The Kerala High Court has ruled that the State is competent to maintain an admiralty suit against MSC and others for the sinking of MSC Elsa 3 and has intervened to modify the security required for the release of its sister vessel MSC Akitteta II. The case follows the May 25, 2025 incident in which the vessel capsized off the Kerala coast, triggering claims of environmental, economic and ecological damage.
Originally, the State had claimed damages totaling ₹9,531 crores, apportioned across three heads: ₹8,626.12 crores for environmental damage, ₹378.48 crores toward preventive or mitigation expenses, and ₹526.51 crores for economic losses to fishermen. The High Court had ordered the conditional arrest of MSC Akitteta II as security for those claims.
In a subsequent interlocutory application, the Court altered the earlier order by reducing the security demanded. The security amount was scaled down from ₹9,531 crores to ₹1,227.62 crores. The vessel’s arrest is to continue until that sum is deposited or suitably secured to the Court’s satisfaction. The Court made it clear, however, that this modification does not prevent the State from seeking an increase in security later upon presentation of further evidence. It also permitted the State to arrest any other sister vessel as required to safeguard its claims.
The Court analyzed four principal questions before arriving at its decision: (1) whether the State was competent to bring the suit; (2) whether MSC Akitteta II qualifies as a sister vessel; (3) if the State had made out a prima facie case; and (4) whether a Letter of Undertaking from a P&I (Protection & Indemnity) Club could serve as valid security.
On the issue of competence, the Court held that the State was within its rights to sue, noting that a vessel’s sinking—even outside territorial waters—can have direct consequences within territorial domains, particularly regarding pollution spill, coastal damage, and fishing losses. It was observed that the submerged wreck, which still contains fuel, hazardous cargo or engine oil, threatens coastal waters and must be addressed.
Regarding the identity of the vessel, while registered ownership differed between MSC Elsa 3 and MSC Akitteta II, evidence was placed before the Court indicating common control, shell-company structures, and operational overlap. On a prima facie basis, the Court accepted that Akitteta II could be treated as a sister vessel, leaving final determination for trial.
Turning to the security component, the Court accepted that the large claims must be scaled down when fixing an interim security. For instance, the environmental damage claim of ₹8,554.39 crores was reduced to ₹500 crores in security terms; the remediation claim of ₹152.10 crores was dropped; and the economic loss of ₹106.51 crores was halved. The Court concluded that the revised security of ₹1,227.62 crores was reasonable in the interim.
Finally, the Court declined to accept a Letter of Undertaking from the P&I Club as suitable security in the present context. The interlocutory application was disposed of with these modifications.
Thus, the Kerala High Court allowed the suit to proceed, with safeguards to ensure the State’s claims are protected while preventing disproportionate interim demands. The trial will determine the full merits, amount of compensation, liability, and whether security should be further increased or additional vessels arrested.
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