High Court orders counter-claim security in ship case

The Colombo High Court recently issued order directing the plaintiff in an admiralty case to provide security for the counter-claim of the defendant, the ship owner, in a sum of US $1 million.

The order, made last week by High Court Judge Ruwan Fernando pertaining to a September 2014 case and its related issues, is the first time a local court has made such an order. The plaintiff in the case is Luna Shipping Enterprises Ltd from the Marshall Islands while the defendants are the vessel M.T. AGROS and its owner, Agros Shipping Company Ltd.

In an earlier case, the late Justice Mark Fernando had directed that for a defendant shipowner to seek security from the plaintiff in connection with its counter claim, it was necessary for the defendant shipowner to demonstrate to the court that the arrest of the vessel was with malicious intention. However in the lat- est ruling, Judge Fernando was of the view that the shipowner will have to demonstrate to the court on paper at least of a prima-facie case in respect of its counter- claim to warrant counter- security and also a genuine and reasonable need for security. The court also stated that it has taken into consideration that the plaintiff company is not resident in this country and thus, in case of an abandonment of the case by the plaintiff, the shipowner will not be able to recover the any losses suffered by the owners due to the arrest of the ship and hence, there is a genuine and reasonable need for counter- security for counter- claims. The court therefore agreed with the plea of the plaintiff and held accordingly.

Dr. Niranjan Abeyratne with Migara Liyanage appeared for the plaintiff while Murshid Mahroof and Dushantha de Silva instructed by Julius & Creasy appeared for the two defendants.