Landmark decision in respect of an admiralty case

A Cyprus-based shipping company has lost its case on three different occasions – in the Commercial High Court, the Appeal Court and the Supreme Court – in a landmark decision pertaining to the arrest of a vessel that docked in Colombo.

In September 2014, Luna Shipping of Cyprus filed action in the Admiralty Court (Commercial High Court sitting in the Admiralty Jurisdiction) to arrest the vessel M.T. AGROS owned by Agros Shipping Co. Ltd., in Liberia. The owners of the vessel furnished security for US$1 million to secure the release of the vessel and made an application on October 12, 2015 to make an order to direct Luna Shipping to furnish security for its counter claim on the basis that the arrest of Luna was with malicious intention.

After a hearing, the Commercial High Court Judge Dr. Ruwan Fernando on October 6, 2017 made his order and directing Luna Shipping to provide security for the counter claim of the owners of the vessel in a sum of $1 million. The Court further held that if security is not provided within the said period, it would make an appropriate order on November 20, 2017 for non-compliance with the order for counter security.

Luna Shipping filed a Leave to Appeal Application in the Appeal Court which was refused. It then appealed to the Supreme Court which on February 19, 2024 dismissed the application. On the instruction of M/s. Julius & Creasy, Nihal Fernando PC with Murshid Maharoof, Dushantha De Silva and Harshula Seneviratne, appeared for the owners of the vessel Agros while Faisz Musthapa PC with Dr. Niranjan Abeyratne on the instructions of KP Law Associates appeared for Luna Shipping.