The UK is a party to the Convention Relating to the Arrest of Seagoing Ships, Brussels, 1952 (Arrest Convention 1952).
The UK has not, as yet, ratified the International Convention on the Arrest of Ships 1999 (Arrest Convention 1999). The Convention entered into force on 14 September 2011 among its 10 acceding states and, as of May 2021, had 12 state parties. Other states, for example, Russia and Colombia, have incorporated elements of the Arrest Convention 1999 into domestic law. Among the changes that the Arrest Convention 1999 introduced to the Arrest Convention 1952 regime is the addition of new categories of maritime claims, including:
In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? Can a bareboat (demise) chartered vessel be arrested for a claim against the bareboat charterer? Can a time-chartered vessel be arrested for a claim against a time-charterer?
Section 20(2) of the Senior Courts Act 1981 lists 19 types of maritime claim within the admiralty jurisdiction of the High Court and in respect of which a vessel may be arrested. These include:
Notable exceptions to this list, where an arrest is not possible, include claims for insurance premiums and for legal costs.
English law treats both English and foreign-flagged vessels equally and it does not distinguish between ‘convention’ and ‘non-convention’ vessels.
It is possible to arrest sister ships, but not associated ships. Sister ships are vessels that at the time when action is brought are owned by the same person who was the legal owner or demise charterer of the ship in connection with which the claim arose, at the time when the cause of action arose.
A bareboat (demise) chartered vessel can be arrested for a claim against the bareboat charterer but a time chartered vessel can only be arrested for a claim against a time charterer if that claim that has given rise to a maritime lien.
Does your country recognise the concept of maritime liens and, if so, what claims give rise to maritime liens?
Yes. The claims that give rise to maritime liens are:
It has been suggested that the following two claims give rise to maritime liens by implication out of statutory provisions:
What is the test for wrongful arrest?
A claim for wrongful arrest usually requires demonstration of bad faith or gross negligence (The Evangelismos (1858) 12 Moo PC 352 (PC) / The Kommunar (No. 3) [1997] 1 Lloyd’s Rep 22)).
An example of a case where the Evangelismos/Kommunar test was met is Gulf of Azov v Idisi [2001] EWCA Civ 505; [2001] 1 Lloyd’s Rep 727. This case involved the detention of both the ship and her crew in Nigeria by the owners of cargo shipped on board. The cargo owners rejected a reasonable offer of security from the relevant P&I club, insisting on what was found to be an extortionate amount of security. The English Court of Appeal held that, as there were no reasonable grounds for the amount of security demanded by the arresting party, a wrongful arrest was established.
Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?
Under English law, a bunker supplier can only proceed against the party with whom that supplier has contracted and cannot arrest a vessel if it did not contract directly with the owner or demise charterer. Furthermore, even if the bunker supply contract with the charterer contains an express term giving the supplier a lien on the vessel under the law governing that contract, this would have no effect under English law because the owners are not a party to that contract. The majority decision of the Privy Council in The Halcyon Isle [1980] 2 LLR 325 held that the lex fori alone governs the recognition and ranking of foreign maritime liens under English law and this majority view has subsequently had a considerable persuasive effect in cases decided in a number of jurisdictions. The bunker supplier may have a claim against the shipowner for conversion of the bunkers (and thereby be entitled to arrest the vessel) where the bunker supply contract contains a retention of title clause, provided that the property in the bunkers does not pass from the supplier until payment for them has been made (see The Saetta [1993] 2 Lloyd’s Rep. 268). However, in those circumstances, the shipowner may be able to rely on section 25(1) of the Sale of Goods Act 1979 (SGA) as a buyer of the bunkers from the charterer in good faith and without notice of any adverse right of the bunker supplier (see The Fesco Angara [2010] EWHC 619). Where the requirements of section 25(1) of the SGA are met, the owner will acquire clean title to the goods.
In 2016, the English Supreme Court ruled in PST Energy 7 Shipping LLC v OW Bunker Malta Ltd and another (Res Cogitans) [2016] UKSC 23 that bunker suppliers that are unable to transfer property in bunkers supplied to a ship were nonetheless entitled to the price of the bunkers from the shipowners. The bunker supply contract in question provided for a credit period and incorporated a retention of title clause. The Supreme Court concluded that it was not a contract of sale within the scope of the SGA. Therefore, the implied term under section 12(1) of the SGA that provides that it is an implied condition of a contract for the sale of goods that the seller has the right to sell the goods or will have such right at the time when the property is to pass, did not apply. Section 49(1) of the SGA, which requires that property in the goods has passed to the buyer if the seller is to maintain a claim for the price, also did not apply. As a result, when the intermediate bunker supplier went bankrupt, the shipowners were liable to the physical bunker supplier for the agreed price of the bunkers, which was held to be a straightforward claim in debt. This decision had important consequences for those entering regularly into bunker supply contracts, who have had to consider whether standard bunker industry forms needed to be amended in order to protect the position of those purchasing bunkers from bunker traders in the future.
Will the arresting party have to provide security and in what form and amount?
The Court of Appeal most recently confirmed, in The MV Alkyon [2018] EWCA Civ 2760 that it is not necessary under English law for the arresting party to provide counter-security. However, a personal undertaking is required from the arresting party to the Admiralty Marshal to pay all costs of arrest, care and custody, upon the demand of the Admiralty Marshal. This is often provided by means of a solicitor’s undertaking.
How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?
