Main Domestic Laws Establishing Maritime Jurisdiction

• The Admiralty Jurisdiction of High Courts Ordinance, 1980 (AJHCO 1980): this is the foundational statute, conferring exclusive jurisdiction on the High Courts of Sindh (Karachi) and Balochistan (Gwadar/other ports) to entertain, try and determine admiralty suits, including the power to arrest ships.
• Pakistan Merchant Shipping Ordinance, 2001 (MSO 2001): this comprehensive ordinance governs all matters related to ship registration, ownership, seamen, maritime pollution, and safety.
• Sindh Chief Court Rules (SCCR), Chapter XXXII: these procedural rules guide the specific actions (in rem and in personam) under the admiralty jurisdiction and are often applied in conjunction with the Civil Procedure Code (CPC) 1908.
• Carriage of Goods by Sea Act, 1925 (COGSA): this governs cargo claims and incorporates the Hague Rules.
• Pakistan Maritime Zones Act, 2023: this defines the maritime zones (territorial sea, EEZ, etc) and Sovereign Rights.

Common Maritime and Shipping Claims Filed in Practice

Maritime litigation in Pakistan frequently involves the following, usually filed as actions in rem (against the vessel) or actions in personam (against the owner/charterer):

• cargo claims (short landing/damage);
• arrest of ships/sister-ships;
• ship breaking/ship recycling claims;
• charter party disputes;
• necessaries (supplies and services);
• maritime liens (crew wages); and
• marine insurance disputes.

Competent Courts

• High Court of Sindh (Karachi): the primary venue for most maritime disputes due to the concentration of shipping activities in Karachi.
• High Court of Balochistan (Quetta/Gadani Bench): this court primarily handles cases related to ship-breaking and incidents in the Gwadar port area.
• Superior Courts (Appellate): appeals against single-bench judgments go to a division bench (two judges) of the same High Court, and subsequently to the Supreme Court of Pakistan.

In Pakistan, the system of port state control (PSC) is designed to ensure that foreign-flagged vessels visiting Pakistani ports comply with international maritime safety, security, environmental and labour standards. The regime operates under the authority of the Directorate General of Ports & Shipping (DGP&S), which falls under the Ministry of Maritime Affairs.

System of Port State Control in Pakistan

• Legal basis: inspections are carried out in accordance with the Merchant Shipping Ordinance (MSO) 2001, the Ports Act 1908, and international conventions to which Pakistan is a signatory, including SOLAS, MARPOL, STCW and the Maritime Labour Convention (MLC) 2006.
• Operational mechanism: inspections are conducted by port state control officers (PSCOs) from the Mercantile Marine Department (MMD), who act as authorised agents of the maritime administration.
• Regional co-operation: Pakistan is part of the Indian Ocean MOU (IOMOU) on Port State Control, which harmonises inspection procedures.
• Scope: PSC in Pakistan focuses on 16 key areas of working and living conditions (under MLC, 2006), as well as structural and operational safety, aiming to identify and detain substandard ships.

Authorities and Powers

• Primary authority: the Directorate General of Ports and Shipping (DGP&S) oversees the regime.
• Operational authority: the Mercantile Marine Department (MMD) in Karachi and other ports handles the inspections.
• General powers:
1. inspection – PSCOs have the right to board foreign ships to verify documents and check equipment;
2. detention – ships found to be in substantial non-compliance (substandard) with international conventions can be detained until deficiencies are rectified; and
3. rectification – repairs or operational changes are required before a ship is allowed to sail.

Powers in Relation to Marine Casualties and Incidents

When a marine casualty (collision, grounding, sinking, pollution) occurs involving a foreign ship, the MMD and DGP&S act immediately to prevent further damage and ensure safety.

• Grounding/stranding: PSCOs co-ordinate with the Port Authority (Karachi Port Trust, Port Qasim Authority, or Gwadar Port Authority) and the Pakistan Navy to issue navigational warnings and assess structural integrity.
• Pollution: if a vessel causes, or is likely to cause, pollution (oil/chemical), the PSCO has the power to –
1. issue notices and fines under the MSO 2001 and the Pakistan Environmental Protection Act (PEPA); and
2. detain the vessel until adequate pollution response measures are taken.
• Seafarer casualties/fatalities: the DGP&S office acts as the co-ordinating authority for investigations into fatalities on foreign ships. It has the power to –
1. investigate working conditions and safety procedures on board; and
2. ensure compliance with MLC 2006 regarding repatriation, compensation, and medical care for deceased or injured crew.
• Wreck removal: under the MSO 2001, the maritime authority has the power to force the owner to remove a wreck that poses a hazard to navigation or the environment, or to arrange for its removal at the owner’s expense.

Key Entities Involved

• Directorate General of Ports & Shipping (DGP&S): highest authority for policy and oversight.
• Mercantile Marine Department (MMD): executes PSC inspections.
• Maritime Security Agency (PMSA): operates under the PMSA Act 1994 to enforce maritime safety, pollution control and security within Pakistan’s maritime zones.

In Pakistan, the domestic legislation and administration of ship registration are governed by federal laws aimed at regulating the shipping industry, implementing international conventions (such as MARPOL and SOLAS), and offering incentives for local vessel registration.

Key Pieces of Domestic Legislation

• Pakistan Merchant Shipping Ordinance, 2001 (MSO 2001);
• Registration of Ships Rules, 2002;
• Pakistan Merchant Marine Policy 2001 (Amended 2019);
• Fishing Vessels Registration Rules – 2021; and
• Tonnage Rules – 2002.

Government Authority for Vessel Registration

• Registrar of Ships: the registration is carried out by the principal officer of the MMD, who acts as the Registrar of Ships.
• Parent ministry: the MMD functions under the DGP&S, which is part of the Ministry of Maritime Affairs.

