Admiralty Law: Defining Ships, Finance, and Legal Issues

This report delves into the multifaceted realm of Admiralty Law, addressing critical aspects of maritime law. The first part critically examines the statement regarding the definition of a ship, analyzing various interpretations across different legal frameworks and international conventions, including COLREGS, HNS 1996, Wreck Removal Convention 2007, and the English Merchant Shipping Act 1995, and relevant case law. The second part focuses on shipbuilding and finance, exploring legal issues and implications within English law, such as swapping hull numbers, failure to complain about faulty equipment, and the challenges faced by ship mortgagees. The report concludes with a discussion of a collision scenario, outlining the legal ramifications for the involved parties. The report provides a comprehensive overview of legal principles and practical considerations within the context of Admiralty Law.

Running head: ADMIRALTY LAW
ADMIRALTY LAW
Name of the Student
Name of the University
Author Note

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Question No. 1:
The legislators often face struggle while interpreting the meaning of the ship. This is
due to the constant change in the making of new commercial crafts like automatic water
vessels and floating storage regasification units (FSRU), inflatable banana rafts and
autonomous underwater vehicles. These all-new generation vehicles have afflicted the
maritime law. The idea of this study is to scrutinize different approaches that took different
cases dealing with ships and vessels and try to find out a universal list that includes those
crafts that can be considered as a ship.
The conflict in interpreting the term ‘ship’ is due to the confusion to demonstrate it
under the Common Law or Admiralty Law. Rule 3(a) of the COLREGS (the International
Regulations for Preventing Collisions at Sea, 1972) rule defined the term ‘vessel’ in most
arguable way which comprises of every kind of watercraft and seaplanes which can be used
or proficient of being used as a mean of carriage on water1. The terms used and capable of
being used denotes the broader approach adopted by the judiciary while interpreting shipment
cases. The International Convention On Liability And Compensation for Damage in contrast
with the Deportment of Hazardous and Noxious Substances by Sea (HNS 1996) employs the
word ‘any type whatsoever’ while elaborating the definition of the term ‘ship’2. In the Wreck
Removal Convention 2007, further includes air-cushion vehicles and submersibles in the
definition of ‘ship’3. The term ship as per the Wreck Removal Convention 2007 means and
includes any kind of seagoing vessels and also includes air-cushion vehicles, hydrofoil boats,
floating crat, submersibles, and floating platforms. However, these platforms are not to be
1 Nguyen, ManhCuong, and ShuFang Zhang. "Vietnam waterway transportation research and recommendation
of ARPA and AIS used in collisions avoidance." 2016 International Conference on Engineering and Advanced
Technology (ICEAT 2016). Atlantis Press, 2016.
2 Adascalitei, Oana. "OVERVIEW ON INTERNATIONAL CONVENTION ON LIABILITY AND
COMPENSATION FOR DAMAGE IN CONNECTION WITH THE CARRIAGE OF HAZARDOUS AND
NOXIOUS SUBSTANCES BY SEA (HNS) 1996." Constanta Maritime University Annals 27.223 (2019).
3 Saharuddin, Ahmad Zawawi. "The implementation challenge of Nairobi Wreck Removal Convention and the
related analysis within the existing Malaysian national law." (2019).

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considered as a ship when they are involved in the survey, exploitation, and production of
any sea bottom mineral resources. However, the International Convention on Civil Liability
for Oil Pollution Damage, 19694 restrict the description of a ship and states that a ship can
only mean and include those platforms that are engaged in the carrying of a proportionate
amount of persistent oil as cargo. Under Article 1(1) of the convention, the charter states that
ship means and includes any type of seagoing vessel and sea-borne craft engaged in carrying
the bulk of oil as cargo. The Maritime Labour Convention (MLC) 20065, provides another
restricted definition of the term 'ship'. It states that ship means and includes every platform
except those that navigate exclusively in or within inland water or end-to-end sheltered water.
Article II (4) of The Maritime Labour Convention 2006, provides that this definition relates
all publicly and privately owned ships involved in commercial actions if not otherwise
provided. However, this definition does not include ships engaged in fishing or similar
business and also does not include ships such as dhows or junks, ships use for war purpose or
naval auxiliaries. However, Section 313 of the English Merchant Shipping Act 1995, defines
ship in a problematic way whose origin is rooted in the obsoleted Merchant Shipping statutes.
The present statute elaborates ‘ship’ without denoting vessel and states that a ‘ship’ contains
every kind of vessel used in navigation. The earlier definition of ship and vessel under section
742 of the Merchant Shipping Act 1894 stated a ‘vessel’ contains any ship, boat or any other
vessels that are used in navigation and ‘ship’ comprises of every that vessel use for
navigation not boosted by oars. However, the term ‘ship’ may include boat containing oars
but subject to exceptions6. In the case of Curtis Vs. Wild7, the craft in issue was a lark dinghy
used for a Belmont reservoir. The court put their focus on the water stating that a lark dinghy
4 Bergesen, Helge Ole, Georg Parmann, and Oystein B. Thommessen. "International Convention on Civil
Liability for Oil Polluthtion Damage 1969 (1969 CLC)." Year Book of International Co-operation on
Environment and Development. Routledge, 2018. 104-105.
5 Fotteler, Marina Liselotte, Olaf Chresten Jensen, and Despena Andrioti. "Seafarers’ views on the
impact of the Maritime Labour Convention 2006 on their living and working conditions: results from a
pilot study." International maritime health 69.4 (2018): 257-263.
6 Ex parte Ferguson and Hutchinson (1871) LR 6 QB 280
7 Curtis Vs. Wild 8[1991] 4 All ER 172,

