Ship arrest

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By Irantzu Sedano and Zuberoa Elorriaga

The usual short stay of ships in the ports where they load and unload goods, as well as the international nature of the maritime sector, means that, on many occasions, it is very difficult to recover a debt from shipowners and charterers. It is in this context that the concept of ship arrest emerges.

Ship arrest is a legal tool that enables the creditor of a claim, which must be defined as a “maritime claim” to secure the detention of the ship concerned in order to guarantee its payment. This precautionary, preventive, and urgent legal action can also be regarded as a burdensome measure due to the economic damage it can cause to the operator of the vessel, as it can lead to delays in the vessel’s navigation plans, unforeseen costs due to its stay at berth in port, etc. It can also be a costly measure for the person requesting the arrest if it is wrongly or improperly proposed.

Reasons for the arrest
The arrest of ships pursues different objectives, which vary depending on the asserted maritime claim. That is to say, when the maritime claim consists of a monetary claim, the arrest will operate so that the shipowner/charterer (debtor) provides sufficient security to lift the ship arrest, with the attaching creditor obtaining security. When the maritime claim consists of a claim to the ownership of the vessel, the arrest will ensure the application of an eventual sentence to hand over the vessel.

The detention of the vessel may be replaced by the provision of a guarantee or substitute security by the shipowner/charterer before the court applying the measure, since the ultimate objective of the arrest is to guarantee the effectiveness of a later judgement on the merits of the claim / “maritime claim”, ensuring thus the possibility of its enforcement for the creditor/attaching creditor’s.

In the event that the arrest is requested unjustifiably or improperly, the shipowner/charterer of the vessel is entitled to claim for any damages resulting from the arrest.

Requirements for the ship arrest
The international legal regime in force in Spain is the International Convention on Arrest of Ships (Geneva 1999), which entered into force on 14 September 2011. At the national level, we must resort to the Maritime Navigation Act 14/2014, of 24 July.

The requirements are as follows:

  • The allegation of a “maritime claim”: ships may only be arrested on the basis of maritime claims and not on the basis of any other claim. The list of so-called “maritime claims” is numerus clausus and is set out in Article 1(1) of the 1999 Geneva Convention. The creditor of the precautionary measure, requesting the arrest, shall be exonerated from proving his claim, being sufficient for him to allege its existence and the cause for it.
  • The arrest of the “offending ship”: arrest of the vessel causing the claim is permitted provided that the person who was the owner/bareboat lessor of the ship at the time the claim arose is still the owner/bareboat lessor at the time the arrest is requested. Under certain conditions it also provides for the possibility of arresting other vessels owned by the person liable for payment of the claim (“sister ships”).
  • The existence of periculum in mora: this refers to the risk that the ship, in principle the only property of the debtor known to the creditor, may at any time leave the port leaving the creditor without guarantees.
  • The obligation to deposit a guaranteed by the attaching creditor: its purpose is to ensure that, in the event that the arrest is requested improperly and without complying with the legal requirement, the damages generated to the shipowner/charterer as a result of the incorrect arrest can be economically alleviated.
  • The pendency of the proceedings: the arrest may be requested before, during or after the commencement of the legal proceedings on the merits. The lawsuit will be brought before the court that is to hear the merits of the dispute.

Release of the arrest and the protective measure
In order to confirm ship’s release from the arrest, the arrested party (shipowner) must lodge a replacement security or guarantee before the court covering the amount claimed by its creditor (arresting party), provided that such amount does not exceed the value of the arrested vessel. If it does, the vessel will continue its voyage, leaving deposited this amount as a security for the alleged maritime claim.

Since, as a general rule, the request for arrest is placed as a precautionary measure prior to the filing of the lawsuit, it will remain without effect if the creditor/attaching creditor does not initiate the proceedings on the merits of the dispute before the competent court and within the time limit established by the court executing the precautionary measure. In such a situation, the arresting party shall be ordered to pay damages that will be considered by the court, and the security deposited by the arresting party before the court shall be forfeited.

In summary, Article 1 of the International Convention on the Arrest of Ships lists what are considered “maritime claims” that can justify the arrest of a ship, so there are many agents in the sector that may be protected by this tool to guarantee their claims (seafarers, ship suppliers, shipyards, administration, etc.).