Key Registration Requirements

• Eligibility: ships must be owned by Pakistani citizens, companies with their principal place of business in Pakistan, or approved bodies corporate.
• Name approval: the vessel name must be approved by the Directorate Signals, Naval Headquarters, Islamabad.
• Procedures: registration requires a declaration of ownership, builder’s certificate, proof of payment of customs duties (if imported), and a survey by MMD surveyors.
• Bareboat charter: a ship on a bareboat charter for at least six months can be registered as a Pakistani ship.

Vessels registered in Pakistan must generally be owned by citizens, companies with their principal place of business in Pakistan that control operations from there, or parties permitted by the federal government. Foreign ownership is restricted, but foreign entities may operate through a locally registered subsidiary. Registration of vessels under construction is possible, often requiring documentation of the builder and construction progress.

Key Requirements and Ownership Rules

• Eligible owners: according to the Registration of Ships Rules, 2002, ownership is restricted to Pakistani citizens (by birth or migration), individuals with Pakistani citizenship via registration, or companies with a principal place of business in Pakistan.
• Foreign ownership: while primarily a closed registry for citizens, foreign investors can potentially own vessels through a locally registered subsidiary or with specific permission from the federal government.
• Registration process: for individuals, this requires a declaration of ownership on stamped paper, notarised, with photographs; and for companies, the memorandum of association and incorporation certificates.
• Vessels under construction: a vessel under construction can be registered, requiring documentation such as a declaration from the builder and proof of ownership.
• Fishing vessels: registration for fishing boats requires submission to the registrar of fishing vessels nearest to the owner’s residence or construction site.

Registration is processed through the MMD Karachi, and can typically be completed in approximately five working days upon submission of all required documentation.

Pakistan’s legal framework, under the Merchant Shipping (Registration of Ships) Rules, 2002, allows for temporary, specific registration, particularly for bareboat charters lasting at least six months. Dual registration is generally not permitted, as the registry requires a declaration of ownership, although temporary bareboat charter registry allows for operation under the Pakistani flag while the primary registry is suspended.

Key Details on Vessel Registration in Pakistan

• Temporary registration: the Rules of 2002 permit the registration of ships on bareboat or demise charter for a period of no less than six months.
• Requirements: a vessel can be registered if the charterer/operator is a Pakistani citizen or a body corporate allowed to be a shipowner under the MSO 2001.
• Dual registration: while not explicitly allowing concurrent full registration, the system facilitates “flagging in” for chartered vessels, allowing them to operate as Pakistani ships.
• Process: applications are submitted to the MMD.
• Documentation: a declaration of ownership, a builder’s certificate, and custom documents are required.

The registration process aims to establish ownership and ensure compliance with safety regulations, and owners can benefit from incentives under the Merchant Marine Policy 2001.

In Pakistan, primarily the Securities and Exchange Commission of Pakistan (SECP) maintains the registration of mortgages and charges created by companies under the Companies Act, 2017.

Key Requirements for Registration (Corporate)

• Form-10: duly signed form detailing the charge, filed within 30 days of creation;
• instrument of charge: original or verified copy of the mortgage deed;
• affidavit: duly signed and attested by a commissioner of oaths;
• proof of payment: fee submission receipt; and
• no objection certificate (NOC): a conditional NOC, if applicable.

Separately, there is also a ship ownership and mortgage registry, managed by the MMD.

In Pakistan, the ship ownership and mortgage registry, managed by the MMD, is not fully digitised or openly accessible to the public online. While public in nature, the register is maintained through a manual, paper-based system, making remote, instant viewing by third parties difficult compared to in other jurisdictions.

How to View Registrations

As the system is not fully digitised, viewing records requires direct interaction with the MMD. The register is maintained at the office of the Principal Officer (Registrar of Ships), Mercantile Marine Department, Karachi, and enquiries regarding ownership or mortgages usually require a formal search request to be submitted at the MMD office. A manual search may then be undertaken for the vessel’s registration.

Limitations

The registry operates on an old, manual system rather than a modern, publicly accessible digital platform. Although information is generally accessible to concerned parties, searching requires physical presence or local representation in Karachi, which can be challenging for international parties.

In Pakistan, typical financing involves a high debt-to-equity ratio, with a heavy emphasis on secured lending, primarily governed by the MSO 2001.

Debt and Equity Financing

• Debt financing structure: The most common structure for vessel acquisition is a long-term loan, frequently in a debt-to-equity ratio of around 80:20.
• Key terms and operative provisions:
1. Loan-to-value (LTV) ratios: typically 50%–60%.
2. Interest rates/spreads: the State Bank of Pakistan (SBP) allows refinancing under its long-term finance facility (LTFF), with a maximum spread (eg, up to 3% pa for ten-year loans).
3. Tenor: loans often match the useful life of the vessel or long-term charter commitments.
4. Currency: loans are often in foreign currency to match revenue, or PKR for local transactions, backed by foreign exchange savings.
5. Key covenants: include maintaining loan-to-value insurance coverage, and compliance with environmental regulations (eg, the PEPA, 1997).
• Equity/other financing: Private equity or internal accruals form the 20% equity portion. Shipping companies listed in Pakistan often raise capital through equity, although debt-based instruments (including through Islamic finance) are more common.

Ship Mortgages and Security Packages

Ship mortgages are registered under the MSO 2001, providing a statutory lien.

• Ship mortgages: A “simple mortgage” (no delivery of possession) is the most common form. Registration must be done with the designated maritime authority/Registrar of Ships to be effective.
• Security packages beyond mortgages:
1. Assignment of earnings – assignment of charter hire, freight, and earnings to the lender.
2. Insurance policies – mortgagee’s interest insurance (MII) and assignment of hull and machinery (H&M) and protection and indemnity (P&I) policies.
3. Corporate guarantees – from parent companies or sister companies.
4. Pledge of shares – pledging shares of the special purpose vessel-owning company.
5. Charge on accounts – a charge over the borrower’s bank accounts, often authorised under the Companies Act, 2017.

Common Types of Transactions

• Direct bank loan (term loan).
• Long-term finance facility (LTFF/ILTFF).
• Islamic finance.
• Export finance schemes (EFS).

Key Aspects of Ship Leasing in Pakistan

• Market trends: The leasing industry in Pakistan has been a significant source of financing since the 1980s. While specific recent data on volume increases is not detailed in the provided search results, the global trend shows a shift towards alternative financing (including leasing) due to stricter traditional bank lending.
• Shift in finance: There is a noticeable shift away from traditional, purely bank-financed lending towards alternative credit providers and Chinese leasing houses. These entities offer more flexible structures compared to conventional debt, including operating-and-finance leases.
• Sale and leaseback: These transactions are common in the industry, serving as a popular method for ship-owners to unlock equity in their vessels while retaining operational control.
• Lessor/lessee v lender/borrower: In a leasing arrangement, the lessor holds title to the vessel, making enforcement, such as repossession, potentially faster than enforcing a mortgage on a defaulting borrower, which may require lengthy judicial intervention.
• Enforcement: Courts and tribunals generally handle leasing defaults by focusing on the contractual right of the lessor to regain possession of the asset. However, legal issues in ship leasing can be complex, often requiring the application of both maritime law and specialised financial lease legislation.

Applicable International Conventions

Pakistan is party to several key International Maritime Organization (IMO) conventions, with the Ministry of Maritime Affairs (formerly Ports & Shipping) acting as the focal point:

• Civil Liability for Oil Pollution Damage (CLC), 1992;
• International Convention for the Prevention of Pollution from Ships (MARPOL 73/78);
• Intervention on the High Seas in Cases of Oil Pollution Casualties, 1969 & 1973 Protocol;
• Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter (London Convention), 1972;
• United Nations Convention on the Law of the Sea (UNCLOS), 1982; and
• Nairobi International Convention on the Removal of Wrecks, 2007.

Relevant Laws of Pakistan

• MSO 2001;
• PEPA, 1997;
• Port Acts (Karachi Port Trust Act 1886, Port Qasim Authority Act 1973, Gwadar Port Authority Ordinance 2002); and
• AJHCO 1980.

Key Domestic Laws (Pakistan)

• MSO 2001;
• AJHCO 1980;
• Merchant Shipping (Navigation, Collision and Accident) Rules, 2003;
• Marine Insurance Act, 2016; and
• PEPA, 1997.

Applicable International Conventions

Pakistan has acceded to several International Maritime Organization (IMO) conventions, impacting liability:

• International Convention on Salvage, 1989 (Salvage 1989);
• International Convention on Civil Liability for Oil Pollution Damage (CLC), 1992 (“CLC-92”);
• International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (the “Bunker Convention”); and
• COLREGs 1972.

Impact on Liability and Interested Parties

• Collision liability: under the MSO 2001, liability is usually determined based on fault, but in instances involving oil-carrying ships, the strict liability rules of CLC-92 apply, holding the owner liable regardless of fault, subject to limited exceptions.
• Salvage rewards: the International Convention on Salvage, 1989 allows for significant awards to be calculated based on the skill of the salvor, the value of the property salvaged, and the protection of the environment.
• Limitation of liability: ship-owners can limit their liability for property damage or personal injury in accordance with the limits defined in the MSO 2001 and the CLC-92, provided the incident did not result from their personal fault.
• Maritime liens and arrests: in the event of a collision or salvage, the claimant can initiate an admiralty suit in the High Court and request the arrest of the vessel to secure claims.

Applicability of the 1996 Protocol to the 1976 Convention (LLMC)

While Pakistan is a signatory to the Convention on the International Maritime Organization (1948) and has ratified UNCLOS, the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims (LLMC) 1976 is not directly shown as ratified or fully domesticated in the provided search results. However, standard terms in Pakistan’s shipping industry, such as those used by DP World Karachi, reference the “1976 Convention on Limitation of Liability for Maritime Claims, and the 1996 Protocol thereto” as applicable limitation conventions.

Note: the 1996 Protocol substantially increases the liability limits set by the 1976 Convention.

2012 Amendments (Increased Limits)

The 2012 amendments to the 1996 LLMC Protocol (which entered into force internationally on 8 June 2015, increasing liability limits) generally apply to contracting states that have adopted the 1996 Protocol. As the status of Pakistan’s accession to the 1996 Protocol is not explicitly confirmed, it is not certain if the 2012 amendments are formally binding in domestic law, although the industry often follows international standards.

Applicable Domestic Legislation

The primary legislation governing maritime liability in Pakistan includes:

• the MSO 2001 – this is the main statute governing merchant shipping, registration and liabilities;
• the Maritime Zones Act, 2013 – this Act (which replaced the 1976 Act) defines the maritime zones and applies to the territorial sea, exclusive economic zone, and other maritime areas of Pakistan; and
• the Carriage of Goods by Sea Act, 1925 – this Act incorporates the Hague Rules.

Pakistan signed the Vienna Convention on the Law of Treaties, 1969 (VCLT) on 29 April 1970, but has not ratified it.

Although Pakistan is not a party to it, the VCLT’s guidelines for treaty interpretation are recognised by Pakistani courts as customary international law.

