Sanctioning Powers of the Directorate General of the Merchant Navy (DGMN)

Receiving notification of the initiation of an Administrative Disciplinary Proceedings is something that leaves no one indifferent, not only because of the final amount of the sanction, but also because of the general lack of knowledge that exists about the particularities of this administrative procedure.

Specifically, in this article we will analyse the characteristics of the Administrative Sanctioning Proceedings in the maritime field, as well as the sanctioning discretion of the Directorate General of the Merchant Navy (DGMN) in this regard.

COMPETENCE

The competence for the processing of a maritime Administrative Sanctioning Proceedings is stipulated in Annex II, article two of Royal Decree 1772/1994, of 5 August, which adapts certain administrative procedures in matters of transport and roads to Law 30/1992, of 26 November, on the Legal Regime of the Public Administrations and Common Administrative Procedure.

In accordance with this regulation, the Directorate General of the Merchant Navy, and the corresponding Maritime Harbour Master’s Office where applicable, will be responsible for the investigation and processing of an Administrative Sanctioning Proceedings.

PROCEDURE

The Administrative Sanctioning Proceedings of the Spanish maritime administration is generally governed by the same provisions that regulate such procedures for any other Spanish administration, i.e. by Law 39/2015 of 1 October, on the Common Administrative Proceedings of Public Administrations.

The Sanctioning Proceedings will be initiated once the irregularity has been noticed by the Administration, generally after an ocular inspection of the vessel or by a complaint from another competent authority, and the interested party or affected party must be notified of this Agreement to initiate the Administrative Sanctioning Procedure.

In the case in question, the competent body for sending this notification will be the competent Maritime Harbours Master’s Office of the place where the ship is located. In this communication, in addition to advising the parties concerned of the irregularity(ies) or deficiency(ies) identified and the possible rule(s) infringed, they shall also be required to provide a financial guarantee to terminate the detention of the vessel subject to the sanction, where this is stipulated. The guarantee shall remain deposited while the administrative procedure is being processed and at the expense of its outcome.

Following notification of the Agreement, interested parties shall have 15 working days to submit any observations they may wish to make. This period may be extended for a maximum period of 7 days beyond the expiry date, provided that the interested parties so request, and the Harbour Master’s Office authorises it.

Once the allegations of the interested parties have been reviewed, the Harbour Master’s Office will issue a Resolution Proposal, in which, in addition to identifying the precepts it considers having been infringed, it must also quantify them, thus determining the amount of the proposed sanction.

Interested parties shall have a further period of 15 days to make representations, should they consider it appropriate.

This point of the procedure is very important, not only because it is the procedural moment in which the Administrative Sanctioning File is transferred from the Harbour Master’s Office to the DGMN, which is ultimately responsible for issuing the Resolution, but also because it gives the interested parties the possibility of ending the process, by voluntarily acknowledging their liability and making prompt payment of the proposed amounts, in compliance with the provisions of Article 85 of Law 39/2015. Thus:

  • Voluntary acknowledgement of liability grants the interested party the benefit of a discount of 20% of the amount of the proposed penalty. However, on the other hand, it also obliges the interested party to renounce any subsequent administrative action or appeal.

In short, whoever acknowledges his or her responsibility for the alleged facts will lose the possibility of denying them in the future or appeal them.

  • Prompt payment of the penalty, before the Resolution was issued, entitles the interested party to a discount of 20% of the amount of the proposed penalty.

Both discounts are cumulative, and the interested party may therefore obtain a discount of at least 40% on the amount of the proposed penalty.

LIMITATION PERIOD

The Administration shall have a maximum period of 12 months from the date of issue of the Agreement to Initiate the Sanctioning Proceedings, to resolve the proceedings (1).

The lack of an express decision will result in the proceedings lapsing and they will be closed, which does not prevent a new one from being initiated if the possible infringements are not time-barred.

EFFECTS OF PROMPT PAYMENT ON THE DGMN’S DISCRETION TO IMPOSE PENALTIES

The power to impose penalties in the maritime field lies with the Ministry of Public Works, and more specifically in the hands of the DGMN, articles 263.k and 315.1.d of the Consolidated Text of the Law on State Ports and the Merchant Navy. There is an express obligation for the DGMN to resolve the procedure before the end of the one-year period granted for this purpose (art. 21 of Law 39/2015).

