How to Arrest a Ship?
Maritime liens have been developed as a means of allowing ship’s creditors to claim an interest in the ship itself to secure their claims. Maritime liens were necessary to permit the growth of maritime trade. Without maritime liens, all business would necessarily have to be on a cash basis. If cash is unavailable, a ship master might not be able to obtain the vital supplies or services needed. Without maritime liens, suppliers and service providers would be at risk of going unpaid.
Maritime lien by itself is valueless without a means of enforcing maritime lien. Mechanism for enforcing a maritime lien is the process of maritime arrest. Under maritime arrest process, maritime lien holder begins proceeding against the ship itself (in rem). If shipowner does not promptly satisfy the maritime lien, maritime lienholder can have the ship sold by the court, and use the proceeds to satisfy the claim. How a maritime lien holder actually accomplishes a maritime arrest.
Maritime Ship Arrest is the procedure for enforcing a maritime lien by bringing a lawsuit against a ship itself (in rem). When a ship is placed under arrest, ship is put under the control of that maritime nation’s district court that issued the warrant of arrest. Ship cannot be moved, cannot unload cargo and certainly cannot depart without a court order permitting the operation.
Maritime lien is a property right in a ship or cargo that is created by operation of maritime law on the basis of certain traditional maritime claims such as:
- Claims for seaman’s wages
- Claims based on collisions or other maritime torts
- Claims for salvage
- Claims for providing necessaries to a ship (procurement)
Notoriously, shipowners might be hard to identify, locate and bring under a court’s jurisdiction. Maritime arrest process gives maritime claimants a relatively fast and powerful way to compel shipowners to answer their claims. In order to receive an Order for Maritime Arrest, a person with a maritime lien against a ship applies to the admiralty court in whose jurisdiction the ship is located by filing a complaint against ship itself (in rem). Ship is the defendant in maritime lien case.
Complaint in Limitation (Petition for Limitation) must be verified as true by the claimant, not just by the lawyer, so that it can serve as a sort of affidavit. Complaint must set out enough facts so that the court can determine that claim is well-founded and that claimant has an apparent bona fide (in good faith, without fraud or deceit) right to a maritime lien against the ship. Complaint is accompanied by papers seeking an Order of Arrest, in which the judge will order authorities to go out and arrest ship and a prepared Warrant of Arrest against the ship for the judge to sign. In United States, a district court with an active admiralty caseload may have a duty judge available to sign the Order of Arrest and Warrant of Arrest.
Shipowner does not have the right to argue against the signing of the Order of Arrest. Usually, shipowner does not even know about complaint until after ship is actually arrested. Process for submitting the complaint, request for Order of Arrest and other papers is ex parte (proceeding where one of the involved parties is not present) or even aware of the submission. Maritime lien and arrest process is ex parte. Hence, complaint must be verified and supported by materials showing the existence of the maritime lien.
Generally, claimants usually prefer no-notice arrests, because advance notice could allow the shipowner to find an alternate port. In some cases, claimant might advise the shipowner of its intention to arrest his ship, in the hopes that shipowner will satisfy the claim beforehand.
When judge signs the order for maritime arrest, the next step is to take the order and supporting documents, such as:
- Copy of the Complaint
- Actual Warrant of Arrest (all in multiple copies)
Depending on the port of arrest, supporting documents are taken to authorities like sheriff, marshals or port police. Authorities can serve the Warrant of Arrest and make the actual arrest of the ship.
Claimant will need to tell the authorities when and where the ship is expected to arrive, so that the authorities can be ready. If ship will be coming alongside a dock, authorities will usually arrive just before the ship docks. If ship will be going to anchorage, then claimant will need to make launch service arrangements for authorities. When the ship arrives, authorities (sheriff, marshals) will go on board with the Customs and Immigration officials who will meet the ship. Authorities will give a copy of the papers to the ship’s master and will post a copy of the Warrant of Arrest in the pilothouse of the ship and also on the gangway. After that post, the ship is under arrest. A ship under arrest cannot move without the permission of the court.
When a ship is controlled by the court, a court order is required for any movement of the ship. Furthermore, to monitor and watch over the ship, court will appoint a custodian. In Singapore, the court will appoint the Sheriff as the custodians of the ship. In United States, the court will appoint the United States Marshals as the custodians of the ship. Authorities (Marshals, Sheriff, Port Police) have many other tasks to perform, so authorities will typically hire watchmen to monitor the ship under arrest. On the other hand, due to the expenses of engaging watchmen can be significant, a claimant will usually file a motion with the court to appoint a substitute custodian. In cases involving commercial ships, the claimant may ask that the ship’s master be appointed as substitute custodian. It may seem counterintuitive to ask ship’s master under arrest to watch over the ship on behalf of the opposing party. But, appointing ship’s master usually benefits both shipowner and claimant, by keeping the custody costs down and ship’s master is usually the best person for the job.
Pleadings Checklist for Maritime Arrest and Garnishment:
- Cover Letter to Clerk of Court
- Civil Cover Sheet
- Filing Fee
- Verified Complaint signed by the claimant
- Documents supporting establishment of maritime lien
- Affidavit of Counsel
- Request for Order of Arrest
- Draft Order of Arrest against the Ship
- Warrant of Arrest
- Authorities (Marshals, Sheriff, Port Police) Process Fee
- Authorities (Marshals, Sheriff, Port Police) Service Process Receipt
- Directions to the ship and arrangements if ship at anchor
- Motion to Appoint Substitute Custodian
- Order Appointing Substitute Custodian
- At least six (6) copies of all documents
In United States, laws and rules for a maritime arrest proceeding are set out in:
- Federal Rules of Civil Procedure
- Supplemental Rules for Certain Admiralty and Maritime Claims
- Asset Forfeiture Actions, Rules C and E
Furthermore, many courts with an active admiralty docket may have Local Admiralty Rules that govern the maritime arrest procedures.