While the VCLT is not a direct statute, Pakistani courts, especially the Supreme Court and the High Courts, increasingly rely on international law to interpret domestic legislation.

The superior judiciary in Pakistan has shown a willingness to look at international legal instruments, including those not formally ratified, to ensure compliance with the “comity of nations” and international obligations.

In Pakistan, a limitation fund, primarily used in maritime law to limit liability for ship-owners, is established by depositing a sum (or guarantee) with a court of competent jurisdiction based on vessel tonnage, governed by the MSO and international conventions like the LLMC 1976. The fund is set by ship-owners or salvors to cap liability for maritime claims.

Key Aspects of Establishing a Limitation Fund

• The following can set a fund: shipowners, charterers, managers, operators and salvors.
• Procedure:
1. initiate legal action in the relevant court (eg, the High Court) seeking to limit liability;
2. calculate the total limit based on the vessel’s tonnage (limitation tonnage) as per the LLMC 1976;
3. deposit the calculated amount into the court; and
4. provide a bank guarantee or deposit cash, ensuring it is immediately available to claimants.
• Calculation: the fund is calculated using units of account (Special Drawing Rights – SDRs) based on the vessel’s tonnage. It covers claims for loss of life, personal injury, and property damage.
• Deposit requirement: a deposit is mandatory. The fund must be constituted by depositing cash or providing a guarantee accepted by the court.

Once the fund is established, it prevents claimants from seizing other assets of the shipowner, acting as a “limitation” on liability.

The Maritime Labour Convention (MLC), 2006, is now applicable in Pakistan. Pakistan officially ratified the MLC 2006 on 14 March 2025.

The ratification signifies that the convention is applicable to all Pakistani-flagged vessels engaged in international voyages, setting minimum requirements for working and living conditions.

While the MLC 2006 was formally ratified in 2025, the primary legislation governing seafarers’ rights, safety and working conditions in Pakistan is the MSO 2001.

Applicable International Conventions

Pakistan has adopted the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (1924) (the “Hague Rules”). This is the primary legal framework governing the carriage of goods by sea and bills of lading. Pakistan has not officially adopted and does not directly apply the more modern Hague-Visby Rules (1968) or the Rotterdam Rules.

Domestic Laws Covering Carriage by Sea and Bills of Lading

The Carriage of Goods by Sea Act, 1925 (COGSA) and the Sea Carriage Shipping Documents Act, 2018 are both implemented.

In Pakistan, the right to sue on a bill of lading is governed primarily by the Bills of Lading Act, 1856, which is still in force and mirrors English law of that era, granting rights to consignees and endorsees. Furthermore, COGSA applies to outward shipments from Pakistan.

The following have the title to sue: the consignee, the endorsee, the lawful holder and the shipper. Pakistan recognises the assignment or transfer of the title to sue.

In Pakistan, ship-owners’ liability for cargo damage is generally governed by COGSA, incorporating the Hague Rules, which mandate duty of care in handling, storing and transporting goods. Liability is limited to specific amounts per package or unit unless the value was declared. Actual and contractual carriers face different liabilities, as contractual carriers are directly responsible for the bill of lading, while actual owners may only be liable if the damage occurred during their operational control.

Ship-Owner’s Liability for Cargo Damage

• Legal framework: Pakistan applies the Hague Rules under COGSA, focusing on the seaworthiness of the vessel and proper care of cargo.
• Scope of responsibility: owners are responsible for damage due to improper stowage or crew negligence, but are generally exempt from liability for Acts of God, fire on the ship, or the perils of the sea.
• Limitation of liability: liability is typically limited to a specific monetary value per package or kilogram under the Hague Rules.

Differences: Actual v Contractual Carrier

• Contractual carrier (eg, NVOCC/Charterer): issues the bill of lading, bearing primary liability for the entire journey, even if they do not own the ship.
• Actual carrier (ship-owner): the owner of the vessel who physically performs the carriage is usually only liable if the damage occurred during their operational control (eg, due to bad stowage), as they may not have a direct contract with the shipper.
• Key distinction: the contractual carrier is usually the primary target of claims, while the actual carrier may be sued directly, especially if the bill of lading includes a “demise clause” identifying the owner as the carrier.

In Pakistan, a carrier can establish a claim against a shipper for misdeclaration of cargo, primarily under the Customs Act, 1969 (Sections 32, 156) and the Carriage of Goods Act, 1925. Shippers are liable for inaccuracies in, or non-disclosure of, the nature/value of goods. If the shipper misdeclares, leading to fines or damage, the carrier can claim damages, though the shipper is often penalised by customs authorities.

Key Legal Positions and Judgments in Pakistan

• Shipper’s liability for misdeclaration: the shipper is generally held liable if the cargo declaration is incorrect, leading to misdeclaration in the Import General Manifest (IGM).
• Case example (misdeclaration/confiscation): in a High Court of Sindh case, East Wind Shipping was held liable for misdeclaring the IGM, resulting in a penalty and the cargo (xylene) being confiscated under the Customs Act.
• “Shipper loaded” containers: if the bill of lading is marked as “shipper’s load, stow, and count” (SLSC/STC), the carrier is not liable for the contents if they are misdeclared or damaged, provided the container was delivered with seals intact (PLD 1992 SC 291).
• Carrier’s defence: carriers can defend themselves if they prove they handled the cargo correctly and the damage/discrepancy resulted from the shipper’s misdescription.

Relevant Regulatory Context

• SRO 2031 (1)/2022: this outlines procedures for compensation and liability, often capping carrier liability unless high value is declared.
• Frustrated cargo (Section 138): if the misdeclaration causes issues, the cargo may be classified as “frustrated”, allowing for re-export, but the shipper/consignee is typically liable for the costs.

