UK: Maritime Arrest Under English Law

Last Updated: 14 May 2010
Article by Leila Woollam

Maritime arrest is a legal action to seize a vessel, cargo, container or other maritime property as security for a claim or to enforce a maritime lien. The claim may be brought "in rem", namely against the arrested property itself and not necessarily against the property's owner (which may be unknown). Arrest differs from "attachment" in that the property itself is not the named party in the action and the defendant must own the property for it to be subject to attachment. "Arrest" is literally just that – the vessel will be prevented from moving or trading pending resolution of the outstanding claim.

Arrest can be effected under English law, the Arrest Convention 1952, or the Arrest Convention 1969. For the purposes of this note, I will deal with the position under English law, governed by the Admiralty Court in London, although the regime is similar in many jurisdictions under these Conventions.

Arrest is available in a wide variety of situations, including any claim to ownership or possession of a vessel or share in it, any claim for damage done by or suffered to a vessel, to claims for goods or materials supplied to a vessel for its operation or maintenance, or a general average act, to name but a few.

There are of course criteria that must be met in order for the Court to entertain an application for arrest. The underlying dispute must be a "maritime claim" as defined by s20 of the Supreme Court Act 1981, meaning that the claim must have some connection with shipping, or aviation. The claimant must also prove that the vessel in respect of which arrest is sought is connected with the claim.

If the claim is a maritime lien, this may operate to allow the arrest of a vessel even if it has changed ownership – the doctrine being that the lien attaches to the property at the time the cause of action arises and remains so attached until satisfied or time barred. Maritime liens take priority over registered mortgages, yet need not be registered themselves. What constitutes a maritime lien varies in different jurisdictions, although the various International Lien conventions may be applicable. Under English law, a claim is deemed to be a maritime lien according to the law of the place of arrest. Essentially, maritime liens under English law arise in respect of claims for damage done by the vessel to property or persons, salvage, crew wages, and wages and disbursements of the Master. Statutory liens include mortgages and claims in respect of goods and services supplied to a vessel. They are not, strictly speaking, maritime liens, but still engender the right to arrest under the Supreme Court Act.

Should a ship connected to the claim have changed ownership, and the claim is against the Owner but does not constitute a maritime lien, arrest of a sister ship is possible, provided that the sister ship was owned by the same entity which owned the ship connected to the claim at the time the cause of action arose. That entity must also be the beneficial owner of all the shares in the sister ship.

The grant of an arrest warrant is not conditional on the claimant making disclosure of all material facts at the time of application, for example that proceedings have been commenced in another jurisdiction. Arrest is often utilised to satisfy a Court judgment, but an application for an arrest can be made at any time once proceedings have commenced, there being no requirement for judgment to have been entered. Nor will a vessel owner's subsequent insolvency override the security obtained by arrest, since an arrested vessel will stay under the control of the Admiralty Court. This provides tangible security for any damages awarded, since the Court can order the arrested property to be sold in order to realise those damages. The possibility of arrest alone will often prompt an Owner to provide security through its bank or its insurers in the form of a letter of undertaking, although provision of such a letter once arrest has been effected will operate to ensure prompt release.

Procedurally, a warrant of arrest is available once an in rem Claim Form, known as ADM1, is issued. This standard form requires "brief details" of the nature of the claim or counterclaim. Full Particulars of Claim will have to follow within fourteen days of service. One must also state that the claim has not been satisfied, the name of the ship and its port of registry, and the amount of the security sought, if any. The maximum security available is the value of the arrested property. In rem applications must also include

  • the name of the person who would be liable on the claim were it not commenced in rem, and that this person was, when the right to bring the claim arose, either the owner or charterer of, or was in possession or in control of, the ship in connection with which the claim arose, and
  • that at the time the Claim Form was issued, was either the beneficial owner of all the shares in the ship in respect of which the warrant is required, or the charterer of the vessel under a charter by demise.

Should the ship be owned by a State where by any convention or treaty, the United Kingdom has undertaken to minimise the possibility of arrest of ships of that State, notice (Form ADM6) must be served on a consular officer at the consular office of that State in London, or the port at which it is intended to arrest the ship, and evidenced to the Court.