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can be used as a craft that to be used for navigation but it cannot be used in the Belmont
reservoir. The court further added that the reservoir in issue can not be considered as waters
that can be navigated according to the reflected sense of the authority. In the cases of
determining vessels and ship navigation is an important factor. The term’used in navigation’
denotes navigation in navigable waters. However, if navigation takes place within fenced
water, it will not attract the requisites of navigable waters. In the case of Southport
Corporation v. Morriss8, the defendant discharged 400 tons of oil from his oil tanker due to
heavy load on the ship that might have caused the risk of downing to the ship and life risk to
the crew. The discharged oil impacted the foreshore belonged to the plaintiff and caused
damages. The court held the defendant responsible for public nuisance and negligence as the
discharge does not include the use of land but it invoves the use of a ship. The court further
held that a small artificial lake does not fall under the navigable water criteria. In another
case of, Weeks v. Ross9, the court held that a non-compounded canal communicated via locks
to the sea where ships are usually come and go can be considered as navigable water. The
court in this case further held that it does not matter whether the vessel in issue did not
proceed to the sea and it does not nullify the water to be considered as navigable water. In
Steedman v Scofield10, the court held that the movement of a platform or water transports in
the water does not constitute navigation. The court further held that, though jet ski in dispute,
in this case, is navigable it cannot be considered as a vessel used for navigation. In another
case of R V. Goodwin11, the court excluded the category of jet ski from the definition of ships
and vessel and held that the word 'used in navigation' does not cover those ships and vessel or
those platforms that do not use for going anywhere and simply use as an object for having fun
in the water. In the Athen’s convention, the admiralty registered while giving his opinion
8 Southport Corporation v Esso Petroleum [1954] 3 WLR 200
9 Weeks v. Ross 232 U.S. 383 (1914)
10 Steedman v Scofield [1992] 2 Lloyd's Rep. 163
11 R V. Goodwin [2005] EWCA Crim

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about the disputed Sea Eagle boat in the case of Michael v Musgrave12, stated that for a ship
to comply with the term ‘used in navigation’ means it must be proficient of being used in
navigation irrespective of the fact that whether it is used in navigation or not at the relevant
time. As per the statement of the Admiralty Registrar, this term would include navy ships but
will not include jet ski or any platform used for the purpose of messing up in the water. While
considering the agenda of use of sips and vessels for navigating purposes, the past, as well as
future use, must be kept into consideration. In another case of Lozman v. City of Riviera
Beach, Florida13, the question in issue was whether the floating boat falls under the
description of a vessel under the guidelines mentioned in U.S.C. §3. The court, in this case,
took a practical approach rather than relying on the theoretical approach and held that floating
boats cannot be used as a medium of transport over the water, henceforth, it cannot be
considered as a vessel. The practical approach theory in determining vessel and ships was
adopted in another case of The Environment Agency v. Gibbs14. The question in issue was
whether houseboats falls within the meaning of the term vessel as defined in Article 2 of the
Inland Waterways Order, that includes vessel of every kind used for pushed or moved in or
through the water for the purpose to carry person, goods, plants or machinery. The court held
that vessel in its common definition means a ship or boat designed for carriage in or through
the water but it does not include simply something that is capable of floating and which is
strong enough to give support to persons or goods. It must be of something that is efficient
enough to bedirected to its projected destination. However, there were instances where a
mere navigating ability and a hollow structure comes out to be insufficient for a vessel or ship
in cases of dispute with other vessels or ships. In Polpen Shipping v. Commercial Union15,
the issue was if a flying boat can be considered as a vessel when it caused damage to the
12 MICHAEL v MUSGRAVE (TRADING AS YNYS RIBS) (THE "SEA EAGLE")
[2012] Lloyd's Rep. Plus 37
13 Lozman v. City of Riviera Beach, Florida, 568 U.S. ___ (2013)
14The Environment Agency v. Gibbs [2016] 2 Lloyd’s Rep. 69; [2016] EWHC 843
15 Polpen Shipping v. Commercial Union (1942) 74 Ll.L.Rep. 157