AIYON Abogados handles arrests of ships requested by any kind of creditors, as well as lifting of the arrests of shipowners/charterers affected by this measure; moreover, for all those who want to find out more in detail about this concept we have the following platform: www.shiparrestrelease.com

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Comments on Spanish Law 13/2021, of 1st October, on combating late payment in the carriage of goods by road

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On 2 October 2021, the Act 13/2021 was published in the Official State Journal, which amends the Land Transport Act to combat late payment in the field of land freight transport; this regulation came into force one day after its publication.

The need for this regulation arises from the fact that in Spain the average payment term for commercial transactions is 90 days, well above the European average, and that the existing asymmetry between the parties to the land transport contract may generate possible situations of unfair competition in the regulatory framework regulating the activity.

In order to correct this situation, a new type of infringement has been created under this new law, which will penalize cases in which transport prices are paid more than sixty days in advance (payment terms of more than 60 days were already void according to pre-existing regulations).

THUS, AND IN A VERY SCHEMATIC WAY:
Two new infringements are created: a very serious one, in the event that the price of the transport exceeds EUR 3,000 and another serious one when it is less than or equal to EUR 3,000.

The regulation establishes a scale of penalties depending on the price of transport, ranging from a minimum fine of EUR 401 to a maximum of EUR 6,000, which, in the even of a repeated offence, may be increased to a maximum of EUR 18,000, with aggravated fines of up to EUR 30,000.

For dissuasive purposes, the regulation contemplates the possibility of publishing the sanctioning resolutions imposed for incurring in very serious infringements.

The regulation does not establish when the maximum period of 60 days starts to be calculated, and although it is most likely to begin with the provision of the service (delivery of the goods at destination), the alternative would be that this period would be calculated from the issuance of the invoice for which the carrier has a maximum period of 15 days from the date of transport/delivery of the goods at destination.

The offending party may be any type of company that owes the price of a transport (even a carrier in the case of subcontracting), regardless of whether the creditor company is a carrier or not. To this effect, it must be taken into account that in the case of subcontracting for transport between companies belonging to the same group, these will also be considered as offending parties and will have to face the corresponding penalties in the event of not complying with the maximum payment term.

It will not be necessary for the creditors to denounce the non-payment of the transport price, that is, the Administration will act ex officio, and we assume that it will be by the inspectors of the Ministry of Transport within the inspections they perform in the transport companies. Although it seems that the sense of this amendment is to support and facilitate the collection of the transport price by the carriers, it is also true that this makes it unlikely that it will be applied to foreign clients of Spanish carriers.

The regulation does not apply retroactively, that is, to transports carried out prior to October 3, 2021.

AIYON Abogados strengthens its position in Aeronautical and Space Law

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AIYON Abogados maintains its commitment to becoming a benchmark law firm in Aeronautical and Space Law. Its position in these areas is reinforced by the new qualification obtained by Zuberoa Elorriaga, partner of Aiyon’s Bilbao office. Her graduation was held last October 25, becoming the first class of the “Postgraduate Course of Specialist in Aeronautical and Space Law” offered by the Faculty of Law of the Universidad Pontificia Comillas (ICADE), in collaboration with the Spanish Association of Aeronautical and Space Law (AEDAE).

These two prestigious entities have launched this pioneering initiative whose objective is solving the existing training deficit in Spain in these two fields, which have traditionally been monopolized by the Administration and other public entities until their liberalization.

AIYON Abogados will continue advising its clients in matters derived from the dynamics of airports, such as handling its legal regime, aircraft contracts, certification and legal regime related to the manufacture and financing of aircrafts, code sharing and interlining in contracts with airlines, insurances, aeronautical inspections and labour contracts, among others.

It is also worth mentioning the training acquired in the increasingly present and relevant space law environment: international treaties and conventions, legal aspects of satellite navigation systems, use of resources, space waste, etc.

The interest and involvement of AIYON Abogados in these areas will be evident on November 5 with the participation of partners from Bilbao and Algeciras,  Zuberoa Elorriaga and José Antonio Dominguez, in the 33rd Annual Conference of the European Air Law Association (EALA) in Copenhagen.

During this meeting of experts, issues related to competition in the sector will be addressed in relation to state aid and EU legislation, the impact of Brexit, changes in the financing of the airline industry and sustainable aviation, among many other issues.

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Verónica Meana and Mikel Garteiz-goxeaskoa participate once again in the Master’s Degree in Business and Maritime Law of the Spanish Maritime Institute

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Verónica Meana and Mikel Garteiz-goxeaskoa, partners of the AIYON Abogados’ offices in Madrid and Bilbao respectively, are once again members of the team of lectures  teaching at the Master’s Degree in Business and Maritime Law of the Spanish Maritime Institute.