In Pakistan, the time bar for filing a claim for damaged or lost cargo, whether framed as a breach of contract or liability in tort, is generally governed by COGSA (incorporating the Hague Rules) or the Limitation Act, 1908.

The following is a breakdown of the limitation periods and extension possibilities.

Time Bar for Cargo Claims (Limitation Period)

• Sea carriage (most common): under Article III, Rule 6 of the Schedule to the Carriage of Goods by Sea Act, 1925, the carrier and the ship are discharged from all liability for loss or damage unless suit is brought within one year after the delivery of the goods or the date when they should have been delivered.
• Other carriers (rail/inland): Articles 30 and 31 of the Limitation Act, 1908, also prescribe a limitation period of one year for compensation against a carrier for non-delivery or damage to goods.
• Contract/tort claims generally: if not covered specifically by COGSA, suits for damages for breach of contract or for tort (negligence/misfeasance) are generally subject to a three-year period under the Limitation Act, 1908, starting from when the damage occurs or the contract is breached. However, the one-year rule for carriers is usually enforced for cargo damage.

Extension or Sustainability of the Time Limit

• Extensions by agreement: the one-year time limit can be extended by mutual agreement between the parties (eg, a “standstill agreement” or extension of time limit). It is common practice for claimants to request an extension from the shipping line before the deadline expires.
• Statutory exceptions:
1. acknowledgment – if the carrier acknowledges the debt/liability in writing before the expiry of the original period, a fresh period of limitation may begin from the time of that acknowledgment (Section 18 of the Limitation Act, 1908); and
2. fraud/concealment – if the carrier has committed fraud or concealed the damage, the time limit might be extended, as equitable principles may apply (Section 18, Limitation Act, 1908).
• Court discretion: the courts in Pakistan are strictly bound by the Limitation Act, 1908, and have limited power to condone a delay in filing a suit once the prescribed period has expired, even on equitable grounds.

International Laws Governing Ship Arrests

Pakistan is a signatory to the 1999 United Nations International Convention on Arrest of Ships, but it has not yet ratified it.

Therefore, no international convention is directly applicable or enforceable regarding ship arrests in Pakistan.

Domestic Laws Governing Ship Arrests

• AJHCO 1980;
• SCCR, 1944 (Rules 729–775);
• CPC; and
• MSO 2001.

In Pakistan, recognised maritime liens are limited to claims for seaman/master wages, damage caused by a ship, salvage, and bottomry, which attach to the vessel and follow it regardless of change in ownership. While liens for crew injuries (a form of master/seaman claim) are generally recognised, Pakistani law distinguishes between maritime liens and statutory maritime claims. Liabilities from chartering a vessel can support a statutory maritime claim allowing vessel arrest.

Maritime Liens and Claims in Pakistan

• Recognised maritime liens: Pakistani courts recognise a narrow category of maritime liens – seamen’s wages/disbursements (including master’s wages), damage caused by a vessel, salvage, and respondentia.
• Crew injuries: a maritime lien for indemnities for injuries to the crew is recognised, generally falling under the umbrella of seamen’s wages/emoluments.
• Distinction between liens and claims: Pakistani law differentiates between these. A maritime lien is a privileged claim that attaches to the vessel from the moment the claim arises and travels with it. A maritime claim is a broader statutory right to initiate an in rem action (arrest) for various, often contractual, claims, as outlined in the AJHCO 1980.
• Charterparty liabilities: liabilities resulting from contracts for chartering a vessel generally provide grounds for a statutory maritime claim (and potential vessel arrest) under Section 3 of the Admiralty Ordinance, 1980, rather than a maritime lien.

Arrest and Time Bars

• Grounds for arrest: a vessel can be arrested for both maritime liens and statutory maritime claims, which include, among others: damage caused by the ship, salvage, wages, loss of life or personal injury, charterparty breaches, non-payment of goods/materials, and mortgage disputes.
• Time bars and expiration: maritime liens are considered valid from the moment the cause of action arises. However, they can be extinguished by laches (unreasonable delay in enforcing the claim) or by a court-ordered sale of the vessel (judicial sale). The specific time limits often follow statutory limitation periods for the underlying cause of action, though laches is applied on a case-by-case basis.

Do the Owners or Demise Charterers Need to be Liable in Personam?

This depends on the nature of the claim.

For maritime liens (damage done, salvage, wages, bottomry)

The personal liability of the registered owner or demise charterer is not necessarily required. A maritime lien acts as a charge on the ship that travels with it, allowing the vessel to be arrested even if the owner is not personally liable.

For statutory in rem claims (necessaries, charterparty disputes, etc)

Generally, the “relevant person” – the person who would be liable for the claim in an action in personam – must be the owner, demise charterer, or the person in possession/control of the ship when the cause of action arose.

Sister-ships

Under Section 4(4) of the AJHCO 1980, a sister-ship can be arrested, but only if the person who is liable in personam is the beneficial owner of that sister-ship at the time the action is brought. Note that Pakistani courts have excluded time charterers from the definition of “beneficial owner”, meaning sister-ship arrests usually require the same owner.

Can a Vessel be Arrested Regardless of Liability on Merits?

In specific circumstances, a vessel can be arrested regardless of the personal liability of the current owner.

Maritime liens

If the claim constitutes a recognised maritime lien (eg, collision damage, salvage, wages), the lien attaches to the ship itself (res) and remains attached regardless of a change in ownership. Therefore, a new owner who was not responsible for the liability can still have their ship arrested.

Procedural requirements

The arrest is initiated by filing a suit in rem and an affidavit in the High Court (usually the Sindh High Court). The arrest is a procedural step to secure the claim.

