That there would be an Event of Default with respect to a party if (amongst other things) that party or its “Credit Support Provider” became insolvent or unable to pay its debts or failed or admitted its inability generally to pay its debts as they became due.

19    The two issues for the Commercial Court were described at [8] as follows:

(1)    That [Transfield] was “insolvent” in a balance sheet sense from (at the latest) 1 January 2010 on the basis that by virtue of its indebtedness to Pioneer of US $8,165,561.84, it had an excess of liabilities over assets at all relevant times after l7 December 2009;

(2)    That Transfield Shipping Inc was a guarantor in respect of each of the FFAs (except Number 08091017) and provided a letter of guarantee for Contract 80923879810 and thereby became a “Credit Support Provider” but was, from (at the latest) 1 January 2010 unable to pay its debts as they became due and/or they became due.

20    The significance of these issues was recorded by the Court at [10] as follows:

The [Deiulemar Entities] seek to assert an “Event of Default” because otherwise the FFAs will have been terminated by [Transfield] pursuant to Notices of Early Termination effective on 5 July 2010 by virtue of the [Deiulemar Entities’] “Failure to Pay Event of Default” arising out of the [Deiulemar Entities’] respective failures to pay the sums which became due for payment under the FFAs by 7 June 2010. On the basis of this Early Termination, [Transfield] claims the sum of US$26,710,346.32 against the First Claimant and US$15,181,119.01 against the Second Claimant. It was not in dispute before me that [Transfield] was entitled to judgment on its counterclaim for these sums in the event that I was to conclude that the [Deiulemar Entities] had no real prospect of success on their [claims].

(Emphasis added.)

As will be apparent, the claims of the Deiulemar Entities failed. The Judgment Sum reflects the fact that, in the absence of a Transfield Event of Default, there was no dispute that Transfield was entitled to judgment on its counterclaim against the First Claimant, Deiulemar.

NATURE OF THE FFAs

21    What then are FFAs? In Lomas v JFB Firth Rixson, Inc [2012] EWCA Civ 419 at [2]–[4], they were described as follows:

2.    These 4 appeals … raise a number of questions of construction in relation to derivatives in the form of interest rate swaps and forward freight agreements on the International Swaps and Derivatives Association Inc (formerly the International Swaps Dealers Association Inc.) (“ISDA”) form of Master Agreement which was published in 1992 and again in 2002 (“the Master Agreement”). Derivatives have come to occupy the time of many Chancery and Commercial judges and it is necessary to understand what they are. Mr Simon Firth of Linklaters has published an important monograph on the topic which … we have found most useful in wrestling with the questions of construction which need to be decided for the purposes of these appeals. He defines a derivative as (para 1-004):-

“a transaction under which the future obligations of one or more of the parties are linked in some specified way to another asset or index, whether involving the delivery of the asset or the payment of an amount calculated by reference to its value or the value of the index. The transaction is therefore treated as having a value which is separate (although derived) from the values of the underlying asset or index. As a result, the parties’ rights and obligations under the transaction can be treated as if they constituted a separate asset and are typically traded accordingly.”

3.    Although derivatives can be quite complex, the theory behind the ones in issue in these cases is simple. Under the interest rate swaps, one party is to pay a floating rate of interest on a notional sum (notional because there is no actual loan) over a period of (say) 6 months. The other party is to pay a fixed rate of interest on the same notional sum over the same period. At the end of each six month period two calculations are done and one party will be “in the money” and the other “out of the money”. That latter party will then pay the other the difference. This contract can be used as a pure speculation or (as in the present cases) be used as a hedge if one of the parties has a long term loan on interest.

4.    Similarly the form of a forward freight agreement (“FFA”) is that one party agrees to pay a fixed rate of notional freight while the other party agrees to pay a rate derived from an index published (normally) by the Baltic Exchange. The difference at the end of a set period is then payable by one to the other depending on the movement of the index as compared with the fixed rate. This can also be used by parties to protect themselves against fluctuation in shipping rates or as a means of trading in futures.

(Emphasis added.)

See also Sims and Singleton (as liquidators of Enron Australia Pty Ltd) v TXU (2005) 53 ACSR 295; [2005] NSWCA 12 at [6].

