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Tisand Pty Ltd v The Owners of the Ship MV "Cape Moreton" (Ex "Freya") (with Corrigendum dated 21 September 2004) [2004] FCA 1191 (10 September 2004)

Last Updated: 13 October 2004

FEDERAL COURT OF AUSTRALIA

Tisand Pty Ltd v The Owners of the Ship MV "Cape Moreton" (Ex "Freya") [2004] FCA 1191

CORRIGENDUM

TISAND PTY LTD v THE OWNERS OF THE SHIP MV "CAPE MORETON" (EX "FREYA")
N 898 of 2004

ALLSOP J
10 SEPTEMBER 2004 (CORRIGENDUM 21 SEPTEMBER 2004)
SYDNEY

1. The third line of the appearances block on page 16 should read "Written submissions for the plaintiffs drafted by Mr A W Street SC and Mr D A McLure."

2. A fourth line below the line referred to in 1, above be inserted on page 16 to read "Written submissions for the defendant drafted by Mr D S James."

Associate:

Dated: 21 September 2004

FEDERAL COURT OF AUSTRALIA

Tisand Pty Ltd v The Owners of the Ship MV "Cape Moreton" (Ex "Freya") [2004] FCA 1191

Admiralty and Maritime Jurisdiction – in rem proceedings under  s 17  of the  Admiralty Act 1988  (Cth) - challenge to jurisdiction – security for the claims of the plaintiffs provided by p & i club letter conditional upon jurisdiction being established – security for costs sought by defendant in relation to jurisdictional challenge.































TISAND PTY LTD v THE OWNERS OF THE SHIP MV "CAPE MORETON" (EX "FREYA")
N 898 of 2004

ALLSOP J
10 SEPTEMBER 2004
SYDNEY

THE COURT ORDERS THAT:

3. The plaintiffs provide security for the costs of the defendant of the substantiation of jurisdiction by the plaintiffs within fourteen days in the sum of $7,500 in a form suitable to the defendant.

4. If the parties cannot agree on the form of security, the matter is to be relisted for argument on the appropriate form of security.

5. If the security is not provided, the matter is to be relisted for argument as to further orders.

6. Each party bear its own costs of the argument on security for costs.

7. The matter stand over to 20 September 2004 for directions as to the future conduct of the matter.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1 I refer to orders made on 11 June 2004 and my reasons therefor published on that day. These reasons should be read with those reasons.

2 Alico Marine Limited ("Alico"), the owners of the ship MV "Cape Moreton", entered an unconditional appearance in the proceedings on 10 June 2004. Also on 10 June, Alico filed in Court an application for release of the ship (which was dealt with by orders on 11 June) and a notice of motion which sought, amongst other orders, the following:

...

2.	that the arrest of the MV "Cape Moreton" be set aside;

...

4.	that the Writ in Rem be set aside for want of jurisdiction alternatively that the proceedings herein be dismissed for want of jurisdiction.

...

3 The challenge to jurisdiction was on the basis that at the time of the commencement of the proceedings the relevant person named in the writ, Freya Navigation Shipholding Ltd ("Freya Navigation") was not the owner of the ship for the purposes of  s 17(b)  of the  Admiralty Act 1988  (Cth), that is, at the date of the commencement of the proceedings (notwithstanding that Freya Navigation remained on the Liberian Register as the owner of the ship at that time).

4  Section 17  of the  Admiralty Act  is in the following terms:

Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:

(a) was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and

(b) is, when the proceeding is commenced, the owner of the ship or property;

a proceeding on the claim may be commenced as an action in rem against the ship or property.

[emphasis added]

5 On 10 and 11 June, Alico asserted that the ship had been sold to it by Freya Navigation at arms’ length and for value before the date of the commencement of the proceedings. Thus, Alico said,  s 17(b)  was not, and could not be, satisfied. The plaintiffs were unwilling to accept these assertions on the material available to them on 10 and 11 June. On 11 June, Alico agreed to an order that it produce as on discovery documents listed in a notice to produce.

