A vessel that owes you money has just called, or is about to call, at any port in Sri Lanka. The owner is offshore, the assets are mobile and the one thing within reach is the ship herself. For a foreign claimant, the arrest of a vessel in Sri Lankan waters is often the single most effective way to obtain security for a maritime claim before the debtor disappears over the horizon.

Sri Lanka sits astride the main east–west shipping lanes of the Indian Ocean and Colombo is one of South Asia’s busiest transhipment hubs. That geography makes the Sri Lankan admiralty jurisdiction commercially important out of all proportion to the size of the country: a great many ships that have nothing else to do with Sri Lanka pass close enough to be reached. This guide explains, from the perspective of an overseas claimant, when a ship can be arrested here, on what grounds, against whom, how the process works in practice and where the law is unsettled.

The legal framework in brief

The arrest of ships in Sri Lanka is governed almost entirely by statute. The central instrument is the Admiralty Jurisdiction Act No. 40 of 1983 (“the AJA”), which vests admiralty jurisdiction in the High Court of the Republic of Sri Lanka and confers the power to arrest ships and other maritime property. The procedure is set out in the High Court (Admiralty) Jurisdiction Rules 1991 (“the Admiralty Rules”).

Several other statutes sit alongside the AJA and matter in practice:

• the Merchant Shipping Act No. 52 of 1971 (as amended), which defines maritime liens and their priority;

• the Carriage of Goods by Sea Act No. 21 of 1982, which gives effect to the Hague/Hague-Visby regime for cargo claims;

• the Arbitration Act No. 11 of 1995, which governs the recognition of arbitration agreements and the enforcement of awards; and

• the Marine Pollution Prevention Act, under which pollution liability is channelled — the AJA expressly extends the admiralty jurisdiction to claims for pollution damage caused in Sri Lankan waters.

On the international plane, Sri Lanka is a party to the 1952 Brussels Convention relating to the arrest of sea-going ships and it participated in the drafting of the 1999 International Convention on Arrest of Ships — but it has not ratified the 1999 Convention. As will be seen, that gap has real consequences for one of the questions foreign claimants most often ask. Sri Lanka is also a signatory to the International Convention on Maritime Liens and Mortgages 1993, and the lien regime in the Merchant Shipping Act reflects that framework.

Why arrest? The action in rem

Admiralty proceedings can be brought in two ways. An action in personam is a claim against a person — the shipowner, charterer or carrier — in the ordinary way. An action in rem is a claim against the maritime property itself: the ship (or, in some cases, her cargo or freight) is treated as the defendant and the writ is served on the vessel by physically arresting her.

For a foreign claimant facing a foreign-owned ship, the in rem route is usually the point of the exercise. An in personam judgment is worth little if the defendant has no assets in Sri Lanka. Arrest changes the balance: the ship is detained under the authority of the Court and cannot trade, load, discharge or sail until security is provided or the claim is resolved. A vessel sitting idle at anchor costs her owner and her insurers money every day and that commercial pressure is what makes arrest such a powerful tool to secure — and frequently to settle — a maritime claim.

The grounds for arrest: which claims qualify

Not every grievance against a shipowner permits an arrest. The Court’s admiralty jurisdiction is defined by a closed list of “maritime claims” in Section 2(1) of the AJA. The full list runs from paragraph (a) to paragraph (r) and includes matters such as disputes over ownership and mortgages. Arrest as a remedy, however, is available for the narrower band of claims in paragraphs (e) to (q). In practical terms, a ship may be arrested in Sri Lanka in support of the following claims:

• (e) damage done by a ship — for example, collision damage or harm caused by the vessel’s operation, a head that the AJA expressly extends to pollution liability in Sri Lankan waters;

• (f) loss of life or personal injury caused by a defect in the ship, or by the wrongful act, neglect or default of those responsible for her navigation, management, or the handling of cargo or persons aboard;

• (g) loss of or damage to goods carried in the ship — the classic cargo claim;

• (h) claims arising out of any agreement relating to the carriage of goods in a ship, or to the use or hire of a ship — this captures charterparty disputes;

• (i) salvage;

• (j) towage;

• (k) pilotage;

• (l) goods or materials supplied, or services rendered, to a ship for her operation or maintenance — the “necessaries” head, which covers bunker supply and similar claims;

• (m) construction, repair or equipment of a ship, and dock charges or dues;

• (n) crew wages, and sums recoverable as wages by or in respect of the master or crew;

• (o) disbursements made on a ship’s account by a master, shipper, charterer or agent;

• (p) general average; and

• (q) bottomry.

