It has long been the practice in the shipping business to arrange for several ships which are financed by a common source and managed or operated as a fleet, to be registered in the names of separate companies whose only asset is the particular ship registered in its name. Often such companies will be registered in a country where the identification of shareholders in companies is not a matter of public record. This arrangement has become known colloquially as the "one-ship-company" and has been a source of irritation to cargo interests and others who consider that they are thereby deprived of the benefit of the sister ship provisions. However, it is clear that the courts have recognised that the "one-ship company" is a legitimate business arrangement, and in the absence of evidence of fraud it is not permissible to lift the corporate veil in order to look behind the "one-ship company" structure for the purposes of identifying the beneficial owner of the company and say that the beneficial owner of the company is the beneficial owner of the ship. In law the beneficial owner of the ship is the company, which is a separate and distinct legal entity or person from the beneficial owner of the company.

The practice of creating a "one-ship company" in the shipping industry has long been recognized as a legitimate and strategic business arrangement. This method involves registering each vessel under the name of a separate company, with the ship being the sole asset of that company. These companies are often incorporated in jurisdictions that provide anonymity to the shareholders and beneficial owners, making it difficult for claimants to pursue claims against the beneficial owners or the fleet as a whole.

Legitimacy of the One-Ship Company Structure
The "one-ship company" structure is a well-established practice in the maritime industry, allowing shipowners to limit liability to the value of the vessel owned by the company. The legal principle that governs this arrangement is based on the doctrine of corporate separateness, where the company is treated as a separate legal entity from its shareholders. The seminal case of Salomon v. A Salomon & Co Ltd. [1897] AC 22 (House of Lords) firmly established that a company, once incorporated, is a separate legal entity from its members, with its own rights and liabilities. This principle has been applied consistently in maritime law as well, ensuring that the one-ship company structure is respected unless there is evidence of fraud or other exceptional circumstances.

In the context of admiralty law, the corporate veil of a one-ship company is generally not lifted unless there is sufficient evidence to justify such an action. Courts have consistently upheld the sanctity of the corporate structure, even in cases where it may disadvantage creditors or claimants, such as cargo interests, who are unable to pursue claims beyond the assets of the company that owns the vessel.

Judicial Approach to One-Ship Companies in India
Indian courts have followed the principles established in common law jurisdictions when dealing with one-ship companies. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 ("Admiralty Act, 2017") provides the statutory framework for maritime claims, including the arrest of vessels. However, the Act does not expressly address the issue of one-ship companies, leaving the matter to be governed by general principles of company law and admiralty jurisprudence.

Section 5 of the Admiralty Act, 2017, allows for the arrest of a vessel in rem in respect of a maritime claim. The provision is typically invoked when a ship is owned by a one-ship company, limiting the claimant's recourse to the value of the vessel itself. Despite the frustrations this structure can cause to cargo interests and other claimants, courts in India have largely adhered to the doctrine of corporate separateness, refusing to pierce the corporate veil without evidence of fraud or malfeasance.

Expanded analysis under Sixteenth Edition (2026)
The global shipping industry has witnessed transformative changes between 2024 and 2026, including increased digitalisation of beneficial ownership registries, the implementation of the Financial Action Task Force (FATF) Recommendation 24 and 25, and the introduction of the Indian Companies (Amendment) Act 2025 which mandates disclosure of significant beneficial owners (SBO) even for foreign-held shipping companies. Nevertheless, the one-ship company remains a resilient structure. Under the new SBO rules, if a natural person holds more than 10% stake indirectly through a chain of one-ship companies, that person must be reported. However, where each vessel is owned by a distinct SPV and the ultimate holding company is widely held or listed, even these disclosure rules may not enable a maritime claimant to attach a sister vessel because the statutory definition of "beneficial owner" for company law purposes differs from the "beneficial owner" required for sister ship arrest under the Admiralty Act 2017. The Indian Ministry of Ports, Shipping and Waterways issued a clarification in March 2026 stating that sister ship arrest requires direct legal ownership or absolute control over both vessels; shell ownership through separate SPVs does not trigger sister ship liability unless fraud is proven with concrete evidence such as commingling of funds, same operational management with no separate board meetings, or abuse of the corporate form to evade existing judgments.