Aimed particularly at graduates in Law, Economics and Business Administration, Seamanship and Naval Engineers who want to develop their work activity in the maritime sphere, this master’s degree is also intended for the professionals of the sector who want to acquire practical and updated expertise.

The master’s degree, which this year celebrates its 38th edition, collaborates with the Faculty of Law of the Universidad Pontifica Comillas and brings here together prestigious maritime lawyers. It comprises of 500 class hours, will start in October and will run until June 2022.

Verónica Meana joins the Arbitration Team of the Madrid Bar Association

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Verónica Meana Larrucea, partner in charge of the AIYON Abogados’ office in Madrid, has recently joined the Arbitration Court of the Madrid Bar Association.

The arbitrators are appointed by the Arbitration Court at the proposal of an Evaluation Committee designated by the governing body of the Bar Association after considering their curriculum and eligibility.

Since her nomination for the area of Maritime and Transport Law was accepted, Verónica will participate together with the other fifteen members in the resolution of the conflicts that may arise within this sphere.

Impact of COVID-19 in the operation of vessels arriving at Spanish ports: obligation to isolate or confine “Close contacts” in case of infection of a crew member and the “Free Practique”

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Informative Talk on Maritime Law for Ship Repair Companies of Tenerife

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Last May, in cooperation with our law firm, the Provincial Association of Auxiliary Companies of Ship Repair and Shipbuilding, (ATIREN-CONNAVALTE), member of FEMETE (Provincial Federation of Metal Companies and New Technologies of Santa Cruz de Tenerife and Training within Metal Sector of Tenerife), offered to its members the first formative seminar on Maritime Law, expecting it to be the first one from many others that will follow it.

During the presentation, the speakers addressed the concept of ship repair contract, its diverse models and overall requirements. They also discussed arrest of ships and the right of retention as a legal guarantee for recovery of maritime liens, that companies devoted to works or supply of parts /raw material on different vessels which they work for might have.

Our partners of AIYON Abogados located in the offices of Bilbao and Algeciras, Zuberoa Elorriaga, José Antonio Domínguez and Mikel Garteiz-goxeaskoa, actively participated in this informative talk, remaining at the disposal of the companies of the association, or third entities, for resolving any question or inquiry.

From AIYON Abogados we would like to thank to ATIREN-CONNAVALTE for the opportunity we were given, hoping that this cooperation will continue in the future.

 

AIYON Abogados Consolidates its Engagement and Involvement with the Port of Cádiz and its Hinterland

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Thanks to the Group JOLY and its newspapers “Diario de Cádiz” and “Europa Sur”, AIYON Abogados SLP had the opportunity to show, once again, its engagement and involvement with the port community of Cádiz and the logistic framework of its hinterland.

Enrique Ortiz, the partner in charge of our office in that place and the secretary of Cádiz-Port, participated in an informative breakfast with the presence of highly relevant representatives of the sector. Among them, Teófila Martínez, president of the Port Authority of the Bay of Cádiz; Alejandro Sánchez, director of Institutional Relations and Public Affairs of Oliva Energy Group; Rafael Fernández, managing director of Bayport; Manuel Rosell, manager of Carlos Rosell; José Antonio Portillo, in representation of the agency Portillo; and Diana Domecq, chief executive officer of Compañía Gaditana de Contenedores S.L. & Concasa Huelva S.L.

The overcoming of the impact of the pandemics, the rail access to the dock at La Cabezuela and the digital transformation of the companies were, among others, some of the main topics that have been treated. With regard to the last of the cited aspects, Enrique Ortiz pointed out that Cádiz-port “has encouraged the technological investment and the option of teleworking”, underscoring the increasing activity, professional and continuous, that AIYON Abogados has been developing in the area of Cádiz and Algeciras since the firm was established 6 years ago.

Source: Group Joly 1.  // Group Joly 2.