Sale of ship

If a ship is sold by the court, the new owner receives a clean title, but the lien-holder has priority over the sale proceeds.

Key Aspects of Bunker Arrests in Pakistan

Contractual v actual supplier

A contractual supplier (middleman) may find it harder to arrest a vessel compared to the actual physical supplier, as the courts focus on who provided the “necessaries”. However, if the contract gives a direct lien to the supplier, it may assist, but this is not absolute against owners if they did not authorise the purchase.

Charterer-ordered bunkers

If bunkers are ordered by a charterer, and the supplier was aware of this (or the owner did not authorise it), an arrest is unlikely to succeed, as the owner is not liable.

Charterer’s authority

Charterers are generally considered to have authority to order necessities to operate a vessel, but this does not automatically create a lien against the vessel itself for unpaid invoices, unless the charterparty or owner authorised the purchase.

Difference Based on Circumstances

Owner liability

If the vessel owner is not personally liable for the debt (ie, the contract was with the charterer and the owner did not authorise it), a claim in rem to arrest the vessel will likely fail.

Proof of supply

The physical supplier must prove the bunkers were supplied on the “faith and credit of the vessel”, yet even this is often insufficient without showing the owner’s liability.

In summary, for a successful arrest in Pakistan, the supplier must typically establish that the owner is liable for the debt or that a specific, recognised maritime lien exists, rather than just a contractual right against the charterer.

Formalities to Arrest a Vessel

• Admiralty suit: a formal suit in rem must be filed against the ship, describing it as “Owner of or persons interested in the ship [name of vessel]”.
• Affidavit in support: a comprehensive affidavit must be filed alongside the plaint (complaint). This affidavit must outline the facts, the nature of the claim (eg, maritime lien, necessaries, mortgage), and the source of information.
• Warrant of arrest: upon accepting the suit and affidavit, the High Court issues a warrant of arrest.
• Execution: the warrant is executed by the court’s nazir (bailiff) by pasting/nailing the original warrant on the main mast or a conspicuous part of the ship.
• Documentation: proof of ownership, port of call details, and evidence of the claim are essential.

Power of Attorney and Documentation

• The PoA and any supporting affidavits originating outside Pakistan must be notarised or apostilled in the country of origin.
• Originals v copies – while photocopies may be accepted during the initial filing to urgently secure a warrant, original documents must usually be filed or produced before the court to verify authenticity, especially if challenged.

Translation Requirements

• All documents submitted to the High Court of Sindh must be in English.
• If the original documents are in another language, they must be accompanied by a certified English translation.

Security Deposit (Counter-Security)

• Court costs: the court requires payment of standard court fees for institution of the suit.
• Arrest costs/undertaking: the arresting party must provide an undertaking (and sometimes a deposit) to cover the bailiff’s fees and the initial costs of maintaining the vessel while under arrest.
• Security for wrongful arrest: this is a rare exception and only possible in complicated cases where the defendant has a counter claim. Although not always mandatory, the court has the discretion to order the plaintiff to furnish security for any damages the shipowner might suffer if the arrest is deemed wrongful or unjustified.
• Release security: to release the vessel, the defendant must provide security (typically a P&I Club Letter of Undertaking or a bank guarantee) to the satisfaction of the court, usually covering the full claim amount plus costs.

The following is a breakdown of the legal position in Pakistan.

Arresting Bunkers (as Property/Goods)

• Action in rem: a claim for “necessaries” supplied to a ship – which includes bunkers (fuel) – can support an action in rem against the vessel.
• Arrested property: if bunkers are supplied and a lawsuit is filed, the court may arrest the ship, and in some circumstances, cargo (including bunkers) on board, to secure the claim.
• Limitation: it is important to note that case law in Pakistan (specifically in the Sindh High Court) has indicated that a bunker supply claim may not hold a maritime lien (which is the highest form of claim), but it is a valid maritime claim that can lead to vessel arrest.

Arresting Freight (as Property/Proceeds)

• Freight as “res”: freight (money payable for the carriage of goods) can be attached as property belonging to the ship-owner or person in possession of the ship.
• Attachment: if the freight is unpaid, it can be arrested or attached to satisfy maritime claims relating to the carriage of goods or the hire of a ship.

A sister-ship arrest is possible in Pakistan.

The following are the key points regarding sister-ship arrests in Pakistan:

• Definition of a sister-ship: under Section 4(4)(b) of the AJHCO 1980, a claimant can arrest a ship that is, at the time the action is brought, beneficially owned as regards the majority shares by the same person who is liable in an action in personam.
• Pre-condition for arrest: the person who would be liable for the claim (owner, charterer, etc) must, at the time the cause of action arose, have been the owner, charterer, or in possession/control of the ship, and must still beneficially own the majority shares in the sister-ship at the time of arrest.
• Excluded entities: recent judicial interpretation by the Supreme Court of Pakistan has clarified that the “beneficial owner” must hold the majority shares, thereby excluding mere time-charterers or demise-charterers from the definition, meaning a ship cannot be arrested for the debt of a mere charterer.
• Procedural requirement: an action in rem must be filed in the High Court (such as the Sindh High Court or Balochistan High Court) along with an affidavit, based on which a warrant of arrest is issued.
• Excluded vessels: ships belonging to the Pakistan Navy or government-owned ships used for non-commercial purposes are exempt from arrest.

The law in Pakistan is quite strict regarding “beneficial ownership”, and mere association between companies is not enough; the applicant must demonstrate that the same entity controls the majority shares of both vessels.

Sister-Ship Arrest

Under Section 4(4)(b) of the AJHCO 1980, a claimant can arrest any other vessel beneficially owned by the same person liable for the claim, particularly if the offending vessel has left Pakistani jurisdiction.