No security is required in effecting arrest, apart from an undertaking in Form ADM4 to pay all costs of the Admiralty Marshal in securing arrest, keeping the vessel under his custody and procuring any subsequent release. The same form requests that a search is made in the Admiralty Registry to ensure that no caution against arrest is in place. Form ADM5 is a Declaration in Support of the Application for Arrest, ending with a Statement of Truth signed either by the claimant or its solicitor. There is also a Statement of Truth in Form ADM1. It is important that the arrest regime is not invoked in bad faith or without due consideration, as doing so may provoke an action for wrongful arrest.

Special conditions apply if the vessel to be arrested is involved in oil spillage, about which evidence will need to be adduced to the Court.

The costs of arrest depend on the value and complexity of the claim. Court fees for issuing a Claim Form in a claim between GBP 50,000 and 100,000 will be £630, increasing on a sliding scale up to £300,000 where they are capped at £1,530. The actual arrest fee is set at £200. The Admiralty Marshal's expenses can increase dramatically if the vessel remains under arrest for some time – since the vessel is under the control of the Admiralty Court, the Marshal is responsible in the first instance for berthing costs and the sustenance of crew. Naturally these costs are passed on to the party making the arrest and are ultimately recoverable, but in practical terms they need to be below the value of the ship.

Further disbursements may include a valuation of the vessel, or a search for its next port of call. The preparation entailed in completing the standard Court forms will depend on the nature of the case, but will clearly increase if the arrest is contested.

Once obtained, the Warrant of Arrest is valid for twelve months. It is physically served on the subject vessel by an officer from HM Customs acting on instructions from the Admiralty Marshal. The entire process can, in some cases, be completed within hours.

Apart from the obvious uses of arrest, namely to satisfy judgments or enforcing security, arrest can be invoked in order to secure jurisdiction in a dispute. If proceedings are started abroad, in breach of an English jurisdiction or arbitration clause, the Courts will act in order to restrain that breach. In the course of obtaining the injunction to prevent the foreign proceedings from continuing, having a vessel effectively immobilized will concentrate the mind of the party in breach. Equally, as a condition of granting a stay of proceedings, the Courts may order the provision of security, which can be obtained via arrest, although in practice alternative security will generally be posted in order that the vessel can sail.

Once a ship has been arrested, release will be ordered by the Court when security for "the reasonably best argued case" has been given. [The Moscanthy, 1971]. A plaintiff demanding excessive security may later be penalised in costs. Provision of security is normally by payment of funds into Court, a Letter of Undertaking from the vessel's P&I Club, an undertaking to the Court with surety (bail bond) or, most commonly, bank guarantee from a bank acceptable to the Court. Procedurally, an application of release must be filed, Form ADM12, together with the consent of the plaintiff. Re-arrest is possible should the security prove insufficient, but this further security must not exceed the value of the ship at the time the first arrest was effected. In practice, re-arrest is not often practicable as most guarantees will exclude re-arrest for the same claim.

A third party claiming a right in rem against arrested property may file a caution against release, which prevents any dealings with the arrested property as well as its release for a maximum period of one year, although further cautions can be entered. The cautioner must have good grounds for its application, since the Court may order the cautioner to pay damages for any delays or loss incurred if those grounds prove baseless. Unless the cautioner's claim is a maritime lien, it must still issue a Claim Form to safeguard against the sale of the vessel whilst under arrest, of which more later. The Court will not enter a caution against release if the level of security is the only reason for doing so.

If security is not forthcoming, an order for sale of the ship can be obtained. The value will be determined by a Court-appointed valuer, the sale advertised and sold via sealed bids. If none of the bids meet the value determined, the Admiralty Marshal will accept the highest bid, if the arresting party and the holders of any cautions consent. In the event of a dispute, the Marshal will obtain directions from the Court.

The buyer in such a sale takes title free of all claims and encumbrances, once outstanding liabilities have been settled. This is why a cautioner must still issue a Claim Form, in order to secure its claim on any sale. The Admiralty Marshal and the Court take priority, then the costs of the party making the arrest. Maritime liens, claims of mortgagees and other secured creditors rank next, followed by other claims in rem and then other claims. If the party making the arrest has no registered charge, it recovers in proportion to any other unsecured creditors. It should be remembered that arrest in itself does not confer priority to the arresting party's claims.

Nonetheless, arrest of a vessel or the threat of it remains a potent resource which, if utilised, is likely to cause severe disruption to a vessel's owners. But the criteria for arrest, which will vary between jurisdictions, must be satisfied or an action for wrongful arrest and damages may ensue. However if arrest is employed appropriately, it will provide the reassurance of physical security for a claim which may otherwise be difficult to set in motion, let alone enforce.

www.bjm-co.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions