We can’t control the wind, but we can direct the sail”
The Sagarmala Project is an ambitious project by the Government of India to upscale and enhance the capability of ports in the country. Launched by the Union Cabinet in 2015, it aims to develop ports along with the 7,516-km long coastline through modernization, mechanization, and computerization. The project looks to, and has amended legislations such as the Major Port Authorities Act, 2021; the Merchant Shipping Bill, 2020 and the Admiralty Act, 2017. This article looks to understand the legal aspect of the implementation of this very project and how it will serve to further the interests of the nation. By analysing and weighing the pros and cons of the implementation of these legislations the article seeks to understand how these legislations would push growth forward. Further, it looks at the perspective of investment and development to analyse the practical effects of these laws. The Government has also attempted to modernize the archaic laws. The colonial maritime laws have been revamped to encourage the effective implementation of projects like Sagarmala. Sagarmala serves as the first step to amending and implementing legislation which will propel India to heights unknown and bring in investment, and along with it, jobs, and infrastructure.
Key Words: “Sagarmala”; “Maritime”; “Admiralty”; “Shipping”; “Ports”; “Legislation”; “Investment”; “Law”
Indeed, the Maritime sector plays a vital role in the overall economic development of a country, and for the same reason, we can see how the Government of India has emphasized bringing changes to the legislation (which are dated back to the colonial period) associated with the above said Sagarmala Project. The Sagarmala Project is one of the prominent projects launched by the Union Cabinet in 2015, which aims to develop ports along with the7,516-km long coastline throughmodernization, mechanization and computerization. Under this project, the Indian Government is trying to create a national multi-modal logistics system based on IT Technology.
The Sagarmala programme intends to maximize the potential of India’s coastline and waterways by focusing on port-led growth and logistics-intensive sectors. Theprogram’s goals include port modernization and new port development, improved port connectivity, port-linked industry, and coastal community development.
Some legislations have a huge impact on the Sagarmala Project as well, such as theMajor Port Authorities Bill and theMerchant Shipping Bill. These legislations will help in facilitating faster and transparent decision-making, benefitting the stakeholders and better project execution capability, to encourage ease of doing business and to meet new challenges facing the merchant shipping sector, respectively.
*How these Legislations (Post-Revampation) have an Impact on the Sagarmala Project and further Discussion and Comparisons made with the Old Prevailing Laws*
Now, in the current scenario, the Sagarmala project would seem like it is just an idea since law and legislation do not support it. Therefore, it is very important to amend the laws that relate to ports and shipping, to allow the project to reach fruition. The government has redrawn acts and tabled amendments to the Parliament to ensure that these legislations are revamped accordingly and in consonance with the ideals of the project.
As a matter of fact, the shipping industry in India is governed by Indian laws that are centrally managed and supervised by the government, in accordance with the International Maritime Conventions to which India is a signatory. TheMerchant Shipping Act of 1958 and theCoasting Vessels Act of 1838 were drafted primarily to encourage thegrowth and preservation of an Indian mercantile marine in a way that best served the national interest. With the rapid pace of change in the world, it is critical that legislation keeps up.
The following legislations were revamped during the commencement of the said project:
Major Port Authorities Act, 2021: Aiming to Provide Large Ports more Autonomy and Freedom
The Minister of State for Shipping tabled the Major Ports Authorities Act, 2021, in the Lok Sabha on December 16, 2016.
Objects and Comparisons
Previously, all major ports are controlled by their respective Boards of Port Trusts, which are made up of members selected by the federal government under the1963 Act. According to the new bill, each large port will now have its own Board of Major Port Authority. The Port Trusts will be replaced by the Boards. Further, these boards also have an equitable representation from their respective Labour Representatives, and the presence of independent members for transparent decision-making. The Bill allows the Board to use its property, assets and funds as deemed fit for the development of the major port. The Board will also have the right over major financial decisions of the Major Port, as was with the Trust Authority in the earlier Act.
The Official Amendments to theMajor Port Authorities Act, 2021, which is now pending in Parliament, have been accepted by the Union Cabinet. The amendments are based on the recommendations of the Parliamentary Standing Committee for the Department.
The following are the modifications that will be made-
i. The number of Labour representatives on the Port Authority Board has increased from one to two from among current Port employees.
ii. The employee representative is elected for a three-year term and may not remain in the same position for more than two consecutive terms; his Board involvement terminates when he retires.
iii. The Port Authority Board would consist of at least two and up to four independent members.
iv. Prior to that date, anyone receiving a retirement benefit from the Board of Trustees under the Major Port Trust Act of 1963 will continue to receive that benefit.
v. The Board of Directors of each Major Port shall have the authority to develop a specific master plan for any development or infrastructure established or proposed to be established within the port limits and adjacent land, and such master plan shall be independent of any local or state government regulations of any authority.
vi. The concessionaire for PPP projects will be free to decide the rate based on market conditions.
