SHIPARRESTININDIA
Publication Date: February 13, 2026
Category: Offshore Drilling Unit Arrest
Source: India

Arresting offshore drilling units in India: mobile rigs, jack-ups, semi-subs as vessel under Admiralty Act, 2017

Ms. Binita Hathi
Ms. Binita Hathi
Partner, Brus Chambers
Offshore & Admiralty Specialist, Ship Arrest Practitioner

Arrest Strategy Offshore Drilling Units (MODU)

  • Fact pattern: Mobile Offshore Drilling Unit (jack-up, semi-submersible, drillship) operating on Indian continental shelf. Unpaid invoices for supplies, services, or charterparty arbitration clause. Unit now positioned within Indian territorial waters.
  • Primary solution: File action in rem under Section 5 Admiralty Act, 2017 before a competent High Court in India. The Admiralty Act defines "vessel" to include "offshore industry mobile units" express statutory inclusion. Maritime claim for "necessaries" / "bunkers" / "services" under Section 4(1)(l), (m), (o).
  • Arbitration clause: Does not oust admiralty jurisdiction for arrest. Section 9 Admiralty Act preserves interim measures. Arrest is to obtain security not a determination on merits; arbitration tribunal decides liability.
  • Sister rig arrest: If the offending rig not owned by debtor but charterer liable, sister rig arrest available if same beneficial ownership when cause arose (Section 5(2)).
  • Security for release CRITICAL: Indian courts do not accept P&I Club Letters of Undertaking (LOU) as security for rig release unless the claimant voluntarily accepts the LOU outside court. The court will order release only upon a bank guarantee, cash deposit, or if the claimant consents to an LOU. Claimant may negotiate LOU privately but court will not impose it.
  • Anti-arbitration injunction: Rarely needed; but if rig owner moves anti-arrest, claimant can seek anti-suit injunction to protect Indian arrest.

1. The Offshore Creditor's Dilemma: Unpaid Rig Services & Arbitration Clause

You are an offshore service provider. You supplied critical equipment, spares, bunkers, or provided charter hire for a mobile offshore drilling unit (MODU) a jack-up rig, semi-submersible, or drillship operating on the Indian continental shelf. The rig is owned by a single-purpose entity, flagged in Panama or Marshall Islands. Your invoice or drilling contract contains an arbitration clause: "Any dispute arising shall be referred to London arbitration under LMAA terms" or "Singapore Arbitration". The rig operator / charterer has defaulted on payments totalling USD 2.5 million. The rig is now positioned within Indian territorial waters, perhaps off Paradip or awaiting monsoon shelter at Dhamra. Can you arrest this massive offshore unit in India despite the arbitration clause The answer is a resounding yes, but the strategy requires mastering the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, which expressly includes "offshore industry mobile units" within the definition of "vessel". This 12,000-word guide provides a complete roadmap: statutory interpretation, procedural nuances, and the decisive leverage point Indian courts do not accept P&I Club LOUs for release unless the claimant agrees outside court. You hold the key.

2. The Express Inclusion: Offshore Mobile Units as Vessel under Admiralty Act, 2017

The Admiralty Act, 2017, Section 2(1)(zc) defines 'vessel' as: "vessel includes any ship, boat, sailing vessel, or other description of vessel used in navigation and includes floating production storage and offloading facilities, mobile offshore drilling units, barges, and other floating crafts." This is a landmark expansion. Unlike the Arrest Convention 1952 or 1999 (to which India is not a signatory), the Indian statute explicitly includes MODUs, jack-up rigs, semi-submersibles, and drillships. The legislative intent is clear: offshore drilling units are subject to admiralty jurisdiction and can be arrested in rem. The definition covers units "used in navigation" mobile rigs that are towed or self-propelled. Even rigs jacked up on location are considered 'vessels' for the purpose of maritime claims. This resolves decades of debate. Thus, a maritime claimant can proceed against a MODU as if it were a conventional vessel.

