NO JUDGMENT IN DEFAULT OF A DEFENCE IN IN REM PROCEEDINGS AGAINST AN ARRESTED SHIP UNLESS THE COURT IS SATISFIED THAT THE CLAIM HAS BEEN PROVED

In Qatar National Bank QPSC v Owners of the Yacht Force India [2020] EWHC 103 (Admlty), the claim arose out of a mortgage granted by Qatar National Bank QPSC over the yacht Force India as additional security for a €27 million loan to finance the acquisition of a company which owned a property on an island off the coast of France. The mortgage was limited to a principal amount of €5 million. Due instalments were not paid and the claimant, Qatar National Bank QPSC, served a notice of default in June 2018.

Two months later, Qatar National Bank QPSC issued in rem proceedings and arrested the yacht Force India. The defendants, Force India Ltd, did not appear at the trial. It was, however, apparent from a letter from their former solicitors to the Court dated 14 January 2020 that Force India Ltd were aware of the trial. Against this backdrop, Qatar National Bank QPSC applied for an order to strike out the defence if Force India Ltd did not attend the trial. Mr Justice Teare granted this order pursuant to CPR Part 39.3 (1).

His Justice explained, however, that, in a case concerning in rem proceedings against an arrested ship, it is not appropriate to grant judgment in default of a defence pursuant to CPR Part 61.9(3)(a)(iii), unless the Court is satisfied that the claim has been proved. That is because other parties may have an action in rem against the arrested vessel. Thus, their interests might be damaged if judgment is given without the claim having been proved. Furthermore, the Practice Direction to CPR Part 39 provides that the claimant must prove his/her claim where the trial proceeds in the absence of the defendant.

Accordingly, Mr Justice Teare examined the documents which proved the claim and gave judgment for the sums claimed. These included €5 million for the value of the mortgage plus interests and the costs of collection. In addition, ancillary orders were given for the yacht to be appraised and sold.

2 thoughts on “NO JUDGMENT IN DEFAULT OF A DEFENCE IN IN REM PROCEEDINGS AGAINST AN ARRESTED SHIP UNLESS THE COURT IS SATISFIED THAT THE CLAIM HAS BEEN PROVED

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