Lucy Keane and Alex Guest discuss admiralty law in Gibraltar in Maritime Risk International

Admiralty law has played a crucial role in shaping Gibraltar’s legal and economic framework. Situated at the intersection of the Mediterranean and Atlantic, this strategically important territory has long been a key centre for international trade and naval activities. Gibraltar’s port serves as a vital hub for ship refuelling and maintenance, making the effective regulation of admiralty law essential. Given this significance, understanding how Gibraltar’s courts determine its admiralty jurisdiction is fundamental to ensuring legal clarity and commercial stability.

Before delving into the specifics of how Gibraltar’s courts determine its admiralty jurisdiction, it is essential to recognise some of the unique aspects of its legal system. While Gibraltar’s legal structure is deeply rooted in English law, it has some differences. Notably, unlike England, Gibraltar does not have a dedicated Admiralty Court like the High Court in England. Instead, admiralty matters fall under the jurisdiction of the Supreme Court of Gibraltar, a body that is composed of the Chief Justice and three puisne judges.

The Supreme Court of Gibraltar has the authority to hear and decide civil, criminal, and admiralty cases, reflecting the diversity and complexity of Gibraltar’s legal environment. Additionally, Gibraltar has its own Court of Appeal, which convenes twice a year, and hears appeals in admiralty and other legal matters, ensuring that Gibraltar’s legal system remains flexible and responds to both local and international needs.

How Gibraltar courts determine its admiralty jurisdiction is influenced by several sources of law, such as legislation passed by the Gibraltar Parliament, as well as Orders in Council that apply to the territory. However, common law and equity principles from England and Wales also apply, in so far as they are applicable to the circumstances of Gibraltar. This approach is explicitly outlined in section 2 of the English Law Application Act of 1962.

A fundamental piece of legislation that shapes Gibraltar’s admiralty jurisdiction is the Admiralty Jurisdiction (Gibraltar) Order 1987, which extends the provisions of sections 20-24 and Part II of the Senior Courts Act 1981 (which is an English act) to Gibraltar. This Act consolidates and codifies the legislation regarding admiralty claims in England and forms the basis of the modern jurisdiction of the Admiralty Court of the High Court in England. Consequently, admiralty proceedings in Gibraltar are, to some extent, consistent with English law.

One recent case that highlights Gibraltar courts’ approach when determining its admiralty jurisdiction is

Hassan Azhari & Ors (The Masters & Crew) Claimants v. The Previous Owners of the M.V. “Medstar” (2024/GSC/029). This case offers a clear example of how Gibraltar’s courts interpret its admiralty jurisdiction in the context of maritime claims, particularly crew wages.

The case concerned a claim for unpaid wages by the masters and crew of the vessel M/V MedStar, totalling MAD 5,680,903.43 (approximately GBP 451,763.36). The case raised important questions about the definition of “wages” and whether a claim for wrongful dismissal could fall within the scope of admiralty jurisdiction.

The facts of the case are that on 15 December 2023, the M/V Medstar was arrested in Gibraltar dock. On 8 February 2024, the court ordered the sale of the vessel.

The crew claimed their unpaid wages and claimed entitlement to rank in the determination of priorities as having a maritime lien. Gibraltar, like England and Wales, follows the established order of priorities in the determination of claims under Admiralty law so that maritime lien holders in an in rem action rank after the Admiralty Marshal for his expenses of sale and the arresting party for his costs, but higher than the remaining claimants on the fund. In common with that approach, Gibraltar law recognises that a maritime lien covers claims for seamen’s wages.

As the case progressed, Far East P & I Pte Limited, an insurance company, intervened in the proceedings, in order to deposit funds to cover some of the unpaid crew wages. The Court ordered that the remainder of the wages due be paid out by the Admiralty Marshal from the sale proceeds as part of the expenses of arrest.

Despite receiving payment of their outstanding wages, the crew claimed further payments for damages for wrongful dismissal. This claim was opposed by the vessel’s mortgagee and judgment holder, Attijariwafa Bank, whose position was that a claim for “wrongful dismissal” did not fall within the scope of the Court’s admiralty jurisdiction. If the Bank was right about that, the crew could not take priority over the Bank in payment out of the sale proceeds.