In fact, the jurisprudence of the Supreme Court (Judgment of 6 October 2022) is well known, confirming that until the competent Administration has issued an express resolution for the procedure, it will not have imposed any sanction, and may even incur the expiry of the actions when the time comes.

We highlight this fact, since the obligation to resolve provided for by law, together with the provisions of article 315.1.d. of the Consolidated Text of the Law on State Ports and the Merchant Navy, clashes with the usual practice of the sector, and more specifically with the right to prompt payment recognised by article 85 of Law 39/2015, which could turn the DGMN’s power into a merely declaratory power lacking any real power to impose a sanction.

Article 85 of Law 39/2015 on the Common Procedure of Public Administrations is clear in stating that “voluntary payment by the allegedly liable party, at any time prior to the resolution, will imply the termination of the procedure”. What is discussed in this case is the effect that article 85.2 of Law 39/2015 could have on the sanctioning power of the DGMN, according to article 315.1.d of Consolidated Text of the Law on State Ports and the Merchant Navy.

What we consider clear is that payment by the interested party should entail the Administration’s commitment to terminate the Sanctioning Proceedings, as is the case in other administrative sanctioning areas. The question to be asked is, how will the proceedings be terminated?

  • The first of the criteria shared by some of the professionals of the sector argues that, in those cases in which the interested party proceeds to make prompt payment of the proposed penalty and to recognise their responsibility, the DGMN may only terminate the procedure without modifying the Resolution Proposed by the Harbour Master’s Office in charge of the investigation of the proceedings.

The main argument defended by this current is that the fact that the DGMN retains the discretion to modify the amount of the sanction, once the interested party has acknowledged his liability and renounced his actions, having thus lost all possible means of defence, would place him in a situation of absolute vulnerability, due to defencelessness, incompatible with the Fundamental Right to effective judicial protection of article 24 of the Constitution. This trend is supported not only by the wording of Article 85 of Law 39/2015, but also by the Supreme Court’s Ruling 1830/2018, which was handed down on 19 February 2018, which interpreted Article 8 of Royal Decree 1398/1993 of 4 August 1993, which has the same content as the current Article 85 of Law 39/2015.

  • On the other hand, the DGMN and other professionals in the sector consider that the Consolidated Text of the Law on State Ports and the Merchant Navy, as a specific regulation of the maritime sector, should prevail over the general provisions contained in Law 39/2015, as the sanctioning power of the administration is an inalienable right of that body. This trend bases this power of the DGMN on Article 90(2) of Law 39/2015, which allows the decision-making body to deviate from what was proposed by the investigating body when it considers the infringement to be more serious. Therefore, they argue that limiting the DGMN’s ability to freely issue the resolution of the case it deems appropriate would be an unjustified limitation of its powers, transferring part of them directly to the Harbour Master’s Office.

This second criterion is the one followed and shared to date by the Spanish Administration, so that all parties involved in a Maritime Administrative Sanctioning proceedings should take this competence of the DGMN into account when assessing whether or not to assume their responsibility and make prompt payment, thus waiving any possible future action to defend their position. In practice, prompt payment and the assumption of responsibility do not guarantee the termination of the procedure, and there is a risk that the DGMN will increase the penalty paid and acknowledged by the defendant.

In any case, as we always advise, each case and scenario should be assessed individually, and be advised by professionals such as the team that makes up AIYON, since relations with the handling of these files and relations with the administrations are part of our day-to-day work.

(1) This is stipulated in Annex 1 of Additional Provision 29 of Law 14/2000 of 29 December on fiscal, administrative and social measures, amended by Article 69 of Law 24/2001 of 27 December on fiscal, administrative and social measures, applicable by virtue of the provisions of the Sole Repealing Provision, section 3 of Law 39/2015 of 1 October.

“ESTRATEGIA EMPRESARIAL”, echoes our almost 9 years of experience in the market

As a firm founded in 2015 in Bilbao, the publication highlights our multidisciplinary team of eight expert lawyers, valuing our comprehensive 360º legal advice. 

With a proven impact at national level acting from our four offices located in Bilbao, Cadiz, Madrid and Algeciras, with which we cover strategic areas for the transport and logistics sector, ESTRETAGIA EMPRESARIAL also highlights the fact that we have all kinds of collaborators at national and international level that help us to cover all the demands for advice and assistance that our clients may have anywhere in the world.