A claimant who cannot bring its grievance within one of these statutory heads cannot arrest, however meritorious the underlying dispute may be. The first task in any Sri Lankan arrest is therefore to characterise the claim and fit it squarely within Section 2(1).

Two further points on scope are worth noting. First, the jurisdiction applies to all ships, whatever their flag and wherever their owners are resident or domiciled — a foreign claimant arresting a foreign ship for a claim arising abroad is squarely within the Act. Second, the res that may be arrested is not limited to the ship: in an appropriate case, cargo on board may itself be arrested, a point confirmed in the MV Thermopylae Sierra litigation discussed below.

Maritime claims and maritime liens: a distinction that decides cases

The most important conceptual divide in Sri Lankan arrest practice — and the one foreign claimants most often misunderstand — is between a statutory maritime claim under Section 2(1) of the AJA and a maritime lien under the Merchant Shipping Act.

A maritime lien is a privileged charge that attaches to the ship at the moment the claim arises and travels with the vessel even if she is sold to a new owner. Section 83 of the Merchant Shipping Act recognises a limited category of maritime liens, broadly:

• wages and related sums due to the master and crew for their service on the ship;

• port, canal and other waterway dues and pilotage dues;

• claims against the owner for loss of life or personal injury in direct connection with the operation of the ship;

• claims against the owner, founded on a wrongful act rather than contract, for loss of or damage to property in direct connection with the operation of the ship; and

• salvage, wreck removal and general average contributions.

These liens enjoy a high priority. Under Section 84 of the Merchant Shipping Act, maritime liens rank ahead of registered mortgages and most other charges over the vessel — a critical consideration where the ship’s value may not cover every competing claim.

A mere statutory maritime claim that is not a lien and behaves very differently. Such a claim can be enforced in rem against a ship only where the conditions in section 3(4) of the AJA are satisfied — broadly, that the person who would be liable on the claim in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship and that the same person is the beneficial owner or demise charterer of the vessel proceeded against when the action is brought. Those conditions are examined in detail below. If the ship has changed hands in the meantime, the right to proceed in rem against her is generally lost. By contrast, a lien is enforced under section 3(3), is unaffected by a change of ownership, and can be asserted against the vessel in the hands of an innocent purchaser.

The practical lesson is blunt. Where a claim qualifies as a maritime lien, the claimant’s position is strong and durable. Where it is “only” a statutory claim, timing and continuity of ownership are everything and a claimant who delays while the ship is sold may find the remedy has evaporated.

Whose ship can you arrest?

More Sri Lankan arrests turn on this question than on any other and the answer is governed by section 3 of the AJA, which prescribes the mode in which the admiralty jurisdiction is exercised. Which limb of section 3 applies depends on the character of the claim.

Claims against the ship or property concerned - Where the claim falls under section 2(1)(a), (b), (c) or (r) — ownership and possession, disputes between co-owners, mortgages and charges and forfeiture or condemnation — section 3(2) permits an action in rem against the ship or property in connection with which the claim or question arises. Separately, section 3(3) provides that wherever there is a maritime lien or other charge on a ship or other property for the amount claimed, an action in rem may be brought against that ship or property. Section 3(3) is the mechanism by which a maritime lien is enforced, and it operates independently of the conditions described next.

