IN THE HIGH COURT OF SINDH, KARACHI

Adm. Appeal No.03 of 2026

[Nexus Marine Trading & Logistics Service SPG v. M/V Lady Ileen & others]

a/w

Adm. Appeal No.04 of 2026

[M/V Lady Ileen & others v. Nexus Marine Trading & Logistics Service SPG & others]

PRESENT:

Mr. Justice Arshad Hussain Khan

Mr. Justice Amjad Ali Sahito

Mr. Taimur Ali Mirza, advocate for appellant-Nexus Marine Trading & Logistics Service SPG in Adm. Appeal No.03 of 2026, which is respondent No.1 in Adm. Appeal No.04 of 2026.

Mr. Mayhar Kazi, advocate for respondent No.2-Ege Trade ve Pazarlama A.S. in both appeals.

M/s. Omair Nisar and Mumtaz Ali Metlo, Advocates for respondents No.1 (M/V Lady Ileen), 3 (Vectory Marine Services ING) and 4 (Nautivoyage Shipping Company in Adm. Appeal No.03 of 2026, which are Appellants in Adm. Appeal No.04 of 2026.

Date of hearing : 12.08.2026 & 17.08.2026

Date of Decision : 27.08.2026.

O R D E R

ARSHAD HUSSAIN KHAN, J. Since both the captioned Admiralty Appeals, namely, Admiralty Appeal No.03 of 2026, preferred by the Disponent Owner/Time-Charterer (Plaintiff in Admiralty Suit No.04 of 2026), and Admiralty Appeal No.04 of 2026, preferred by the Vessel, its Registered Owners and Technical Managers (Defendants Nos.1, 3 and 4, respectively, in the said Suit), arose out of and call in question the same order dated 09.04.2026 passed by the learned Single Judge on CMA No.49 of 2026, both appeals are being heard and decided together through this common order.

2. The facts giving rise to the present litigation, as gathered from the record, are that a Time Charter dated 16.10.2025 was executed between Nexus Marine Trading & Logistics Service SPC (the “Time-Charterer”) and Nautivoyage Shipping Company (Respondent No.4 in Admiralty Appeal No.03 of 2026/Appellant in Admiralty Appeal No.04 of 2026), acting on behalf of the registered owners, Vectory Marine Services INC, in respect of the vessel M.V. Lady Ileen (IMO No.9238117). Subsequently, on 08.01.2026, two Fixture Notes were executed between the Time-Charterer and Ege Trade ve Pazarlama A.Ş. (the “Voyage Charterer”) for carriage of consignments of Rock Phosphate/Ground Phosphate in bulk from Abu Ghosoun Port, Egypt, respectively to Bandar Imam Khomeini (“BIK”), Iran, and Port Muhammad Bin Qasim, Karachi, Pakistan. The vessel was expected to arrive at discharge port on or about 23.01.2026. During the course of the voyage, however, a dispute arose between the Time-Charterer and the Voyage Charterer regarding the final port of discharge. The Voyage Charterer insisted that the vessel proceed to BIK, Iran, whereas the Time-Charterer maintained that proceeding to BIK would expose the vessel and her crew to serious war risks. The Time-Charterer accordingly invoked the war-risk provisions of GENCON 1994 and called upon the Voyage Charterer to nominate an alternative safe port, which, according to the Time-Charterer, it failed to do. Consequently, the Time-Charterer instituted Admiralty Suit No.04 of 2026 and obtained an ex-parte order dated 04.03.2026 restraining M.V. Lady Ileen from leaving Karachi Port without permission of the Court. In the Suit, the Time-Charterer filed CMA No.48 of 2026 under Section 151, C.P.C., seeking protective discharge of the cargo from the vessel at Karachi into port storage for safekeeping, without delivery thereof. It also filed CMA No.49 of 2026 under Rule 731 of the Sindh Chief Court Rules (O.S.), seeking issuance of a warrant for arrest of the vessel within the territorial waters of Karachi as security for the Plaintiff’s maritime claim, together with ancillary directions restraining the concerned authorities from issuing port clearance, outward clearance or sailing permission to the vessel and from permitting her to depart from, or shift within, Pakistani waters. The learned Single Judge, upon consideration of CMA. No.49 of 2026, disposed of the same through the impugned order dated 09.04.2026 in the following terms:-