6 By 8 July 2004 (on which day the matter was in Court), the plaintiffs were not yet completely satisfied of the bona fide, arms’ length nature of the sale of the ship for value. They remained of the view that there was jurisdiction to arrest the ship – based on the state of the Liberian Register.

7 On 8 July 2004, Alico filed in court an application for security for costs of the proceedings in the amount of USD 100,000.

8 I made directions on that day for the filing of evidence and submissions on the question of security for costs, and for the filing of evidence in relation to the defendant’s challenge to jurisdiction by the motion filed on 10 June 2004.

9 By 16 July 2004, the solicitors for the plaintiffs finalised their views as to the bona fide nature of the sale of the ship. On 16 July they wrote to my associate and to the solicitors for Alico stating:

We refer to the Directions Hearing in this matter last Thursday, 8 July.

We note that on that occasion his Honour inquired of us as to whether the issues which will be in dispute in relation to the Defendant’s Motion challenging the Court’s jurisdiction to arrest the vessel could be limited. We are now instructed to inform the Court that in response to that Motion our client will not seek to assert that Freya Navigation remained the beneficial owner of the vessel at the time of commencement of proceedings. Our client’s response to that Motion will be limited to what has been described by us and our Counsel in Court as the ‘registered owner’ point.

10 The matter came before me for directions on 26 July 2004. By consent, I made orders which required the plaintiffs to complete their submissions on the jurisdiction question including what factual material was to be relied on. I also made directions as to completing the submissions on security for costs.

11 All the plaintiffs are outside the jurisdiction with no assets in Australia. The plaintiffs concede that should they be successful on the debate about jurisdiction involving the meaning of the word "owner" for the purposes of  s17(b)  of the  Admiralty Act , it would be appropriate for them to put up security for the in personam claim underlying the arrest. This is a claim for damages arising from a consignment of zircon sand in bulk from Richards Bay in South Africa to Shanghai in July 2003. One of the conditions of the release of the ship was that the in personam claim, on the assumption of jurisdiction being established, would be litigated in this Court.

12 The parties are agreed that the jurisdictional question should be heard first. The terms of the p & i club letter allowed that to happen without the need for extreme urgency. The parties are agreed that, subject to the Court agreeing, the jurisdictional question should be heard before any other question in the proceedings. That is plainly the appropriate course. When jurisdiction is challenged the authorities say that it is to be determined on the motion to set aside the writ and not decided as an issue in the trial of the whole proceedings: see: I Congreso del Partido [1978] QB 500; The Nazym Khikmet [1996] 2 Lloyd’s Rep 362, 363; The St Merriel [1963] P 247; The Andrea Ursula [1973] QB 265; The Maritime Trader [1981] 2 Lloyd’s Rep 153; The Saudi Prince [1982] 2 Lloyd’s Rep 255; Vostok Shipping Co Limited v Confederation Limited [2001] 1 NZLR 37; Wo Fung Paper Making Factory v Sappi Kraft (Pty) Ltd [1998] 2 HKLR 346, 352; The Tian Sheng No 8 [2002] 2 Lloyd’s Rep 430, 443; The Andres Bonifacio [1193] 3 SLR 521, 524; and The Kapitan Temkin [1998] 3 SLR 254, 257.

13 The High Court said in the Shin Kobe Maru [1994] HCA 54; (1994) 181 CLR 404, 426:

Where jurisdiction depends on particular facts or a particular state of affairs, a challenge to jurisdiction can only be resisted by establishing the facts on which it depends and, of course, they must be established on the balance of probabilities in the light of all the evidence advanced in the proceedings held to determine whether there is jurisdiction.

14 To the extent that some of the above cases depend upon the effect, in particular procedural regimes, of the filing of the unconditional appearance, it should be recalled that in this Court the filing of an unconditional appearance does not prevent the attack on jurisdiction: Th Zoya K [1997] FCA 1162; (1987) 79 FCR 71, 80 and The Socofl Stream [1999] FCA 1419; (1999) 95 FCR 403.