3. Maritime Claims Against Offshore Drilling Units: Section 4(1) Admiralty Act

Section 4 enumerates maritime claims. For offshore rigs, relevant heads include: (l) goods, materials, bunkers, provisions, stores, spares, equipment or supplies supplied to the vessel for its operation or maintenance; (m) services provided as part of the operation of the vessel, including towage, pilotage, salvage; (o) construction, repair, conversion, equipping or docking of vessel; (p) dues in respect of port, canal, dock, harbour, and light; (q) insurance premiums; (r) commission, brokerage, or agency fees; (s) general average; (t) environmental damage; (u) wreck removal. A claim for unpaid charterhire, supply of drilling equipment, or offshore support vessel services falls squarely within these heads. The Admiralty Act does not distinguish between a tanker and a semi-submersible rig. Once the rig is within Indian territorial waters, a maritime claim arises and the High Court can exercise admiralty jurisdiction.

4. Action in Rem under Section 5: Arresting the Rig Itself or a Sister Rig

Section 5(1) allows action in rem if: (a) the claimant has a maritime claim against the vessel (the rig); and (b) the owner of the rig is liable in personam for the claim, and is the owner when action commenced. 'Owner' includes charterer (by demise or otherwise) where the charterer is liable. For offshore rigs, often the charterer (operator) incurs the debt. If the charterer is a demise/bareboat charterer, they are deemed owner. If time charterer, the statute's phrase 'charterer (by demise or otherwise)' includes time charterer. Indian courts adopt a broad interpretation: if the charterer ordered necessaries and the master (as agent of owner) accepted them, the rig itself is impliedly liable. Alternatively, sister rig arrest under Section 5(2): arrest any other rig or vessel owned by the person who was the owner of the offending rig when the claim arose. This is vital when the debtor charterer owns another rig operating in Indian waters (e.g., a drillship owned by the same drilling contractor).

5. Arbitration Clause: No Bar to Arrest of Offshore Drilling Unit

The drilling contract or supply invoice stipulates 'Arbitration: London LMAA / SIAC'. The rig owner, upon arrest, will argue that the dispute must be arbitrated, not litigated in admiralty. This argument fails. Section 9 of the Admiralty Act, 2017 provides: "Nothing contained in this Act shall prevent any person from seeking interim relief, including interim relief as specified in section 9 of the Arbitration and Conciliation Act, 1996 or from seeking any other interim or other relief from any court or tribunal in accordance with any other law for the time being in force." Arrest is interim relief to secure the claim. It does not adjudicate liability. The arbitral tribunal decides the merits; the security is held pending award. Thus, the arbitration clause is irrelevant at the arrest stage. This principle applies fully to offshore drilling units.

6. Indian High Court: Strategic Jurisdiction for MODU Arrest

The rig is heading to an Indian port such as Paradip or Dhamra. The relevant High Court having admiralty jurisdiction over the territorial waters where the rig is located can exercise jurisdiction. The Admiralty Act, 2017 vests jurisdiction in High Courts within whose limits the vessel (rig) is or is expected to be. Indian High Courts have become preferred jurisdictions for arresting offshore units due to proactive admiralty benches, efficient Marshals, and proximity to major offshore supply bases. You must act as soon as the rig enters Indian territorial waters (12 nautical miles). Prepare the plaint and arrest application in advance. The Admiralty Marshal (Registrar) will execute the warrant upon the rig. The procedure is analogous to vessel arrest, but tailored to the physical nature of a jack-up or semi-sub.

7. Pre-Arrest Preparation for Offshore Rig Arrest: Documentation and Evidence

Assemble: (i) Contract / charterparty / purchase order clearly identifying the rig name, IMO number (if any), owner/operator details. (ii) Invoices, statements of account, proof of default. (iii) Bunker delivery receipts or service completion certificates signed by rig personnel. (iv) Evidence of rig ownership: IHS Markit register, Equasis, or flag state registry. (v) If sister rig arrest, proof that debtor owns another rig within jurisdiction. (vi) Undertaking to pay damages if arrest is found wrongful. This undertaking is mandatory. For offshore rigs, the quantum of counter-security demanded by court may be higher (often 10-15% of claim) given the high value of the asset and potential demurrage. Be prepared to furnish a bank guarantee for the undertaking or a strong affidavit. Counsel must also prepare a detailed note on the vessel status of the rig, citing Section 2(1)(zc).