The amount of security to be provided must be reasonable but the assessment may be based on an approximation. ‘Reasonable’ in this context will generally mean the claimant’s best arguable case, plus interest and costs. Clearly there is scope for negotiation as to what the claimant’s best arguable case is. Only if such negotiations are unsuccessful will the court determine the amount and form of the security to be provided. The Arrest Convention 1952 does not limit the value of the security to the value of the ship, instead stating that security should be ‘sufficient’ (article 5), and this is interpreted as being sufficient to cover the arresting party’s best arguable case, including interest and costs. In practice, the court may limit the security to either the value of the ship or to the statutory limit of liability with interest and costs. By contrast, the Arrest Convention 1999 explicitly states in article 4(2) that: ‘in the absence of agreement otherwise between the parties, total security cannot exceed the value of the ship’ although the UK is not a signatory.
As to the form of security, this is not prescribed and is a matter for negotiation between the parties. If the court is forced to intervene, then it will look to the financial standing of any guarantor being proposed (whether that guarantor is the shipowner, its P&I club or another entity). It is not necessarily the case that the security must be provided by an independent financial institution in order for it to be considered adequate.
What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of attorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?
There are no formalities required for appointing a lawyer to make the arrest application to the Admiralty Court: a power of attorney is not required. To arrest a ship, documents in support of the claim should be filed with the claim form, together with details of the ship’s location and port of registration. All original court documents (warrant of arrest and claim form) must be filed with the court before the arrest. A declaration must also be provided regarding the ownership of the ship, the level of security sought and providing confirmation that the claim has not been satisfied. This declaration must be verified by a statement of truth.
The documents do not need to be notarised or apostilled. However, where documents are in need of translation, translations must be certified by a notary. Where possible, original documentation should be provided, although the court may order an arrest even though some original documentation is not available. Documents can be filed electronically and the procedure for organising an arrest is in most cases straightforward and can be completed in a matter of hours. Before the ship is arrested, the arresting party must check to ensure that no caution (caveat) against arrest has been lodged with the court. Furthermore, the arresting party’s solicitor must undertake to pay the Admiralty Marshal’s fees and any expenses incurred by him or her in respect of the arrest of the ship, the care and custody of it while under arrest and eventual release from arrest.
Who is responsible for the maintenance of the vessel while under arrest?
The costs of arrest, care and custody are reimbursed to the Admiralty Marshal by the arresting party, but the arresting party is likely to be able to recover the costs from the defendant when the ship is sold because the Admiralty Marshal’s costs and expenses rank first in priority of claims against the proceeds of the sale of the vessel.
Proceedings on the merits
Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?
Article 7 of the 1952 Arrest Convention, to which the UK is a party, specifies the circumstances in which the arresting court has jurisdiction to hear the claim on the merits. In England, the right to arrest is co-extensive with a right to hear the claim on its merits. This jurisdiction is not exclusive and, at least in theory, the claimant could arrest in England for security only and then pursue his or her claim in a different jurisdiction. More typically, however, the claimant will both arrest the vessel in England and seek to pursue the claim here and the defendant may seek to stay the English court proceedings in reliance on a foreign jurisdiction clause or by asserting forum non conveniens. If the English court grants a stay in favour of proceedings elsewhere, it has jurisdiction to maintain the security pending the outcome of the foreign proceedings.
Injunctions and other forms of attachment
Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?
The main English law interim remedy is the freezing injunction (formerly known as a Mareva injunction). A freezing injunction is an interim order prohibiting the respondent from dealing with or disposing of its assets. It is used to preserve those assets with a view to enforcing a judgment against them. Such an injunction is not, of itself, a form of security. It does not grant any kind of priority over the assets, for example, but it does oblige the injuncted party to either comply with the terms of the order or to be held in contempt of court. The injunction normally obliges the injuncted party to disclose details of their assets and, where the injunction includes assets held by a third party on behalf of the injuncted party, for example, a bank, the injunction will be served on that third party, who will also be required to comply with the terms of the injunction. A breach of the injunction may amount to a contempt of court, which is punishable by a fine, imprisonment or seizure of assets. The threat of the injunction (or its effect once obtained) may, however, be sufficient to persuade the target party to provide security voluntarily.
A freezing order will generally be capped at the amount of the claim, but it is possible to obtain orders that do not have a cap or that relate to a specific asset or assets. In circumstances where some or all of the respondent’s assets are outside the jurisdiction, the court may grant a worldwide freezing order.
There are six general conditions for the granting of a freezing injunction:
Delivery up and preservation orders
Are orders for delivery up or preservation of evidence or property available?
Orders for the delivery up of property are available under the Torts (Interference with Goods) Act 1977 (the Act), but not more generally. Among other things, the Act provides remedies for the wrongful interference with goods, such as the torts of trespass to goods and conversion. The availability of an order for delivery up as an interim remedy may result in a claim being brought in tort, even if a claim would also lie in contract. An example of a claim for conversion in respect of which an order for delivery up under the Act might be sought is a claim for wrongful retention of cargo.
In a wider context, interim orders are available for the detention, custody, preservation or inspection of relevant property. In particular cases, the court may also make orders allowing samples to be taken or experiments to be conducted on relevant property. The court may also, in certain circumstances, order the sale of goods (generally perishable goods).
Bunker arrest and attachment
Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?
Arresting bunkers is not possible under English law, although bunkers could still be the subject of freezing injunctions.