Likewise, the publication points out our commitment to disseminate all kinds of legislative and jurisprudential developments related to the logistics sector, both in terms of maritime law, transport law in general, insurance and national and international trade via our conferences, talks to clients or the two corporate websites: www.aiyon.es and shiparrestrelease.com.

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Brief comments on the reform on digital and procedural efficiency (Royal Decree-Law 6/2023 of 19 December for the Administration of Justice)

Following in the wake of the now repealed Law 18/2011, of 5 July, regulating the use of information and communication technologies in the Administration of Justice, and driven by the COVID-19 pandemic crisis suffered in 2020, which made even more evident the urgent need to achieve technological adaptation of the Administration of Justice, the Royal Decree-Law 6/2023, of 19 December, approving urgent measures for the implementation of the Recovery, Transformation and Resilience Plan in the field of public service in the public administration of justice, has recently been legislated, Royal Decree-Law 6/2023 of 19 December, approving urgent measures for the implementation of the Recovery, Transformation and Resilience Plan for the public service of justice, civil service, local government and patronage, published on 20 December 2023 in the BOE.

This RDL introduces several changes to different legal provisions, seeking to modernise and digitalise the administration of justice, as well as to implement procedural efficiency measures that contribute to reducing the number of lawsuits and increasing the dynamism of procedures in all the different jurisdictional orders.

The aim is thus to make the digital relationship with the Administration of Justice the most common and ordinary one, providing a new, faster, and more efficient channel under this cover of norms and rules, if possible, to better satisfy the rights of citizens when they come into contact with the Administration of Justice. In any case, effective judicial protection, regulated in art. 24 of the Spanish Constitution, is an absolute priority.

It seems that the “Electronic Court File” will be called upon to be the centrepiece of the future of digital justice, which will be developed in conjunction with the application of the general principle of data orientation, with the aim of opening the door to new technological solutions and the use of artificial intelligence in the administration of justice.

So, within the enormous list of modifications contained in this Royal Decree-Law 6/2023, of 19 December, this article will focus below on the new features of digital efficiency and telematic hearings introduced, as well as on the changes for civil proceedings.

It must be assumed that its provisions will be applicable exclusively to legal proceedings initiated after its entry into force, and therefore its retroactive application is not envisaged. This entry into force will take place twenty days after its publication in the Official State Gazette (on 9 January 2024), except for the new provisions on procedural efficiency, which will enter into force three months after their publication in the Official State Gazette (on 20 March 2024).

a) The telematic hearing as a general rule:
With this new RDL, and the required modification of the LEC, the holding of telematic hearings will be the new general rule in civil jurisdiction, conditional, of course, on the judicial offices having the necessary technical means (art. 129 bis 1 LEC).

As an exception to the above, only those hearings in which the appearance, declaration or testimony of the parties, witnesses or experts is required will be held in person; however, even in these cases, the telematic modality may be chosen if certain circumstances are met (for example, if the person who must intervene lives in a different location from that of the court).

b) The first summons shall be served electronically:
Given that telematic means of notification are preferable, it is not surprising that the new content of art. 155 LEC indicates that the first summons will be made electronically, except in the case of natural persons who are not represented by a solicitor, who may choose whether they are communicated on paper or by electronic means. If three days have passed without the addressee accessing its content, it will be published by means of the Single Judicial Notice Board.

The Constitutional Court’s interpretation that, according to the previous regulations, the first summons had to be made in paper format to entities obliged to relate to the Administration of Justice by electronic means, such as companies, will thus go down in the history of law (STC 47/2019, of 8 April).

This brings with it a new and clear “de facto” obligation for this type of entity, which must now categorically manage and control each and every one of the electronic platforms to which judicial notifications may reach them, namely:

  • The Justice Folder.
  • The Electronic Judicial Headquarters.
  • The Single Enabled Electronic Address (DEHú).
  • The Single Bulletin Board.