22    The FFAs in issue in this application were provided to the Court. The general description in the italicised passage of the preceding paragraph accurately summarises those FFAs. The set period specified in the FFAs was a “Contract Month”, being each month from January 2009 to December 2010 (inclusive): cl 4. The “Settlement Sum” (cl 7) was:

… the difference between the Contract Rate [US$45,750 per day] and the Settlement Rate [defined in cl 6] multiplied by the Quantity by Contract Month. If the Settlement Rate is higher than the Contract Rate, the Seller [Transfield] shall pay the Buyer [Deiulemar] the Settlement Sum. If the Settlement Rate is lower than the Contract Rate, the Buyer shall pay the Seller the Settlement Sum.

23    The “Settlement Date” for the payment of the Settlement Sum at the end of each Contract Month was “the last Baltic Exchange Index publication day of each Contract Month”: cl 5.

24    As is apparent, the amount of the Settlement Sum and who was to pay (namely who was in the money and who was out of the money) was a mathematical calculation. It involved:

1.    no freight paid or payable;

2.    no ship or other property as the subject of the contract;

3.    no contract that related to the carriage of goods or person;

4.    no contract for the use or hire of a ship;

5.    no physical delivery.

25    As the Court of Appeal in Lomas [2012] EWCA Civ 419 noted, FFAs are commonly described as “derivatives”. They are derivatives because no party buys or sells any goods. There is no chartering of any ship. There is no carrying of goods whether by ship or otherwise. FFAs are usually entered into for one of two purposes: as a form of insurance, or hedge, by freight companies who desire some form of protection from fluctuations in freight prices either charged or paid by them (see, eg, In re Britannia Bulk Holdings, Inc 665 FSupp2d 404 (SD NY 2009)), or as pure speculation, a bet (cf Lomas [2012] EWCA Civ 419 referred to at [21] above). FFAs can be, and are, traded as financial instruments. Participants in that market include investment banks and financial institutions as mere speculators.

WHETHER TRANSFIELD’S CLAIM UPON THE FFAs GIVES RISE TO A GENERAL MARITIME CLAIM

26    Does Transfield’s claim have the legal character set out in s 4(3)(f) of the Act?

27    In Heilbrunn v Lightwood plc (2007) 164 FCR 1, Allsop J (as he then was) identified some important considerations that attend the construction and interpretation of the Act at [28]–[30]:

1.    “the Act should be read in its legal and historical context, and that the Act and the definitions of maritime claims have an international as well as a domestic maritime context, including the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships 1952, done at Brussels on 10 May 1952 [(the 1952 Convention)] and [the ALRC Report]”;

2.    “provisions conferring jurisdiction or granting powers to courts should be interpreted liberally and without imposing limitations not found in the express words”: The Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Company, Inc (1994) 181 CLR 404 at 421 and Hewlett Packard Australia Pty Limited v G E Capital Finance Pty Limited (2003) 135 FCR 206 at [187];

3.    “the importance of the background of English legislation and authority and any settled international construction”: Owners of MV ‘Iran Amanat’ v KMP Coastal Oil Pte Ltd (1999) 196 CLR 130 at [20].

28    As Allsop J identified in Heilbrunn 164 FCR 1 at [31], the last consideration was and remains of particular significance in relation to s 4(3)(f) of the Act. His Honour’s careful analysis of the history at [31]–[35] identified the following matters:

1.    the ALRC recommended that the proposed head of jurisdiction (s 4(3)(f)) follow the language of s 20(2)(h) of the Supreme Court Act 1981 (UK) (the 1981 UK Act), which was the successor provision to ss 1(1)(h) and 47(2)(e) of the Administration of Justice Act 1956 (UK) (the 1956 UK Act): see ALRC Report at para 168;

2.    section 4(3)(f) follows, though not precisely, the language of s 20(2)(h) of the 1981 UK Act;

3.    the provisions in the 1956 UK Act (and the 1981 UK Act) were passed to enable the United Kingdom to ratify and to comply with its international obligations under the 1952 Convention: The ‘Eschersheim’ [1976] 1 WLR 430 at 434 (per Lord Diplock) and Gatoil International, Inc v Arkwright-Boston Manufacturers Mutual Assistance Co [1985] AC 255 at 266 (per Lord Keith of Kinkel); and

4.    the existence of unanimous decisions of the final court of appeal in the United Kingdom interpreting domestic legislation having its origins in an international convention (Gatoil [1985] AC 255 and Samick Lines Co Ltd v Owners of the ‘Antonis P Lemos’ [1985] AC 711 ), the desirability of international uniformity, or at least broad consistency, and an expressed suggestion by the ALRC (which was heeded) that Parliament follow the wording of the 1981 UK Act, necessarily constrained the interpretation of s 4(3)(f).

