SHIP ARREST IN ASIA AND U.S.A.
A brief overview
Ronald Sum, Partner
Blank Rome Solicitors
Blank Rome – Maritime Practice
Blank Rome’s notable combinations with the maritime practices of
Dyer Ellis & Joseph in 2003 and Healy & Baillie LLP in 2006 gave the Firm a solid foundation as the largest maritime practice in the United States. Our maritime attorneys are based in New York,
Washington, DC, Philadelphia, Hong Kong and Shanghai, and regularly handle complex, multi-jurisdictional, and international maritime and admiralty matters for publicly traded and maritime and admiralty matters for publicly traded and privately-owned companies throughout the world, including:
ship owners
operators and charterers cargo owners ship managers Shipyards waterfront facilities P&I clubs marine insurers shippers financial institutions
Introduction
Objectives of Arrest
Checklist
Procedure and requirement :
Hong Kong & Singapore
PRC
PRC
Japan
Australia
Objectives of Arrest
打官司
打官司
打官司
打官司，
，
，
，唔怕你惡
唔怕你惡，
唔怕你惡
唔怕你惡
，
，
，只怕你窮
只怕你窮
只怕你窮
只怕你窮。
。
。
。
Found jurisdiction
Get security
Get security
Act quickly
Check-list
Power of Attorney – usual requirements
Notarised & apostilled & legalised
Writs, Affidavits etc may need to be translated
Counter-security (may be substantial)
Complaint / details of the claim (short form)
Complaint / details of the claim (short form)
Costs of arrest (relatively inexpensive)
Forum shopping
Sister ship arrest/associated ship arrest (depending on
Arrest in Hong Kong and Singapore
Similar procedures in both
sister ship arrest permitted in both
Claim must fall within the definition of an admiralty
claim. Two categories of admiralty claim:
Maritime liens; and
Maritime liens; and
Arrest in Hong Kong & Singapore
Maritime liens
Attach to the ship
Subsist whether or not the vessel changes
ownership
Damage done by a ship
Damage done by a ship
Salvage
Crew Wages
Disbursements
Arrest in Hong Kong & Singapore
Statutory liens – give rise to a right of action in Rem. It will
extinguish if proceedings have not been brought before change of ownership
Possession or ownership claims; A mortgage on a ship;
Damage done by or to a ship;
Loss of life or personal injury due to a defect; Loss of life or personal injury due to a defect; Loss of or damage to goods;
Claims associated with use or hire; Salvage, towage or pilotage;
Goods or materials supplied to a ship; Construction or repair of a ship;
Crew wages;
Arrest in Hong Kong & Singapore
Procedure and Documentation
Writ of Summons for an action in Rem (“a thing”)
Precipae for a warrant of Arrest
Affidavit setting out the grounds of the application for
an Arrest (important and takes longest time) an Arrest (important and takes longest time)
Undertaking to indemnify the Bailiff for any costs and/or
Arrest in Hong Kong & Singapore
Affidavit sets out the legal requirements for arrest.
Mandatory information:
Nature of the claim
If the claim arises in connection with a ship, the name of
the ship
The party liable in personam (“in person”)
The party liable in personam (“in person”)
The owner or charterer or in possession of or in control
of the ship in connection with which the claim arose
For sister ship arrest: details as to the beneficial owner
Arrest in Hong Kong & Singapore
“Ship” / Shipowner must provide security:
Cash
Bail Bond
P&I Club LOU P&I Club LOU
Bank Guarantee
Insurance Company Guarantee
Arrest in PRC
PRC: not a signatory to the 1952 Brussels Arrest
Convention.