15 The plaintiffs, however, resist the entitlement of the defendant to require security for what they characterise as Alico’s positive challenge to jurisdiction.

16 It should be noted that the amount of security put up by Alico’s p & i club in order to gain release of the ship included an amount of legal costs (and a not insignificant amount) for the jurisdictional challenge.

17 The plaintiffs submitted that the issue as to whether security for costs should be ordered should be heard with the preliminary issue on jurisdiction. Alico objected to this as being likely to deprive it of any successful order as to security. I agree with Alico’s submissions in this regard. The question of security should be decided first.

18 The parties were agreeable to my deciding both the question of security and if it were to be ordered the amount of security on the papers. I do so in these reasons.

19 In their submissions, the plaintiffs put forward important questions of principle to be taken into account in the approach to security for costs application in in rem claims under the  Admiralty Act .

20 The nature of the issues to be litigated on the jurisdictional question is relevant not only to the question of the amount of the security, but also to the discretion as to whether to order security. In these circumstances, it is appropriate to outline what presently appears will be the factual and legal debate at the hearing concerning  s 17(b)  of the  Admiralty Act .

21 The plaintiffs have identified the following matters of fact upon which they will rely in the jurisdictional challenge:

(a)	At the date when the cause of action arose (see  s 17(a)) , Freya Navigation was registered as owner of the ship on the Liberian Register and was the relevant person in relation to the claim.
(b)	As at the date the proceedings were commenced (see  s 17(b)) , Freya Navigation, being the relevant person for the purposes of the  Admiralty Act , was and remained registered as owner on the Liberian Register.
(c)	As at the date of the commencement of the proceedings, Alico had obtained provisional registration with the Hong Kong Registry of the ship.
(d)	Under the bill of sale from Freya Navigation to Alico dated 24 May 2004 the usual warranty was given of the ship being free of all liens, debts and claims. The bill of sale is in a standard form which records the details of the ship.
(e)	On 21 May 2004, the Deputy Commissioner of Maritime Affairs of the Republic of Liberia granted permission for transfer of the ship, subject to payment of outstanding charges and fees and to discharge or release of a recorded first preferred mortgage and stated that a certificate of cancellation would issue upon surrender of the ship’s current valid certificate of registry, ship radio station licence and executed of the bill of sale.
(f)	On 24 May 2004, a further permission for transfer of the ship was issued by the Deputy Commissioner of Maritime Affairs of the Republic of Liberia, subject to the same outstanding steps to be taken, other than discharge of the mortgage.
(g)	These remaining steps were not fulfilled by the purchaser prior to the commencement of the proceedings.

22 The issue propounded by the plaintiffs for the jurisdictional hearing was expressed in their submissions as follows:

The only question to be determined for the purpose of jurisdiction is whether as a matter of construction of  s 17  of the  Admiralty Act 1988  "owner" includes "registered owner".

23 By this expression of the issue I take the plaintiffs to be saying that the question of construction is as to whether in  s 17  of the Admiralty Act the word "owner" necessarily includes registered owner. By this I do not mean that the registration of a party as owner is a necessary incident of that party being the owner. Cases such as The Iron Shortland (1995) 59 FCR 535 and The Maria Luisa [2002] FCA 1207; (2002) 130 FCR 1 and [2003] FCAFC 93; (2003) 130 FCR 12 make clear that in Australia a party may be the "owner" of a ship for the purposes of  aa1988115 /s17.html" class="autolink_findacts">ss 17,  18  or  19  and not be on any Register, if it is the beneficial owner. What the plaintiffs say is that if a party is in fact registered as owner on an international ship register that, of itself, is sufficient for satisfaction of the criterion of "owner" in the above sections, irrespective of the beneficial ownership (in the property sense) of the ship.