29    Allsop J rejected in Heilbrunn 164 FCR 1 at [36] the contention that a claim cannot “arise out of an agreement” because it is not framed in contract and the further contention that any non-contractual claims must arise out of an agreement between the plaintiff and the defendant as contrary to The ‘Antonis P Lemos’ [1985] AC 711. His Honour adopted the views expressed by Lord Brandon in The ‘Antonis P Lemos’ [1985] AC 711 at 731 that a wide and liberal, not narrow, construction was to be given to the phrase “arising out of” as being equivalent to “in connection with”. The wider construction was preferred by Lord Brandon because, as described by Allsop J in Heilbrunn 164 FCR 1 at [39]:

(a) the words were the implementation of an international convention and should, in general, be given a broad and liberal construction; (b) the text and structure of the words in Art 1 of the 1952 Convention in introducing all the listed maritime claims tended to a broad construction; (c) the rearrangement of the words from Art 1 to those in s 20(2) was not to be taken as intending a narrowing of the meaning found in the 1952 Convention; and (d) the existing English authorities, The ‘St Elefterio’ [1957] P 179 and the The ‘Sennar’ [1981] 1 Lloyd’s Rep 295, supported the capacity to bring a claim in tort under the antecedent to s 20(2)(h).

30    To those reasons, Allsop J added the following remarks in Heilbrunn 164 FCR 1 at [40]:

Given the need for the 1952 Convention to apply to a wide variety of legal systems and given the capacity of maritime claims to arise by reference to chartering and carriage arrangements often of some complexity, it would make little practical sense to limit the types of claims to which this paragraph was directed to contractual claims between parties to the agreement. Secondly, the provision is one in which jurisdiction is given to a court. It should be read liberally: The Shin Kobe Maru 181 CLR at 421. Third, The Antonis P Lemos [1985] AC 711 was recently applied by a Full Court of this Court, though in a different context: that of construing an arbitration clause containing the phrase “arising out of”, in Comandate Marine v Pan Australia Shipping Pty Limited (2006) 157 FCR 45 at 89 at [171]. The Full Court, though in that different context, gave the same wide meaning to the phrase “arising out of”: Comandate Marine v Pan Australia 157 FCR 45 at [162]–[176].

31    Justice Allsop noted in Heilbrunn 164 FCR 1 at [42] that Lord Brandon also rejected the second contention that, even if claims in tort were covered, coverage extended to only those claims which were “directly connected” with an agreement covered by the provision (that is one that related to the carriage of goods in a ship) and that such an agreement need be between the plaintiff and defendant.

32    Allsop J then stated the following proposition in Heilbrunn 164 FCR 1 at [42] on which Transfield sought to place considerable reliance:

… the claim which may be non-contractual need only arise out of, in the sense of be connected with, some agreement having the relevant relationship with the carriage of goods in a ship (or other relational fact in s 4(3)(f)) even if that agreement is one to which the plaintiff is not a party.

33    In my view, that proposition does not assist Transfield in this case. An analysis of the relevant part of the claim in Heilbrunn 164 FCR 1 is instructive. In that case, Allsop J found at [43] that the claim by the plaintiff:

1.    undoubtedly arose out of an agreement to load cargo into a container;

2.    could be seen to be connected with an agreement evidenced by a bill of lading;

3.    could also be seen to arise out of, that is be connected with, identified agreements for the transportation of cars from England to Australia.

34    The question then posed by Allsop J was whether any one or more of the agreements in [33] above answered the description of “an agreement that relates to the carriage of goods ... by a ship”, as that phrase was interpreted by the House of Lords in Gatoil [1985] AC 255. In Gatoil [1985] AC 255 at 270–1 Lord Keith of Kinkel (with whose speech Lords Fraser of Tullybelton, Scarman, Wilberforce and Roskill agreed) concluded that the phrase “related to” should not be construed widely, but rather there should be “some reasonably direct connection” with the activities described in the provisions (there ss 1(1)(h) and 47(2)(e) of the 1956 UK Act).