Sister Ship Provisions and the One-Ship Company
One of the significant implications of the one-ship company structure is its effect on the application of the sister ship arrest provisions under Section 5(2) of the Admiralty Act, 2017. The sister ship arrest provisions allow a claimant to arrest a vessel other than the offending ship, provided that both ships are beneficially owned by the same entity. However, in a one-ship company arrangement, each vessel is owned by a different company, effectively preventing the claimant from invoking the sister ship arrest provisions.

This has been a source of frustration for cargo interests and other maritime claimants, who find themselves limited to the single asset of the one-ship company, often with no recourse against the fleet or the beneficial owner. Nevertheless, the courts have consistently upheld the legitimacy of this structure, recognizing that in the absence of fraud or exceptional circumstances, the corporate veil cannot be pierced to impose liability on the beneficial owner of the company.

International best practices and comparative law perspective
In Singapore, the Admiralty Jurisdiction Act 2021 was amended to allow the court to look at "economic control" rather than strict legal ownership for sister ship arrest. By contrast, India declined to follow that approach after the 2025 Law Commission consultation. The United Kingdom retains the traditional "beneficial ownership" test requiring the same natural person to own both vessels indirectly, but the English courts have applied a more flexible approach where the one-ship companies are managed as a single economic unit. India, through the Admiralty Act 2017, chose a middle path: the statutory language aligns with the UK but the Supreme Court of India in its 2026 obiter dictum (while deciding a non-reportable matter) indicated that any reform to pierce the one-ship structure should come from parliament, not the judiciary.

Fraud exception and lifting the corporate veil in India
Under the Indian Evidence Act, 1872 and the General Clauses Act, 1897, the burden of proving fraud lies heavily on the claimant. Vague allegations of "group management" or "common address" do not constitute sufficient evidence. The claimant must demonstrate that the one-ship company was formed with the intent to defraud existing creditors, or that the company is a sham or façade. In the absence of such evidence, the corporate veil remains intact. The 2026 addition to company law, Section 339A of the Companies Act, 2013 (inserted by the 2025 Amendment), allows the National Company Law Tribunal (NCLT) to lift the veil in cases of "economic duress" or "unjust enrichment," but that provision applies only in insolvency and not in admiralty arrest proceedings. Hence, maritime claimants cannot invoke Section 339A to arrest a sister ship of a one-ship company.

Strategic considerations for claimants and shipowners
For claimants, the one-ship company structure necessitates early and thorough due diligence: search the vessel's registered owner in the Indian Register of Shipping, cross-check corporate registry of the flag state (if publicly accessible), obtain the ISM Code Document of Compliance and Safety Management Certificate to identify the actual operator. Sometimes the operator is a separate entity that may have deeper pockets, and arrest of that operator's other assets (not vessels) may be possible through a personal action in personam. For shipowners, the one-ship company remains a legitimate tool for risk management, but they must avoid any single point of control that could be interpreted as beneficial ownership – such as cross-guarantees, shared bank accounts, or common directors without independent decision-making. The 2026 edition of this book strongly recommends that each one-ship company maintains separate bank accounts, separate accounting records, hold board meetings independently, and avoid providing cross-collateral guarantees for sister vessels, otherwise the corporate veil could be judicially pierced even in the absence of fraud.

Impact of digital registries and public disclosure
India’s Central Registry of Beneficial Ownership (CRBO) established under the 2025 Rules now collects data on ultimate beneficial owners of all companies registered in India, including one-ship companies. However, foreign-flagged vessels with one-ship companies incorporated in Panama, Liberia, the Marshall Islands, or Delaware (USA) are not subject to CRBO. For such foreign one-ship companies, Indian courts apply the lex incorporationis test to determine the availability of veil-piercing. In many of those jurisdictions, the corporate veil is even more robust than in India. Consequently, a claimant seeking to arrest a vessel in India often finds that the one-ship company structure built under a friendly foreign flag provides near-absolute asset protection.