Arrest of ship is governed by the domestic law, mainly the
Special Maritime Procedure Law of the People’s Republic of China, 2000 (“SMPL”) (中華人民共和國海事訴訟特別程序法中華人民共和國海事訴訟特別程序法中華人民共和國海事訴訟特別程序法中華人民共和國海事訴訟特別程序法),
which is generally in line with the provisions of the 1999 which is generally in line with the provisions of the 1999 Convention on Arrest of Ships
NO CONCEPT of an ACTION IN REM
Arrest of a Vessel is regarded as a procedure for “property
Arrest in PRC
A ship can be arrested irrespectively of her flag.
There are 22 types of claims for which a ship may be
arrested specifically provided for in Article 21 of the SMPL, which is similar to the provisions of Article 1 of 1999
Convention on Arrest of Ships. Convention on Arrest of Ships.
No application can be accepted for the arrest of a ship on
account of maritime claims other than the said 22 specific types, except for the enforcement of a judgment, an
Arrest in PRC
Vessel which can be arrested
a ship can only be arrested if owner is the debtor of
a maritime claim. There are essentially two
exceptions:
•
Bareboat Charter
•
Bareboat Charter
Such a ship can be arrested if the bareboat charterer of the ship is liable for the maritime claim and is the
bareboat charterer of the ship when the arrest is
effected and it is limited to arrest the ship involved in the dispute
Arrest in PRC
•
Maritime Liens
Wages, crew repatriations
Loss of life or personal injury
Vessel’s tonnage dues, pilotage dues, harbour dues
and other charges and other charges
Salvage payments
Loss or damage to property resulting from
previous acts in the course of the operation of the ship
Arrest in PRC
Sister ships can be arrested
“Sister ship” means any ship (other than the particular
ship giving rise to the maritime claim) which is owned by the shipowner, bareboat charterer, time charterer or
voyage charterer who is liable for the maritime claim. voyage charterer who is liable for the maritime claim.
Arrest in PRC
Arrest Procedures
Claimant serves a written application with the Court,
accompanied by supporting documentation:
• Applicant’s and respondent's name, addresses and the legal
representatives’ names
• Nationality
Nature of the application
• Nature of the application
• Vessel’s name, port of registry and location
• Particular vessel involved in relation to the maritime claim • Reason for the application/particulars of the claim
Court issues the arrest order within 48 hours of receipt of
Arrest in PRC
Documentation
Application should be original
Original supporting documents not required immediately
POA is required (unlike HK and SG), which should be notarised and
legalised if claimant is foreign company
Certificate of identity of legal representative and of the Claimant is
required (notarised and legalised)
Counter-security normally required:
• Cash deposit
Arrest in PRC
Release
Appropriate security is provided;
The relevant party files an application for release;
All expenses incurred during the course of the arrest are paid; The agreement of the claimant is obtained; and
The bailiff releases the vessel. The bailiff releases the vessel.
N.B. The claimant must bring an action or applies for arbitration in accordance with the arbitration agreement within 30 days
after the arrest, other wise the maritime court shall release the ship or return the security provided by the respondent.
Arrest in PRC
Wrongful Arrest
If the application for the arrest is proven to be wrong,
the applicant shall compensate the losses suffered by the owners or any interested persons affected by the the owners or any interested persons affected by the arrest.
Arrest in PRC
Arresting in PRC will found jurisdiction for the claim
in the PRC
Judges can stay proceedings in favour of resolution in
an alternative jurisdiction in circumstances where
an alternative jurisdiction in circumstances where
there is an arbitration agreement between the parties
BUT this is discretionary.