After a ship is arrested, claimants (persons claiming an ownership interest in the ship) must make an appearance. If claimants (persons claiming an ownership interest in the ship) wish, their appearance to defend against the maritime arrest may be a limited appearance. Limited appearance means that claimants are not deemed to have appeared for any other purpose or any other case, unless they have been personally served with process in the other case.
Ship owners have a right to a prompt court hearing to challenge the arrest. At court hearing, claimant who caused the arrest of ship has the burden to show why the arrest should not be vacated. Claimants (persons claiming an ownership interest in the ship) must show the existence of the maritime lien. Hearing is not the trial and the burden on the claimant is not a heavy one. Burden is only to make a prima facie showing of a right to the maritime lien. If court finds that the complaint and supporting documents set out a valid maritime lien, should be sufficient to sustain the maritime arrest. At court hearing, if the claimant cannot show a valid maritime lien against ship, arrest is quashed (voided). A claimant (person claiming an ownership interest in the ship) can be liable for arresting a ship if the arrest is vacated at the court hearing. If arrest is vacated, shipowner has right to seek damages for a wrongful arrest. Under maritime law, damages for the wrongful arrest of a ship are only granted if the court finds that the person claiming the maritime lien acted with bad faith, malice or gross negligence. If claimant acted in good faith reliance on the advice of legal counsel, that is enough to defeat a claim of bad faith.
Agreement to Release Ship
If ship arrest is sustained, ship might not remain in limbo until the end of case. If ship owner is not successful at the post-arrest hearing or decides that hearing would be futile (unavailing, useless), shipowner can still get his ship released from arrest by posting a bond. Shipowner can enter into a Letter of Undertaking (LOU) with claimant (persons claiming an ownership interest in the ship). Besides, shipowner can provide some other form of security. In some cases, where the parties do not enter into Letter of Undertaking (LOU) or otherwise agree upon security for the ship and ship is incurring costs that would exceed the value of the ship, maritime court may order ship sold prior to trial and will then hold the proceeds in substitution for the ship.
Letter of Undertaking (LOU) is an agreement between shipowner’s insurer (Protection and Indemnity Club) and claimants (persons claiming an ownership interest in the ship). By signing Letter of Undertaking (LOU), claimant agrees to release the ship from arrest, in consideration for which shipowner agrees to submit to the jurisdiction of maritime court that issued Warrant of Arrest and to pay any judgment ordered by the court. Furthermore, shipowner’s insurer (Protection and Indemnity Club) agrees that it will ensure that the judgment is paid. Once a Letter of Undertaking (LOU) is agreed to and signed by the parties, Letter of Undertaking (LOU) becomes a substitute for the arrested ship, and the ship is permitted to go on its way. Usually, Letter of Undertaking (LOU) benefit both parties, because Letter of Undertaking (LOU) avoids the costs that would otherwise be incurred by holding a ship in custody, such as dockage, fuel, guards etc. Letter of Undertaking (LOU) permits the ship to continue to operate, earning revenues that could be used to pay the claim.
A maritime arrest case, a complaint in rem against the ship itself, proceeds similarly to any other federal case. Shipowners arrange attorneys to represent the ship and parties (claimant and shipowner) follow the customary steps in litigation of discovery, motions and trial. The most crucial difference is that in an in rem case, all other persons with maritime lien claims against the ship must come forward and join in the lawsuit against the ship or risk losing their liens. Once all parties with a claim against the ship have appeared in the case, judge sets a schedule for the trial to determine which claims are payable and which claims should be denied.
If judge ultimately finds against the ship in favor of one or more claims, shipowner will have to pay the claims or the ship will be sold. If ship is sold, proceeds will be distributed to maritime lien holders based on the priority of their respective maritime liens.
When ship is sold by the court in a judicial sale, proceeds are allocated based upon priorities. First priority is given to the costs of keeping the ship in the custody of the court. Afterwards, maritime liens are settled based upon their respective priority. Priority of different types of maritime liens are set out by statute as follows:
- Seaman’s wages
- Tort Claim
- General Average (GA)
- Preferred Ship Mortgage
- Necessaries, Supplies, Repairs, etc. provided
- Cargo damage
- Unpaid freight
- Contract claims (breach of charter-party)
When claimants have maritime liens in the same category, later lien usually prevails over the earlier lien. Maritime lien holder of the earlier lien could have enforced that lien before the second lien was created. Because, maritime lien is a right in the ship, later lien is a right against all claimants with a prior right in the ship, including earlier lienholders as well as the owners. In order to determine which liens were created first, courts typically consider liens that accrue during a single voyage to have occurred at the same time. When liens of the same category occur on the same voyage, courts will usually allocate the proceeds pro rata, on the basis of the proven claims.
If a party with a maritime lien claim against a ship decides not to join in the action and the ship is ultimately sold, person’s maritime lien is extinguished. Claimant may still have a claim against the shipowner, but the right to arrest the ship to enforce a maritime lien will be gone.
International Ship Arrest
Generally, maritime nations have similar procedures for ship arrest, enforce a maritime lien and to sell ships through judicial auctions. Details for such procedures will necessarily vary from country to country. Certain maritime nations may not recognize maritime liens that would be recognized in the United States. Certain claims that may not support a maritime lien under foreign law may still permit a maritime attachment which can be similar to maritime arrest.
Prudent buyer who is interested in buying a ship from a foreign judicial sale is to ensure that the Order of Sale expressly states that it extinguishes prior maritime liens and to obtain a legal opinion from a qualified attorney from the relevant jurisdiction that the judicial sale was conducted by a court of competent admiralty or maritime jurisdiction. Furthermore, ship sale was conducted in accordance with the relevant local law for the judicial sale of ships and that ship was sold free and clear of all prior maritime liens. If prior maritime lien holder later attempts to enforce the old lien by arresting the ship, buyer should be able to have the ship released promptly upon producing the Order of Sale and the legal opinion.
How to Arrest a Ship?
“Arresting a ship” refers to the legal process where a ship is detained to secure a maritime claim until the matter is resolved or the ship is sold. The procedure for arresting a ship can differ from one jurisdiction to another, but the general process is as follows:
- Establish Grounds for Arrest: Before you can arrest a ship, you must have a legitimate maritime claim. Common grounds for arrest include unpaid debts related to the ship (like supplies or crew wages), damages from collisions, or environmental damages.
- Engage a Maritime Lawyer: Given the complexities of maritime law, you’ll need to work with an attorney who specializes in this field. They will guide you through the legal procedures and ensure that all the necessary paperwork is filed.
- File a Lawsuit: You need to file a lawsuit in the competent court of the jurisdiction where the ship is located or expected to be located. The lawsuit will outline your claim and the need for the ship’s arrest.
- Obtain an Arrest Warrant: Once the lawsuit is filed, your lawyer will petition the court for a warrant to arrest the ship. This warrant gives the local maritime authorities the right to detain the ship.
- Serve the Arrest Warrant: Once you have the arrest warrant, you must serve it. This typically involves physically delivering the warrant to the ship’s master or captain, and in some jurisdictions, it might also involve attaching a copy to the ship itself.
- Detain the Ship: Once the warrant is served, the ship is officially “under arrest” and cannot leave port. Local maritime authorities or port state control will ensure the ship remains detained.
- Maintain the Ship: While under arrest, the ship must be maintained. This can include ensuring that the crew is cared for, that the ship is properly moored, and that essential systems are operational. The costs for this maintenance often fall upon the party that sought the arrest, though they may be recoverable later.
- Resolution or Sale: The arrest can lead to one of two outcomes:
- Resolution: The claim can be settled, either through negotiation or by court decision. Once settled, the ship can be released.
- Forced Sale: If the claim is not settled, the court can order the ship to be sold. The proceeds from the sale are then used to pay off the claim and any associated costs.
- Release the Ship: Once the matter is resolved, the ship is released from arrest. If there is a forced sale, the ship is handed over to the new owner.
- Counter-Security: In some jurisdictions, the party seeking to arrest the ship may be required to provide a security deposit or guarantee. This is to ensure that if the arrest is deemed wrongful or malicious, there are funds available to compensate the shipowner for any losses or damages they might suffer due to the arrest.
- Wrongful Arrest: If a court later determines that the ship was wrongfully arrested (i.e., there was no legitimate claim or if the arresting party acted in bad faith), the shipowner may be entitled to damages. This is one reason why it’s crucial to consult with a maritime attorney and ensure that there are legitimate grounds for the arrest.
- Release on Security: A shipowner can request the court to release the ship before the final resolution of the claim by providing a security (like a bank guarantee or cash deposit) equivalent to the value of the claim or the ship’s value. If accepted, the ship can operate while the lawsuit continues.
- Multiple Claims: In instances where multiple parties have claims against the same ship, things can become complex. The claims might be ranked in order of priority, with certain claims (e.g., crew wages) given precedence over others. This hierarchy determines how the proceeds from a forced sale are distributed among claimants.
- Alternative to Ship Arrest: Sometimes, just the threat of ship arrest can motivate parties to resolve disputes more amicably, considering the costs and complications involved in such an arrest. Therefore, the potential of a ship arrest can be used as a negotiation tool.
- International Implications: The arrest of a ship can sometimes have international implications, especially if the ship belongs to a foreign country. There might be diplomatic pressures or discussions between countries, especially if it’s seen as a move that affects international trade or relationships.
- Effects on Seafarers: It’s worth noting that when a ship is arrested, it’s not just the shipowner who is affected. The crew onboard might find themselves stranded in a foreign port, away from their families, and without pay. Humanitarian considerations and support for the crew, therefore, become important.
It’s essential to understand the specific procedures and laws in the jurisdiction where you wish to arrest the ship, as details can vary. International conventions, like the 1999 International Convention on Arrest of Ships, also play a role in standardizing these procedures across countries, but not all nations are signatories. Always consult with a maritime lawyer before proceeding.
Arresting a ship is a complex legal procedure that has implications far beyond the immediate legal dispute. It intersects with international relations, trade, the wellbeing of seafarers, and can involve significant costs and potential repercussions. While it’s a powerful tool in maritime law to ensure the resolution of disputes, it should be approached with caution and expertise.
How to Arrest a Sister Ship?
“Arresting a sister ship” refers to the legal action where a ship that is not directly involved in a particular maritime dispute is detained because it is owned by the same entity that owns a ship which is involved in the dispute. This is done to secure a maritime claim. The process is a part of maritime law and is practiced in various jurisdictions around the world.
The procedures for arresting a ship can differ based on the jurisdiction, but here is a general outline of the steps involved:
- Identify Ownership: Before you can arrest a sister ship, you need to verify that the ship you intend to arrest is indeed owned by the same entity that owns the ship directly involved in the dispute.
- Legal Representation: Engage a maritime lawyer who is familiar with ship arrest procedures in the specific jurisdiction.
- Obtain a Maritime Lien: Most jurisdictions require that the claimant has a maritime lien against the shipowner. This lien gives the claimant the right to arrest the ship as security for their claim.
- File a Lawsuit: In most jurisdictions, you must initiate a lawsuit against the shipowner. This is typically done in a maritime or admiralty court.
- Apply for a Warrant: Once the lawsuit is initiated, you will need to apply for a warrant of arrest from the court. The application should clearly detail the nature of the claim and provide evidence supporting the need for the arrest.
- Serve the Warrant: Once the warrant of arrest is granted, it will need to be served. This usually involves physically giving the warrant to the master of the ship or placing it on the ship.
- Detention of the Ship: Once the warrant has been served, the ship will be detained in the port. During this time, it cannot leave or carry out any operations.
- Maintain the Ship: The party arresting the ship may be responsible for its maintenance costs, including port fees, crew wages, and other related expenses.
- Release or Sale: The ship can be released if the claim is settled or if the shipowner provides security equal to the claim’s value. If the dispute is not resolved, the court may order the sale of the ship to satisfy the claim.
