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Change of ownership post collision and 'in rem' claims

If an in rem writ is issued against the wrong doing ship involved in a collision after she undergoes a change in ownership, then who should enter an appearance to defend it – the new owner or the previous one? S&P agreements normally have a provision requiring the previous owner to indemnify the new owners in such cases, but does this mean that the new owners must defend the in rem claim? These deceptively simple questions were up before a Singapore court in The Echo Star [2020].

In Apr’19, Royal Arsenal collided with Gas Infinity in Straits of Hormuz. 3 months later, Gas Infinity was sold & renamed Echo Star. 4 months after that, the owners of Royal Arsenal commenced Adm. action against Echo Star. New owners had to furnish a security of $6.7m to secure her release from arrest. They now wanted to withdraw as they felt they were not the proper in personam defendant.

Surprisingly, previous authority on this issue was scarce. Since a collision gives rise to a maritime lien, the court thought it best to start there. An important aspect was it travels secretively & is not defeated by change of ownership. Therefore, the in rem action against a ship could NOT be addressed to a bona fide purchaser. As for the indemnity under the S&P agreement, it was a separate matter.

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