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