“ix. In view of the above, I dispose of Application [C.M.A. No. 49 of 2026) by directing that immediately, the Bank guarantee of USD 200,000 US Dollar Two Hundred Thousand) be submitted by Defendant No.4 with the learned Nazir of this Court for release of the subject Vessel: and/ or, if there is some legal impediment, the same amount should be transferred in The Bank Account of learned Nazir of this Court, as a tentative security, whereafter, learned Nazir will take further steps for release of the subject Vessel Defendant No.1. The other charges, if any, for the time being, shall be borne by the Plaintiff, subject to final decision on the interlocutory Applications.

x. The Plaintiff will deposit Rs.4 Million, either through Bank guarantee or any other mode, including solvent surety/security with the learned Nazir of this Court towards PMSA charges, which shall not be released by the learned Nazir unless directed by this Court

xi The above Order is without prejudice to the stance and submissions addressed by the learned Counsel for the Parties.

Being aggrieved by the aforesaid direction, both sides have preferred these cross-appeals.

3. Learned counsel for the Time-Charterer (Appellant in Admiralty Appeal No.03 of 2026 and Respondent No.1 in Admiralty Appeal No.04 of 2026) contended that the impugned order is perverse and contrary to law, inasmuch as it permits release of the Vessel without first deciding C.M.A. No.48 of 2026, whereby the Time-Charterer has sought protective discharge of the cargo into Court-supervised storage. According to him, release of the Vessel while the cargo remains laden on board would effectively render the said application infructuous, destroy the Time-Charterer’s asserted contractual and maritime lien over the cargo, and cause irreversible prejudice by creating a fait accompli. Learned counsel further contended that the learned Single Judge erred in directing conditional release of the Vessel against security of merely USD 200,000, notwithstanding that the Time-Charterer’s maritime claim has been quantified and updated at USD 3,655,200, besides continuing demurrage at the rate of USD 16,400 per day. Referring to Rules 745 and 748 of the Sindh Chief Court Rules (O.S.), he argued that an arrested vessel cannot be released without adequate security commensurate with the claim asserted in the suit. He maintained that the security ought to reflect the claimant’s reasonably arguable best case and that fixation of a nominal or arbitrary amount, substantially below the asserted claim, effectively deprives the arresting party of the very security sought to be preserved through the action in rem. Learned counsel also assailed the direction requiring the Time-Charterer to deposit PKR 4,000,000 towards the charges claimed by the Pakistan Maritime Security Agency (PMSA), contending that such liability has been imposed without adjudicating the legality, maintainability or quantum of PMSA’s claim and is, therefore, arbitrary and without lawful basis. Lastly, with regard to the objection concerning maintainability of the suit and the status of Defendant No.4 in the context of Section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980, learned counsel submitted that an interlocutory appeal arising out of an order concerning arrest and security is not the appropriate stage for determination of disputed questions relating to ownership, beneficial ownership or liability. According to him, such questions involve mixed issues of fact and law requiring proper adjudication on the basis of pleadings and evidence and, therefore, ought to be left for determination in the suit. He accordingly prayed that Admiralty Appeal No.03 of 2026 be allowed and the impugned order be set aside or suitably modified to the extent challenged therein, whereas Admiralty Appeal No.04 of 2026 be dismissed. In support of his contentions he has relied upon the case of M.V.”Nedon and another v. M/s. Bangladesh Shipping Corporation [PLJ 1981 Karachi 463] and Convell Laboratories Ltd., v. M.V. Alexanders’ Faith [PLD 1983 Karachi 459].

4. Conversely, learned counsel appearing for the Vessel, its Registered Owners and Managers (Appellants in Admiralty Appeal No.04 of 2026/Respondents in Admiralty Appeal No.03 of 2026) assailed the impugned order as being without lawful authority, arbitrary and unsustainable in law. He contended that the learned Single Judge had no jurisdiction to require furnishing of any security whatsoever, even to the extent of USD 200,000, when the very maintainability of the underlying admiralty action and invocation of the Court’s in rem jurisdiction were seriously disputed. He further contended that the suit is barred by Section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980, as the underlying claim essentially arises out of a commercial dispute between the charterers and is, at best, an action in personam against the party allegedly liable under the relevant contractual arrangements. According to him, no corresponding in rem liability attaches either to the Vessel or to its Registered Owners. He argued that once specific objections regarding maintainability and the jurisdictional requirements of Section 4(4), coupled with the existence of mandatory arbitration clauses, had been raised, the learned Single Judge was required to determine such threshold objections before burdening the Vessel or its Owners with any obligation to furnish financial security.