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harbor by its anchor. The court held that though the craft in issue had the structures of a
flying boat and not of a seaplane, the terms ‘ship or vessel’ does not cover a flying boat under
its definition merely for its navigating incidental feature. The court further states that any
character of a platform that does not form the part of its primary purpose of work cannot be
considered as a ship or vessel for its subsidiary work part.
The earlier CLC Convention of 1969/1971 defined the ship as a craft which is used to
carry oil as cargo16. But the 1992 CLC and Fund Convention under Article 2(1) and 2(3)
elaborated ship as any kind of seaborne vessel constructed and considered for the carriage of
oil as cargo, however, a ship that is skilled of carrying oil and cargos can be considered as a
ship if it is used in carrying oil in bulk as cargo. On 14th September 2011, a Director of
International Oil Pollution Compensations Funds stated on his ships are engaged in carrying
oil as cargo in the sequence of a voyage which they would continue after the STS but it
depends upon the discretion of the Member States to decide that up to what time it can be
considered a vessel. It is further stated that a vessel made or amended for the carrying oil as
cargo should be termed as a CLC ship, regardless its definite use as a loading unit. The
International Convention on Salvage, 1989 under Article 1(b) stated that a vessel comprises
of any ship, craft, or any navigable structure. Therefore, the navigable capability adjoined
with the structure as dissimilar from a ship or a craft.
It can be concluded from the above-mentioned study that even after various cases and
interpretations of Judges, there is no such literal definition of a ship is available that can
convince a layman. Therefore the room is still open where new definitions and varients of
ships and vessels might get add to the available list with the future technological growth in
the ship manufacturing industry.
16 Bergesen, Helge Ole, Georg Parmann, and Oystein B. Thommessen. "International Convention on
Civil Liability for Oil Pollution Damage 1969 (1969 CLC)." Year Book of International Co-operation on
Environment and Development. Routledge, 2018. 104-105.

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Question 2:
Shipbuilding and financing are the core things in the shipping business. On the one hand,
shipbuilding refers to the manufacturing of a ship by the shipping corporation and
organizations and on the other hand, shipping finance refers to investment regarding the
manufacturing process. The financial aspects relating to commercial activities of the marine
industry are covered completely under the rules and regulations of maritime finance. The
activities for this purpose refers to buying and purchasing of an entire ship, shipping parts,
development and repairing shipping instruments, gadgets. This is all covered by marine
insurance and other financial elements. Some pre-requirements needs to be fulfilled to qualify
for marine finance. Due to the highly volatile nature of the marine industry, it is for the
parties dealing with ships and vessels to ensure that they are complying with all relevant
requirements for the successful execution of the finance without any default. Few of the
conditions are stated below;
 Tough credit value
 Strong reserves of cash or;
 Available of subsidiary resources to indemnify against latent deprivations.
There are numerous parties involved in the field of maritime financing17. On one hand,
some of the methods of operation of these parties are conventional and on the other hand,
some of the ship finance operators follow an unconventional way and established their own
method of dealing. This difference of opinion between the ship financers creates an extensive
range of feasibilities for the people in need of maritime financial aid. Below is the list of few
maritime finance operators and their services;
Banks and financial organization as lenders:
17 Drobetz, Wolfgang, and Max Johns. "The evolution of modern ship finance." Finance and risk
management for international logistics and the supply chain. Elsevier, 2018. 85-108.