The case came before Mr Justice Happold on an application by the crew for judgment in default. The question before the Court was: “could the crew’s claim for wrongful dismissal fall under the definition of “wages” as defined in the Senior Courts Act 1981?”

In addressing the legal questions in the Medstar case, Mr Justice Happold’s ruling reflected Gibraltar’s approach when determining its admiralty jurisdiction.  In citing the case of the “Arosa Star” (1952) 2 Lloyd’s Rep. 396, the Court affirmed the position that the lex fori should apply in determining what “wages” were.

He noted that the term “wages” has its limits, a principle established in the case of The Tacoma City (1991) 1 Lloyd’s LR 330. Mr. Justice Happold reiterated that wrongful dismissal is considered to be a contractual claim, not an admiralty claim, as established in both The Arosa Star and The Tacoma City. Under reference to the latter case, the learned judge opined that wages are contractual entitlements whereas damages for wrongful dismissal were damages for breach of contract.

The Court concluded that the claim for wrongful dismissal was not a claim that fell within the terms of section 20(2)(o) of the Senior Courts Act 1981. It was therefore not a claim that fell within the Court’s Admiralty jurisdiction. The Court accordingly refused the crew’s application for damages for wrongful dismissal.  Hassan Azhari & Ors v. The Previous Owners of the M.V. “Medstar” case underscores how Gibraltar’s courts adopt a legal approach that closely follows the principles of English maritime law.

The case also highlights the consistency and reliability of Gibraltar’s admiralty jurisdiction, particularly in relation to claims for unpaid wages and wrongful dismissal. Mr. Justice Happold’s judgment demonstrates Gibraltar’s commitment to aligning its admiralty legal framework with established English common law and legislation.

Beyond the issue of admiralty jurisdiction, another pressing concern in the maritime industry is the question of sanctions.

The enforcement of sanctions is critical to Gibraltar’s reputation as a transparent and compliant financial centre.

The Sanctions Act 2019 (SA 2019) governs the application of sanctions in Gibraltar ensuring that Gibraltar complies with international regulations and supports global efforts to combat illicit financial activities.

Whilst Gibraltar is not an EU member state (although there is Gibraltar legislation retaining EU law after Brexit), the SA 2019 definition of “international sanctions” includes any restrictive measures by the EU. This would include the recent EU 16^th package of sanctions against Russia, which entered into force on 25 February 2025, and is already applicable in Gibraltar. Section 7(1) of the SA 2019 stipulates that international sanctions automatically become effective in Gibraltar as soon as they are enacted globally, ensuring that Gibraltar remains compliant with international standards.

The terms of section 6(2) of the SA 2019 underscore Gibraltar’s close links with the UK in stating that sanctions imposed by the UK will take precedence over those imposed by the EU.

The SA 2019 applies to both tangible and intangible financial resources, including cash, claims on money, dividends, securities and other financial instruments. Its provisions ensure the automatic recognition and enforcement of international sanctions, aligning Gibraltar’s financial system with global standards.

Furthermore, to add flexibility in enforcement, section 7(2) allows Gibraltar to tailor these sanctions to fit its specific legal and economic context. This adaptability ensures that Gibraltar can respond appropriately to both global and local developments in the enforcement of sanctions.

Gibraltar’s approach to admiralty jurisdiction demonstrates a strong alignment with English proceedings, ensuring consistency and reliability in maritime claims and enforcement. The case of Hassan Azhari & Ors v. The Previous Owners of the M.V. Medstar serves as a clear example of Gibraltar’s commitment to adhering to established English legal precedents while adapting them to local legal frameworks.

In addition to its established Admiralty jurisdiction which closely follows that of England and Wales, Gibraltar’s SA 2019 ensures that the territory remains compliant with international standards, safeguarding its reputation as a key player in the maritime sector.

By continuing to follow the legal precedents set in England, while tailoring laws to its unique circumstances, Gibraltar will remain a significant jurisdiction for the maritime industry and trade operations in the years to come.