Hence the importance of subscribing to the so-called “alert systems” contained in these electronic platforms, in order to receive an email notification that a new notification has been made and to access it, otherwise you will have to check these platforms on a daily basis if you want to be diligent, in case one has been made.

c) Modifications to the procedure of the Verbal Judgment:
As a result of the new wording of art. 249 LEC modified by this RDL, the amount of the ordinary trial procedure is raised from 6,000 to 15,000 euros. Consequently, the matters that must now be heard by means of a Verbal Trial will be those that are determined by the amount of 15,000 euros or less.

Its scope of application is also extended by reason of the subject matter, covering for the first-time lawsuits in which individual actions are brought in relation to general contracting conditions (art. 250.1.15º LEC).

d) Amendments concerning appeals and review of final judgments:
As a result of the new wording of articles 458 and 461.1 LEC, introduced by this RDL, the Appeal will no longer be devolutive and will be lodged directly before the Provincial Court, instead of before the Court of First Instance that heard the case, as has been the case until now.

The regulation of the Appeal in Cassation has also been modified in two main aspects, namely (i) withdrawal of the Appeal in Cassation will not be permitted once the date for deliberation, voting and ruling has been set (art. 450.1 LEC) and (ii) with regard to the costs of the Appeal in Cassation, there will be the possibility that the appellant who has seen his appeal rejected will not be ordered to pay the costs in those cases in which our highest court appreciates circumstances that justify it.

To conclude, we would like to point out that the first phase, which began more than a decade ago, aimed at the transition from paper to digital in the Administration of Justice, is now behind us, and that we are now in a new, much more advanced phase, in which the aim is to achieve substantial and concrete improvements in the already existing digital environment. This is why the wording and content of this RDL should not surprise us, as even greater changes are expected in the future in this line of digitalisation, promoting greater effectiveness and efficiency in the Administration of Justice, which we will always consider more than welcome.

Notes to the Judgments of the CJEU and the High Court KBD of England on the Prestige Case

The English Court does not apply the doctrine of the CJEU which confirmed the possibility of recognising the Spanish conviction in the Prestige case in England.

The environmental tragedy of the M/T Prestige initiated a long-running legal dispute between the insurer of the M/T Prestige (The London Steam-Ship Owners’ Mutual Insurance Association Limited, hereinafter “the Club”) and Spain, through two different proceedings in two Member States at the time, the United Kingdom and Spain.

This article is based on Spain’s application to the UK courts in 2019 under Article 33 of “Regulation 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters” to recognise and enforce the Spanish court’s judgment. This decision was the Enforcement Order of 1 March 2019 of the Provincial Court of A Coruña enforcing its previous judgment, confirmed in cassation by the SC on 19 December 2018. It condemned the Master, the owners of the Prestige and the Club against the Spanish State and more than 200 other parties. As far as the Club was concerned, up to the contractual limit of USD 1 billion on the basis of the insurance policy.

The High Court of Justice Business and Property Courts of England and Wales Commercial Court (hereinafter High Court KBD) granted that application in May 2019, which was ultimately appealed by the Club on the basis of two main arguments under art. 34 of Regulation No 44/2001: (i) argument of incompatibility with the English judgment (ii) recognition of the Spanish judgment would be contrary to English public policy principles for violation of the res judicata rule.

At this procedural stage, the High Court KBD referred a question to the CJEU for a preliminary ruling, in relation to the interpretation of Regulation 44/2001, as to whether the recognition and enforcement in the UK of the sentence imposed in Spain could be refused, due to the existence in the UK of an award and a subsequent judgment upholding it, the effects of which were irreconcilable with the Spanish judgment.

The CJEU ruled on 20 June 2022 that a judgment given by a court of one Member State (UK) on the terms of an arbitral award cannot prevent the recognition, in that Member State, of a decision given by a court of another Member State (Spain), where provisions or objectives of Regulation 44/2001 have been contravened.

Therefore, the English courts had indeed to recognise and enforce the said Order of Enforcement of the AP de A Coruña, since the arbitration award on the terms of which the English judgment was rendered would have infringed certain provisions of Regulation No 44/2001, namely (i) the effect of the arbitration clause inserted in an insurance contract since, according to the CJEU’s own case law, an agreement conferring jurisdiction concluded between an insurer and a policyholder cannot bind the person injured by the insured damage and (ii) the rules of lis pendens since, when the arbitration award was entered into, the insured person cannot be bound by the arbitration award, an agreement conferring jurisdiction concluded between an insurer and a policyholder cannot bind the person injured by the insured damage and (ii) the rules of lis pendens since when the arbitration proceedings were brought in the UK (16 January 2012), proceedings between the Spanish State and the Club were already pending before the Spanish courts. Therefore, in accordance with Article 27 of Regulation 44/2001, the English courts should have suspended the proceedings ex officio until the Spanish courts had declared themselves to have jurisdiction and, if they did so, as was the case, they should have declined jurisdiction in favour of the Spanish courts.

