In a significant development in a major maritime pollution case, the Mediterranean Shipping Company (MSC) has secured the release of one of its vessels by furnishing a massive bank guarantee of Rs 1,227.62 crore before the Kerala High Court. The vessel, MSC Akiteta II, was arrested in connection with environmental and economic damages claimed by the state government following the sinking of its sister ship, MSC Elsa 3, off the Alappuzha coast.
Court Proceedings and the Bank Guarantee
The legal tussle reached a crucial phase in the second week of December 2025, when MSC formally submitted the bank guarantee to the Registrar General of the High Court. This action led to the release of the MSC Akiteta II by the end of that month. The ship had been under arrest at the Vizhinjam International Port since July 7, 2025.
MSC had initially approached the court seeking permission to provide this bank guarantee, issued by a private bank, as an alternative to depositing the colossal cash amount. This request followed an earlier court directive that had given the company the option to either deposit the sum or furnish security for it.
However, the state government's pleader strongly opposed the move. The opposition was based on the argument that an actual cash deposit could be placed in an interest-bearing account, which would benefit the state through accrued interest over time. A bank guarantee, they contended, would not yield such interest and could potentially prejudice the state's financial interests.
The High Court's Decision
In its order dated November 11, 2025, the High Court bench, presided over by Justice M A Abdul Hakhim, observed that the state could not insist solely on a cash deposit. The court noted that its previous order had explicitly permitted the shipping company to choose between depositing the amount or providing security. Subsequently, on December 4, 2025, the court allowed MSC to furnish a bank guarantee from another private bank, different from the one mentioned in the initial plea. The company complied, leading to the vessel's release.
Background: The Sinking of MSC Elsa 3
The entire case stems from a maritime disaster that occurred on May 25, 2025. The Liberian-flagged cargo vessel MSC Elsa 3 capsized and sank about 13 nautical miles off the Thottappally spillway in Alappuzha. The ship was en route from Vizhinjam port to Kochi port at the time of the incident.
Citing the event as the cause of serious environmental harm and economic losses, the Kerala state government filed an admiralty suit claiming a staggering Rs 9,531 crore in damages. To secure this claim, the state sought the arrest of a sister vessel from the same fleet, the MSC Akiteta II, until the claim amount was secured. The court initially ordered the vessel's arrest in July 2025, later revising the required security amount down to the Rs 1,227.62 crore figure.
Implications and Next Steps
The release of the MSC Akiteta II via a bank guarantee marks a pivotal moment in this high-stakes legal battle, but it is far from the conclusion. The guarantee now stands as security for the state's claim as the substantive case regarding the actual liability and quantum of damages proceeds. The outcome will set a significant precedent for environmental liability and maritime law enforcement in India, particularly concerning major pollution incidents along its coastline.
The case underscores the complex interplay between international shipping operations, environmental protection, and legal recourse for coastal states affected by maritime accidents.
