Natwest Markets Plc v Stallion Eight Shipping Co. SA, (the ship MV ALKYON)

A claimant in rem is entitled to obtain a warrant for the arrest of a vessel as of right, provided the rules and practice direction are complied with. The court’s discretion to release the vessel must be exercised consistently with that principle and the established Admiralty practice that release ordinarily requires alternative security. A first-instance court should not introduce, through the release jurisdiction, a general requirement for a cross-undertaking in damages. The analogy with freezing orders is insufficient because an arrest is obtained as of right, serves both jurisdictional and security functions, and operates within established shipping-industry arrangements for avoiding arrest. Any fundamental change to the balance between claimants and shipowners is a matter for Parliament or the Rules Committee after proper consultation.

The claimant bank arrested the defendant ship in an Admiralty action in rem after accelerating a secured loan following an alleged breach of the required value-to-loan ratio. The shipowner disputed the default and sought release under CPR Part 61.8(4)(b) unless the bank gave a cross-undertaking in damages covering losses caused by the arrest if the claim failed.

The shipowner relied on the analogy with interim and freezing injunctions, the losses caused by the vessel’s detention, and its asserted inability to provide alternative security. The bank opposed the proposed change to Admiralty practice. The central issue was whether the court should exercise its release discretion to require such an undertaking.

1. Application refused. The vessel was not to be released merely because the claimant declined to give a cross-undertaking in damages.
2. Under CPR Part 61.5 and Practice Direction 61, paragraph 5.2, a claimant complying with the rules is entitled to the issue of a warrant of arrest. The arrest establishes the Admiralty court’s jurisdiction and provides security for the in rem claim. The right to arrest is therefore a distinctive feature of the procedure.
3. CPR Part 61.8(4)(b) confers a discretion to order release, but that discretion must be exercised on principled grounds. The usual practice is to release on provision of security assessed by reference to the claimant’s reasonably arguable best case. The discretion is not confined to that situation, as The Vanessa Ann shows, but no sufficient exceptional circumstance was established here.
4. The absence of a cross-undertaking at the arrest stage could not properly be remedied by ordering release unless an undertaking was provided. Such an order would substantially negate the right to arrest as of right and would effect a major change in practice. The cases, including The Bazias 3 and Bazias 4 and Willers v Joyce, supported maintaining the existing position.
5. An arrest and a freezing order are not procedurally equivalent. An arrest does not result from a discretionary court order, and the shipping industry has established means of avoiding arrest through undertakings and security. The analogy therefore did not justify importing the freezing-order cross-undertaking requirement.
6. The shipowner’s evidence of inability to provide security was insufficiently particularised. It should have addressed not only its own resources but also the resources available through direct and indirect shareholders. The costs of providing security were not unusual in this context.
7. The court acknowledged the potential for injustice where a shipowner cannot obtain release and cannot recover losses without proving wrongful arrest. Whether the longstanding balance should change was a matter for Parliament or the Rules Committee, following consultation with the relevant court users and industry.