8. Drafting the Admiralty Plaint (Action in Rem) for Offshore Drilling Unit

The plaint must be titled: 'In the High Court at [Place], Admiralty Suit (In Rem)'. Defendant described as: 'M.V. / Jack-up Rig [NAME], IMO [NUMBER], her owners and all persons interested in her'. Structure: (i) Parties and description of claimant (offshore supplier). (ii) Rig description, flag, IMO, owner, charterer. (iii) Facts of supply / services, invoices, default. (iv) Rig expected arrival within Indian jurisdiction. (v) Maritime claim under Section 4(1)(l),(m),(o) read with Section 2(1)(zc). (vi) Cause of action and jurisdiction. (vii) Arbitration clause only to state it does not bar arrest and that interim relief is preserved. (viii) Sections 5,6,9 Admiralty Act. (ix) Undertaking for damages. (x) Prayer for arrest, appointment of receiver, and security. (xi) Valuation and court fees (nominal in most High Courts). File affidavit of documents and evidence of ownership.

9. Arrest Application: Prima Facie Case and Necessity of Security

File simultaneously with plaint. Emphasize: the rig is a foreign asset, likely to depart, leaving the claim unsatisfied. The arrest is not punitive but to obtain security. Quote Section 9 Admiralty Act. The affidavit must state: 'The applicant undertakes to pay damages as the court may award in case of wrongful arrest.' In some High Courts, a separate undertaking deed may be required. Since the rig's arrival is imminent, apply ex parte. The judge will scrutinize whether a MODU qualifies as vessel present the statutory definition. You do not need to prove the entire case; only a 'good arguable case'. The threshold is low but cogent.

10. The Arrest Warrant, Marshal, and Custody of Offshore Rig

Upon issuance of warrant, the Admiralty Marshal proceeds to execute. For a jack-up rig at anchorage, the Marshal will board via pilot boat or helicopter. For a semi-submersible or drillship, similar access. The rig is detained; port authorities will not grant inward clearance or port clearance. The court appoints a Receiver / Custodian often a naval architect, marine surveyor, or port official. The custodian ensures safety, maintains security, and prevents movement. Costs of custodian (approx. INR 1,00,000 2,00,000 per day for a rig) are initially borne by the arresting claimant, recoverable from owner or sale proceeds. This is a significant exposure; however, for high-value rigs, owners typically furnish security swiftly.

11. Security for Release: P&I Club LOUs, Bank Guarantees, Cash Deposit CRITICAL DISTINCTION FOR RIGS

CRITICAL PRACTICE POINT P&I CLUB LOU NOT ACCEPTED BY COURT: Indian courts do not accept Letters of Undertaking (LOUs) issued by P&I Clubs (or offshore rig insurers) as security for release of an arrested MODU. This is settled practice. The court will not order the rig's release against an LOU unless the claimant voluntarily agrees to accept the LOU outside court. If the claimant insists on a bank guarantee or cash deposit, the court will direct the owner to furnish such security. This is a fundamental divergence from English, Singapore, and US practice. Offshore rig owners and their insurers (P&I Clubs, offshore energy insurers) will immediately approach the claimant to negotiate acceptance of a Club LOU. The claimant has immense leverage: the rig remains under arrest until a bank guarantee is deposited or the claimant agrees to an LOU. Many claimants accept a first-class Club LOU on negotiated terms (interest, law, jurisdiction) through a private settlement agreement. Once the claimant communicates to the court that it accepts the LOU, the court orders release. The court itself will not compel acceptance. This dynamic is central to post-arrest strategy for offshore units.

Following arrest of the rig, the owner's liability insurers (P&I Club or specialist offshore energy insurer) will issue an LOU. As emphasized, Indian courts do not accept the LOU as sufficient security for release without claimant's consent. The court will determine security quantum the claimant's 'reasonably arguable best case' (principal, interest at contractual or 8% p.a., costs). The owner may then either furnish an Indian bank guarantee (expensive, requires 100% cash margin) or negotiate with the claimant to accept the LOU. This gives the claimant strong bargaining power. Often, settlement discussions accelerate. Once security is in place (bank guarantee or accepted LOU), the court releases the rig. The claimant then pursues arbitration on the merits, and the security stands as cover for the eventual award.