35    Approaching the matter in that way (see [34] above), none of the FFAs in issue has a reasonably direct connection with the activity of carriage of goods by a ship and thereby “relates or relate to the carriage of goods by a ship” under s 4(3)(f) of the Act. Put another way, there is a need for a relationship between the claim and the particular ship the subject of the application in rem. Here, there was no relationship. There was no claim which fell within the description of a general maritime claim in s 4 and, in particular, there was no claim of the type provided for in s 4(3)(f) of the Act.

36    Counsel could not refer the Court to any decided case in Australia or the United Kingdom where a claim in relation to a FFA had founded jurisdiction for the arrest of a ship. That is not surprising given the nature of the agreement and the fact that there is no relationship between the claim arising out of the FFA and the particular ship the subject of the application in rem.

37    It was for those reasons that the Writ and the Arrest Warrant were set aside and the Ship was released from arrest forthwith.

Associate:

Dated:    28 May 2012 ANNEXURE A

(3)    A reference in this Act to a general maritime claim is a reference to:

(a)    a claim for damage done by a ship (whether by collision or otherwise); or

(b)    a claim in respect of the liability of the owner of a ship arising under Part II or IV of the Protection of the Sea (Civil Liability) Act 1981 or under a law of a State or Territory that makes provision as mentioned in subsection 7(1) of that Act; or

(ba)    a claim under:

(i)    the applied provisions (within the meaning of the Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008); or

(ii)    a law of a State or Territory of a kind referred to in subsection 10(1) of that Act; or

(c)    a claim for loss of life, or for personal injury, sustained in consequence of a defect in a ship or in the apparel or equipment of a ship; or

(d)    a claim (including a claim for loss of life or personal injury) arising out of an act or omission of:

(i)    the owner or charterer of a ship;

(ii)    a person in possession or control of a ship; or

(iii)    a person for whose wrongful acts or omissions the owner, charterer or person in possession or control of a ship is liable;

being an act or omission in the navigation or management of the ship, including an act or omission in connection with:

(iv)    the loading of goods on to, or the unloading of goods from, the ship;

(v)    the embarkation of persons on to, or the disembarkation of persons from, the ship; and

(vi)    the carriage of goods or persons on the ship; or

(e)    a claim for loss of, or damage to, goods carried by a ship; or

(f)    a claim arising out of an agreement that relates to the carriage of goods or persons by a ship or to the use or hire of a ship, whether by charterparty or otherwise; or

(g)    a claim relating to salvage (including life salvage and salvage of cargo or wreck found on land); or

(h)    a claim in respect of general average; or

(j)    a claim in respect of towage of a ship; or

(k)    a claim in respect of pilotage of a ship; or

(m)     a claim in respect of goods, materials or services (including stevedoring and lighterage services) supplied or to be supplied to a ship for its operation or maintenance; or

(n)    a claim in respect of the construction of a ship (including such a claim relating to a vessel before it was launched); or

(o)    a claim in respect of the alteration, repair or equipping of a ship; or

(p)    a claim in respect of a liability for port, harbour, canal or light tolls, charges or dues, or tolls, charges or dues of a similar kind, in relation to a ship; or

(q)    a claim in respect of a levy in relation to a ship, including a shipping levy imposed by the Protection of the Sea (Shipping Levy) Act 1981, being a levy in relation to which a power to detain the ship is conferred by a law in force in Australia or in a part of Australia; or

(r)    a claim by a master, shipper, charterer or agent in respect of disbursements on account of a ship; or

(s)    a claim for an insurance premium, or for a mutual insurance call, in relation to a ship; or

(t)    a claim by a master, or a member of the crew, of a ship for:

(i)    wages; or

(ii)    an amount that a person, as employer, is under an obligation to pay to a person as employee, whether the obligation arose out of the contract of employment or by operation of law, including the operation of the law of a foreign country; or

(u)    a claim for the enforcement of, or a claim arising out of, an arbitral award (including a foreign award within the meaning of the International Arbitration Act 1974) made in respect of a proprietary maritime claim or a claim referred to in one of the preceding paragraphs; or

(w)    a claim for interest in respect of a claim referred to in one of the preceding paragraphs.

(Emphasis added)