Following the preliminary ruling, the High Court KBD decided on 06 October 2023 on the appeal lodged by the Club:

i). That they were irreconcilable judgments, given that the English judgment declared that under the “pay to be paid” clause, as the shipowners had not paid any amount, the Club was not liable to Spain and the Spanish judgment maintains that the Club is liable to Spain. These positions cannot coexist and therefore, both judgments are irreconcilable and thus, in accordance with art. 34 of Regulation 44/2001, the Spanish judgment can neither be recognised nor enforced in England.

ii). The English judgment in line with the arbitral award is res judicata and as Regulation 44/2001 excludes arbitration from its regulation, the existence of potentially inconsistent decisions and lack of coordination with future arbitral awards is assumed by the Regulation. Furthermore, it understood that since the Regulation does not apply to arbitration, the English court’s decision to ratify the arbitral award did not alter the provisions of the European Regulation.

It also considers that the CJEU, in its ruling on the question referred for a preliminary ruling, exceeded the scope of the questions referred for a preliminary ruling, and purported to apply the law to the facts, which is outside its competence (reserved to the Member States). Considering that the CJEU had exceeded its powers, the High Court KBD considered that it was not bound by its decision.

In conclusion, we must remember that the interpretation issued by the CJEU is binding on the court that asked the question for a preliminary ruling, which may not, under any circumstances, depart from it or ignore it, either on its own initiative or because it is instructed to do so by a hierarchically superior court, and that in the future, this interpretation of the CJEU will be the one that will be applied in the EU. However, the English judgment may be seen as opening a small door to legal uncertainty if it allows a Member State to unilaterally consider that the CJEU has exceeded its powers and that its decision is therefore not binding on it, without prejudice to any liability it may incur for breach of Community law.

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Aiyon, taking care of what is important

Another year full of experiences.
Together we have faced and overcome every challenge.
You know that taking care of you is what gets us going every day.
The trust you place in us continues to thrill us.
Without it we could not have shared this path.
In these times when we are with our people.

We wish you a safe return home.

Aiyon
taking care of what is important
Merry Christmas and Happy New Year

El Diario de Cádiz Highlights the Work of Aiyon Lawyers in Algeciras and Cádiz

El Diario de Cádiz has recently published an article highlighting the work carried out by Aiyon from its offices in Algeciras and Cádiz, its solid presence in the south and its active participation in the sector, not only as expert lawyers in Maritime Law, International Trade, Insurance or Transport Law, but also as teachers and trainers of the new generations being part of the teaching staff of the “Master in Legal Consultancy of Companies” taught at the University of Cadiz.

From its headquarters in Algeciras, José Domínguez Castro, partner and head of the firm, who in addition to being a lawyer has a degree in Nautical and Maritime Transport, a Diploma in Civil Navy and a Merchant Navy Pilot with accredited experience in passenger ships and ro-ro cargo, confirmed to the Journal that the local client is fully aware of the need of specialised lawyers to provide legal advice in the different areas of our speciality. We refer to all matters relating to trade, transport and insurance, and all that this entails in terms of the lawyer’s knowledge of the world of logistics, port handling, storage and warehousing, shipbuilding and ship repair, ship supplies and services, land transport, sanctioning procedures, insurance claims, etc. Legal advice is provided from a purely contentious point of view when the dispute has already arisen and in order to try to reach a negotiated resolution, or judicial if unavoidable, as well as from a previous moment in order to obtain preventive advice and avoid possible future risk situations.