12. Challenging the Arrest: Rig Owner's Remedies and How to Defend

Rig owner may apply to set aside arrest on grounds: (i) rig is not a vessel this fails under Section 2(1)(zc). (ii) no maritime claim. (iii) claimant not proper party. (iv) arbitration clause ousts jurisdiction defeated by Section 9 Admiralty Act. (v) no prima facie case of liability. (vi) wrongful arrest due to nondisclosure. The owner may argue that a jack-up rig with legs fixed on seabed is not 'in navigation'. However, the statutory definition includes 'mobile offshore drilling units' without requiring continuous navigation. Moreover, the rig's mobility (ability to tow and re-float) satisfies the test. Indian courts have followed a purposive interpretation. Prepare evidence of the rig's IMO number, classification, and movement history. Counter any suggestion that the rig is a non-arrestable structure.

13. Anti-Arbitration Injunction and Anti-Suit Injunction: Protecting the Indian Arrest

In rare cases, the rig owner may approach the London arbitration tribunal for an anti-suit injunction, alleging that the Indian arrest breaches the arbitration agreement. To pre-empt, the claimant may seek an anti-arbitration injunction from the Indian admiralty court. Indian courts have inherent power to restrain a party from pursuing foreign proceedings that are vexatious or interfere with the court's jurisdiction to provide interim security. The plaint may include a prayer: 'that pending arbitration, the respondent/owner be restrained from initiating or continuing any proceedings before any foreign court or tribunal challenging the arrest or seeking anti-arrest injunction.' This defensive measure ensures the arrest remains unchallenged in the foreign forum. In practice, P&I Clubs rarely pursue such tactics; they seek to negotiate an LOU settlement.

14. Sister Rig Arrest A Powerful Tool for Offshore Creditors

If the debtor (owner or demise charterer) owns another rig or vessel within Indian jurisdiction, you can arrest that sister asset under Section 5(2). For example, a drilling contractor owns two jack-up rigs; one is the offending unit, the other arrives off an Indian port. You can arrest the sister rig even if it has no connection to the claim. This provides immense pressure. You need to prove common ownership. Offshore drilling contractors often operate through special purpose vehicles; you may need to pierce the corporate veil to establish beneficial ownership. Collect evidence: annual reports, group company structures, same ultimate parent, common management. Indian courts are willing to look at control and beneficial ownership for sister ship arrest. This is particularly effective against major offshore drilling companies.

15. Time Limits, Limitation, and Laches for Offshore Claims

The Limitation Act, 1963 applies three years from default. Admiralty doctrine of laches also applies; unreasonable delay causing prejudice may bar arrest. Given the rig's imminent arrival, no laches. Ensure arbitration claim is commenced within any contractual time bar (LMAA six-year limit, or one year for demurrage).

16. Costs and Expenses: Claimant's Exposure for Rig Arrest

Arresting a MODU involves substantial costs: custodian fees, security guards, crew wages, insurance, port dues, legal fees. The owner is primarily liable, but if they delay, the claimant may have to advance funds. For a claim of USD 2.5 million, costs are manageable but must be budgeted. The court will direct the owner to pay custodian charges; if unpaid, they are deducted from sale proceeds. In most cases, the owner furnishes security quickly to minimize costs.

17. Practical Steps: From Rig ETA to Arrest Warrant

Step 1: Retain Indian counsel at the relevant High Court. Step 2: Prepare plaint, arrest application, affidavits, undertaking. Step 3: Search caveat register. Step 4: Move Admiralty Judge for ex parte warrant. Step 5: On issuance, hand warrant to Marshal. Step 6: Marshal coordinates with port/coast guard, boards rig, serves warrant, arrests, hands custody to Receiver. Step 7: Owner's solicitors appear, seek time to furnish security. Step 8: Negotiation on security amount and form (bank guarantee or claimant's acceptance of LOU). Step 9: After acceptable security furnished, court orders release. Step 10: Pursue arbitration merits against security.

18. Jurisdiction of Indian High Courts Specific Procedure for MODUs

Each High Court exercising admiralty jurisdiction has its own Admiralty Rules (modeled on the 2022 draft rules). The Registrar (Admiralty) acts as Marshal. Court fee is nominal in most jurisdictions. The court may require an undertaking guarantee of INR 10-20 lakhs for custodian costs, given the higher daily rate for rigs. Several Indian High Courts have experience with rig arrests; they are pro-arrest jurisdictions. The rig may be at anchorage off a major port; the Marshal will board via pilot. File an affidavit stating rig expected within 24 hours. The court may issue telegraphic arrest instructions to port authorities.

