• Ship agent fights Grand Classica default ruling

• Cruise line: Affair derailed key COVID financing

• Celebration sold at ‘bargain basement price’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian shipping agent is fighting to overturn a $25m “default judgment” stemming from the earlier “arrest” of a major cruise ship that brings thousands of visitors to this nation annually.

ISS Freeport is now seeking a Supreme Court date for its bid to overturn the “interlocutory” judgment obtained on June 30, 2021, by the Grand Classica’s ultimate owner and operator, Bahamas Paradise Cruise Line, which is asserting that its vessel was “wrongfully” arrested while in Freeport earlier this year although it was subsequently freed and has resumed sailing since July.

The cruise company is alleging that ISS “misled the court” in persuading it to issue an arrest warrant for the Grand Classica over debts owed to the Bahamian shipping agent, and other vendors/suppliers, from unpaid bills that piled up during the COVID-19 pandemic when the industry was unable to sail.

ISS alleged it was owed around $302,000 for services provided in its capacity as shipping agent, with the balance of the $917,685 debt due to other vendors and suppliers. Justice Petra Hanna-Adderley, in a February 25, 2021, ruling and subsequent Order, granted the Grand Classica’s release once $16,204 to cover the Admiralty Marshall’s costs in detaining and securing the vessel were paid.

She also ordered that a Letter of Undertaking (LOU) from maritime insurers, the American Steamship Owners Mutual Protection & Indemnity Association, be provided in the sum of $913,101 to cover the debts owed to ISS Bahamas and the other vendors.

But Bahamas Paradise Cruise Line and its affiliates are now alleging that ISS’ actions in seeking the Grand Classica’s detention “were done with bad faith, with malice and with wanton disregard for the rights of owners and operators of the vessel”.

They claim that the cruise ship’s arrest torpedoed efforts to secure $25m in financing that would have carried Bahamas Paradise Cruise Line through the remainder of the pandemic, and that ISS and its then-franchisor, Inchcape Global, had given no indication of any concerns in previous meetings where the cruise line had pleaded for “patience” over the debts and promised they would be repaid when the industry resumed sailing.

ISS Bahamas vehemently rejected these assertions in its July 2, 2021, defence. “In the circumstances it is denied that the defendant was negligent and/or fraudulent and/or liable as alleged or at all,” it countered, noting that it had provided evidence of unpaid invoices supplied to the cruise line.

However, it is now faced with attempting to overturn the $25m default judgment obtained by Bahamas Paradise Cruise Line before it filed its defence. It is demanding that it be struck out on the basis that it is “an abuse of the court process” and breaches its rules.

The cruise line, in a statement of claim that has been obtained by Tribune Business, said ISS and the Grand Classica’s other vendors were originally “empathetic” to the dire economic situation facing itself and the wider cruise industry due to the shutdown resulting from the COVID-19 pandemic.

However, it alleged that Inchcape Global contacted it in September-October 2020 requesting that its “out-of-pocket” expenses and those of ISS be repaid. Bahamas Paradise Cruise Line responded that it was “exploring various financing options which would allow them to stay afloat” and repay the outstanding debts.

It admitted that it was forced to sell its other vessel, the Bahamas Celebration, to generate cash flow and liquidity that would ensure its survival. “Faced with the extension of the cruising restrictions and the uncertainty of the pandemic response by various governments, the financing discussions were extended on numerous occasions,” Bahamas Paradise Cruise Line said.

“To remain afloat and manage the daily cash burn, the plaintiffs and others were forced to liquidate one of the ships in its fleet at a bargain basement price. The funds obtained from that sale were enough to maintain the remaining fleet and manage the projected cash burn of the fleet. The plaintiffs had to preserve all the liquidity as the overall pandemic was a fluid situation.”

The cruise line alleged that Inchcape and ISS again inquired about payment in late 2020, and were “asked to be patient as financing discussions were in the final stages, and once able to close on the $25m financing arrangements, payment to Inchcape Global and ISS could be made in full”.

Bahamas Paradise Cruise Line further claimed that details of the proposed financing were shared with ISS and Inchcape, and neither “expressed any hostility or expressed intention to take the action they did”. No demand letter. it alleged, was received before ISS petitioned the Supreme Court to have the Grand Classica detained/arrested on January 21, 2021, while docked in Freeport over the unpaid debts.

Justice Hanna-Adderley previously found there was sufficient evidence to support that ISS Freeport was owed $300,000 in “out-of-pocket” expenses by Bahamas Paradise Cruise Line for its role as the latter’s Freeport-based shipping agent, but the cruise line is asserting that it “did not - and does not have - a bona fide maritime lien on the vessel”. 

It also alleged that ISS Freeport “lacked probable cause” to arrest the Grand Classica because necessary supporting documents and evidence had not been provided, resulting in “serious irregularities” around the detention.

Bahamas Paradise Cruise Line also argued that its Bahamian-flagged vessel could not leave this nation’s waters due to COVID-19 restrictions imposed by the US with effect from March 29, 2020, but alleged that ISS - despite knowing this - stalled and delayed on the Grand Classica’s release for around a month.

While the cruise ship was eventually released in early March, and subsequently resumed sailing from the Port of Palm Beach to Freeport in early March, Bahamas Paradise Cruise Line claimed that ISS has since sought to “re-arrest the vessel” despite the provision of the $913,000 security by the insurers

“ISS’s tactic succeeded by making [Bahamas Paradise Cruise Line] miss the financing arrangements that would have provided the vessel with sufficient funding to continue operations during the COVID-19 pandemic,” the cruise line claimed. “To-date, the vessel has incurred damages in excess of $25m and anticipates incurring additional damages as a result of the wrongful arrest of the vessel.

Edwin Knowles, attorney for ISS Freeport, did not return Tribune Business’ call seeking comment before press time last night. Michael Hall, ISS Freeport’s principal, also could not be reached as multiple phone numbers listed for the company were said to not be working when called by this newspaper.

A mobile number said to belong to Mr Hall was answered by a man who identified himself as “Mike”. However, when Tribune Business explained the purpose of its call, he said “are you sure you have the right person” and denied he was Michael Hall.

This was despite the phone’s voice mail having said “this is Michael Hall of ISS Freeport” on an earlier call. When this newspaper pointed this out, the man alleged he “did not have control of the voice mail” having only recently taken possession of the phone.

Bahamas Paradise Cruise Line is being represented by the ParrisWhittaker law firm.