NEWSLETTER & UPDATES ( L N & U )
- ISSUE: XXIIIXIIII00XI (15-31)
Our recent visit
to 1300 MW Balagarh Thermal Power Plant at West Bengal Hoogly District
- Bombay High Court ship arrest
The arrest of the Chinese registered vessel, M.V. Tongli Yantai, at Chennai,
India by the Bombay High Court in appeal filed by Great Pacific Navigation
(Holdings) Corporation Ltd [(Great Pacific)] against M.V. Tongli Yantai, decided
on 14th October 2011, highlights the importance of
- a. Pan-India ship arrest
b. Admiralty jurisdiction can be acquired if the writ or if the warrant of
arrest is executed on the ship when it arrives within the territorial
jurisdiction of the court
c. Lifting the corporate veil to establish beneficial ownership for the purpose
of arresting a sister vessel-ship
- Great Pacific, a Hong Kong
based company, filed a suit in the Bombay High Court against the vessel M.V.
Tongli Yantai for security in respect of their claim pending arbitration. At the
time of filing of the suit and application for arrest as well as at the time of
passing of the order, the vessel was not within the territorial waters of India.
The vessel was arrested later when she arrived Indian territorial waters at
Great Pacific had chartered a vessel called M.V. Nasco Diamond from Da Sin
Shipping Pte. Ltd. Da Sin had in turn time chartered the vessel from the head
owners YDM Shipping Company Limited. Great Pacific thereafter sub-chartered the
vessel M.V. Nasco Diamond to Tongli China acting through its
agents/nominees/alter ego Tongli Samoa pursuant to a fixture recap for a time
trip charter. The fixture recap was signed by Tongli Samoa. The ship sank. Da
Sin raised the claim upon Great Pacific who in turn raised the claim upon its
charterer, Tongli Samoa. Great Pacific sought recourse to arbitration. Tongli
Samoa, against whom Great Pacific has raised a claim is the sister concern of
one Tongli Shipping Co. Ltd., China who beneficially owned M.V. Nasco Diamond as
also the respondent, original defendant vessel, M.V. Tongli Yantai. Tongli China
incorporated a number of shell companies including Tongli Samoa which is a sham
and a facade for Tongli China. The arrested ship is of the registered ownership
of Halcyon Ocean Shipping Companies Ltd.
The Single Judge refused to lift the veil of Halcyon; and refused to consider
Halycon as being the alter ego of Tongli China nor had recorded any finding that
there was a fraud involved, the defendant vessel M.V. Tongli Yantai was released
from arrest, this decision was overturned on appeal.
In this case, the Appeal Court of Bombay High Court allowed that an order from
Bombay High Court can be executed in any Indian territorial waters and is in
agreement with the decision of the learned single judge answering the
preliminary issue with regard to the jurisdiction of the court in Geetanjali
Woollen Pvt. Ltd. Vs. M.V. X-Press Annapurna And Ors. dated 9th August, 2005
(2005 (6) BCR 31). It was also held by the single judge that the Court can
acquire jurisdiction if the writ or if the warrant of arrest is executed on the
ship when it arrives within the territorial jurisdiction of this Court. Although
the question on jurisdiction was left unanswered by the appeal court in M.V.
X-Press Annapurna And Ors. Vs. Geetanjali Woollen Pvt. Ltd, dated 11th March
2011, as it was in their opinion not necessary to decide that question in
appeal. In an unreported appeal court judgment, dated 20th July 2001 in M.V.
Umang, the Bombay High Court ruled that its admiralty jurisdiction extends
throughout the territorial waters of India.
Great Pacific also urged in their appeal to raise the corporate veil to see the
truth of the facts relating to all of the aforesaid parties hitherto concealed,
suppressed, masked, screened or otherwise not shown by the simplicitor
registration of Tongli Yantai with Halcyon in the shipping records. It may be
rather myopic not to consider the true position of the parties behind legal and
juristic facade. It is under such circumstances that in several cases the
lifting of the corporate veil is permitted as an equitable doctrine in general
law relating to corporate management as also more specially in the case of
shipping companies. The Counsel for the vessel owner argued in the Appeal Court
that where there was no fraud made out, lifting the veil would not be possible.
