Scottish Court of Session Decisions

The defenders have indicated that they wish to reclaim my decision refusing to recall an arrestment of a mobile offshore drilling unit, "Sovereign Explorer" which was laid on the dependence of the action on 15 October 1999. In that context I was invited to issue a short written opinion explaining my reasons for refusal.

The motion, as enrolled, reads:

In contending that the "Sovereign Explorer" was not a ship, Mr Currie, QC, for the defenders, referred me to p. 482 of 1993 4 Lloyds Maritime and Commercial Law Quarterly where reference is made to a recent decision of the Court of Cassation at Dubai. According to the commentary the Court of Cassation held that an oil rig could not be regarded as "a vessel... normally operating... in navigation by sea..." within the meaning of Art. 11 of the UAE Maritime Law because, as in the present case, it was not self-propelling. However, the definition of "ship" in section 48 of the Administration of Justice Act 1956, being, I understand, based on the 1952 International Convention Relating to the Arrest of Sea Going Ships, is in somewhat different terms and states that, "'ship' includes any description of vessel used in navigation not propelled by oars". As to the Convention, Mr Currie very fairly referred me to Berlingieri on Arrest of Ships 2^nd Edition at p.10 where the author expresses the view that off-shore platforms, even if not self-propelled, are subject to the Convention regime. More importantly, perhaps, Mr Howie, on behalf of the pursuers, when he came to address me, referred to the Opinion of the Inner House in The "St. Machar", 1939, 65 Lloyds List Reps. 119 at p.125 where it was held, inter alia, that a newly launched vessel without means of either self-propulsion or steering still qualified as a "vessel used in navigation" for purposes of Section 742 of the Merchant Shipping Act 1894. At first I was inclined to the view that that decision should be read as depending on the rather special circumstance that the launched hull was undoubtedly intended to be fitted out subsequently as a normal sea-going vessel. However, Mr Howie then referred me to a recent decision of the Supreme Court of Ireland - The "Von Rocks" [1998] 1 ILRM 481 - where, in reference to a definition of "ship" to all intents and purposes identical to that contained in section 48 of the 1956 Act, the Supreme Court held that a backhoe dredger with no bow, stern or anchors, and having no capacity for self-propulsion and no form of steering mechanism, nonetheless fell to be regarded as a "ship". In doing so the Supreme Court reviewed a number of English decisions dating back to The "Mac" (1882) 7 P.D. 126 from which it seems that the preponderance of authority is against the view that either self-propulsion or ability to steer is regarded as essential to the concept of a vessel. In The "Mac" cit. sup. it was held by the Court of Appeal that a barge used on the Thames qualified as a ship, Brett L.J. observing that, "The term ['ship or boat'] includes ... all things which are built in a particular form for the purpose of being used on the water". In the result, I am satisfied that the "Sovereign Explorer" qualifies as a "ship" and has been competently arrested on the dependence of the present action.

The next question is whether it can be said that the arrestment is "nimious and oppressive". I can deal with that matter quite shortly. The action in question is, I was told, essentially an action to secure claims which have been advanced in an Arbitration being conducted in London. The arbitration has apparently been running for about two years and may not reach finality until the year 2003. According to Mr Currie the pursuers had had many opportunities, if so advised, to arrest vessels belonging to the defenders in the past and the fact that they had not taken these opportunities demonstrated that there had never been any real concern regarding the credit-worthiness of the defenders. In that situation I should infer that the present arrestment had been laid for an ulterior and dishonest motive. In this connection, Mr Currie acknowledged that the defenders' immediate holding company, Sedco Forex Holdings Limited, hereinafter referred to as "Sedco", was currently the subject of a merger with Transocean Offshore Inc. as described in the Circular lodged as No. 7/6 of process, and, in particular, at page 8 of that document. However, Mr Currie maintained that Sedco could be seen as surviving the merger with its assets and credit-worthiness intact. It was unreasonable for the pursuers to take any other view.

As against all this Mr Howie, for the pursuers, pointed out - in my view correctly - First, that Sedco now had a new parent company and that there was no knowing what its attitude would be in 2003 when the Arbitration was scheduled to end; Second, that, although the accounts of Sedco shown in No. 7/5 of process looked fairly impressive, Sedco was nonetheless a company registered in the British Virgin Islands and Note 1 to the accounts contained the somewhat unusual statement that,

and; Third, that the accounts in question did not deal fully with contingent liabilities and contained no reference, for example, to the contingent liability for $51m referred to at Note 13 to the accounts or to the document of Guarantee lodged as No. 7/4 of process. According to Mr Howie it was the uncertainty surrounding the new merger proposals which had impelled his clients to lay the arrestment in question.

In the whole circumstances, having heard what Mr Howie had to say, I am quite unable to take the view, either that the pursuers laid the arrestment for the dishonest and/or ulterior motive of embarrassing the defenders or that the arrestment reflects an unreasoned or unreasonable reaction on the part of the pursuers to the merger of Sedco with Transocean Offshore Inc.

This brings me, lastly, to the alternative branch of the defenders' motion, as enrolled, namely to a consideration of whether the pursuers should be compelled to accept in place of the arrestment a guarantee from Sedco. For essentially the same reasons as those mentioned above in relation to nimiety I am in no doubt that this question also should be answered in the negative. It may be that in certain circumstances a guarantee from a large parent company of unimpeachable credit-worthiness could be accepted by the Court but, in general, I am of opinion that the guarantor should be an independent lending institution with impeccable credentials. Indeed, in my own modest experience the guarantor has not infrequently been a major bank. But, however one approaches the matter, I am quite satisfied that in this case, with the various uncertainties surrounding Sedco, it would be quite unreasonable to loose the arrestment on the guarantee at present proferred by the defenders. I should add, for the sake of completeness, that, in the course of the debate before me, Mr Currie made various submissions to the effect that any guarantee required should be for a sum considerably less than $90m, which is the sum first concluded for. Since, however, I was clearly of opinion that the only guarantor put forward by the defenders was in any event unsuitable I did not find it necessary to hear Mr Howie in reply on the matter of quantum and I accordingly express no view on that matter.