- Legal Proceedings: The underlying claim that led to the arrest will still need to be litigated or settled in court.
- Release the Ship: Once the claim is settled or adequate security is provided, the arresting party should seek a court order to release the ship.
It’s essential to understand that the specifics can vary by jurisdiction, and there can be legal consequences for wrongfully arresting a ship. Always consult with a maritime attorney in the specific jurisdiction where you wish to arrest a ship.
Ship Arrest Procedure
Ship arrest is a legal remedy available to claimants over disputes related to maritime activities. It involves the detention of a ship in port to secure a maritime claim and to enforce a maritime lien or to obtain security for a claim. The procedure varies by jurisdiction, but there is a general framework that is often followed internationally due to the recognition of international conventions like the Arrest Convention.
Here’s a general overview of the ship arrest procedure:
- Identifying Grounds for Arrest: Before arresting a ship, the claimant needs to ensure they have a valid maritime claim. Typical grounds for ship arrest include:
- Unpaid crew wages.
- Bunker (fuel) disputes.
- Damage done by the ship.
- Breach of charter party agreements.
- Unpaid ship mortgage.
- Jurisdiction: The claimant must determine the jurisdiction in which to arrest the ship. It’s often most practical to arrest a ship where it is or where it is due to arrive.
- Engage Local Agents: It’s vital for a claimant, especially if they are from another country, to engage a local lawyer or agent familiar with the maritime laws and ship arrest procedures of that jurisdiction.
- Preliminary Search: Before arresting a ship, it might be beneficial to conduct a search on the ship’s details, ownership, mortgages, and other relevant data. This will give the claimant a clearer picture of the potential complications.
- Lodge a Security: Depending on the jurisdiction, the claimant might need to lodge a security or provide an undertaking to pay the costs and damages if the arrest is found to be wrongful.
- Application for Arrest: The claimant, through their representative, will file an application in the appropriate court seeking the arrest of the ship. This application will typically be supported by an affidavit or sworn statement detailing the claim.
- Issuance of Arrest Warrant: If the court is satisfied that there is a prima facie case for the claim, it will issue a warrant of arrest.
- Physical Arrest: Once the warrant is issued, the local maritime authority, usually the harbor master or sheriff, will serve the warrant on the ship and physically detain it.
- Maintenance and Upkeep: Once arrested, the claimant may be responsible for the ship’s upkeep costs, including crew wages, provisions, and port charges.
- Release of the Ship: The ship can be released if:
- The claim is satisfied.
- An acceptable security (often a bank guarantee or P&I Club letter of undertaking) is provided.
- The arrest is found to be wrongful or unwarranted.
- Judicial Sale: If the claim is not satisfied and no security is provided, the court can order the ship to be sold to satisfy the claim.
- Claims from Other Parties: Once an arrest is publicized, other parties may come forward with their claims. This can complicate the process as multiple claims might need to be settled.
- Release and Distribution of Funds: If the ship is sold, the proceeds will be used to cover the claim, legal costs, and other associated expenses. Any remaining amount will be returned to the shipowner.
It’s essential to understand that the procedure can differ based on local laws and regulations. Consulting with local maritime legal experts is crucial when contemplating a ship arrest.
Best Jurisdictions to Arrest Ship
The ability to arrest a ship is an important legal process that allows a creditor to obtain security for a maritime claim by detaining the ship until the claim is settled or secured. Jurisdictions with well-established maritime laws and efficient legal procedures are often considered favorable for ship arrests. However, it’s important to note that laws can change, and you should always consult with legal experts and authorities before proceeding with any action. Some jurisdictions known for favorable ship arrest procedures include:
- United States: The U.S. has a well-developed legal framework for maritime claims and ship arrests. Admiralty law in the U.S. allows for ship arrests to secure various types of maritime claims, such as unpaid crew wages, salvage, and collision damages.
- United Kingdom: The UK is another jurisdiction with a long history of maritime law and efficient arrest procedures. London is a major maritime center with well-established legal resources for ship arrests.
- Singapore: As a key maritime hub in Asia, Singapore has a well-regulated maritime legal system that allows for prompt and effective ship arrests. Its courts have a reputation for dealing swiftly with maritime claims.
- Hong Kong: With a strong legal system and strategic location, Hong Kong is often chosen for ship arrests in the Asia-Pacific region. The city’s legal processes are influenced by its British colonial history.
- Netherlands: The Netherlands is known for its efficient and comprehensive maritime laws. Rotterdam, in particular, is a major port city where ship arrests can be carried out effectively.
- Greece: Greece has a rich maritime tradition and offers favorable procedures for ship arrests. The country’s legal framework is well-suited for securing maritime claims.
- Australia: Australia has a modern and well-regulated maritime legal system that provides for ship arrests to secure various types of maritime claims.
- United Arab Emirates: Jurisdictions within the UAE, such as Dubai and Abu Dhabi, have developed as significant maritime centers with favorable legal procedures for ship arrests in the Middle East.
It’s important to understand that the choice of jurisdiction for ship arrests should be based on a variety of factors, including the nature of the claim, the ship’s location, and the local legal system’s efficiency.
Arrest of Ships
The Significance of Ship Detainment
In 77 nations, the ship arrest finds its foundation in domestic legislations that enact the tenets of the 1952 Brussels Convention on the Arrest of Seafaring Ships, referred to as ‘the 1952 Convention.’ In an additional 10 countries, ship detainment rests upon the principles delineated in the 1999 International Convention on Arrest of Ships, known as ‘the 1999 Convention.’
Detainment involves the restraint of a ship’s departure from port, overseen by a court or the pertinent judiciary. This stands distinct from detaining a ship under the Maritime Labour Convention (MLC) by the authorities of port state control, as it lacks the supervision of a judicial process. The rights conferred by the MLC augment your existing entitlements. You can exercise your MLC rights, arrest a ship grounded in your maritime lien, or apprehend a sibling ship. It is advisable to seek counsel from a local legal expert to chart your optimal course of action.