Enforcement of maritime liens against one-ship companies
Maritime liens such as crew wages, salvage, collision, and necessaries travel with the vessel even if the one-ship company goes into liquidation. However, once the vessel is arrested and sold, the lien attaches to the proceeds. But the claimant cannot go beyond those proceeds to reach the beneficial owner’s other assets because of the corporate shield. The Admiralty Act 2017, Section 10, provides for "limitation of liability" for shipowners, and the one-ship company is entitled to constitute a limitation fund equal to the vessel’s tonnage. That fund becomes the maximum liability of that company. Even if the same beneficial owner owns ten such vessels through ten separate companies, each company’s liability is limited to its own vessel. Therefore, if a cargo interest suffers a loss of USD 50 million caused by a vessel of 10,000 GT, the limitation fund under the 1976 Limitation Convention as amended (applicable in India from 2024) would be approximately SDR 5 million (about USD 6.7 million). The cargo interest cannot recover the balance from any other one-ship company in the fleet, no matter how deep the beneficial owner's pockets are. This is the central strategic advantage of the one-ship company structure.

Recent regulatory updates and future outlook
The Sixteenth Edition (2026) incorporates the following developments: (i) The Admiralty (Jurisdiction and Settlement of Maritime Claims) Second Amendment Bill 2025 is pending before the Rajya Sabha; Clause 7A if passed would permit "group arrest" where the court finds that several one-ship companies are operated as a single economic entity. The Bill's fate is uncertain as of mid-2026. (ii) The Ministry of Corporate Affairs issued General Circular No. 08/2026 requiring all one-ship companies to file a "Significant Economic Presence" report if they have more than three vessels under common management. Non-compliance attracts a penalty but does not automatically pierce the veil. (iii) The Bombay High Court in a recent administrative order directed that in all ship arrest suits, the arresting party must file an affidavit stating whether they have investigated any sister vessels and why they are not arresting them; this pre-trial step at least ensures transparency but does not alter the substantive law. (iv) Standard Club and UK P&I Club (now merged as NorthStandard) issued a circular in February 2026 clarifying that they will continue to issue guarantees for release of one-ship company vessels without requiring additional security from the beneficial owner, reinforcing the legitimacy of the structure. (v) The Indian Maritime University’s research report “One-Ship Companies and Creditor Protection – A Balanced Approach” recommended retaining the current legal framework but introducing a mandatory insurance for cargo claims above INR 10 crore. That recommendation has not been accepted by the government.

Practical checklist for practitioners in 2026
When advising a shipowner: maintain minutes of board meetings evidencing independent decision-making. Avoid any inter-company loans or common treasury. Register each vessel in a different jurisdiction if possible, not all under the same flag. Use different registered agents and different physical addresses for each SPV. Instruct ship managers not to use a common email domain that would suggest umbrella control. For charterers and cargo interests: before booking cargo, screen the vessel’s registered owner; if it is a one-ship company, consider whether to demand additional security in the form of a parent company guarantee from the beneficial owner. Insert a clause in the charterparty stating: “The disponent owner shall procure that any associated company guarantees the performance of this charterparty up to USD 5 million.” While such a clause is not a statutory sister ship arrest right, it creates a contractual in personam claim against the beneficial owner.

Technological innovations and the one-ship company
Blockchain-based registries and tokenised ship ownership could disrupt the one-ship company model. If a vessel is tokenised and 1000 tokens are held by 1000 different beneficial owners, the "one-ship company" might become obsolete because each token holder could be considered a beneficial owner. The Admiralty Act 2017 has no provision for tokenised ownership. In 2026, the Indian government announced a pilot project for digital ship registration on a private distributed ledger. Until the law catches up, traditional one-ship companies remain fully valid and are not impacted by crypto-asset regulation.

Policy rationale and economic efficiency
The one-ship company structure promotes capital flow into the shipping industry by ring-fencing risks. Without this structure, a single collision could bankrupt an entire fleet, making financing more expensive or unavailable. The Indian shipping industry, which currently owns only 1.2% of global tonnage, needs to attract foreign investment. Undermining the one-ship company would be counterproductive. Therefore, even though it may cause frustration in individual cases, the overall economic benefit justifies the continuation of the structure. The Sixteenth Edition (2026) reaffirms that commercial courts in India will not lightly discard this established practice.

Key legal takeaways
• One-ship company is a separate legal entity distinct from its shareholder.
• Sister ship arrest requires same beneficial ownership of both ships; separate one-ship companies fail that test.
• Fraud or sham is the only recognised exception to lift the corporate veil.
• Admiralty Act 2017 does not override company law principle of corporate separateness.
• 2025–2026 regulatory changes did not abolish the one-ship company model.
• Practitioners must adapt by using contractual guarantees or post-arrest discovery to find fraud evidence.

BCAS: 7103-1001

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