Bringing a Claim in Indian Courts vs Foreign Seat Arbitration for International Shipping Disputes

For a shipping dispute with an Indian nexus, the question is seldom whether to litigate in India or arbitrate abroad, but which forum should do which work, and when. The Indian admiralty court supplies what no foreign tribunal can: coercive security over a ship in Indian waters. A foreign seat supplies a neutral merits forum and an award that travels.

The admiralty gateway: section 5 of the 2017 Act

The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 vests admiralty jurisdiction in the specified High Courts, extending to their territorial waters, and section 4 lists the maritime claims on which an action in rem may be founded. Arrest is gated by section 5(1): the court must have reason to believe that the person who owned the vessel when the claim arose is liable and remains owner at arrest; or that the demise charterer at that time is liable and is demise charterer or owner at arrest; or that the claim is founded on a mortgage or similar charge, relates to ownership or possession, or is secured by a maritime lien under section 9. Section 5(2) permits the arrest of another vessel in lieu, but only subject to the same conditions.

Two consequences are routinely misjudged. First, a claim against a time or voyage charterer does not found arrest of the chartered vessel, which the charterer neither owns nor holds on demise. An owner pursuing unpaid hire must look instead to a lien on sub-freights or cargo, to a ship the charterer itself owns, or to relief in personam. The Supreme Court has recently confirmed that section 5(2) is subject to section 5(1): the person liable must hold the requisite status in the very vessel arrested, both when the claim arose and when the arrest is effected. Creditors of a bareboat charterer must therefore move before the owner terminates; on the terms of BARECON 2017, a valid termination notice ends demise status at once, the charterer thereafter holding the ship as gratuitous bailee pending repossession. Second, the maritime liens in section 9 form a closed statutory list: crew wages, loss of life or personal injury connected with the operation of the vessel, salvage, port, canal, pilotage and other statutory dues, and loss or damage caused by the vessel’s operation. The better view is that whether a claim carries a lien or a right of arrest is a question for the Act as the law of the forum, not for the governing law of the contract; a lien recognised by a foreign governing law should not be assumed to travel.

Arrest where the merits are bound for a foreign seat

The 2017 Act contains no counterpart to Article 7 of the 1999 Arrest Convention, to which India is not a party. The availability of arrest in support of a foreign arbitration therefore rests on judge-made law. The Bombay High Court has long held that an admiralty court may arrest notwithstanding an arbitration agreement and retain the security to answer the eventual award, and has confirmed that the position survives the 2017 Act. Two limits must be respected. A suit filed solely to obtain security, without seeking a decree on the maritime claim, has been held not maintainable: the plaint must be a genuine action on the claim. And arrest cannot be obtained under section 9 of the Arbitration and Conciliation Act, 1996, which operates in personam against a party to the arbitration agreement, not in rem against the ship.

Where the defendant invokes the arbitration agreement, the governing provision for a foreign-seated arbitration is section 45 in Part II, not section 8. The court must refer the parties to arbitration unless it prima facie finds the agreement null and void, inoperative or incapable of being performed. Reference does not unwind the arrest; the suit remains on the file and the security is retained.

Limitation of liability: the defendant’s counter-move

Since 15 March 2026, limitation of liability has been governed by Part IX, Chapter II of the Merchant Shipping Act, 2025 (sections 162 to 174), which gives effect to the 1976 Convention on Limitation of Liability for Maritime Claims. Once a fund is constituted under section 168, a claimant who has claimed against it is barred from proceeding against any other vessel or property of the person limiting, and any arrest, attachment or security must be released by the High Court, whichever High Court, or the Central Government, holds the fund. Both consequences depend on the claim having been made against the fund and on the fund being actually available and freely transferable. A defendant that constitutes a fund thus converts the contest from security to limitation. The claimant must assess at the outset whether the claim is limitable and whether the conduct bar in section 163 can realistically be engaged. A foreign tribunal may rule on the right to limit as a defence; it cannot constitute or administer an Indian fund.

Section 9 interim measures in aid of a foreign seat

Since 23 October 2015, the proviso to section 2(2) extends sections 9, 27, 37(1)(b) and 37(3) to international commercial arbitrations seated outside India, subject to an agreement to the contrary. Orders securing the amount in dispute are approached by reference to the principles underlying Order XXXVIII Rule 5 CPC, though not with their full rigour; the applicant must still show a prima facie case and a real risk that the award will be frustrated.

The proviso is confined to international commercial arbitrations. Whether a clause conferring exclusive interim jurisdiction on the seat courts amounts to an agreement to the contrary is a question best foreclosed by drafting. And an emergency arbitrator’s order in a foreign-seated arbitration is not directly enforceable in India; its substance must be sought afresh under section 9.

Why the merits usually belong at a foreign seat

A foreign seat offers neutrality, specialist tribunals, confidentiality and, decisively, a Convention award enforceable wherever the counterparty holds assets.

The English Arbitration Act 2025, in force from 1 August 2025, inserted section 6A: absent an express choice of law for the arbitration agreement itself, the law of the seat governs it, and a choice of law for the main contract is not such an express choice. Parties seated in London under a foreign-law contract must now address the law of the clause deliberately.

Enforcement in India: award against judgment

A foreign award is enforceable under Part II only if it was made in a territory notified under section 44(b) as one to which the New York Convention applies. Not every Convention state is notified; England, Singapore and Hong Kong are. The application lies to the High Court under the Explanation to section 47, and in international commercial arbitration matters to its Commercial Division. Once the court is satisfied, the award is deemed a decree under section 49; recognition and execution proceed in a single proceeding.

The section 48 grounds are exhaustive and, save for arbitrability and public policy, must be proved by the party resisting enforcement. Since 2015, public policy is confined by statutory Explanations to awards induced or affected by fraud or corruption, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of morality or justice, with no review on the merits. An appeal under section 50 lies only against an order refusing enforcement. The enforcement application must be filed within three years under Article 137 of the Limitation Act, 1963.

A foreign judgment travels less well: outside the section 44A CPC route for reciprocating territories, it requires a fresh suit, exposed to the section 13 CPC defences.

Disclosure and the cargo dimension

Admiralty and maritime suits are commercial disputes under the Commercial Courts Act, 2015, attracting the amended Order XI regime of disclosure with pleadings. Cargo claims with an Indian leg must now be assessed against the Carriage of Goods by Sea Act, 2025 and the Bills of Lading Act, 2025, both in force from 10 September 2025.

Drafting and sequencing

A shipping arbitration clause with an Indian nexus should name the seat, the law of the arbitration agreement and the rules, and should expressly preserve the right to arrest and to seek section 9 relief in India notwithstanding the foreign seat. In a typical dispute the sequence is:

1.     Map the counterparty’s assets and test the section 5 ownership or demise-charter conditions against the person actually liable, and that person’s capacity to limit.

2.     Arrest by a genuine action in rem pleading the full maritime claim, and obtain security.

3.     Commence the arbitration; meet any section 45 application by accepting reference while seeking retention of the security.

4.     Enforce the award in the High Court within limitation, applying the retained security.

The Indian court secures; the foreign tribunal decides; the Indian court, again, enforces. Getting the section 5 analysis right at the outset determines whether that sequence is available at all.

This article is for general information and does not constitute legal advice.

For specialist advice on this topic, contact Jimi John at CHAMBERS OF JIMI JOHN, ADVOCATES, a member of the Global Law Experts network.

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