The appeal court observed that it would certainly be applied to companies which
are no longer autonomous having the identity and community of interest between
companies in a group to look at the economic scenario to meet which the
companies are incorporated. The test is to see whether they exist as autonomous
units or as organs of each other. As the financial and economic situations
become more and more complex in the commercial and business world, the ambit of
the employment and application of the doctrine would grow commensurately. It
would be required to be more frequently invoked upon present day considerations
when such situations arise oftener enjoining courts to use their discretion to
do complete justice upon equitable consideration.
Why it matters:
Based on the above cited decision when the moment comes for decision as to which
court of India one should approach for obtaining an order of arrest, Bombay High
Court is preferred as order for arrest of a vessel obtained from the Bombay High
Court can be executed anywhere in Indian territorial waters, wherever the vessel
However, this pan-India admiralty arrest jurisdiction is only with the Bombay
High Court while other High Courts with admiralty jurisdiction i.e. Calcutta,
Madras and Gujarat High and other admiralty courts jurisdiction is within their
State territorial waters.
Absent fraud, economic and commercial unity is no ground to lift the veil.
However, the observation of the appeal court is extremely broad. This will ease
untangling the complex cobweb behind one-ship company that mask the real owner,
the concept that detaches ships from her sister-ship, making it difficult to
arrest the sister ship, as the real owner is not known. One-ship company concept
is used to limit the financial liability of such individual company or the group
of such companies. Such commercial position does prevail in the admiralty world.
However, such one-ship companies are then expected to have their own corporate
structure sufficient for their separate distinct presence. No Court can
countenance that such a position would be allowed to prevail if it would cause
injury, damage or injustice to creditors and other third parties dealing with
such companies. It would, therefore, be allowed to prevail if within a group or
by an individual who owns a fleet of ships various separate distinct legal
entities by way of incorporation are created having their separate distinct
liabilities with capability to meet them. If that is done and no connection with
the group of reliance of one company upon another for the discharge of its
liability is shown, the commercial position would certainly be allowed to
prevail. This would be if each one-ship company thus incorporated would have its
own place of business, shareholders and management distinct and separate from
the group of companies so as to rely upon the assets or control of those
companies for its survival. If however that is not the case, the one-ship
company would not be a distinct incorporated person at all and merely a shadow
of companies or the individual behind it.
- by Shrikant Hathi (Dr) and Dorothea
- (the authors are partner and a
foreign visiting lawyer with BRUS CHAMBERS)
- Similar topic is also published by
IHS Fairplay at United
Kingdom on December 22, 2011 while the above article can be
New port for Andhra
The Ministry of Shipping is likely to finalise the site for the proposed
integrated port and shipyard project in Andhra Pradesh in the next two months.
The Government of Andhra Pradesh has identified about 5,000 acres of land at
three locations, namely Nakkapally in Visakhapatnam district, Ramaypatnam in
Prakasam district, and Durgarajapatnam in Nellore district, for the project.
The National Shipping Board, which initiated the proposal with the ministry, has
estimated a project outlay of 4,500 crore for which Visakhapatnam Port Trust,
Cochin Shipyard Ltd, Shipping Corporation of India Ltd and National Mineral
Development Council are likely to be stakeholders. The new port with a draft of
about 16m to 18m, to accommodate bigger vessels, would handle coal, required for
power plants, agri-products, steel and iron ore.
With the Ministry of Shipping asking the maritime states to submit proposals for
greenfield port projects, states like Gujarat, West Bengal and Kerala have shown
interest in taking up port projects. The Indian ports sector, including
non-major ports, is projected to handle about 1,590 million tonnes throughput by
2025-26, while India's container traffic is also expected to touch 21 million
TEUs by 2015, as projected by the Maritime Agenda 2010-2020.
Contractors completes 70% of civil works
Leighton Welspun Contractors Pvt. Ltd has successfully completed 70 per cent of
its contract work on the Vishakhapatnam Port project. This project was started
by Leighton in November 2010 as an SPV partner undertaking the civil works on
behalf of the joint venture. Leighton's scope of work includes extension of the
existing berth seaward by 21 metres, strengthening the existing berth,
construction of the conveyor gallery foundations, conducting stockyard soil
improvement, providing stacker and reclaimer foundations, constructing
administration and terminal operation buildings, and installation of requisite
Visakhapatnam Port Trust chose to undertake mechanisation of coal handling
facilities and upgradation of the general cargo berth, in the Outer Harbour of
the port, to cater to 200,000 DWT vessels through public-private partnership on
DBFOT basis. The main scope of the project, which is to be completed by October
2012, broadly includes planning, engineering, designing, financing,
construction, development, operation and maintenance of the general cargo berth
to cater to 200,000 DWT vessels of 300m LOA. The work undertaken on the port
project includes civil, mechanical and electrical works for installation of a
suitably designed system for unloading of coal at the rate of 70,000 tpd via
three ship unloaders. Keeping in view the growing trade demand and requirement
for faster evacuation due to constraints of back-up space for storage and
environmental considerations, mechanisation of the berth in the Outer Harbour
will benefit the local industry as well as the surrounding community. Leighton
Welspun Contractors Pvt. Ltd operates across a diverse range of sectors
including oil and gas, buildings, infrastructure and mining and has having
offices in Mumbai, Delhi and Chennai, with a team of over 800 staff and a
2,500-strong diverse work force..