The “relevant person” test under section 3(4) - For the great majority of commercial claims — those under section 2(1)(e) to (q), which are the arrest heads listed earlier — the position is governed by section 3(4) of the AJA, which closely follows section 21(4) of the English Senior Courts Act 1981. Two conditions must be satisfied: (a) the claim must arise in connection with a ship; and (b) the person who would be liable on the claim in an action in personam — whom the statute calls the relevant person — must have been, when the cause of action arose, the owner or charterer of, or in possession or in control of, that ship.

Where both conditions are met, an action in rem may be brought against either (i) that ship, if at the time the action is brought the relevant person is the beneficial owner of her or her charterer under a charter by demise; or (ii) any other ship of which, at the time the action is brought, the relevant person is the beneficial owner as respects all the shares in her. Limb (ii) is the statutory basis for sister-ship arrest in Sri Lanka. It is a matter of express provision, not of analogy with English practice.

What the test means in practice - Several consequences follow and they are not self-evident from the language. First, the relevant person need not have been the owner when the claim arose: the test is equally satisfied where that person was the charterer, or merely in possession or control of the vessel, so liabilities incurred during a charterer’s operation of a ship can found an action in rem. Second and critically, the connection must survive to the date on which proceedings are instituted, because ownership or demise charter is tested at that later date. Where a time charterer incurs the liability and is neither the beneficial owner nor a demise charterer when the action is brought, the vessel cannot be arrested for that claim — the point that most often defeats bunker and other supply claims contracted by time charterers. Third, the criterion is beneficial ownership rather than registration and for a sister ship the relevant person must own all the shares in her. Fourth, section 3(6) directs that, in deciding whether a person would be liable in personam for the purposes of section 3(4), it is to be assumed that he has his habitual residence or a place of business in Sri Lanka — so the absence of any local connection is no bar to the claim.

One ship only: the section 3(7) restriction - A limitation that foreign claimants frequently overlook is that the choice of target can be made only once. Section 3(7) provides that where, as regards a claim under section 2(1)(e) to (q), a ship has been served with a writ or arrested in an action in rem to enforce that claim, no other ship may be served or arrested in that or any other action to enforce the same claim. A claimant may therefore proceed against the offending vessel or against a qualifying sister ship, but not against both, and cannot arrest a second vessel if the security obtained proves inadequate. The subsection does preserve the ability to issue a writ naming more than one ship, or several writs each naming a different ship — useful where it is not yet known which vessel of a fleet will call first — but only one of them may in the event be served or arrested. Selecting the right target is accordingly a decision that cannot be revisited.

Maritime liens stand outside this scheme - Where the claim is secured by a maritime lien, it is enforced under section 3(3) against the ship to which the lien attaches, without reference to the section 3(4) conditions and irrespective of any change of ownership. A lien for crew wages or salvage may accordingly be enforced against a vessel even though her owner was not the contracting party and even after she has been sold.

How an arrest is carried out

One of the attractions of the Sri Lankan jurisdiction is that an arrest can be obtained quickly and ex parte — without notice to the owner — provided the claimant’s papers are in order. The essential steps are as follows:

Instruction and authority - A simple proxy authorising a Sri Lankan attorney to act is sufficient to commence proceedings. This keeps the front-end formalities light, which matters when a vessel may only be in port for hours.

The supporting affidavit - The claimant files an affidavit setting out the full maritime claim, exhibiting the documents that support it — the bill of lading, charterparty, bunker invoices, salvage agreement, crew contracts, survey reports or whatever the claim depends on. The affidavit must establish, at least to a prima facie standard, that the claim falls within Section 2(1)(e)–(q) and that the conditions for arresting this particular vessel are met. The affidavit may be executed through a power of attorney holder, if necessary.

The writ and the application for the warrant - An action in rem is commenced by a writ of summons in rem, endorsed with the nature of the claim and the relief sought and issued under the seal of the Court. A warrant for the arrest of the vessel may be issued at the time of, or at any time after, the issue of that writ, on the affidavit described above. Under section 7(1) of the AJA the judge must be satisfied that the vessel or property to which the action relates will be removed out of the jurisdiction of the Court before the claimant’s claim is satisfied. The warrant is prepared by the claimant’s attorney and signed by the Registrar and is served by the Marshal of the Admiralty Court or his officers.