19. Interaction with Customs, Port Authorities, and DG Shipping

When a MODU is arrested, port clearance is withheld. Customs and the Directorate General of Shipping are notified. The rig's classification society may be involved. The Marshal coordinates with all agencies. It is vital to notify the port conservator and the Indian Coast Guard if the rig is mobile.

20. Claim for Interest and Costs

The security amount must include interest at the contractual rate or court rate (usually 12% per annum). Claimant should also include legal costs and custodian expenses advanced. The court will determine the quantum based on the reasonably arguable best case.

21. Wrongful Arrest Protection for Offshore Claimant

The rig owner may claim damages for wrongful arrest. However, if you act in good faith, with reasonable cause, and full disclosure, you are protected. The threshold is high; mere failure of claim is not sufficient. Your undertaking covers such damages. In India, wrongful arrest damages are rarely awarded absent malice or gross negligence.

22. Established Principles Offshore Drilling Units, Arrest & Arbitration

23. Drafting the Undertaking for Damages MODU Specifics

Undertaking is filed in Form XII Admiralty Rules. The claimant undertakes to pay damages if arrest is found wrongful. For high-value rigs, the court may ask for a bank guarantee to back the undertaking. This is becoming common in Indian admiralty practice. The amount may be fixed at 10% of the claim or INR 50 lakhs, whichever lower. Be prepared to arrange this. The undertaking is signed by authorized signatory, notarized, and filed.

24. Contentious Issues: Rig Already under Arrest Priorities

Check if the MODU is already under arrest by another creditor. If so, your arrest will be subsequent. Bunker/supply claims are not maritime liens (unless under Indian law, some necessaries claims are now statutory liens debated). They rank after crew wages, salvage, etc. Nonetheless, arrest is still possible to obtain security.

25. Service of Warrant and Notice on a Jack-Up Rig

Serving a warrant on a jack-up rig with legs elevated requires coordination. The Marshal will board via crew boat or helicopter. The master or Offshore Installation Manager (OIM) is handed a copy. The rig is arrested; the Marshal posts a notice on the rig's bulletin board. All movement ceases.

26. Application for Appointment of Receiver Offshore Custodian

A separate application for appointment of Receiver is filed. The court appoints a marine surveyor or port official as Receiver. Their duties include safety, preventing spud can movement, maintaining watch. Receiver's fees are fixed by court; typically higher than vessel custodian due to specialised nature.

27. Security Amount Determination for Offshore Units

On owner's application, court determines security quantum. The owner may argue claim is inflated. You must provide contract, invoices, evidence of market rate. Interest is typically 8-12% p.a. from due date. Costs: INR 500,000 1,000,000. The court will assess the reasonably arguable best case. For a rig, security often includes anticipated arbitration costs.

28. P&I Club LOU Negotiation and Acceptance Outside Court for Rigs

As repeatedly emphasised, Indian courts do not accept P&I Club LOUs directly. The rig owner's insurers will seek your consent to accept an LOU. Consider the creditworthiness of the Club (all International Group Clubs are first-class; offshore energy insurers like Skuld, Gard, UK Club also underwrite rigs). You can negotiate interest rate, governing law, and forum for enforcement. Once a settlement agreement is signed, you file a memo in court accepting the LOU. The court then releases the rig. If you refuse all LOUs and insist on a bank guarantee, the owner must arrange an Indian bank guarantee, which is costly and time-consuming; this may pressure the owner to settle the claim swiftly. This leverage is your greatest asset.

29. Consequences for Arbitration Transfer of Security

After security is in place (bank guarantee or accepted LOU), the substantive dispute goes to arbitration. The court may order that the security be held as security pending arbitral award. You must commence arbitration within a reasonable time (typically 90 days). The LOU or bank guarantee is payable upon an award. This is seamless.

30. Default of Owner Judicial Sale of Offshore Drilling Unit

If the rig owner does not furnish security and abandons the rig, the claimant can apply for judicial sale. The court orders a Marshal sale; the rig is auctioned. Sale proceeds distributed per statutory priority. MODUs have high value but specialised market; sale may take 6-12 months. Claimant must bear custodian costs during this period. This is a last resort but forces owner's attention.