On the merits of the underlying controversy, learned counsel submitted that the relevant clean recap required, as a condition for discharge without production of the original bills of lading, proof that the original bills had been invalidated, coupled with a Letter of Indemnity (LOI) in the wording prescribed by the Owners’ P&I Club. He maintained that, in the face of an objection by the named/formal shipper, the Owners were under no contractual or legal obligation to commence discharge of the cargo. He further contended that compliance with commercial and regulatory safeguards, including requirements relating to LOIs, sanctions, insurance and port formalities, remained governed by the terms of the bills of lading and the relevant contractual arrangements and could neither give rise to any independent tortious liability on the part of Vectory Marine Services INC nor furnish a basis for invoking in rem jurisdiction against the Vessel. Learned counsel further argued that the impugned order dated 09.04.2026 is internally inconsistent, inasmuch as the learned Single Judge left the fundamental questions of jurisdiction and maintainability undecided while, at the same time, conditioning the release of the Vessel upon furnishing a bank guarantee. Insofar as the quantum of security fixed by the learned Single Judge is concerned, however, he supported the impugned order and submitted that, in any event, no enhancement thereof is warranted. In the alternative, he prayed that the objection to the maintainability of the suit under Section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980, be remitted to the learned Single Judge for immediate determination as a preliminary issue. Lastly, he prayed that Admiralty Appeal No.04 of 2026 be allowed to the extent prayed for, the requirement of furnishing security be set aside, and Admiralty Appeal No.03 of 2026 be dismissed. He has relied upon the case of Messrs Sing Fuels Pte Ltd v. M.V. Yasa Aysen and 4 others [2020 CLD 70], Messrs Sun Line Agencies Ltd v. Vessel M.V. “PSILORITIS” & 2 others [1984 CLC 1553], Atlantic Steamer’s Supply Company v. M.V. Titisee and others [PLD 1993 Supreme Court 88], Messrs V.N. Lakhani & Company v. M.V. Lakatoi Express and 2 others [PLD 1994 Supreme Court 894], Selat Marine Services Co. LLC v. M.T. Bofors and 2 others [PLD 2019 Sindh 533], Sajid Plastic Factory v. MSC Bahamas and 9 others [PLD 2020 Sindh 568], unreported judgment dated 07.08.2023 passed by this Court in Admiralty Suit No.17 of 2023 (M/s. Jawad & Sons v. M.V. Tolmi and another), unreported order dated 08.04.2026 passed by this Court in Admiralty Appeal No.02 of 2026, (M/s. Jawad & Sons v. M.V. Tolmi and another), so also cases reported as 1997 Vol. 1 LLR-8, 1998 Vol. 2 LLR-411, 1994 Vol. 2 LLR-541, 1994 Vol. 2 LLR-266 and 2001 Vol. 1 LLR-147.

5. Insofar as Respondent No.2 is concerned, learned counsel submits that although he had earlier entered appearance and represented the said Respondent in these proceedings, his authority has subsequently been withdrawn and, therefore, he no longer represents Respondent No.2. He, however, points out that the objections earlier filed by him on behalf of Respondent No.2 are already available on record. A perusal of the said objections reveals that Respondent No.2 has substantially supported the stance taken by Respondents Nos.1, 3 and 4. It further transpires that Respondent No.2 has also specifically questioned the maintainability of the Admiralty Suit under Section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980, besides raising an objection founded upon the arbitration clause contained in the underlying contractual arrangement.

6. We have heard the learned counsel for the respective parties at length, perused the available record, and examined the relevant laws.

7. The controversy before us, though arising out of an interlocutory order, involves competing considerations. On the one hand, the Time-Charterer asserts a substantial maritime claim and seeks to preserve its alleged contractual lien over the cargo by obtaining its protective discharge and storage. On the other hand, the Vessel, its Registered Owners and Managers seriously dispute the very maintainability of the action in rem and contend that the underlying dispute is essentially contractual and in personam between the charterers, with no corresponding liability attaching to the Vessel. It may be observed that Section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980, does not make every maritime or contractual claim concerning a vessel automatically enforceable in rem against that vessel. For the categories of claims contemplated therein, the provision prescribes certain jurisdictional conditions, including the identity of the person who would be liable on the claim in an action in personam, his relationship with the vessel when the cause of action arose, and the beneficial ownership of the vessel when the action in rem is instituted. These requirements go to the very foundation of the exercise of jurisdiction in rem.