This Compendium of Information predominantly draws from the 1952 Convention, taking into consideration the trio of agreements governing maritime liens: the International Convention for the Unification of Certain Rules of Law Relating to Maritime Liens and Mortgages of 1926 (the ‘1926 Convention’); the International Convention for the Unification of Certain Rules relating to Maritime Liens and Mortgages of 1967 (the ‘1967 Convention’); and the International Convention on Maritime Liens and Mortgages of 1993 (the ‘1993 Convention’).
Qualifying Grounds for Ship Arrest
Under the 1952 Convention, a ship can solely be apprehended in the presence of a ‘maritime claim’ directed at the ship. This maritime claim must be connected to the ship in question.
Maritime claims most pertinent to seafarers, enabling the arrest of a ship, encompass wage-related matters, repatriation (encompassing lodging, sustenance, water, and medical attention), as well as instances of personal injury and demise. Both the 1952 Convention and the 1999 Convention specifically address wages and personal injury and death. Repatriation finds explicit mention in the 1999 Convention and generally falls within the scope of a wage claim as per the 1952 Convention.
Arresting a Ship to Assert Claims for Wages
Your demand for unsettled earnings or repatriation in case of your abandonment (a claim often secured by a maritime lien as established by the 1926 Convention, the 1967 Convention, and the 1993 Convention) can be executed against the ship to which you devoted your service under the 1952 Convention.
Your entitlement to earnings and a maritime lien emerges independently of the identity and individual responsibility of your employer, and usually, it remains inconsequential whether your employer is, for instance, the ship’s owner, charterer, manager, or operator, or any other individual. Your entitlement to earnings, enforceable through a maritime lien, arises once you have legitimately provided services to your ship, irrespective of any other considerations.
Subject to the stipulations of your employment contract and the particulars of your situation, you may potentially continue to accrue wages while pursuing your claim for unpaid compensation through legal means. Typically, you won’t be obligated to remain on board the apprehended ship or within the nation while your demand for wages and/or repatriation is prosecuted in court. Nonetheless, in specific jurisdictions, it might be necessary for you to remain within the country or return to it if your presence is required in court as a witness.
Seizing a ship to pursue claims for personal harm or fatality Your claim for personal injury or death (commonly upheld by a maritime lien as established by the 1926 Convention, the 1967 Convention, and the 1993 Convention) can be enforced against the ship under the 1952 Convention or the 1999 Convention.
If neither of these conventions is enacted and a maritime lien arises based on foreign law, then the domestic law of the court overseeing your maritime claim’s progression will decide whether your maritime lien as per foreign law will be acknowledged and enforced, and if so, how it will be prioritized.
Jurisdiction over your maritime claim Under the 1952 Convention, the court of the nation in which the arrest occurs holds the authority to adjudicate the case on its merits if the national law of that nation confers jurisdiction to the court. Therefore, when your ship is situated in a port, the court possessing jurisdiction over that region will generally possess admiralty jurisdiction over your maritime claim.
The court’s authority to hear and determine your maritime claim is ordinarily accessible to you whether the specific ship or a sibling ship is subjected to arrest. The court’s jurisdiction typically stands irrespective of your nationality, your employer’s identity, or the ship’s flag.
Occasionally, the court might abstain from exercising its jurisdiction if the shipowner can demonstrate that another court is more suitable for hearing and deciding upon your maritime claim. Nonetheless, the court, as a general principle, won’t refrain from exercising its jurisdiction if doing so would prejudice you by depriving you of any other legal forum or tribunal to resolve your maritime claim.
Your right to arrest a ship furnishes you with several advantages in most nations. Depending on national law, it extends jurisdiction over the ship in a favorable and strategic location for pursuing a maritime claim against the shipowner. It enhances the likelihood of settling your maritime claim, as shipowners might seek to avert the business disruption caused by an arrest. In the absence of a settlement, it should afford you with pre-judgment security for your maritime claim. Furthermore, as a consequence of the ship’s arrest, you will likely be regarded as a secured creditor, thereby avoiding the unfavorable effects of the shipowner’s company insolvency.
Your legal representative should ascertain that you possess a maritime claim as per the 1952 Convention or the 1999 Convention, or the national law permitting ship arrest. If your ship has not been previously apprehended, verify its eligibility for arrest. Certain nations have a mechanism allowing shipowners to lodge a “caveat” or “caution against arrest” with the court. This process prevents ship arrest but necessitates prompt financial security for your claim.
Ships subject to Arrest
As per the 1952 Convention, you have the authority to apprehend the specific ship implicated in the maritime claim and to which your maritime lien is linked. The maritime lien grants you pre-judgment security for your maritime claim, empowering you to apprehend the ship even if it has been transferred to a new Shipowner or come under the control of a new charterer, manager, operator, or any other third party. The absence of a legal relationship between you and the new entity at the time your maritime lien arose should not hinder you from apprehending their ship.
Alternatively, under the 1952 Convention, in lieu of apprehending the specific ship linked to your maritime lien, you may apprehend any other ship owned by the shipowner who was the Shipowner of the specific ship at the time of your maritime claim’s origin. Apprehending a ship other than the one to which your maritime lien pertains is referred to as the arrest of a “sister ship.” The national laws governing the arrest of sister ships under the 1952 Convention exhibit some variability among countries, and generally, a maritime lien does not extend to a sister ship. National law will also ascertain whether you can relinquish your maritime lien by mutual agreement.
The financial aspects of apprehending a ship If the shipowner faces no financial hardships and wishes to detain their ship, they may present an alternative form of financial assurance to expedite the release of the ship. In such scenarios, it is customary for a letter of commitment from the ship’s Protection and Indemnity Club (P&I Club) or a bank guarantee to be proffered as collateral for your maritime claim, enabling the ship’s resumption of its voyage.