31. Involvement of Indian Counsel and Offshore Experts

You need a lawyer on record in the High Court. Only advocates with standing can file. Also engage a surveyor familiar with MODUs to assist the Marshal and Receiver. Counsel must be experienced in admiralty arrest of offshore units.

32. Timing: When to File for Rig Arrest

As soon as the rig enters Indian territorial waters (12nm), you can approach court. Some courts require the rig to be within port limits. The Admiralty Act does not explicitly require berthing; 'within jurisdiction' suffices. You can file anticipatorily and keep warrant ready.

33. Caution: Prior Caveat by Rig Owner

Check if the owner has filed a caveat against arrest. If so, you must give notice; no ex parte arrest. In practice, few offshore owners file caveats in India. Search the caveat register.

34. Bond for Release and Counter-Security

If the owner provides a cash bond, it is deposited in court. If you have given an undertaking backed by bank guarantee, that counter-security may be held until final determination.

35. Arbitration and Interim Relief in Foreign Seat Concurrent

The Indian arrest does not prejudice the foreign arbitration. The tribunal decides merits; the security is for the benefit of the eventual award. This is consistent with international practice.

36. Limitation for Arbitration Offshore Contracts

Check the time bar under the drilling contract or charterparty. LMAA terms provide a one-year time bar for demurrage, six years for breach. Issue a notice of arbitration or protective claim promptly.

37. Supply via Subcontractor: Assignment of Rights

If you are a sub-supplier and your immediate buyer is a trader who on-sold to the rig, ensure you have an assignment of the maritime claim. Without assignment, you may lack privity. Obtain assignment deeds before arrest.

38. Claim Against Freight or Hire Not Applicable

Offshore claim is against the rig itself, not freight. However, unpaid charterhire is a maritime claim under Section 4(1)(k).

39. Importance of Rig IMO Number and Flag

Identify the rig by IMO number (if assigned), official number, flag, call sign. Many MODUs have IMO numbers as they are registered vessels. Wrong identification may lead to wrongful arrest.

40. Custodial Expenses Responsibility

Court directs owner to pay custodian fees. If owner defaults, claimant pays and recovers from proceeds or security. For MODUs, daily custodian cost is high; factor this into settlement strategy.

41. Risk of Owner Abandoning an Ageing Rig

If the rig is old and its scrap value is low, the owner may not provide security. Evaluate the rig's value before arresting. For a modern deepwater drillship, value is substantial, so owner will secure release. For a 40-year-old jack-up, consider carefully.

42. Arrest of MODU in India Modern Practice

E-filing is available in many High Courts. The benches are responsive and familiar with offshore terminology. In recent years, Indian courts have seen arrest of jack-up rigs and drillships.

43. Need for Speed: Drafting Checklist for Rig Arrest

Plaint, arrest application, affidavit of documents, undertaking, memo of parties, court fees, vakiaalatnama, evidence of ownership, evidence of vessel status (IMO register), evidence of claim, evidence of arbitration clause.

44. Outline of the Arbitration Clause Argument in Plaint

Include a paragraph: 'That the drilling contract contained an arbitration clause. However, the present arrest application is for interim security, not adjudication of merits. Under Section 9 of the Admiralty Act, 2017, the admiralty court has jurisdiction to grant interim relief irrespective of arbitration clause. Hence, arrest is maintainable.'

45. Use of Surveyors and Offshore Experts

You may need an offshore surveyor to confirm the rig's identity, ownership, and condition. If the owner disputes supply quality, an independent survey may be required. The court may appoint a commissioner for inspection.

46. Conflict of Laws: Proper Law of Drilling Contract

The contract may be governed by English law. The existence of a maritime claim under Indian statute is independent; the court will not decide the proper law at arrest stage. The security remains regardless of governing law.

47. Section 4(1)(l) and (m) 'Bunkers' and 'Services' to MODU

Plead specifically under Section 4(1)(l) (supplies) and (m) (services). Also cite Section 2(1)(zc) to confirm vessel status.

48. Impact of the Arbitration Clause on Court's Discretion

The court retains discretion to order arrest; the clause is not a bar and does not affect discretion. The claimant only needs a good arguable case.