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Among the conventional lenders, banks and financial organizations are the most
popular ones. Whenever an organization requires finance, it approaches a bank or a finance
firm, it then goes for a detailed investigation of the organization asking for money. The
finance receiver is required to mortgage the ship or pay an initial deposit of 10%-40% of the
required finance as per the bank’s existing norms. Only after when the bank or the finance
firm is fully convinced with the creditworthiness of the organization, it grants the finance.
Marine Money Lenders:
Marine money lenders are the second most popular financer in the field of maritime
finance. Their role becomes important when any bank or financial institution does not agree
to give a loan to an organization. However, it can be tricky and costly to take a loan from
private money lenders as their money lending process does not comply with any proper
guidelines, unlike the bank.
Capital Investment:
Capital Investment for a maritime project is similar to that of investing in share. However,
the risk, in this case, is in case of failure of the project, people investing money may be lost
their money forever.
In cases of borrowed finance the shipowner often has to mortgage the ship or vessel to
secure a loan from bank or financial institution. However, foreign investment is a popular
way of financing commercial shipbuilding. In the United Kingdom, the private shipping
industry is governed by the rules and regulations of the Shipbuilding Industries Act, 1977,
which ensures the roots of the British Shipbuilders Act, 1983 by its incorporation. Shipping
organization usually entered into a shipbuilding contract with the shipyard and it is on the

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parties to decide about the governing law of the contract. Under the English Law,
shipbuilding contract has been referred to as a contract for the sale of goods18.
a) In the shipping contract, Hull number is referred to as the labeling number for the ship19.
Under English Law, hull number is considered as a mere number for labeling and a buyer
cannot refuse to accept delivery of vessel on the ground that the hull number is different from
what it is written in the shipbuilding contract20. The malpractice regarding the modified hull
number arises when the shipbuilder of a contract allocates a different hull number without the
consent of the buyer for the execution of an entirely different contract. In the case of The
Diana Prosperity or Reardon Smith Line Ltd v Yngvar Hansen-Tangen and Sanko SS & Co
Ltd21, the dispute was regarding the name of the yard mentioned in the body of the ship as the
contract was subcontracted by the actual builder of the contract to another yard. But the buyer
wanted to discontinue the contract on a different reason stating that it does not comply with
the provision of section 13 of the Sale of Goods Act, 1979. The court held that in this case
focus should be placed on the goods but not on the technical arguments. Thereby, the hull
number has no significance. In the case of Simgood v MLC Shipbuilding 22, the appellant
entered into a shipbuilding contract with the respondent company for making a vessel with a
specific hull number and the respondent failed to deliver the vessel. The appellant claimed
that the respondent tried to swap the hall number of the vessel with another vessel number
made before. The court held that the respondent's act was inspired by the fact that the
respondent wanted to postpone the repayment of a loan and there was no intention of the
respondent to cause injury to the appellant by swapping the hull number of the vessel and
18 McDOUGALL v. AEROMARINE OF EMSWORTH, LTD.[1958] 2 Lloyd's Rep. 345
19 He, Jiayi, et al. "Froude number, hull shape, and convergence of integral representation of ship
waves." European Journal of Mechanics-B/Fluids 78 (2019): 216-229.
20 Gauci, Gotthard M. "The Rights of a Ship’s mortgagee in English Law." Security Interests in Mobile
Equipment. Routledge, 2017. 155-180.
21 The Diana Prosperity or Reardon Smith Line Ltd v Yngvar Hansen-Tangen and Sanko SS & Co Ltd [1976] 1
WLR 989
22 Simgood Pte Ltd v MLC Shipbuilding Sdn Bhd [2015] SGHC 303

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further that renumbering is not a civil wrong. Hull number swapping is a process of ship
rotation by using the old vessel number to a new vessel. Often the financing institutions
required a marine mortgage to be registered against the money lending process. However,
hull number registration is not required to prove ownership of the ship. Hull identification
number is a fourteen digit number of issues to all vessels. However, the larger vessel gets a
permanent International Maritime Organizational Number(IMO) which is associated with the
hull23. This number is to identify registered ship owners and management companies assigned
under the International Convention for the Safety of Life at Sea (SOLAS). The United
Kingdom maritime law only allows dual registration of a ship under a bareboat charter.
Therefore showing to the financing bank about the buying of a new ship to get fast finance is
a strategy adopted by the buyers or companies engaged in the shipping business.
b) Parties to a shipbuilding contract have the discretion to choose the governing law of
the contract. However, English law used to consider shipbuilding contracts as a contract
under the sale of goods Act. In the case of Mcdougall v. Aeromarine Of Emsworth, Ltd24, the
court held that suppliers of the yacht gave a tentative delivery date to the buyer thinking that
he will complete the construction within that date. Therefore, shipbuilding contracts can be
considered as a contract for the sale of future goods. In another case of Hyundai Heavy
Industries Co v Papadopoulos and Others25, under a shipbuilding contract, a clause
mentioned that in case of the buyer's failure to pay the installment of a shipbuilding contract
creates a right of recession in favor of the builder. The buyer was a defaulter in paying the
second installment and the builder rescinded the contract. The court held that though builder
rescinded the contract, they cannot deny the duty to refund the amount paid by the buyer
beforehand as shipbuilding contracts have the characteristics of construction contract under
23 Bodansky, Daniel. "Regulating greenhouse gas emissions from ships: The role of the International
Maritime Organization." Ocean Law Debates. Brill Nijhoff, 2018. 478-501.
24 McDOUGALL v. AEROMARINE OF EMSWORTH, LTD.[1958] 2 Lloyd's Rep. 345
25 HYUNDAI HEAVY INDUSTRIES CO LTD V PAPADOPOULOS: HL 1980[1980] 1 WLR 1129, [1980] 2
All ER 29, [1980] 2 Lloyds Rep 1