Yet, when the Shipowner grapples with financial distress and the ship holds substantial value, other stakeholders invested in the ship’s ongoing journey (such as the charterer, cargo-owner, or ship’s financiers or insurers) might engage in negotiations to provide financial security in exchange for the ship’s liberation. Suppose, for instance, a bank holds a mortgage on the ship, and it is in the process of enforcing its claim. In that case, the bank might settle your maritime claim to streamline the payment process.
If the Shipowner faces financial hardship and the ship possesses negligible worth, a distinct financial appraisal is imperative. This assessment hinges on the value generated from the court-ordered sale of the ship. This enforced sale does not invariably realize the optimum price, often aligning with the ship’s scrap value. An estimation of the anticipated residual value of the proceeds must be calculated after deducting the worth of maritime claims equivalent to or surpassing your maritime claim’s priority from the sale’s proceeds.
An arrest is only likely to result in full or partial compensation for your maritime claim if these additional maritime claims can be satisfied using the anticipated proceeds from a forced sale. To make this calculation, comprehending the hierarchy of your maritime claims is essential.
Hierarchy of the Maritime Claim
Upon securing a favorable judgment, the court will oversee the sale of the ship. All maritime claims against the ship, including your maritime claim, are positioned in descending order of priority concerning payment from the sales proceeds. This ranking is employed when the sale proceeds prove insufficient to cover all the claims.
Under the 1926 Convention, maritime claims are prioritized as follows: (1) legal expenses incurred by the state and costs expended to safeguard the ship and facilitate its sale; tonnage dues, light or harbor dues, and other public levies, pilotage fees, the expenses associated with the ship’s safeguarding; (2) your maritime claim stemming from your seafarer’s agreement; (3) your maritime claim for salvage and the ship’s contribution in a general average; (4) claims for collision or other navigation mishaps, damage inflicted on structures constituting parts of harbors, docks, and navigable routes, and your maritime claim for personal injury. The 1967 Convention and the 1993 Convention present somewhat comparable hierarchies. Generally, if your maritime claim is secured by a maritime lien, it should attain a lofty ranking, entitling it to precedence over numerous other claims.
Nevertheless, if you have detained a sister ship, the status of your maritime lien will not necessarily apply to the sibling ship. Consequently, lacking a maritime lien, your maritime claim will not receive as elevated a ranking as it would with lien security, adhering to divergent national legislation.
Other expenses must also be factored in, such as your attorney’s fees and court costs, which are often settled beforehand to enable the ship’s arrest. Maintaining the ship’s detainment until the court adjudicates your maritime claim proves costly. The court might demand a deposit or alternative form of financial security. Occasionally, the court expedites the claim’s hearing or mandates the auction of the arrested ship, with the proceeds placed in custody until the court’s verdict on your maritime claim is reached. In some jurisdictions, if the ship’s arrest is deemed negligent, lacks probable cause, or is executed in bad faith, parties suffering losses due to the arrest might be entitled to legal action against the arrestor for wrongful detainment. Furthermore, a risk exists that the court might require you to provide financial security to address potential claims stemming from wrongful arrest.
To ascertain your maritime claim’s ranking and the likelihood of its compensation as accurately as possible, it is advisable to consult a local legal expert.
Checklist for Ship Arrest
Determine whether detaining a ship is more advantageous than pursuing remedies via the MLC’s grievance procedures. Should you choose to arrest the ship, enlist the services of a legal professional. Establish if you possess a maritime claim justifying the arrest of a ship. Select the port where the ship will be apprehended. Decide whether to apprehend the specific ship or a sister ship. Evaluate the ship’s worth post a court-ordered forced sale. Ascertain the hierarchy of your maritime claim. Factor in attorney and court fees, costs associated with maintaining the ship’s detention, the possibility of an early court-ordered ship sale, and any financial security that might be required from you. Consider the potential for claims alleging wrongful arrest. Release of the detained ship may be possible upon furnishing adequate bail or alternate security.
Points to Consider if your Ship is Arrested
Is this a valid ship arrest in accordance with a court directive or an unjustified confinement?
An arrest embodies a court directive that restrains a ship in furtherance of a “nautical assertion” against a shipowner. Shipowners should endeavor to deduce the essence of the assertion underpinning the arrest by perusing the legal documents effectuated on the ship. Such documents might encompass a court edict, an arrest warrant, and a sworn statement.
Should there be an absence of arrest documents or a court directive, the “Ship Arrest” is liable to be a wrongful detention. The Protection and Indemnity Club (P&I Club) is cognizant of certain ports where ships are confined sans the procurement of a court directive or arrest warrant. Such detentions could arise from misguided claimants who have exerted undue influence on the local authorities. In essence, these detentions are legally untenable and do not merit categorization as an arrest. Shipowners should promptly apprise the Protection and Indemnity Club (P&I Club) in order to facilitate requisite aid, either via local legal practitioners or through written correspondence. Additionally, Shipowners should duly serve a pertinent notice of protest against the party effecting the “arrest.”
Is the Ship Arrest connected to a valid claim?
A ship can exclusively be arrested for a “nautical assertion.” The definition of a nautical assertion is heavily reliant on the indigenous legislation in the jurisdiction where the arrest is set to transpire (observe, for instance, the Senior Courts Act 1981 of the United Kingdom and the High Court Admiralty Jurisdiction Act for Singapore). Broadly, the nautical assertions encompassed within these local legal statutes parallel those of the Arrest Convention, and a party can effect an arrest for nautical assertions falling under the ensuing classifications:
- Loss of life or personal harm inflicted by any ship or in conjunction with the activities of any ship.
- Accords linked to the utilization or lease of any ship, whether through a charterparty or alternative means.
- Accords associated with the transport of commodities aboard any ship, whether through a charterparty or alternative means.
- Loss of or impairment to commodities, including baggage, conveyed via any ship.
- General average.
- Commodities or substances furnished to a ship for its operation or maintenance, regardless of origin.
- Fabrication, refurbishment, or outfitting of any ship, alongside dock levies and fees.
- Compensation to the captain, officers, or crew.