Together with Enrique Ortiz, partner in charge of Aiyon’s office in Cadiz and expert lawyer, our colleagues have actively participated as speakers and trainers in Universities and companies. An example of this are the recent lectures on transport and insurance in the international sale and purchase given int June in the “Master’s Degree in Business Legal Consultancy” at the University of Cadiz. With regard to his teaching work, we would like to echo José’s words: “We have really enjoyed giving these conferences and we are grateful to the University of Cadiz for having counted on us for this Master’s Degree. With the regulatory selection we made and the case study method, taking advantage of our real experience, we think that the students have been able to acquire a global vision of real and common risks that arise in this complicated sector and how to advise their companies or clients so that they can prepare themselves in the best possible way and protect their interests when facing operations of this type”.

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Order TMA/201/2022 of 14 March: New Procedure for the Settlement of Disputes in Favour of Air Transport Users

On 17 March 2022, the Official Spanish Gazette (BOE) published the order TMA/201/2022, of 14 March, which regulates the procedure for alternative dispute resolution for air transport users on the rights recognised in the European Union in terms of compensation and assistance in the event of denied boarding, cancellation, or long delay, as well as in relation to the rights of persons with disabilities or reduced mobility, approved by the Ministry of Transport, Mobility and Urban Agenda.

The entry into force took place the day after its publication, affecting those incidents occurring after the first day of the month following the publication of the resolution of the competent authority in the Official Spanish Gazette, accrediting the State Aviation Safety Agency (hereinafter also the Agency) as an alternative dispute resolution entity in the field of air transport user protection.

The Order shall apply to the procedure which the Agency provides for air transport users (whether they are consumers or not) to resolve disputes over the application of the following regulations:

– Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to air passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91; and

– Regulation (EC) No 1107/2006 of the European Parliament and of the Council of 5 July 2006 concerning the rights of disabled persons and persons with reduced mobility when travelling by air.

This rule in no way precludes the exercise of the passenger’s right to resort to any out-of-court dispute resolution system accepted by the airline or airport operator.

The procedure shall be free of charge, without prejudice to the assumption of the costs of the tests by the party proposing them. For passengers, voluntary acceptance and non-binding outcome; for airlines, mandatory acceptance and binding outcome; for pre-acceding airport operators, mandatory acceptance and non-binding outcome; and for all other operators, voluntary acceptance and non-binding outcome.

Finally, it should be noted that the Agency’s decision, which will always be reasoned, as mentioned above, will be binding on the airline but not on the passenger, who may bring any civil action he or she may have against the airline.

El Canal Marítimo y Logístico Highlights the Trajectory of AIYON Abogados since its Foundation

The journal El Canal Marítimo y Logístico analyses and highlights the trajectory of our firm since its foundation in 2015 and catalogues it as a model of success that continues to develop and grow.

The article confirms that, since the firm was founded more than six years ago, AIYON Abogados has formed a multidisciplinary, solid, and participative team of professionals, with marked quality standards in its services, and always respecting its concept of “boutique law firm” firmly connected with its clients and the sector.

From its basic nature with regard to maritime law, our firm aims to further reinforce the relationship with our international clients (maritime insurers, shipping companies and freight forwarders) on the basis of specialised training. This is one of the areas in which    we are involved as part of our activity, collaborating as regular lecturers in the Master of the Spanish Maritime Institute (Madrid), giving training talks at the University of Cadiz, maintaining collaborations with the universities of Deusto and La Laguna, as well as acting as members of the Court of Arbitration of the Madrid Bar Association. This is a commitment to the new generations, but also to clients, who expect andobtain personalised professional advice.

Likewise, the publication makes special mention of the website on the lifting of the ship arrest that the firm launched in 2021, which can be consulted at: shiparrestrelease.com.

On the other hand, the AIYON team informs that we continue to be clearly committed to handling matters related to land transport, especially in the area of national and international road transport, and the world of insurance and trade, where we have great professionals advising our clients on a daily basis and accompanying them on theirprofessional journey.

Finally, our firm’s clear vocation to deepen its knowledge of Air Law – air chartering, incidents, claims or purchase and sale of aircraft, among others – and Space Law is reflected in the “Postgraduate Specialist Course in Aeronautical and Space Law”, taught by the Faculty of Law (ICADE) in collaboration with the Spanish Association of Aeronauticaland Space Law (AEDAE).

You can read the article at the following link: https://www.diarioelcanal.com/aiyon-abogados-socio-fiable-prioriza-relacion-estrecha-cliente/

Ship arrest

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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