When a vessel is arrested in Bangladesh (especially in Admiralty matters involving maritime claims like collisions, damages, unpaid dues, etc.), the owner of the arrested vessels can apply to the court for its release. The Court usually allows release if the owner furnishes security, typically by submitting a Bank Guarantee for an amount equivalent to the claim made by the plaintiff. The Bank Guarantee acts as a substitute for the vessel — it ensures that the plaintiff’s claim remains secured, even though the vessel is physically released. The Court has discretion whether to accept the security and whether to adjust the amount, but full security is normally required unless exceptional circumstances are proven.
In Xin Sheng Shipping (Pte) Ltd. vs. M.V. Atiqur Rahman and Others, the Bangladesh High Court Division on 30 March 2017 rejected the defendants’ application to reduce the security amount required for releasing the vessel MV Atiqur Rahman after a collision at Chittagong Port. The Court held that liability had not yet been determined and that full security, matching the plaintiff’s claim amount of BDT 15,10,82,077.09, must be furnished. The Court stressed fairness and followed earlier precedents, ordering security by way of a Bank Guarantee without any cost order.
Background:
- Two vessels, MT Ocean Victory (owned by Xin Sheng Shipping) and MV Atiqur Rahman (owned by MR Shipping Lines), collided on 7 November 2013 at Chittagong Port.
- Following the collision:
- MR Shipping filed Admiralty Suit No. 61 of 2013 seeking $2,481,676.94 in damages.
- Xin Sheng Shipping filed Admiralty Suit No. 30 of 2015 seeking $1,939,187.23 in damages.
- Both suits were pending before the Court.
Main Issue:
- Defendant Nos. 1 and 2 (owners of MV Atiqur Rahman) filed an application seeking reduction of the security amount necessary for the release of MV Atiqur Rahman (which had been arrested following the suit).
- They argued:
- The vessel was out of trade and generating no income.
- They had enough assets in Bangladesh to cover any judgment.
- Furnishing high security was burdensome.
Plaintiff’s Opposition:
- Plaintiff (Xin Sheng Shipping) opposed the reduction, arguing:
- Liability for the collision was not yet determined.
- Security must match the full amount of the claim.
- Reducing security would prejudice their interests.
- Referred to an earlier precedent: GD Alesio, Livorno vs. MV Hawai Splendour (49 DLR 122).
Court’s Reasoning:
- The Court emphasized that liability for the collision had not yet been determined.
- Cited the earlier incident where the Appellate Division had reversed a previous reduction in security involving the same parties.
- Stressed that both sides had to furnish security equivalent to their claim to ensure fairness and protect interests.
- Refused to consider the merits (liability of the collision) at the stage of deciding on security.
Decision:
- The application for reduction of security was rejected.
- Defendant Nos. 1 and 2 were directed to furnish full security amounting to BDT 15,10,82,077.09 (equivalent to the claim amount) through a Bank Guarantee.
- No order was made regarding costs.