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the common law. Therefore, the liability of a builder and seller of a shipbuilding contract can
be understood under the Sale of Goods Act, 1979 and Consumer Protection Act, 1987. In the
present scenario if the buyer failed to complain about the installation of wrong fire
extinguisher, then the remedies available to him will depend upon the following factors;
 In most cases of shipbuilding contract, the builder usually inspects the craft after the
builders inform about the completion and conduct a trial run for the same.
 After inspection and trial, the builder handover the ship to the buyer and in such a
scenario the buyer usually renounced his right to institute a complaint against default
in terms of any pre-service of the ship as such acceptance if binding and final.
 In many shipbuilding contracts, there exists a clause mentioning the warranty for a
few defects in which cases the builder will make good the loss even after delivery.
 Under the Consumer Protection Act, 1987, for a shipbuilding contract, the producer of
the product (in this case the producer is the shipbuilder) is liable to give damages to
the other party (in this case the buyer) for any defect of the product (in this case ship)
and if for such defect any person has suffered injury or loss, provided such loss has
occurred during the personal use of the product by the loss sufferer.
 Under the Sale of Goods Act, 1979, the seller is duty bound to deliver defect-free
products or goods to the buyer. The term 'good' includes ships and carriage under the
Sale of Goods Act, 1979. In case of any defect in the delivered goods by the buyer,
the buyer is obliged to replace or repair the same so that it does not cause loss or
injury to the seller. However, in case the seller fails to complain about the defective
goods and if due to the defective goods it caused loss to the buyer or any person has
any other vested interest in the good, then the court will not determine buyer’s right to
get damages under the Sale of Goods Act, 1979 and also not execute rights of the

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buyer under section 48E of the same act. Therefore, will hold the buyer responsible
for the loss suffered.
c) In case of a carriage, the ship-owner does not owe any duty towards their party cargo
owner. However, as per the Hague and Hague-Visby Rules, shipowners are liable to the third
party cargo product damage to that level where it is in fault for any collision.26Under the
English Maritime Law, mortgage has the same duty as that of a guarantor of a loan. The
mortgagee is not suppose to act in a way that unethically prejudices the mortgagor by selling
quickly at a lesser price adequate to pay off the debt. The mortgagee must act impartially to
the mortgagor. He must protect his own interests in the mortgage but he is not permitted to
behave in such a way that can be turned out to be biased for the mortgagor. He is obliged take
rational care to maximise his profit from the property.
Question No. 3:
Every seafarer is liable to get minimum wages by its employer that is the shipowner and
the amount must comply with the guidelines provided by the Government regarding the
same27. Minimum wage law applies to seafarers only in cases when:
 When they are operating on ships surrounded by UK waters and ports irrespective of
where the ship is registered, or where the worker ordinarily resides or work.
 In case of a foreign ship, if it registered outside but work on UK.
In this case, Vernon is the owner of the MV Old Grog and Nelson and Hardy have
worked as seafarers onboard the Old Grog for more than a year but neither has received any
wages. Under Regulation 2.2 of the Maritime Labour Convention, 2016, every shipowner is
bound to to the seafarer’s monthly wages as per the terms of the contract of employment and
26 Todd, Paul. "Hague Rules and burden of proof." Lloyd's Maritime and Commercial Law
Quarterly 2017 (2017): 169-175.
27 Chen, Gang, and Desai Shan. "Seafarers' access to jurisdictions over labour matters." Marine
Policy 77 (2017): 1-8.