Oil & Gas Projects in
Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners L.P.
of US, has entered into an agreement with GAIL (India) Ltd to trade about 3.5
million tonnes of LNG annually. The agreement will help the state-run company to
ensure long-term gas supply for growing demand in India. The supply under the
20-year agreement will commence by 2017 while Avantika Gas Ltd, a joint venture
of HPCL and GAIL (India) Ltd, has commenced the piped natural gas project in
households in Indore, Madhya Pradesh, with supply of natural gas, with methane
as a major constituent (up to 94 per cent), for cooking in 25 new customers
houses at Narayan Bagh in the city. The project has been taken up to lower the
cost of LPG by 8 per cent and ease long refill queues. Avantika Gas got the
250-crore project to supply natural gas not only in domestic sector but also to
vehicles through its outlets..
Crompton Greaves (CG)
develops 1,200kV transformer
Global electrical solutions provider Crompton Greaves (CG), part of the
$4-billion Avantha Group, said it has successfully designed, developed and
tested its first indigenous 1,200kV class auto-transformer. The engineering
major announced the dispatch of its first 1,200kV transformer to Power Grid
Corporation of India Ltd in Bina, Madhya Pradesh. The transformer was tested
successfully in October at CG's transformer division in Mandideep, Madhya
Pradesh, the company said in a statement.
"After being the pioneer in manufacturing 800kV transformers, CG has proved its
excellent technical and manufacturing capabilities yet again," CG Chief
Executive Officer and Managing Director Laurent Demortier said. Globally, the
1,200kV transformer was limited to a few countries like Russia (1,200kV), Japan
(1,100kV), Italy (1,050kV) and China (1,100kV), the company said. It added that
the country would need 1,200kV AC, as next transmission voltage for bulk
transfer of power of the order of 3,000 to 6,000 mw per line from power
generation complexes in east and northeast to load centres located in Northern
and Western Regions, in line with plans of augmenting power generation
sees first half revenues rise 6.7% to hit £184m
Eversheds has posted a 6.7%
increase in revenues for the first half of the 2011-12 financial year.
Turnover at the top 10 firm increased to £184.2m over the six month period,
against an equivalent figure of £172.6m last year. Last year's H1 figure was
marginally down on the first six months of 2009-10.
The firm said it saw fee income grow significantly across practices including
financial services, where revenues increased by 15%; construction litigation,
where revenues grew 23%; competition and real estate environmental, both of
which saw increases of more than 20%.
Eversheds chief executive Bryan Hughes (pictured) commented: "All of our key
indicators are positive, with activity and billings ahead of last year. Our
strong revenue position has flown down to the margins, with a £10m increase in
He added: "It goes without saying that market conditions remain interesting, in
recent weeks changing by the hour. However, we have had a good half year which
gives us a robust platform for the next six months."
Meanwhile, Eversheds' international operations saw an overall increase in
turnover of 22% for the first half of this year. The increase comes on the back
of launches in Romania and Hamburg and a merger with Middle Eastern law
consortium KSLG, which handed the firm new bases in Iraq, Jordan, Saudi Arabia
and Dubai, during the six month period.
Eversheds posted static revenues of £355m for the full 2010-11, alongside a 7%
increase in profits per equity partner (PEP) to £550,000.
Eversheds' announcement makes it the latest in a stream of top 50 UK firms to
post revenue increases for the first half of the current financial year. These
include Allen & Overy, which reported a revenue rise of 11%, Ashurst and
pre-merger Clyde & Co, which both posted 12% hikes.
Authored by Sofia Lind, Legal
Week and as published on December 21, 2011.
R U S C H A M B E R S
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