Gujarat High Court Upholds Reference to Arbitration Under Admiralty Jurisdiction – Appeal Dismissed in Long-Running Ship Sale Dispute

In a significant decision dated 10 November 2025, a division bench of the Gujarat High Court comprising Justice A.Y. Kogje and Justice J.L. Odedra dismissed R/O.J. Appeal No. 5 of 2025 arising out of Admiralty Suit No. 20 of 2022. The appeal was filed by M/s Jai Bharat Steel Company challenging the order of a Single Judge who had referred the dispute to arbitration under Clause 18 of a Memorandum of Agreement (MOA) dated 18.09.1998. The suit involved claims arising from the purchase of a vessel (M.V. Irene) and included a prayer for the arrest of another vessel (M.V. Orient Stride), alleged to be a sister vessel. The High Court affirmed that the dispute was arbitrable and that respondent No. 2 (Anslem Shipping) could be treated as a party claiming through respondent No. 1 (Mountain Shipping Ltd.) under Section 45 of the Arbitration and Conciliation Act, 1996.

The bench rejected the appellant’s core argument that there was no arbitration agreement with respondent No. 2, who was not a signatory to the MOA. The Court found that respondent No. 2 could be deemed to be “claiming through” respondent No. 1, and therefore was entitled to invoke the arbitration clause. The Court relied heavily on the five-judge bench decision in Cox & Kings Ltd. v. SAP India Pvt. Ltd. (2024) 4 SCC 1, which elaborated the contours of the “group of companies” doctrine and clarified the phrase “claiming through or under” in the context of Section 45.

The litigation stemmed from a 1998 ship sale transaction in which the appellant alleged that Mountain Shipping Ltd. (respondent No. 1) defrauded it by issuing a forged “no charge” certificate for the vessel M.V. Irene. When the appellant attempted to take possession of the vessel, it was informed of an arrest order passed by the Bombay High Court in a suit filed by another company. The appellant, claiming to have suffered substantial losses, filed a civil suit seeking damages and injunctive relief against the vessel M.V. Orient Stride, which was alleged to be under the same ownership as M.V. Irene. Respondent No. 2, Anslem Shipping, was impleaded as a defendant on the grounds of common ownership, management and address.

The civil suit, originally filed before the Bhavnagar Civil Court in 1999, was later transferred to the Commercial Court at Rajkot, and eventually to the Gujarat High Court under its admiralty jurisdiction. During the pendency of the matter, multiple applications were filed, including several attempts to refer the matter to arbitration, most of which were rejected. However, in 2023, the respondent sought adjudication of issue No. 5 (maintainability of the suit) as a preliminary issue. The Single Judge allowed the application and referred the parties to arbitration.

On appeal, the appellant contended that the Single Judge erred in referring the dispute to arbitration without a clear finding on the applicability of the arbitration clause to respondent No. 2. The appellant relied on the decision in Cox & Kings, arguing that without establishing the five cumulative factors laid down in Discovery Enterprises (2022), respondent No. 2 could not be treated as a party claiming through respondent No. 1.

The High Court, however, disagreed. It observed that the appellant had itself earlier taken the stand that respondent Nos. 1 and 2 were the same entity, a position accepted by the courts all the way up to the Supreme Court. It also noted that three separate MOAs were forwarded to the appellant at the time of the transaction, one each by respondent Nos. 1, 2, and Symco Shipping Ltd., suggesting interlinked corporate control and a community of interest. The Court held that this was sufficient to treat respondent No. 2 as a veritable party to the transaction, and therefore entitled to invoke arbitration.

The Court further held that the framing of issue No. 5 as a preliminary issue and its adjudication by the Single Judge amounted to a valid invocation of Section 45 of the Arbitration Act. It reiterated that under Cox & Kings, the referral court at this stage is only required to make a prima facie finding on the existence and applicability of the arbitration agreement. Any deeper analysis, including the applicability of the group of companies doctrine or assessment of cumulative factors, must be left to the arbitral tribunal.

The Court also emphasized that in admiralty matters, the principles underlying claims against sister vessels and the necessity of joining vessel owners apply with particular force. It held that the phrase “person claiming through” under Section 45 should apply even more vigorously in the context of admiralty suits where claims in rem are made against vessels associated through common ownership or management.

Accordingly, the Court held that the Single Judge rightly referred the parties to arbitration, and that no interference was warranted under the appellate jurisdiction. The appeal was dismissed, and the interim arrangement concerning the Rs. 25 lakh security deposited for release of the vessel was continued for six weeks.

Date of Decision: 10 November 2025