Landmark decision on Admiralty case involving Agros Shipping and Luna Shipping

Luna Shipping of Cyprus instituted Action in Rem No. 8/2014 on 15 September 2014 to obtain an order of the Admiralty Court (Commercial High Court sitting in the Admiralty Jurisdiction) to arrest the Vessel M. T. AGROS, owned by Agros Shipping Co. Ltd., in Liberia.

The owners of the vessel Agros Shipping Co. Ltd. furnished security for $ 1 million to secure the release of the vessel and made an application on 12 October 2015 to make an order to direct Luna Shipping to furnish security for its counterclaim on the basis that the arrest of Luna was with the malicious intention. Both parties’ written submissions were and the then Commercial High Court Judge sitting in the Admiralty Jurisdiction Dr. Ruwan Fernando on 6 October 2017 made his order and directed Luna Shipping to provide security for counter claim of the owners of the vessel Agros Shipping Company Ltd. of Liberia in a sum of 

$ 1 million by depositing that sum by means of a Bank guarantee on or before 20 November 2017. The Court further held that if security is not provided within the said period, the Court will make an appropriate order on 20 November 2017 for non-compliance with the order for counter security. 

Luna Shipping filed a Leave to Appeal Application No. 10/2017 in the Court of Appeal. The Court of Appeal made its order on 8 November 2022 refusing the application of Luna Shipping. 

Thereafter, Luna Shipping preferred its leave to appeal application to the Supreme Court Number SC/SPL/LA 353/2022. The Supreme Court comprising the Bench of Justices Yasantha Kodagoda PC, Achala Wengappuli and K. Priyantha Fernando made the order on 19 February 2024 dismissing the application of Luna Shipping. 

In the aforesaid circumstances, now it is incumbent on Luna Shipping in compliance with the order of the Admiralty Court dated 6 October 2017 by Justice Dr. Ruwan Fernando to deposit a sum of $ 1 million as security for counter claim or to tender a Bank Guarantee for the said sum. 

This is a landmark decision of the Sri Lankan Court. On the instruction of Julius & Creasy Nihal Fernando PC with Murshid Maharoof, Dushantha De Silva and Harshula Seneviratne Attorneys-at-Law appeared for the owners of the Vessel Agros. Faisz Musthapha PC with Dr. Niranjan Abeyratne, Attorney-at-Law, on the instructions of KP Law Associates appeared for Luna Shipping.