PAKISTAN Law and Practice Contributed by: Faisal Daudpota, Daudpota International
Triggers for Damages Courts may penalise claimants for demanding exces - sive security, arresting for claims not recognised by law (non-maintainable), or failing to diligently pros - ecute 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. 6. Passenger Claims 6.1 Laws and Conventions Applicable to the Resolution of Passenger Claims 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 for - feited if the loss resulted from the shipowner’s per - sonal intent or recklessness. 7. Enforcement of Law and Jurisdiction and Arbitration Clauses 7.1 Enforcement of Law and Jurisdiction Clauses Stated in Bills of Lading Pakistani courts generally recognise exclusive juris - diction and arbitration clauses in bills of lading as binding contractual terms.
• possessory liens (holders in possession prior to arrest); • maritime liens (crew wages, salvage, collision dam - age); and • registered mortgages. 5.11 Insolvency Laws Applied by Maritime Courts 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. Con - sequently, a court may proceed with a judicial sale to settle these liens even if the shipowner is undergoing insolvency proceedings. 5.12 Damages in the Event of Wrongful Arrest of a Vessel Pakistani High Courts (Sindh, Balochistan, Lahore) may award damages if an arrest is deemed “wrong - ful” 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 pro - cedural failures, negligent misstatements, or arresting a vessel that does not meet “beneficial ownership” requirements.
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