Claims and disputes prevail in shipping. The challenge when these arise is that it involves a complex interplay of countries, jurisdictions and transnational law. Maritime arbitration assists the resolution of disputes which are enforceable across jurisdictions. A more important remedy would be in rem enforcement. This is in the realm of Admiralty Law.
The main mode is the remedy of ship arrest. This is available for certain types of claims which lend themselves to in rem enforcement.
The ability to proceed in rem (“against the thing”, referring to adjudication regarding a piece of property, like a ship) and to arrest ships is unique in the enforcement of maritime claims. This important mode of enforcement in maritime claims is exercised by the courts through their admiralty powers.
“The U.S. has a relatively liberal approach to vessel arrest compared to other nations,” states Raymond Waid of Liskow & Lewis in New Orleans. “The seizure may be accomplished through a warrant of arrest or a writ of attachment procedure.
“An arrest requires that the claimant have a maritime lien over the vessel in rem. There are many grounds for a maritime lien under U.S. law, the most common of which are liens arising from a tort committed by the vessel (e.g., collision, allision, personal injury, wrongful death or cargo damage) or arising from the provision of ‘necessaries’ to the vessel (bunkers, supplies, repairs or other services).”
Waid adds that U.S. vessel seizures may be undertaken to prosecute claims that will be litigated and tried within the U.S. or they may be used as mechanisms to obtain security for claims that will be litigated or arbitrated elsewhere.
In China, ship arrest is readily available, says Trevor Fox of HFW in Shanghai: “While claims are not brought in rem against the ship itself as they may be in the U.S. or UK, the 22 types of claims that qualify as ‘maritime claims’ under PRC law are nearly identical to those of the International Convention on Arrest of Ships (1999).”
The primary consideration is invariably the level of counter security required, set at the court’s discretion, often on the basis of 30-days’ hire or a percentage of the claim.
“Even this obstacle is often not determinative,” Fox adds, “as the increasingly sophisticated maritime courts in China will accept counter security in the form of a guarantee from a local bank or insurance company.”
In India, the Admiralty (Jurisdiction & Settlement of Maritime Claims) Act was enacted in 2017 and conferred maritime jurisdiction on the eight coastal High Courts of India, bringing in some much-needed reforms.
“However, there is no provision for ship arrest for security pending an arbitration,” says Chartered Arbitrator Madhvendra Singh, “or, for that matter, release of a ship on the furnishing of security.”
The common law enforcement of ship arrest as practiced under the English Admiralty Courts, as in Singapore and Malaysia, follow a somewhat uniform process.
The claimant’s lawyer will first apply for the issue of an Admiralty Writ in Rem, showing the admiralty judge that the claim meets the criteria for in rem enforcement i.e., that the claim fits the defined subject matter and also that the party liable ‘person liable in personam’ has beneficial ownership of the vessel.
After the Writ in Rem and Warrant of Arrest is issued, both of these are served on board the vessel and on the port authorities. Once done, the vessel will not be granted port clearance. In some countries like Malaysia, the service must be done by a judicial officer normally either the Admiralty Sheriff or his designated bailiff.
For an insight of this process of a ship arrest which we executed this year, please see video.
Photo credit: iStock/Rawf8