24 The plaintiffs do not identify any issue of Liberian law which they wish to proffer.

25 Alico does not accept that the issue can be so simply stated. Alico sees the issue as being whether Freya Navigation, the relevant person, was at the time the proceedings were commenced, the owner of the vessel within the meaning of  s 17(b)  of the  Admiralty Act  by reason of its registration as such on the Liberian Register, even though, as a matter of fact, it was neither the legal or beneficial owner of the vessel at that time. The defendant notes that it is not common ground between the parties that Freya Navigation was neither the legal nor the beneficial owner of the ship at the time when the proceedings were commenced. If the legal or beneficial ownership in property terms is the relevant issue Alico will seek to prove that Freya Navigation was not at the commencement of the proceedings the legal or beneficial owner. Alico says that proof of this will involve significant evidence in relation to the transfer of property in the vessel and the law applicable in Liberia and Hong Kong, the ship being provisionally registered in Hong Kong.

26 As I said earlier the plaintiffs appear to eschew any proof of foreign law and the effect of the sale to Alico.

27 It is unnecessary to resolve the issue as to the correct approach to the issue to be decided for the purposes of  s 17(b)  of the  Admiralty Act  in this application or whether the parties are propounding different, or the same, issues. It is sufficient to recognise that, whether or not the plaintiffs agree with the need for the defendant to attempt to prove various matters, the defendant wishes to approach the question of jurisdiction on the basis that it will need a body of evidence, at least concerning Liberian and Hong Kong law. It is also appropriate to note that the issue, however formulated, raises important questions about the correct approach to the meaning of the word "owner" in the  Admiralty Act  and the place of international ship registers in understanding what was intended by Parliament in that respect. It will be important to understand whether an entirely proprietary analysis, based on notions of property law referable to Australia, or the law of the flag or some other law, is appropriate to bring to bear, or whether there is a place for a broader conception of "owner", which at least includes the party registered as owner, irrespective of any particular jurisdiction’s law of property, thereby giving statutory importance to the well known international system of ship registration. The issues that will arise on the issue of jurisdiction may raise questions of private international law of the kind referred to in The Nazym Khikmet ; The Kapitan Temkin ; Vostok Shipping; and The Ivanovo [2002] 4 SLR 978.

28 Turning to security, no submission was made that the Court had no power to order security. The plaintiffs accept that s 56 of the Federal Court of Australia Act 1976 (Cth) is sufficiently wide to empower the Court to make an order for security in an action in rem.

29 The plaintiffs seek to resist the order for security on a basis referable to the character of the proceedings in question. The plaintiffs argue that ordering of security for costs in a preliminary challenge to jurisdiction would significantly undermine the efficacy of, and public interest in, the free exercise of Admiralty jurisdiction. It would place an impediment, it was said, in the path of utilising the arrest provisions. It was said that parties should be able to bring in rem claims free of considerations of security and counter security, subject only to actions under  s 34  of the  Admiralty Act . To permit any security would, it was said, impermissibly, by discretion, be importing notions of counter-security into the law of the kind in Article 13 of the 1999 Arrest Convention, which has not been adopted in Australian law. This is reinforced, it was said, by the fact that in substance the defendant was the aggressor or moving party in the challenge to jurisdiction. Reference was made to the structure and terms of the  Admiralty Act  and in particular  ss 8(2) ,  20 ,  21 ,  29 ,  30 ,  34 ,  39 ,  40  and  41 (2). The plaintiffs also submitted that as a matter as principle the jurisdictional challenge of the kind made here by Alico should not be seen as a defensive move by Alico so as to give rise to an obligation to provide security, rather it was said that Alico was the aggressor.

30 Alico argued that s 56 of the Federal Court of Australia Act gave the Court power, that the plaintiffs were overseas without assets in the jurisdiction and that in accordance with ordinary principles and the approach of Tamberlin J in The Balakleya [1999] FCA 520 security in an appropriate amount should be ordered.