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New website of AIYON Abogados on Ship Arrest

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AIYON Abogados has launched a new website devoted to the management of the ship arrest, both to request its lifting as well as to proceed with its execution. Thus, those interested in learning about and, when needed, in using this efficient legal tool that guarantees the recovery of a debt (International Convention on Arrest of Ships, 1999) may obtain all relevant information on www.shiparrestrelease.com

The concept of arrest of ships entails the detention of any kind of vessel by judicial authorities in cooperation with maritime authorities of the place where the vessel is located. Given the usual brevity of the vessel’s port call and the internationality of the maritime sector as well as of its operators, the possibility to take an anticipatory and urgent legal action, such as arrest of ships, allows for an easy recovery of a debt from shipowners and shippers. The same urgency involves the reverse procedure when the action is taken from the position of shipowners and shippers. 

Our multidisciplinary team of lawyers, comprising of professionals of renowned prestige and with a large trajectory as experts in Maritime Law is here at your entire disposal to assist any query or initiate any action related to ship arrest or to arrange the lifting of the measure on a vessel.    

“MV EVER GIVEN”: Insurances and General Average

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On 23 March 2021, the vessel “MV EVER GIVEN”, one of the largest container ships in the world with a capacity of 20,000 TEUs, was grounded in the Suez Canal (Egypt). From then on and for the following six days, until the ship could finally be towed, an immense traffic jam was generated in the area, blocking the passage of thousands of goods transported daily by this waterway.

To date, there have been countless delays, because, in addition to those suffered by the cargo carried by the “MV EVER GIVEN”, there have also been delays suffered by all the ships and their cargoes that were trapped on one side of the canal or the other during this time. This has affected a significant number of shipowners and shippers worldwide.

Over time, all the details of this event will become clearer, and responsibilities will be clarified, but what can be said is that the insurance coverages of the affected operators and agents will have to be activated in order to be able to face the many costly claims that will be filed.

In this case, the directly affected insurance policies would be:

– Hull & Machinery Insurance, for damage to the proper vessel and    salvage costs.

– Protection and Indemnity Insurance (P&I), for shipowners and charterers, with civil liability cover.

– Cargo insurance for shippers, for possible damage to cargo.

The “MV EVER GIVEN” has been arrested since 13 April, at the request of the Suez Canal Authority (hereinafter SCA). SCA originally claimed $916 million for the non-payment of the ship’s refloating and maintenance costs but decided to reduce the claim by almost a third part, filing a final claim for $600 million in order to find a quick solution for the matter.

In view of this situation, several relevant questions arise.

 

  • Do shippers have the right to claim against the carrier for the delay?

Spanish law provides some protection in this respect, obliging the shipper to prove that the delay suffered was not “reasonable”. However, after analysing the standard contracts of carriage generally used by maritime carriers, it is very unlikely that the applicable law be Spanish law, as English law usually dominates these agreements.

At the same time, it is important to bear in mind that losses arising from delay are usually excluded from cargo insurance policies for maritime transport, as is the case in the most common clauses, the English clauses (ICCA).

 

  • Why does the ship’s operator, Taiwan’s Evergreen Marine CORP (EMC), not transfer the cargo to other vessels so that it can reach its destination?

The answer to this question is not simple.

Although the operator’s legal representatives are struggling to obtain the necessary permits and transhipments, at present the vessel and the cargo transported are understood to be a single entity and indivisible unit affecting the expenses claimed by SCA. This means that as long as the vessel is detained in Egypt, so are its goods.

Furthermore, to be able to carry out the transhipment, the vessel “MV EVER GIVEN” would have to move from the lake where it is berthed and detained (Great Bitter Lake) to the nearest port.

Finally, it cannot be overlooked that the shipowner has declared the figure of “general average”, so that the cargo transported is affected by the costs of the general average.

 

  • What is “General Average”?

It is understood as any expense or sacrifice reasonably and intentionally incurred by the shipowner, the purpose of which is to preserve the maritime adventure, the voyage and the goods involved in a maritime expedition, avoiding greater damage.

Once the general average is declared, all the interests involved (the ship, the cargo, the freight, etc.) have the legal obligation to contribute proportionally to the payment of those damages or expenses generated to save the voyage and the rest of the cargo. Therefore, this is a figure that is usually present in the ICC coverage agreed by shippers.

Shippers who do not have the goods insured under these clauses will have to provide personally the guarantees required by the shipowner to ensure their subsequent contribution to the general average. As long as such guarantees are not provided, the goods will continue retained by the shipowner.

In summary, in view of the fact that the vessel continues detained while waiting for the evaluation of the possible transhipment of the cargo to other vessels, we recommend that those affected receive specialised and appropriate legal advice to deal with the damages that they may have suffered due to this situation with all the guarantees.

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