Attachment Before Judgment

If a defendant attempts to remove assets (like cargo or funds) to obstruct a potential court decree, the court can order their attachment under Order XXXVIII Rule 5 of the CPC 1908.

Attachment of Other Assets

Courts can attach a defendant’s movable or immovable property, such as freight money or bank accounts, under Section 60 of the CPC 1908. This extends to funds held as guarantees with local authorities.

Injunctions

High Courts can issue interlocutory injunctions (restraining orders) under Order XXXIX Rules 1 and 2 to prevent parties from transferring assets or removing cargo from the jurisdiction.

In Pakistan, an arrested vessel can be released by providing suitable security to the court, typically involving the consent of the plaintiff, payment of bailiff fees, and filing an application for release. A P&I Club Letter of Undertaking (LOU) is not commonly accepted unless the claimant agrees to the same; otherwise, a local bank guarantee is often required.

Options to Release an Arrested Vessel in Pakistan

• Security deposit/guarantee: this entails providing a bank guarantee, bail bond, or cash deposit to the court for the claimed amount, plus interest and costs.
• Negotiated settlement/LOU: an LOU from an International Group P&I Club is generally not accepted, unless the claimant agrees to it.
• Court application: filing an application for release based on the security provided may be successful, if the court orders the release after ensuring the claimant’s interests are protected.
• Objection to arrest: this involves challenging the validity of the arrest in court, arguing that it was wrongful or that the claim is not a maritime lien.
• Foreign bank guarantee: this is generally not acceptable unless the claimant agrees to it.
• Conditional acceptance: if the plaintiff does not agree to the LOU, the court may require a more secure form of guarantee, such as a bank guarantee or cash deposit.

Public Auction

If an owner fails to provide security to release an arrested vessel, the High Court will order a public auction conducted by the nazir. The court confirms the sale to transfer a clean, unencumbered title to the buyer.

Private Sales

These are generally prohibited to ensure transparency. However, a court may allow a private sale if all parties consent or if it is proven to yield a better price than an auction.

Maintenance Liability

The arresting party (plaintiff) is initially responsible for the vessel’s maintenance costs while it is in court custody (custodia legis). These expenses are classified as “marshal’s charges” and are prioritised for reimbursement from the sale proceeds.

Priority Ranking

In the absence of specific statutes, the courts follow English principles to rank claims. The general hierarchy is:

• marshal’s costs (maintenance and sale expenses);
• possessory liens (holders in possession prior to arrest);
• maritime liens (crew wages, salvage, collision damage); and
• registered mortgages.

Corporate Rehabilitation and Vessel Arrests

Pakistan employs the Corporate Rehabilitation Act, 2018 (CRA) to manage insolvency, similar to Chapter 11 of the US Bankruptcy Code.

Rehabilitation framework

The CRA allows financially distressed companies (with liabilities of PKR100 million or more) to petition for a rehabilitation plan, granting a temporary stay on legal actions against them.

Impact on vessel arrests

A rehabilitation order does not absolutely bar the arrest or judicial sale of a vessel. Under the AJHCO 1980, courts can still exercise in rem jurisdiction to satisfy maritime liens (eg, crew wages or collision damage).

Priority of claims

Maritime liens are treated as highly secured claims that generally rank higher than unsecured debts. Consequently, a court may proceed with a judicial sale to settle these liens even if the shipowner is undergoing insolvency proceedings.

Pakistani High Courts (Sindh, Balochistan, Lahore) may award damages if an arrest is deemed “wrongful” based on specific criteria.

Grounds for Liability

An arrest is wrongful if executed in bad faith (mala fides) or without reasonable cause (eg, frivolous claims or false affidavits). Liability also arises from procedural failures, negligent misstatements, or arresting a vessel that does not meet “beneficial ownership” requirements.

Triggers for Damages

Courts may penalise claimants for demanding excessive security, arresting for claims not recognised by law (non-maintainable), or failing to diligently prosecute the suit after the arrest.

Compensation

Awards typically cover actual damages – including daily detention costs, lost profits, and port dues – along with the legal costs of the suit.

Claims regarding passenger injury or loss of life are adjudicated by the High Courts under a combination of domestic statutes and international conventions.

Governing Laws

Key frameworks include the AJHCO 1980 (granting in rem jurisdiction) and the MSO 2001, alongside the LLMC Convention, 1976 for liability limits.

Time Limits

The standard limitation period for filing a suit is one year from the date of injury or service completion. This may be extended if the carrier acknowledges liability in writing.

Liability Caps

Under the LLMC Convention, a shipowner’s liability is generally capped at 175,000 SDR multiplied by the ship’s passenger capacity. However, this limit is forfeited if the loss resulted from the shipowner’s personal intent or recklessness.

Pakistani courts generally recognise exclusive jurisdiction and arbitration clauses in bills of lading as binding contractual terms.

• General rule: the courts will typically stay domestic proceedings to allow disputes to be resolved in the agreed foreign forum. Under the 2011 Arbitration Act, referring parties to arbitration is mandatory if a valid agreement exists.
• The COGSA Exception: COGSA creates a critical distinction between –
1. outbound (from Pakistan): the Act applies to shipments leaving Pakistan and foreign clauses that attempt to override statutory protections in these cases may not be enforced; and
2. inbound (to Pakistan): the Act generally does not apply to incoming shipments, making the enforcement of foreign jurisdiction clauses much more likely.

The courts in Pakistan generally recognise and enforce law and arbitration clauses of a charterparty that are incorporated into a bill of lading, provided the incorporation is express, clear and consistent with the bill of lading terms.