- Disbursements of the captain, encompassing outlays undertaken by Shippers, Charterers, or Agents on behalf of a ship or Shipowners.
- Conflicts pertaining to the entitlement to or possession of any ship.
- Disagreements among co-owners of any ship concerning the possession, control, deployment, or earnings of said ship.
- Mortgage or hypothecation of any ship.
Should the ship arrest not pertain to the aforementioned assertions, it is likely an illegitimate detention. In such an event, it is advisable to promptly issue a notice of protest, and once more inform the Protection and Indemnity Club (P&I Club) to procure supplementary counsel and support from local legal experts and correspondents.
Is it feasible to detain a ship in aid of overseas arbitration and legal processes?
Individuals involved in legal disputes must exercise additional prudence, as their maritime crafts might be singled out by adversaries to procure assurance.
The ability to apprehend a ship in the context of supporting foreign arbitration and legal proceedings is contingent upon local statutes. In the majority of jurisdictions adhering to common law, the detention of a ship to support foreign arbitration is conceivable. However, with regard to foreign legal proceedings, certain common law territories like Singapore do not permit such ship arrests.
May a ship be arrested for the enforcement of an arbitration award or a court judgment?
This inquiry hinges upon the prevailing local legislation. Within jurisdictions governed by common law, the arrest of a ship for the purpose of enforcing arbitration awards is, in strict terms, proscribed. Nevertheless, the Hong Kong courts have established that such restraint would not be nullified if the assertion is articulated as falling within the realm of “maritime claims” as delineated earlier. This assertion holds merit because the in rem legal cause against the ship remains discrete from the in personam verdict directed at the Shipowner. It retains its viability as long as the verdict remains unsatisfied (Handytankers KS v MV Alas and The Rena K Case).
Is the Arrested Ship the appropriate one for detention?
Confronted with a maritime arrest in support of a claim, Shipowners ought to verify whether the enlisted possessor of the apprehended ship is the entity accountable in personam to the claimant. If this holds true, then the ship becomes the fitting subject of detention. Should this not be the case, Shipowners might find themselves with a scenario of unjustifiable detention initiated by the claimants.
If the Shipowner found accountable in personam does not hold the title of the ship connected to the dispute, yet retains ownership of other ships, the Shipowner’s remaining ships remain susceptible to arrest. This is acknowledged as a sibling ship detention. In various nations such as South Africa, a more expansive scope of ship arrest (referred to as an affiliated ship detention) is sanctioned. Ships belonging to a distinct enterprise possessed (whether directly or indirectly) by the Shipowner responsible in personam to the claimant can be singled out for arrest. Typically, Shipowners can strategize their corporate matters by employing specific ship-centric companies to minimize their exposure. The affiliated ship detention is contrived to circumvent this arrangement and permit creditors to seize ships overseen by the same entity controlling the ship connected to the dispute, albeit not necessarily owning it directly.
Is the Ship Off-Hire while Arrested?
In the event of a ship’s arrest, one of the primary concerns that arises pertains to whether the ship is under suspension. The response to this inquiry hinges on several factors.
Initially, it is prudent to examine the suspension provision within the charter agreement to determine if an arrest constitutes an “off-hire occurrence.” It is worth noting that an arrest does not qualify as an off-hire event under the NYPE 1946 Form; however, it does fall under the category of an off-hire event according to the NYPE 1993 and NYPE 2015 versions. It is essential for Shipowners to acknowledge that the verbiage denoting the relevant off-hire event in the NYPE 1993 and NYPE 2015 editions reads as “detention due to the arrest of the ship.” This implies that detentions considered “unlawful,” as stated in the previous section, would not qualify as an off-hire occurrence, and the remuneration should continue to accrue.
Furthermore, a pivotal aspect to consider is an additional stipulation in the NYPE 1993 and 2015 editions which specifies that an arrest is not regarded as an off-hire event if “such arrest is a consequence of actions for which the Charterers, their employees, representatives, or subcontractors are accountable.” The judgment of The Global Santosh (2016) Case by the Supreme Court offers a valuable elucidation of the types of arrests falling within the aforementioned clause. Not all arrests resulting from actions for which the charterers, their employees, representatives, or subcontractors are liable will result in the ship remaining on hire. Essentially, not every action performed by a subcontractor can be construed as the exercise of a privilege or the fulfillment of an obligation under the time charter. Consequently, the ship will remain on hire solely if the ship arrest arises from actions of the Charterer’s representatives as a consequence of executing a delegated responsibility of the Time Charterer.
What actions should be taken by Charterer if the ship they have hired becomes subject to arrest?
For Charterers, the options available are generally limited when the chartered ship is arrested due to a claim that is not directly related to the charter agreement (such as a claim made by another ship due to damages resulting from a collision). Although the charterparty is likely to outline the remedies available to the charterer during an arrest, it is advised that Charterers promptly inform the Shipowners about the ship being off-hire , as stipulated in the charterparty, and issue a formal protest notice to safeguard their entitlements for any losses or damages incurred due to the resulting delays.
Can Shipowners assert that the arrest is unjustified?
Shipowners whose ships have been arrested may contemplate pursuing a claim of wrongful arrest against the party responsible for the arrest, if the circumstances of the case permit. In general terms, a wrongful arrest of a ship pertains to an arrest executed with mala fides (ill intent) or crassa negligentia (gross negligence). This situation arises when the party effecting the arrest lacks a sincere belief in the legality or legitimacy of the arrest, or when they have neglected to adequately assess the validity of the arrest but nonetheless proceed in order to exert unwarranted pressure on the ship owners.
In practical terms, establishing a successful claim of wrongful arrest against the arresting party often proves challenging for ship owners due to the substantial burden of proving malicious intent.
Are there any measures in place to avert a Ship Arrest?