Execution by the Marshal - The Marshal effects the arrest, and the vessel is then under the custody and authority of the Court. She cannot lawfully leave until released.

Speed and arrest in anticipation of arrival - Where the documents are ready, an application can be made almost immediately and in genuinely urgent cases it can be supported outside ordinary court hours, in the judge’s chambers.

Critically, a claimant need not wait until the vessel is alongside. Proceedings may be instituted, and the writ and the warrant of arrest issued, on the basis that the ship is scheduled to arrive within the territorial waters of Sri Lanka. The writ and warrant can then be held in readiness and served on the vessel upon her arrival. For a foreign claimant tracking a ship’s itinerary from abroad, this is perhaps the most valuable feature of the procedure: it turns a short port call into a workable opportunity rather than a race that begins only once the vessel has berthed. Claimants monitoring a debtor’s fleet movements should therefore instruct Sri Lankan counsel as soon as a call becomes likely, so that the writ and warrant are already issued and waiting when the ship enters the jurisdiction.

A note on documents and filing – Certified copies of the documents would generally suffice for the purpose of obtaining the arrest, but the originals must be produced when the matter proceeds to be heard on its merits. Foreign claimants should therefore arrange early for originals to be available, allowing for the time it takes to courier documents and, where necessary, to have them notarised or legalised.

No counter-security from the claimant - Unlike some jurisdictions, Sri Lanka does not require the arresting party to put up counter-security as a condition of obtaining the arrest. The burden of providing security runs the other way: it is the shipowner who must post security to secure the vessel’s release.

Releasing the vessel: security and its form

Once a ship is under arrest, the owner’s commercial imperative is to get her trading again, and the route to release is the provision of acceptable security. The AJA contemplates release where the owner either pays into Court the amount claimed (or an amount equal to the appraised value of the vessel), or provides bail, guarantee or other security to the satisfaction of the claimant. The procedural mechanics of release are dealt with under the Admiralty Rules.

Several features of Sri Lankan practice deserve emphasis, because they differ from what foreign owners and their insurers may expect:

• A first-class bank guarantee is the standard - In practice, release is usually secured by a guarantee from a first-class bank within the Sri Lankan jurisdiction. The amount must be sufficient to cover not only the principal claim but also interest and costs.

• A P&I Club letter of undertaking (“LOI”) is not treated as sufficient - This is the point that most surprises shipowners and their clubs. In many arrest jurisdictions a P&I Club LOU is the ordinary currency of release. In Sri Lanka it has not been accepted as adequate security to lift an arrest, which means owners typically have to tie up cash or arrange a bank guarantee — a materially more expensive and slower process. Owners calling at Sri Lankan ports should factor this into their contingency planning. There are certain occasions that specific LOIs may be sufficient until replaced by a bank guarantee.

• The Court can adjust the quantum - The judge has a discretion to increase or reduce the amount of security having regard to all the circumstances, so the figure demanded is not necessarily fixed at the claimant’s first estimate.

• Sale before judgment - Where an arrested vessel (or arrested property) is subject to speedy decay or is deteriorating in value while under arrest, the Court may, on the Marshal’s application, order her sale by public auction and direct that the proceeds be held in Court pending determination of the claim. This protects value for all interested parties when a protracted dispute would otherwise see the asset waste away.

The grey areas

A candid guide must address the points on which the law is genuinely uncertain or counter-intuitive. These are the issues on which careful, jurisdiction-specific advice earns its keep.

Arrest purely as security for foreign proceedings - Many shipping contracts provide for disputes to be resolved by arbitration in London or Singapore, or by litigation in another forum. A claimant in that position frequently wants to arrest a ship in Sri Lanka only to obtain security, intending to fight the substantive case abroad. Here the absence of the 1999 Arrest Convention matters. The AJA contains no express provision permitting the arrest of a vessel as security for proceedings pending overseas. The Admiralty High Court’s order in the MV Thermopylae Sierra case has left an element of uncertainty as to whether in rem proceedings can be instituted purely to obtain security and in particular whether a security-only arrest will be entertained where the substantive dispute is reserved for a foreign forum. This is unsettled territory, and a claimant relying on a security-only arrest should understand that the point may be contested.

