Shipping 2026

PAKISTAN Law and Practice Contributed by: Faisal Daudpota, Daudpota International

• 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 compa - nies is not enough; the applicant must demonstrate that the same entity controls the majority shares of both vessels. 5.8 Other Ways of Obtaining Attachment Orders Sister-Ship Arrest Under Section 4 (4)(b) of the AJHCO 1980, a claim - ant 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 immova - ble 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. 5.9 Releasing an Arrested Vessel In Pakistan, an arrested vessel can be released by pro - viding 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 Inter - national 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 success - ful, 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 guaran - tee or cash deposit. 5.10 Procedure for the Judicial Sale of Arrested Ships 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 cus - tody (custodia legis). These expenses are classified as “marshal’s charges” and are prioritised for reimburse - ment from the sale proceeds. Priority Ranking In the absence of specific statutes, the courts follow English principles to rank claims. The general hierar - chy is: • marshal’s costs (maintenance and sale expenses);

462 CHAMBERS.COM