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ADMIRALTY IN REM – WRONGFUL ARREST – POSSESORY RIGHT – ARREST GONE WRONG: WHEN A SHIP ARREST BACKFIRES WITH DAMAGES

1. Summary and Facts:

Eletson Holdings Inc & Ors v The Owner and/or the Demise Charter and/or Persons in Possession or Control of the Ship or Vessel, ‘Paros’ of the Port of Piraeus (OCM Maritime Gas 3 LLC, intervener) and another action [2026] 80 MLJ 8 concerns on arrested a vessel (Paros) by the Plaintiff for claiming right to possession or control via a bareboat charter (BBC). Their claim was based on control of the charterer company (Paros SME) after US bankruptcy proceedings. However, the registered owner (OCM) had already terminated the BBC before the arrest. Therefore, the registered owner (OCM) challenged admiralty jurisdiction, re-arrested vessel and sought possession together with damages for wrongful arrest.

2. Legal Issues:

  • Whether plaintiffs had properly invoked admiralty jurisdiction of court.
  • Whether plaintiffs have possessory interest to the vessel.
  • Whether the plaintiffs claimed should be struck out.
  • Whether the plaintiffs are liable to pay damages for wrongful arrest of the vessel, on the basis that the arrest was affected mala fide or with gross negligence.

3. Court’s Findings:

  • The Plaintiffs’ had not properly invoked admiralty jurisdiction of court since they failed to establish the jurisdictional fact under Section 20(2)(a) namely; a proprietary or possessory right at the time of the writ and an arguable proprietary claim.
  • The court found that the bareboat charterparty (BBC) was the only source of any possessory right.
  • The BBC was terminated before the writ was filed and therefore no existing right or possessory interest on that vessel.
  • The Plaintiffs’ claim was struck out under O 18 r19 ROC 2021, as no legal basis in admiralty law.
  • It was only an internal corporate not a maritime claim.
  • Therefore, the claim was frivolous, vexatious and abuse of court process.
  • The court found that both elements for mala fide and gross negligence was satisfied because; Plaintiffs knew BBC had been terminated and Plaintiffs failed to disclose termination when applying for arrest.
  • Therefore, the court ordered damages for wrongful arrest to be assessed.

4. Practical Implications:

This judgment affirms the several principle of laws including:

  • The Ship arrest is a serious remedy and cannot be used to pressure the other side in non-maritime dispute.
  • If the arrest is made without proper basis or with non-disclosure, the party may be ordered to pay damages.
  • Parties must disclose all important facts, including anything that weakens their case. Failure to do so can invalidate the arrest.

If you need more information on our legal updates, our Knowledge and Law News Division at lawnews@yhalaw.com.my would be pleased to assist.

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58200 Kuala Lumpur
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ADMIRALTY IN REM – WRONGFUL ARREST – POSSESORY RIGHT – ARREST GONE WRONG: WHEN A SHIP ARREST BACKFIRES WITH DAMAGES

In Eletson Holdings Inc & Ors v The Vessel “Paros” [2026] 8 MLJ 80, the High Court set aside an arrest after finding that the plaintiffs had no proprietary or possessory right to the vessel at the time of the writ, as the bareboat charter had already been terminated. The Court held that the claim was in substance a corporate control dispute dressed up as an admiralty action, and emphasised that such disputes do not fall within admiralty jurisdiction. Critically, the plaintiffs’ failure to disclose the termination of the charter when obtaining the arrest warrant amounted to a serious breach, leading the Court to find mala fides or gross negligence and order damages for wrongful arrest. The decision reinforces that ship arrest is a powerful remedy that must be exercised with full disclosure and a proper maritime foundation.

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