By Philip Teoh, partner and head of the Shipping, International Trade, Insurance Practice at Azmi & Associates, one of Malaysia’s largest law firms. He is also an international arbitrator and author of key practitioner texts used in the industry.
Time is money. That is the idea of prosecuting a maritime claim vide the in rem remedy of a ship arrest. Once arrested, the vessel cannot continue with its voyage. The owner is put to difficulty as he cannot use his vessel to continue with voyages to earn revenue.
Until and unless acceptable security sufficient to cover the claim amount, costs and interests are provided, the vessel will remain under arrest. If no security is provided, the claimant can proceed with a sale pendente lite, which can take place even before the claim is adjudicated.
Upholding the law
I have prosecuted many ship arrests over my decades of experience and fought as many. The process takes two steps, applying for the Warrant before the Admiralty Court and proceeding with enforcement. The latter means boarding and serving the vessel with the Warrant and In Rem Writ by the bailiff.
Ship arrest is an experience as while the sheriff or bailiff serves the instrument, we often accompany them. Each arrest is a learning experience. This experience is one that my juniors eagerly look forward to.
In one case, I had to arrest a vessel over the weekend. We set off from Kuala Lumpur about 10 pm Sunday. We arrested the Vessel in Kemaman, Terengganu at 2.30 am Monday, and the problem was I had a trial starting on that same Monday in Johor.
I asked for an adjournment, and the judge granted but only until 2.30 pm. So, after the arrest, I drove the bailiff back to Kuala Lumpur and then set off to Johor Bahru, arriving 1 pm, had quick lunch and started the trial.
In three separate cases the vessel knew it was being tracked. On the first attempt, by the time we arrived in Lumut, the vessel had sailed away 40 minutes earlier. For the second attempt, we tracked it sailing from north to south but she did not stop. On the third attempt, months later, we tracked it to Kemaman, and saw that she sailed to an offshore platform. We waited in Kemaman and when it sailed back, we arrested it on our third attempt.
In another case, the vessel was tracked to Sabah waters, but attempts there was unsuccessful. Months later we arrested it in Malacca.
In a separate case, we located the vessel in Bintulu and it was always tracked to an offshore platform some 20 NM from coast outside arrestable area. Months later, it showed up in Labuan, again at an area outside arrest limits. We had difficulty tracking her in between movements. Then, we realized that the vessel was manipulating its location transponder and so my shipping agent took a boat out and found her 2 NM away. It was tedious tracking and many attempts before we arrested the vessel.
Long boat launch rides on large and small vessels, and on many occasions, also involved placating the crew on the vessels we arrested. I often have to explain to the crew that the arrest concerns issues or claims owed by the owner, not them. The crew sometimes join the arrest as they too are owed wages.
In the area of contentious shipping/dry shipping, charterparty disputes are the most common type of disputes that proceed to maritime arbitration. Either parties’ vessel can be arrested for pending or ongoing arbitration. Sometimes the arrest leads to settlement and stops the arbitration.
Enforcing your maritime claim
One of the key aspects of Admiralty is the remedy of ship arrest. This is easily the most effective method of enforcing maritime claims. The Malaysian Admiralty Jurisdiction follows the same admiralty jurisdiction as in the United Kingdom, and Singapore too, to a great extent although Singapore has its own Statute. The Warrant and Writ in Rem must be served by the Admiralty Sheriff or Bailiff.
In Malaysia, the importance of having a specialist Admiralty Court (Court) gained impetus from the needs of the industry and this culminated with the setting up of the Court in October 2010.
A common order issued by the Court is the Warrant of Arrest (Warrant). This Warrant once executed on the vessel will prevent the vessel from leaving the Court’s jurisdiction. It is a powerful remedy which can result in quick settlement or the sale of the arrested vessel.
The Malaysian Court is based in Kuala Lumpur and operates as a specialist court within the Commercial Division of the Kuala Lumpur High Court. Since its inception in October 2010, the establishment of the Court quickly became an important support to the growth of the maritime sector in Malaysia. The Court has since its inception rapidly became an important adjunct to spurring the growth of the maritime sector in Malaysia.
Admiralty jurisdiction under the Court exercises “the same jurisdiction and authority in relation to matters of admiralty as is for the time being exercisable by the High Court of Justice in England under the UK Supreme Court (now Senior Courts) Act 1981. The Court has expanded jurisdiction to hear shipping and logistics claims related to ports.
However only the traditional claims recognized under English law are amenable to in rem enforcement.
Wet or dry shipping claims and disputes can lend itself to in rem enforcement. The Arbitration Act allows vessels to be arrested for intended or ongoing arbitration.
Top image credit: iStock/arsenisspyros