31 It is true that in rem claims are a particular class of action in which international parties are afforded the opportunity of establishing jurisdiction in respect of personal claims against parties who may never otherwise be amenable to suit, by the means of the in rem action against the ship which has a relevant connection to the party personally liable. I need not enter the debate as to the relationship of the in rem and in personam claims and as to the correctness of the Indian Grace (No 2) [1997] UKHL 40; [1998] AC 878, cf Rose, [1998] LM&CLQ 27 and Teare, [1998] LM&CLQ 33, or its place in Australian law in the light of the terms of the  Admiralty Act . It is only necessary to recognise that the nature of arrest is quite different from actions and proceedings such as injunctions or Mareva injunctions: cf Australian Law Reform Commission Report No 33 on Civil Admiralty Jurisdiction [245]-[247]. The remedy of arrest, depending on the precise form of the statute or rules in question, is virtually administrative in its character. (It is unnecessary to discuss the curial incidents of the procedure of the arrest such as the obligations of disclosure: see generally Sea Containers Ltd v Owners of Vessel Seacat 031, Lockhart J, Federal Court of Australia, 7 June 1993; The Stephan J [1985] 2 Lloyd’s Rep 344, 346; The Vasso [1984] 1 QB 477, 491-2; The Nordglimt [1988] 1 QB 183; The Kherson [1992] 2 Lloyd’s Rep 261; The Ship Harima [1987] HKLR 770; The Varna [1993] 2 Lloyd’s Rep 253; and The Vanessa Ann [1985] 1 Lloyd’s Rep 549, 551.)

32 The Court should be slow to take any step which might be seen to undermine or impede the bona fide use of in rem actions by foreign parties by their availing themselves of the procedures under the  Admiralty Act . The arrest of ships is a recognised feature of international maritime commerce and international maritime jurisdiction. Very often legitimate claims will go unsatisfied unless there is recourse to an effective and efficient system of maritime arrest. Ships, their owners and insurers are expected, in the ordinary course of their businesses, to be ready to deal with in rem claims arising in connection with the use or deployment of the ship or the business of the owner or charterer.

33 Nevertheless, the party that avails itself of procedures providing for in rem claims and the arrest of ships under the  Admiralty Act  must be ready to justify its conduct and to prove that it was entitled to take advantage of the remedy of arrest.

34 The availability of arrest is often expressed in terms of "jurisdiction".  Sections 17 ,  18  and  19  use the following terms:

A proceeding... maybe commenced as an action in rem against (a ship or property) if: ...

Thereafter, factual preconditions are set down.

35 A difficulty for the plaintiffs in their arguments is the decision of Tamberlin J in The Balakleya. In that case his Honour said, in discussing whether or not a defendant should obtain from the plaintiff security in relation to an argument as to jurisdiction, the following:

There appears to me to be no basis in principle why an applicant requesting the release of a vessel, in respect of which it claims to have an interest, should not, if successful, have security for the costs of the application to strike out the arrest for want of jurisdiction in circumstances where the arresting person resides outside the jurisdiction and has no assets in Australia. There is no suggestion in this case that an order for security would stifle litigation and produce a judgment in favour of a party without contest.

36 Implicit within his Honour’s judgment is the proposition that the defendant in such an application (as is brought here by Alico) is not the true aggressor by reason of its notice of motion going to jurisdiction. Rather (as was said by Alico here), the defendant was simply putting the plaintiff to proof of a matter they assert (namely jurisdiction) and which the plaintiff bears the burden of proving and must therefore establish.

37 The plaintiffs submitted that I should not follow Tamberlin J in The Balakleya.

38 I do not need to consider whether or not The Balakleya was correctly decided . As I said earlier, it was not put that I do not have power to order security. In my view, the respective positions of the parties should not be reduced to over-simplistic categorisation by reference to the notice of motion as a whole. It is trite that, if challenged, the plaintiff who has brought about an arrest must make out its jurisdictional entitlement to invoke the  Admiralty Act  arrest procedures. Equally, it is clear that the defendant in putting on a motion to challenge jurisdiction is making an attack on the position of the plaintiffs and their entitlement to invoke the  Admiralty Act . In any particular case, where the balance of evidence and onus of proof lies is or maybe a matter of some complexity. It may be that the characterisation of who is the aggressor depends, at least in part, upon the particular factual circumstances. In my view, that is the case here.

39 I think the matter can be approached by way of understanding the position of the parties, the statutory context in which they find themselves and the particular factual circumstances here. There is significant force in the plaintiffs’ proposition that the Court should be slow to impose additional requirements upon plaintiffs in in rem cases not otherwise appearing in the  Admiralty Act  and Rules. The provisions of  ss 17 ,  18  and  19  of the  Admiralty Act  are an important facility for parties, including overseas parties, to obtain justice and redress in international transport and commerce where it is oftentimes extremely difficult to obtain satisfactory arrangements with personal or corporate defendants. That said, however, the injustice of empty orders for costs against overseas plaintiffs in circumstances where the overseas plaintiffs have obtained, as the price for the release of the vessel, their own security for their costs, including their costs in the jurisdiction argument from the party interested in the vessel, can be readily seen. Looking to the particular facts here, the plaintiffs were entirely justified in taking the view that the relevant person, Freya Navigation, was the owner at the two relevant points of time. It was on the Liberian Register as searches revealed to the plaintiffs’ solicitors. Upon the matter coming to Court, it was also not unreasonable for the plaintiffs’ solicitors and the plaintiffs to be less than immediately convinced of the factual material dealing with the underlying sale. Non-arms’ length sales of vessels, effected in order to defeat creditors and anticipated arrests, are not entirely unheard of. Nevertheless, upon relevant information having been disclosed to them, the plaintiffs and their solicitors have recognised that the sale was apparently bona fide and arms’ length.

40 Thus, up to this point in mid-July 2004, it is plain that the plaintiffs behaved perfectly reasonably in first believing that they had a clear foundation for jurisdiction and thereafter in not accepting what the defendant and its solicitors said, until due enquiry was complete. In these circumstances, and in the context of the place of in rem procedure in the  Admiralty Act , I would see no basis for requiring security which was of an amount which effectively reached back in time before mid-July 2004.

41 The question is whether security should be provided by the plaintiffs to justify their assertion of jurisdiction in the face of the material that has been put forward by Alico which demonstrates a bona fide for value transfer of the ship, subject to the matters identified and relied upon by the plaintiffs, as to which see [20] above.

42 There is nothing unusual about the proposition that a Court exercising Admiralty jurisdiction may order any person invoking its assistance to provide security for costs: Dillon v Baltic Shipping Co (1991) 102 ALR 402, 485 and Cremean Admiralty Jurisdiction: Law and Practice in Australia and New Zealand (2^nd edn) pp. 177-78.

43 Just as the commercial realities of the maritime world explain the in rem procedure and its virtually administrative nature in the arrest of the vessel, and the lack of any need for an undertaking as to damages, so such realities affect the position of the defendant as well. Without security for its costs in the jurisdiction argument, Alico will be exposed to a likely irrecoverable expense should it win and should its vessel have been arrested without warrant.

44 There are a number of important considerations here. First, it is important to recognise that impediments should not be placed in the path of the free use of the in rem procedure laid down by the  Admiralty Act  that otherwise do not appear in the  Admiralty Act  or Rules. Secondly, one must recognise that the onus is ultimately on the plaintiffs to justify the lawful invocation of the  Admiralty Act . Thirdly, the circumstances in which these plaintiffs sought and pressed for jurisdiction was that the relevant person was at all times registered on the Liberian Registry, as owner. Fourthly, notwithstanding the plaintiffs’ ultimate onus, on the hypothesis that the appropriate universe of discourse is the law of property, there is an effective onus on the defendant in these circumstances to bring forward material to show that the relevant person is not the owner despite its position on the Liberian Register as such. Fifthly, the desire and preparedness of the plaintiffs to approach the argument only on the basis of the matters that they have raised is of importance. The plaintiffs do not seek to prove foreign law. Sixthly, there is the necessity to do justice between the parties. Seventhly, the challenge to jurisdiction can be seen as both defensive and aggressive. To the extent that the plaintiffs must persuade the Court on the way they wish to run the argument that registration is sufficient, they are substantiating jurisdiction, as they must do, when it is challenged. To the extent that Alico wishes to argue that a well-known flag state registration is inadequate to conclude the argument of ownership and that the true proprietary position as between the vendor and purchaser of the ship is the appropriate way to look at the matter, it is the aggressor. Eighthly, a purchaser who deploys a vessel which is on an international ship Register in the name of the vendor as owner must, to a degree, assume the burden of rebutting a legitimate argument as to ownership based on the Register. Ninthly, it is important, in the resolution of the question in a just way, to recognise that the plaintiffs sought and obtained, as the price of release of the vessel, a sum, within the p & i club letter, for the costs of the jurisdiction argument. Tenthly, the issue as to the proper construction of s 17 of the  Admiralty Act  is a matter of some public importance.

45 In all these circumstances, I think it is appropriate to order some, though modest, security. The security should be seen as referable to the arguments which the plaintiffs wish to propound as to the proper construction of  s 17  of the  Admiralty Act . In that way, the security can be seen as reflecting the motion insofar as it requires a true substantiation of jurisdiction by the plaintiffs. In approaching the matter in that way, I would only order a sum referable to the cost of one day’s hearing and preparation therefor on a question of some importance, which may involve a significant body of legal preparation in connection with the meaning of the word "owner" in the  Admiralty Act , and in other maritime statutes and conventions and in respect of which it would be appropriate to brief senior counsel. This puts the defendant at some risk of preparation costs of the evidence underpinning its assertion that ownership is to be determined quite apart from the Register of the flag state by reference to the property rights seen to be consequent upon the private sale transaction, by the laws of whatever legal system is said to be relevant.

46 This approach reflects the fact that Alico can be seen as the moving party on the motion to the extent that it is responsible for bringing forward material to challenge what otherwise would be a clear conclusion drawn from the fact that the ship was registered in the name of the relevant person as owner on the Liberian Register at both relevant times for the purposes of  s 17  of the  Admiralty Act .

47 In these circumstances, with the need to marshal argument and given the nature of the issue, I think a sum of $7,500 is appropriate. I considered a lower amount, but in all the circumstances, I think this sum is fair, in particular, in the light of preparation for the argument which would be appropriate. There is no suggestion that any such sum will stifle the litigation. The sum may not be, and is not intended to be, a full indemnity for the argument to be put forward by the plaintiffs, but is, in my view, a just sum.

48 The ordering of security in this case should not be taken, or seen, as something that will be done as of course in in rem cases. Nor should the sum that I have awarded be seen as a tariff in any sense whatsoever. There is a public interest in parties in international shipping and commerce being freely able to avail themselves of the provisions of the  Admiralty Act  without procedural encumbrances not identified in the  Admiralty Act  or Rules, subject to Rule 6(1) of the Admiralty Rules.

49 I do not think that the approach that I have adopted is contrary to principle. Admiralty Rules have recognised the place for appropriate orders for security for costs: see Roscoe’s Admiralty Practice (4^th edn 1920) p 419; and Cremean op cit pp 177-78. The procedure in Admiralty is subject to the Federal Court of Australia Act and Rules when not contrary to the  Admiralty Act  and Rules.

50 The security that I have ordered, in my view, does justice between the parties, will not stifle any litigation, recognises the underlying importance to international litigants of the availability of the in rem procedures and reflects an approach which is not inconsistent with the structure of the  Admiralty Act  and Rules and with the fact that Australia has not adopted the 1999 Arrest Convention. The sum is security for costs, not for the consequences of wrongful arrest.

51 Given the arguments of, and the position taken by, the parties, they should bear their own costs of the argument as to security for costs.

52 I will stand the matter over to a directions hearing on 20 September to hear the parties on the further preparation of, and setting a date for, the jurisdiction hearing.

Associate:

Dated: 10 September 2004