Merchant Shipping Bill to Replace Merchant Shipping Act, 1958: Aiming to Promote the Expansion of the Shipping Industry
On November 26, 2020, the Ministry released a draft of the Merchant Shipping Bill 2020, inviting public comments on the same. The Merchant ShippingAct of 1958 (Act No. 44 of 1958) and theCoasting Vessels Act of 1838 are being repealed and replaced by the Bill (Act No. 19 of 1838).
Object and Comparison
The Bill was written with the goal of promoting the expansion of the shipping industry by combining best practices from industrialized countries such as theUnited States, Japan, the United Kingdom, Singapore, and Australia. In many aspects, the prior Act featured limitations that hampered the growth of the shipping industry. The new Bill will not only transform the shipping industry, but it will also speed up development andforeign direct investment in Indian-flagged boats, encouraging international trade as well.
Previously, a ship flagged in India had tobe owned entirely by Indians, prohibiting foreign corporations or individuals from owning any share in the country’s boats. In addition, under Section 406 of theMerchant Act of 1958, Indian ships were required to have a license issued by theDirector-General. It took a long time to complete the registration process. The lack of regulationscovering pollution, seafarer safety, and the ambiguous/non-existent concept of repatriation show the legislation’s weakness.
TheMerchant Shipping Bill of 2020 will fundamentally alter how the regulatory structure operates. Having said that, it is undeniably a step in the right direction for business and progress. Provisions formaritime education, training, certification, and recruiting of seafarers are among the numerous important modifications made by the new Bill. Overall, the Bill addresses every facet of the shipping industry and provides practical and effective remedies to important concerns. If adopted, it will result in significant changes in India, as well as FDI, by broadening the scope of activity in the shipping industry.
Unique Characteristics of the Bill
i. The Bill not only addresses major conventions, but also ensures that a host of new definitions are included to enhance the quality of the legislation. Further these definitions are not restrictive, but rather ensure that the scope is broadened to include various maritime zones of India alongside the earlier mentioned ports. The new Bill expands the definition by including “performing any service within waters under Indian jurisdiction, including zones defined under the Territorial Water, Continental Shelf, Exclusive Economic Zones, and Other Maritime Zones of India Act, 1976 (80 of 1976), or any other law for the time being in force, or any port or place, including inland ports that the Central Government may, notify through notification in the official GPO.”
ii. Further the Bill also establishes ground-breaking legal framework to control maritime emergency response and makes a use of time-effective procedure to reduce the occurrence of catastrophe.
iii. Repatriation provisions have also been amended and separately mentioned to comply with theMaritime Labour Convention, 2006, to ensure that the right of a seafarer to decent working conditions and ensure universal applicability.
iv. The High Courts may appoint assessors to provide findings on the degrees of fault of each vessel to strengthen the investigation and adjudication of claims arising from marine collisions. Apportionment of Liability, which states that the High Court may assign all or any of the following duties to any assessors appointed by the Central Government under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 in the course of proceedings under this Act for any maritime claim arising out of a collision between vessels:
a. determine fault, including the degree of fault attributable to each vessel;
b. attend High Court hearings;
c. provide their written conclusions to the High Court; and do any additional tasks that the High Court may assign.
v. The Director-General, who will be appointed under Section 6 of the new Bill, will have the authority to act against dangerous boats that endanger the safety of seafarers and the environment. It also empowers the Director-General to hear appeals from detention orders and establishes the procedure for doing so.
vi. The Central Government now has the authority to compel compulsory insurance or other financial compensation for pollution-related harm, as part of the Bill’s goal of encouraging vigorous enforcement of pollution-prevention measures.
Admiralty Act, 2017
In the light of the Sagarmala project, the act that is sine qua non for the respective project is the ‘Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017.’ The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, unifies the laws governing admiralty jurisdiction, judicial processes involving vessels, their arrest, detention, and sale, as well as other matters related to or incidental to them. Italso repeals the following five antiquated British statutes relating to admiralty jurisdiction in civil matters:
i. The Admiralty Court Act, 1840,
v. The provisions ofthe Letters Patent, 1865, which apply to the admiralty jurisdiction of the Bombay, Calcutta, and Madras High Courts.
Admiralty law is a codified system of laws that applies to both domestic and international law and covers all forms of transactions, injuries deriving from contracts, and offences or torts committed on navigable waters. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act of 2017 codifies the maritime lien and claims that can lead to a ship being impounded. At first,only the courts of Bombay, Calcutta, and Madras were given maritime jurisdiction to handle cases, but issues of overlapping jurisdiction began to rise at a rapid pace.
In the case ofM.V. Elisabeth and others v. Harwan Investment and Trading Pvt. Ltd. 1993 AIR 1014, the Supreme Court extended the jurisdiction of several other courts to handle maritime matters, prompting theformation of the151st Report of the Law Commission and the introduction of theAdmiralty Bill, 2005, whichfailed miserably and was finally backed up by the introduction of the Admiralty Act, 2017.
Highlights of Admiralty Act, 2017
The following are the important highlights and modifications that theAdmiralty Act, 2017 has brought about:
(i)Extending admiralty jurisdiction beyond the High Courts of Bombay, Calcutta, and Madras to the High Courts of Karnataka, Odisha, Kerala, Gujrat, Hyderabad, and any other High Courts across the country as the Central Government sees appropriate.
(ii) The purpose of the act is to prioritise the issues and claims it addresses. The Admiralty Act of 2017 specifies that marine claims take precedence over all other claims. In marine disputes, wages, lifesaving, and injury-related claims have all been prioritised.
(iii) The High Courts have been given the authority to hear maritime disputes, such as thoseinvolving vessel ownership, mortgages, and repairs, among other things.
(iv) The legislation has begun the process of reducing the number of jurisdictions. This means that the law seeks to streamline court jurisdiction over individuals and, in some ways, clarifies what actions can be filed against them based on the individual’s circumstances.
(v) The measure also suggests that a maritime claim can be appealed to the Supreme Court if a High Court decision is unfavorable.
(vi) The Act gives the Central Government the task of choosing a qualified and skilled assessor to handle marine problems.
Although the Admiralty Act is the first step toward codifying Admiralty jurisdiction and related practises and rules under Indian law, it has resulted in some anomalies that have yet to be addressed by the Legislature or the Judiciary. One such issue concerns the Admiralty Act’s retrospective application under Section 17 (2), which states that all admiralty proceedings pending in any High Court immediately prior to the commencement of the Admiralty Act must be adjudicated by such court in accordance with the provisions of the new Act. The Admiralty Act contains no provision for saving proceedings begun before the Admiralty Act came into effect on April 1, 2018.
Another issue is that the Admiralty Act resolves the question of whether a dumb barge can be arrested and whether the Court can exercise jurisdiction over Indian vessels. However, due to the operation of Section 17, all such pending applications are rendered infructuous, or meaningless. The Courts and the Legislature have yet to address this issue.
Certain provisions of the Act could be interpreted as allowing a Court to settle non-maritime claims after a vessel is arrested for a maritime claim.
The Bombay and Calcutta High Courts’ pan-Indian in rem, admiralty jurisdiction has been limited. Instead, the Act seeks to give High Courts with territorial jurisdiction over a coastline Admiralty jurisdiction. The current drafting, ironically, results in either all High Courts exercising pan-Indian admiralty jurisdiction, or each coastal High Court’s jurisdiction being limited to 12 nautical miles from any point on the coastline within its territorial jurisdiction. It should be noted that the Admiralty Act only applies to vessel arrests and does not allow for the arrest of cargo, freight, or bunkers under the Admiralty Jurisdiction of the High Courts.
According to Section 9(1) and (2), the reduction in the limitation period for a maritime lien from three to one year is intended to exist for all vessels that do not undergo any change in ownership, registration, or flag that the vessel bears. If they are not arrested within that time frame, all such vessels will be decommissioned within a year. These clauses are a significant disadvantage since claimants’ capacity to pursue justice will be constrained because the measure favours ship owners more. The majority of India’s international trade is currently conducted by sea. Ports and the marine sector as a whole play a huge role in the development of international trade. The shipping business, as one of the most significant, requires a set of regulations that can address problems and redress injustices in a timely manner.
In the light of the above-mentioned contention and analysis, it is stated that India needs a versed system of connections to ports because centres attracting goods for shipment are mainly located inland rather than in coastal regions and to achieve this efficient system. The Government has attempted to modernize the archaic admiralty laws and bring them in consonance with the International Conventions (Arrest of Ships, 1999 andMaritime Liens, 1993) by enacting theAdmiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017. The Act has repealed the historic colonial statutes and unified the laws concerning security, arrest of vessels, admiralty jurisdictions, detention, and other incidental matters to them. This step was taken in response to the Maritime Industry’s emphasis on updating the Admiralty Laws of India and ensuring the effective and speedy resolution of maritime disputes.
The proposed laws demonstrate the evolution of the maritime industry and how these measures shall not only promote investment opportunities but also function as a catalyst to make the maritime industry self-sufficient. The colonial maritime laws have been revamped to encourage the effective implementation of projects like Sagarmala to serve the nation’s best interest.
About the Author
Adv. Nalini Mishra is an Associate Partner at Singhania & Co. LLP. She was assisted by Mr. Abhishek Tripathi, Legal Intern, Singhania & Co. LLP.
Managing Editor: Naman Anand
Editors-in-Chief: Jhalak Srivastav and Muskaan Singh
Senior Editor: Aribba Siddique
Associate Editor: Charvi Dev
Junior Editor: Kaushiki Singh
Preferred Method of Citation
Nalini Mishra, “The Revamped Maritime and Related Legislations amidst Sagarmala Project – to Serve the Interest of the Nation” (IJPIEL, 13 July 2022)