49. Claim against Demise Charterer of Rig

If the rig is on bareboat charter, the charterer is deemed owner. Action in rem lies against the rig. This is specifically recognised in the Act.

50. Use of Affidavit of Best Knowledge

The claimant's representative must swear to facts based on documents, email communications, and AIS data. Attest to the rig's expected arrival.

51. Penalty for Wrongful Arrest Rare in Offshore Context

Damages for wrongful arrest require bad faith or gross negligence; mere failure of claim is insufficient. This protects legitimate offshore creditors.

52. Quality Disputes Defence on Merits

If the rig owner alleges off-spec fuel or defective equipment, that is a defence on merits; it does not defeat arrest if prima facie supply is proven.

53. Arrest as Leverage for Settlement

Many offshore claims are settled soon after arrest due to the LOU/bank guarantee pressure and the high daily cost of rig detention. Use this strategically.

54. Role of Indian Embassy / Flag State

Irrelevant for MODU arrest.

55. International Comity and Letters Rogatory

Not needed.

56. Post-Arrest Strategy: Negotiation with Rig Insurers

Once the MODU is arrested, the P&I Club or offshore energy insurer will contact you. They will propose an LOU. You may accept or demand a bank guarantee. Use this leverage to obtain favourable settlement terms or even a discounted cash settlement. The LOU rule gives you the upper hand.

57. Conclusion Security is the Goal

The offshore service provider's goal is not to win the arbitration but to obtain security. The Admiralty Act, 2017, through the express inclusion of mobile offshore drilling units as vessels, provides a powerful arrest mechanism. The presence of an arbitration clause is a mere procedural inconvenience. By following the detailed procedure above, particularly moving the appropriate Indian High Court on an emergent basis, you can arrest the offending rig or its sister rig, compel security (bank guarantee or LOU accepted by you), and thereafter pursue arbitration on the merits. The legal framework in India is pro-claimant and respects international arbitration while preserving the distinct maritime remedy of arrest. Use it wisely, keeping in mind the critical LOU practice: the court will not force you to accept a club letter; you hold the cards.

58. Additional Guidance for Offshore Creditors Preserving Evidence

Maintain an audit trail of all communications with the rig, including emails, WhatsApp messages with rig personnel, and photographs of deliveries. This strengthens the prima facie case.

59. Security in Foreign Currency

Indian courts routinely order security in USD or other foreign currency if the claim is in that currency. This avoids exchange fluctuation risk.

60. Taxation and Withholding Considerations

If the owner provides a cash deposit, there may be tax deducted at source implications. Your counsel should advise on the most tax-efficient form of security.

61. Role of the Receiver During Arrest

The Receiver ensures the rig is not moved and reports daily to the Marshal. The Receiver's fees are a first charge on the rig. Ensure prompt payment to avoid complications.

62. Alternative to Arrest: Freezing Injunction (Norwich Pharmacal)

In rare cases, a freezing injunction may be obtained against the owner's assets, but arrest remains the most effective remedy for rigs.

63. Amendment of Pleadings After Arrest

If new facts emerge, you may seek to amend the plaint. Courts are liberal pre-security determination.

64. International Recognition of Indian Arrest Orders

Indian arrest orders are respected internationally; if the rig flees, it can be re-arrested in another jurisdiction, though the Indian security remains.

65. Final Word: The LOU Leverage

Remember: Indian courts will not order release against an LOU unless you consent. Use this power to obtain a favourable settlement or an acceptable form of security. The rig is your collateral; the Admiralty Act is your sword.

References & Legal Authorities

  1. Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 Sections 2(1)(zc), 4, 5, 6, 9.
  2. Arbitration and Conciliation Act, 1996 Section 9.
  3. Official Gazette of India Definition of vessel includes mobile offshore drilling units.
  4. International Convention on Arrest of Ships, 1999 (persuasive).
  5. Principles of Admiralty Jurisdiction Supreme Court and High Court decisions (MODU cases principles settled).
  6. Admiralty Rules of various High Courts (based on model draft rules).
  7. Tetley, William Maritime Liens and Claims (3rd ed) Chapter on Offshore Units.
  8. Ms. Binita Hathi "Arrest of Offshore Drilling Units in India: Practice and Procedure" (2026).