8. In the present case, the objection under Section 4(4) was specifically raised before the learned Single Judge. The case of the Vessel and its Registered Owners is that the liability, if any, arises out of contractual arrangements involving the Time-Charterer and Voyage Charterer and that no liability in personam, capable of supporting an action in rem against the Vessel, attaches to the Registered Owners. The Time-Charterer, on the other hand, disputes this position and maintains that the questions of liability, control and beneficial ownership require examination of the underlying contractual documents and surrounding circumstances.

9. We are conscious that above questions cannot appropriately be conclusively determined by us in these appeals without their first being considered by the learned Single Judge on the basis of the pleadings and material before him. Nevertheless, once an objection going to the very maintainability of the action in rem had been specifically raised, it was necessary that such objection receive determination before the Vessel was subjected to a continuing restraint or its release made dependent upon financial security.

10. We are also unable, at this stage, to accept the contention of the Time-Charterer that the security ought necessarily to have been fixed at USD 3,655,200 together with continuing demurrage merely because such amount has been asserted in the suit. Rules 745 and 748 of the Sindh Chief Court Rules (O.S.) contemplate release of arrested property upon payment or security in the sum in which the suit has been instituted. However, before directing security commensurate with the entire asserted claim, the Court must necessarily consider, inter alia, the nature of the claim, the basis upon which jurisdiction in rem is invoked and the extent to which the claim is prima facie sustainable against the arrested property. Particularly where the very foundation of the action in rem is under challenge, enhancement of security to the entire amount claimed, without first addressing that objection, would be premature. Even otherwise, the security fixed by the learned Single Judge is expressly tentative in nature and, therefore, remains open to reconsideration, modification or enhancement, if warranted, upon determination of the relevant jurisdictional and maintainability issues.

11. For the same reason, however, we are not persuaded to set aside the security of USD 200,000 altogether at this stage. Doing so before determination of the pending applications and the objection under Section 4(4) may leave the Time-Charterer without any interim protection should its claim ultimately be found maintainable. The amount already fixed may, therefore, continue purely as an interim arrangement, without prejudice to the rights and contentions of the parties and subject to such further order as may be passed by the learned Single Judge after deciding the relevant applications.

12. As regards the direction requiring the Time-Charterer to furnish security of PKR 4,000,000 towards PMSA charges, we find substance in the contention that liability for such charges ought not to be finally fastened upon a party without determining the legal basis and quantum thereof. The amount, if already deposited or secured pursuant to the impugned order, shall therefore remain with the Nazir and shall not be released to PMSA or any other person except pursuant to a further order of the learned Single Judge after hearing the concerned parties.

13. In view of the foregoing, we are of the considered opinion that the impugned order requires modification rather than being sustained or set aside in its entirety. Accordingly, both appeals are disposed of in the following terms:

i. The learned Single Judge shall, before taking up any other pending application, first determine the objection regarding maintainability of the action in rem under Section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980, as well as the objection founded upon the arbitration clause, after affording the concerned parties a fair opportunity of hearing.

ii. The security of USD 200,000 directed through the impugned order shall, continue as an interim security, without prejudice to the respective rights and contentions of the parties. The question whether such security is to be maintained, enhanced, reduced or discharged shall be reconsidered by the learned Single Judge after determination of the maintainability objection and the relevant pending applications.

iii. Insofar as the direction relating to PKR 4,000,000 towards PMSA charges is concerned, if such amount/security has already been deposited, the same shall remain with the Nazir and shall not be disbursed without further orders of the learned Single Judge. If it has not yet been deposited, the requirement of deposit shall remain in abeyance until the entitlement and quantum of PMSA's claim are considered after affording an opportunity of hearing to the concerned parties.

It is clarified that the observations made herein are tentative and confined to disposal of these interlocutory appeals. Nothing stated herein shall be construed as an expression of opinion on the merits of the suit, the existence or extent of the alleged contractual/maritime lien, the liability of any party, beneficial ownership of the Vessel, the quantum of the maritime claim, or the entitlement of PMSA to the charges claimed.

Consequently, Admiralty Appeal No.03 of 2026 and Admiralty Appeal No.04 of 2026, along with the pending applications therein, stand disposed of in the above terms, with no order as to costs.

JUDGE