Arbitration clauses and the in rem jurisdiction - Running alongside that uncertainty is a line of authority that is, if anything, favourable to claimants. In Colombo Commercial Limited v. MV “SCI Mumbai”, the Court of Appeal held that the AJA — enacted before the Arbitration Act — is a special statute that is not impliedly repealed by the later, general Arbitration Act, applying the maxim generalia specialibus non derogant. The Admiralty High Court followed that reasoning in MV Thermopylae Sierra, holding that an agreement to arbitrate does not automatically oust the Court’s admiralty jurisdiction and confirming in the same case that an action in rem may be brought against cargo, not only against a ship. The takeaway is nuanced: an arbitration or foreign jurisdiction clause does not necessarily defeat an arrest, but it may affect whether the Court will retain the substantive claim and it interacts with the unsettled “security-only” question above. The interplay is fact-sensitive and should not be assumed either way.

The threshold for wrongful arrest - An owner whose ship is wrongly detained will naturally look for damages. Sri Lankan courts recognise the concept of wrongful arrest, but — consistently with the international position — they set a high bar: an arrest is treated as wrongful only where malice or gross negligence on the part of the arresting party is established. A claim that ultimately fails on the merits is not, without more, a wrongful arrest. This cuts both ways: it gives claimants comfort that an arrest made in good faith on a genuine claim is unlikely to expose them to damages and it warns owners that recovering for a wrongful arrest is difficult.

Piercing the corporate veil - Shipowning is structured through single-ship companies precisely to compartmentalise liability and a debtor may try to defeat a claim by transferring the vessel to a new entity. The Sri Lankan courts will, in exceptional cases, examine the circumstances of such a transfer and pierce the corporate veil where a sale is shown to be a sham designed to evade a claim — but this turns on proof of fraud and is not lightly invoked.

Practical and procedural friction - Finally, claimants should plan around the practical realities: the absence of electronic filing, the need to produce original documents at the merits stage and the cash-or-bank-guarantee approach to release security all add time and cost compared with the most modern arrest jurisdictions. None of these is a reason not to arrest in Sri Lanka; each is a reason to prepare early and to be advised by lawyers who handle these matters routinely.

Practical pointers for foreign claimants

• Move before the ship does - Arrest can be founded on a scheduled arrival, so have the writ and warrant issued in advance and waiting.

• Characterise the claim precisely - Confirm at the outset that the claim falls within Section 2(1)(e)–(q), and identify whether it also qualifies as a maritime lien — that single point often determines how strong your position really is.

• Apply the section 3(4) test at the outset - For a claim not secured by a maritime lien, confirm that the relevant person was the owner or charterer of, or in possession or control of, the ship when the cause of action arose and is her beneficial owner or demise charterer when the action is brought — then decide whether the offending ship or a sister ship is the better target, because section 3(7) permits only one.

• Assemble originals early - Build in time to courier and, where needed, legalise original documents for the merits stage.

• Budget for the security regime - Assume that release may require a Sri Lankan bank guarantee covering principal, interest and costs, and that a P&I Club LOU may not suffice.

• Take a view on the grey areas in advance - If your real dispute is destined for arbitration or a foreign court, get advice on the security-only question before you arrest, not after.

Looking ahead

Sri Lankan admiralty law is built on a sound statutory base, but that base is now several decades old and the maritime world it regulates has changed beyond recognition. The catastrophic X-Press Pearl casualty and the litigation that followed have put a spotlight on the country’s maritime legal framework, with the higher courts signalling that domestic maritime law should be reviewed and brought into line with current international standards. Reform — whether of the AJA itself, of the security and release regime, or of Sri Lanka’s convention commitments — would resolve several of the grey areas described above. For now, the law remains as set out here and a foreign claimant who understands both its strengths and its uncertainties is well placed to use the Sri Lankan jurisdiction to real advantage.