RIAA defeats ship arrest of M/V Lady Ileen amid the Strait of Hormuz crisis

The Strait of Hormuz crisis has produced a new wave of shipping disputes — diverted voyages, stranded cargoes, war-risk invocations — with Pakistan’s admiralty courts at Karachi emerging as a key forum. Against that backdrop, last week the Sindh High Court released M/V Lady Ileen, a Palau-flagged bulk carrier arrested at Karachi since March 2026. The Court acted on a jurisdictional challenge by RIAA Barker Gillette for Turkish voyage charterer Ege Trade ve Pazarlama A.Ş. Two questions arose: whether a disponent owner can bring a ship arrest without a claim in personam against the beneficial owner relating to the use or hire of a ship; and whether protective discharge can rest on a war-risk case advanced under a since-terminated time charter, and contradicted by the claimant’s own contemporaneous correspondence.

The commercial backdrop

In January 2026, Ege Trade fixed M/V Lady Ileen for 27,500 tonnes of ground phosphate from Egypt to Bandar Imam Khomeini (BIK), Iran. The Oman-based disponent owner, Nexus Marine Trading & Logistics Service SPC, agreed the fixture and took freight. For banking reasons, the parties executed two fixture notes: Karachi as the documentary port, and BIK — via a rider — as the actual destination. Unknown to Ege Trade, Nexus’s time charter banned Iran trade save a narrow food-only carve-out that excluded phosphate.

The invocation of war risk

The vessel signalled ETAs to BIK for 15–19 January 2026. Yet Nexus shortly afterwards invoked the war-risk clause, and the vessel went directly to Karachi anchorage. On the same day it served its war-risk notice, Nexus’s own correspondence called BIK the “intended port of call.” Port records showed BIK remained operational. War risk was the stated reason; the undisclosed head-contract bar was the real one.

The ship arrest

On 4 March 2026 — days after strikes on Iran triggered the Hormuz crisis — Nexus filed suit at the Sindh High Court and obtained ex parte ship arrest. RIAA filed counter-affidavits and a stay application under the 2011 Arbitration Act the very next day.

The jurisdictional defence

Our principal defence attacked the statutory gateway to the ship’s arrest. Section 4(4) of the Admiralty Jurisdiction of High Courts Ordinance, 1980 requires both a claim in personam and beneficial ownership of the vessel to sit in the same defendant for quasi in rem claims, including those under section 3(2)(h). Under V.N. Lakhani v. M.V. Lakatoi Express (PLD 1994 SC 894), charterers fall outside that category. The registered owner, Vectory Marine Services Inc., had no contractual nexus with Nexus.

The plaintiff’s agency argument that the manager acted for the registered owner failed on the documents. The BIMCO SHIPMAN management agreement had only the technical functions opted in, not commercial management. The NYPE time charter bore the manager’s own signature, named the manager as “Owner,” and directed hire to the manager’s account.

Protective discharge and the liens

Protective discharge could not outlast the arrest, and was self-defeating on its own terms. The plaintiff invoked both the GENCON Clause 8 lien (voyage level) and the mirror NYPE Clause 18 lien (time-charter level) — but both are possessory. Discharge without original bills of lading would also have exposed the registered owner to a misdelivery claim.

Outcome

After several days of argument, the Court on 9 April 2026 passed a short tentative order releasing the vessel, recording that serious questions of maintainability arose. The Court required no security from Ege Trade. The plaintiff’s appeal failed to secure a stay. The vessel sailed from Karachi on 17 April 2026. At subsequent hearings, we will be pushing for a hearing on maintainability.

“Disciplined jurisdictional analysis is decisive in admiralty arrest cases,” said Mayhar Kazi, Partner at RIAA Barker Gillette. “Pakistani law requires a claim in personal to be alleged against the beneficial owner as the gateway to arrest for quasi in rem claims, and SHIPMAN-based agency arguments require testing against what the form actually agrees.”

The matter reflects RIAA’s integrated dispute resolution capability across admiralty, international arbitration and sanctions-sensitive trade. It was led by Mayhar Kazi (Partner – Pakistan) supported by Doost Muhammad Jan (Associate).

For further information on admiralty, shipping and sanctions-sensitive trade matters, please contact Mayhar Kazi today.

This article is not legal advice; it provides information of general interest about current legal issues.

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RIAA Barker Gillette is Pakistan’s premier law firm, with an on-the-ground presence in three major cities in Pakistan: Karachi, Islamabad and Lahore, and affiliated offices in Dubai (DIFC) and London. 

The firm practices in all areas of corporate, commercial and dispute resolution law. Leading international legal directories consistently recognise the firm as a top-tier law firm in Pakistan.

RIAA Barker Gillette is the exclusive member firm in Pakistan for Lex Mundi, the world’s leading network of independent law firms with in-depth experience in over 125 countries worldwide.