In most legal jurisdictions, Shipowners are typically allowed to submit a caveat against arrest within the court. A caveat in opposition to ship arrest imposes an obligation upon the apprehending party to apprise the Shipowners of the impending arrest prior to executing the arrest itself. Essentially, this mechanism resembles an early warning system that notifies Shipowners of a prospective arrest, thereby affording them the opportunity to willingly furnish security as a means to evade an arrest. Consequently, should any Shipowners possess knowledge regarding potential claims that could potentially lead to an arrest within a specific jurisdiction, it would be prudent for them to contemplate offering security as a preventive measure against the arrest of their ship.
Alternatively, in the event that the navigational routes of a ship are steadfastly established, rendering Shipowners well-versed in the customary ports their ships frequently dock at, Shipowners can also regularly conduct inquiries within the local court’s archives or database to verify the existence of any novel or potential claims, legal writs, court decrees, or arrest warrants directed at their ships. Nevertheless, this approach might prove excessively laborious, with the option of filing a caveat against arrest standing as a generally more convenient recourse if such an avenue is accessible.
Liberation of a Arrested Ship
Recommended measures of assurance – Letter of Undertaking (LOU) from a Protection and Indemnity Club. When a ship finds itself in the clutches of an arrest, Shipowners typically find themselves obliged to furnish the appropriate assurances to secure the ship’s emancipation. While a multitude of forms of assurance may be tendered (such as bank guarantees, bail bonds, insurance company bonds, and monetary deposits), it is not uncommon for Shipowners to petition the Protection and Indemnity Club (P&I Club) to extend assurance in the form of a Letter of Undertaking (LOU). Instances of exemplary LOUs encompass the guarantees dispensed in connection to Inter-Club Agreement claims, as well as the Admiralty Solicitors Group (ASG) 1 Collision Undertaking and the ASG 2 Collision Jurisdiction Agreement.
The merits of employing a Protection and Indemnity Club (P&I Club) Letter of Undertaking (LOU) encompass:
- The swift furnishing of assurance at a negotiated quantum
- Typically devoid of charge
- A negotiable selection of jurisdiction
- The circumvention of the delay, expenses, and inconvenience inevitably occasioned by an arrest, and
- The continuous assurance for the claimant devoid of peril (The Oakwell 1999 Case)
Courts situated in the United Kingdom, New Zealand, Canada, Singapore, Australia, Hong Kong, and South Africa have universally ruled that Protection and Indemnity Club (P&I Club) LOUs constitute ample and suitable assurance, impervious to unreasonable rebuff by claimants. Nevertheless, there persists a number of civil law tribunals that decline to acknowledge Protection and Indemnity Club (P&I Club) LOUs as an admissible form of assurance, thereby compelling Shipowners to resort to more time-consuming avenues such as the procurement of a bank guarantee.
In what manner can the Protection and Indemnity Clubs (P&I Clubs) extend its support to Shipowners during Ship Arrest?
As is customary with all Protection and Indemnity Clubs (P&I Clubs), the allocation of safeguarding in representation of a Shipowners is a matter of choice. Nevertheless, in the majority of instances, the Protection and Indemnity Club (P&I Club) displays a willingness to offer aid in terms of safeguarding, recognizing the profound impact that detentions can have on the commercial pursuits of its Shipowners. The favored course of action invariably involves a Protection and Indemnity Club (P&I Club) Letter of Undertaking (LOU); however, it goes without saying that certain prerequisites must be met before the safeguarding is furnished. These prerequisites encompass the usual condition that the claim is aligned with a liability covered by the Protection and Indemnity Club (P&I Club), and the dues of the Shipowners must be satisfactorily settled.
Elaborated instructions pertaining to the Protection and Indemnity Club’s (P&I Club’s) regulations pertaining to the provision of safeguarding can be located in Rule 28 of the Protection and Indemnity Club’s (P&I Club’s) Class 1 Regulations.
What constitutes the measure of security requisite to effect the release of an Arrested Ship?
The party effecting the detainment retains the right to a measure of security proportionate to their plausibly defensible optimal scenario, as exemplified by The Moschanthy 1971 Case. This benchmark sets a modest standard, and those effecting detentions generally wield elevated bargaining influence, affording them the entitlement to procure security encompassing their claim alongside an augmentation to accommodate interest and expenses.
The zenith degree of security mandated can fluctuate between nations, contingent upon whether the Shipowner holds the privilege to confinement under pertinent statutes or Conventions within that jurisdiction. Such constraints shall be considered during negotiations concerning the measure of security, ensuring it remains within the bounds of statutory limitations enshrined in local legislation. The likelihood of security surpassing the appraised worth of the impounded asset, namely the ship itself, remains exceedingly improbable.
Upon acquisition of satisfactory security, the party responsible for the detention ordinarily forfeits the right to reinitiate detainment as a tactic to amplify the measure of security.
Upon the culmination of proceedings, it becomes essential to acknowledge the following aspects. Once an ample degree of security is duly furnished to the apprehending party, they are obligated to rescind the arrest and effectuate the release of the ship.
However, it is imperative for Shipowners to bear in cognizance that upon the detention of a ship, other claimants hold the capacity to submit a caveat against its release. Such an action would impede the prompt liberation of the ship unless an official court decree is procured either by the apprehending party or the Shipowners themselves. In order to expedite the discharge of their ship, Shipowners should duly recognize the presence of any caveats against release instituted by other claimants. Subsequently, the appropriate course of action, namely approaching these claimants to proffer security, should be pursued to ensure the swift release of a detained ship.
In the event of a Shipowners’ ship being subjected to arrest, it is prudent to contemplate the ensuing steps:
- Ascertain whether the arrest has been sanctioned through a lawful court order or if it constitutes an unwarranted detention.
- Verify the authenticity of the apprehending party’s entitlement to effectuate the arrest by obtaining the necessary legal documentation.
- Evaluate whether the registered possessor of the arrested ship is the entity bearing in personam liability.
- Scrutinize the terms of your charterparty to determine if the ship is classified as off-hire.
- Establish communication with the Protection and Indemnity Club (P&I Club) to explore the possibility of arranging adequate security measures to facilitate the release of the ship.