Pakistan, as a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), has incorporated its provisions through the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (the “REFA Act”). Under Section 4 of this Act, Pakistani courts are mandated to stay legal proceedings and refer parties to arbitration if a valid arbitration agreement exists, unless the agreement is found to be “null and void, inoperative or incapable of being performed”.

The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is applicable in Pakistan. Pakistan ratified the convention on 14 July 2005, and it entered into force on 12 October 2005.

Applicable Domestic Law

The primary domestic legislation that incorporates and enforces the New York Convention in Pakistan is the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (the “2011 Act”).

Additionally, the Arbitration Act 1940 governs domestic arbitration, while the Arbitration (International Investment Disputes) Act 2011 implements the ICSID Convention.

Pakistani High Courts (specifically those with Admiralty Jurisdiction) retain the power to arrest vessels or attach assets to secure a claim, even if the underlying contract mandates foreign arbitration or jurisdiction.

Legal Basis

Under the Admiralty Jurisdiction Ordinance 1980, the courts can exercise in rem jurisdiction against a vessel for maritime claims, regardless of foreign ownership or where the cause of action arose.

Security v Dispute

While the 2011 Act requires disputes to be referred to arbitration, courts view vessel arrests as “precautionary measures” to secure the claim rather than a final adjudication, allowing both to co-exist.

Procedure and Release

To arrest a vessel (either the offending ship or a sister-ship), a claimant must file a supporting affidavit. The vessel is typically released once a Bank Guarantee or P&I Club letter of undertaking is provided.

Pakistan does not have any exclusive, or widely recognised, national maritime arbitration association.

If a lawsuit is filed in a Pakistani court despite a valid foreign jurisdiction or arbitration agreement, the defendant has two primary remedies to halt the proceedings.

• Stay of proceedings (arbitration) – under Section 34 of the Arbitration Act, 1940, a defendant can request the court to stay proceedings. This must be filed before submitting a defence. Additionally, the 2011 Act mandates that courts refer international disputes to arbitration unless the agreement is void or inoperative.
• Return of plaint (foreign jurisdiction) – if a contract specifies a foreign court, the defendant can apply under Order VII Rule 10 of the CPC, 1908 to have the plaint returned. Pakistani courts generally uphold these clauses and will direct the plaintiff to file in the agreed-upon foreign jurisdiction.

Pakistan offers significant tax relief to resident shipping companies and those flying the Pakistani flag.

• Tonnage tax regime – instead of standard corporate tax, ship-owners pay a fixed rate based on Gross Registered Tonnage (GRT): USD0.75 per GRT for the first five years, rising to USD1.00 per GRT thereafter.
• Key exemptions – income generated from ship operations (including tugs and dredgers) and the import of vessels are exempt from income and advance taxes until 2030.
• Depreciation – companies not using the tonnage tax regime can claim a 25% initial depreciation allowance on the cost of ships put into service.
• Seafarer relief – salaries of Pakistani seafarers working on foreign vessels are income tax-exempt, provided the funds are remitted through banking channels within two months of the tax year’s end.

Under the Contract Act, 1872 (Sections 32 and 56), parties can be excused from shipping contracts if an unforeseeable event creates “supervening impossibility” (making performance illegal or physically impossible), rather than just a commercial hardship.

Valid Grounds

Recognised events include acts of God (severe floods), government actions (embargoes), war/hostilities, perils of the sea (extreme weather), and widespread, unavoidable strikes.

Exclusions (Commercial Risks)

Routine port congestion, ordinary bad weather, and technical breakdowns do not excuse non-performance. Similarly, “self-induced” issues like negligence or poor planning are not valid grounds for frustration.

Demurrage

In cases of slow loading/discharging, the rule “once on demurrage, always on demurrage” typically applies, holding the charterer liable unless the contract explicitly provides a force majeure exemption.

Pakistan integrates United Nations Security Council (UNSC) resolutions into domestic law through the United Nations (Security Council) Act, 1948. This allows the Ministry of Foreign Affairs to enforce measures like asset freezes, arms embargoes, and travel bans. Additionally, the Anti-Terrorism Act, 1997 is used by the Ministry of Interior to apply targeted financial sanctions against proscribed entities.

Maritime Sulphur Regulations (IMO 2020)

Since January 2020, Pakistan has enforced the “IMO 2020” global standard, capping marine fuel sulphur content at 0.5%.

Enforcement

The Ministry of Maritime Affairs and PSC monitor vessels. The carrying of non-compliant fuel without approved exhaust scrubbers is prohibited and can lead to detention or fines.

Supply

As of late 2025, local initiatives have been actively supplying very low sulphur fuel oil (VLSFO) to ensure industry compliance.

Pakistan incorporates international sanctions, specifically UNSC resolutions, into its domestic legal framework to ensure compliance.

UNSC Sanctions

Under the United Nations (Security Council) Act, 1948, the Ministry of Foreign Affairs issues orders to enforce asset freezes, arms embargoes, and travel bans.

Targeted Financial Sanctions

The Ministry of Interior utilises the Anti-Terrorism Act (ATA), 1997 to identify proscribed entities and implement financial sanctions.

The Red Sea crisis has created severe legal and commercial risks for Pakistan, primarily driven by forced rerouting via the Cape of Good Hope. Key consequences include:

• legal friction – companies may face contract disputes, invoking “force majeure” or frustration clauses due to the impossibility of performance or necessary route deviations;
• logistical setbacks – rerouting adds 10–14 days to transit, risking damage to time-sensitive exports like textiles and agriculture; and
• rising costs – war risk insurance premiums have surged (up to 2% of vessel value), while higher freight rates contribute to inflation and expensive raw material imports.

There were no other shipping or maritime issues relevant to Pakistan at the time of writing.