Arrest in Japan
Arrest
Action in personam
sister ship Arrest possible
Arrest to enforce Maritime lien
Examples of Maritime liens:
• The sale of the vessel • The sale of the vessel
• Expenses of preservation of vessel • Public dues
• Pilotage and towage dues
• Salvage remuneration and General Average
Arrest in Japan
Documentation required:
Power of Attorney (notarised & legalised)
Certificate of Identity e.g. Copy of company register of the arrestor and debtor required
Valuation
Prima facie evidence of a claim Prima facie evidence of a claim
Counter-security required in certain circumstances All documentation MUST be translated into Japanese
(expensive)
Cash security to release the vessel
Arrest in Japan
Illegal to arrest the ship once she has completed
Arrest in Australia
Not a signatory to 1952 Arrest Convention
Domestic law applies:
Admiralty Act 1988
Similar to Hong Kong
Jurisdiction can be exercised by Federal or High Courts
Jurisdiction can be exercised by Federal or High Courts
Possible for
maritime claims, general maritime claims, maritime liens
Arrest in Australia
Proprietary Maritime Claims: relates to ownership and title
and mortgage of the vessel
General Maritime Claims –statutory claims (similar to Hong
Kong and Singapore)
Maritime Liens (similar to Hong Kong and Singapore)
Salvage
Damage done by a ship
Wages of mater or member of the crew Master’s disbursements
Arrest in Australia
Action “in rem” (“a thing”) is allowed for:
Proprietary maritime claim
General maritime claim, the “relevant person” must be General maritime claim, the “relevant person” must be
the shipowner:
• When cause of action arose
Arrest in Australia
Procedure:
File a Writ in Rem
File an Application for Arrest Warrant
File an Affidavit
File an Arrest Warrant
Pay filing fees
Writ is similar in content to Hong Kong
Arrest in Australia
Release procedures:
Arresting party consents in writing
Orders of Court with terms
Arrest in U.S.A.
No International Convention applies to arrest of ships in
U.S.A.
The Federal Rules of Civil Procedure (F.R.C.P.)’s
Supplemental Rules for Certain Admiralty and Maritime Claims (“the Supplemental Rules”) govern the procedure Claims (“the Supplemental Rules”) govern the procedure for arresting or attaching a vessel in the U.S.A.
The Supplemental Rules apply to all admiralty and
Arrest in U.S.A.
Rule B – NO MORE!!
Rule C of the Supplemental Rules (“Rule C”) is the
procedural mechanism used to arrest property (i.e.- a vessel) that is subject to a maritime lien or other U.S.A. vessel) that is subject to a maritime lien or other U.S.A. statute that creates an “in rem” cause of action.
Arrest in U.S.A.
Maritime lien claims include:
ship repairs ship supplies towage
use of dry dock or maritime railway or other necessities to any ship crew wages
tort claims arising from a collision cargo damage/loss
certain maritime contracts (e.g. breach of charter party) preferred ship mortgages
Arrest in U.S.A.
A ship can be arrested irrespectively of her flag.
A ship can be arrested irrespectively of the debtor,
except that it is owned by a government or other foreign sovereign, as per the Foreign Sovereign Immunities Act.
Arrest of sister ships/associated ships is not possible,
unless you can show an “alter-ego” relationship or other common ownership of assets.
Arrest in U.S.A.
An arrest order can be obtained within a couple of hours, when
filing an emergent motion. Rule C(3)(a)(ii) requires the Clerk to issue the summons and warrant for arrest of the vessel where the Claimant’s attorney certifies that exigent circumstances exist that make court review impracticable. The Claimant has the burden of demonstrating at a post-arrest hearing that exigent circumstances demonstrating at a post-arrest hearing that exigent circumstances existed.
Court will issue warrant of arrest
Arrest in U.S.A.
Documentation
POA is not required. The documents to be submitted to U.S. Courts
vary depending on the type of proceeding commenced, includes but not limited to:
- Verified Complaint asserting that the Claimant’s underlying claim is an
admiralty/maritime claim within the meaning of Rule 9(H) of the F.R.C.P., accompanied by supporting claim documentation
- Summons - Summons
- Agreement of Indemnity, agreeing to hold the Marshal harmless for damages if the
arrest is later found to have been wrongful
- Form USM-285/U.S. Marshal Service Process Receipt and Return
- A bank or certified cheque (for an amount which varies by jurisdiction) as a deposit
to cover insurance, guard services, and other costs related to arresting the vessel
- Motion for appointment of substitute custodian, with supporting declaration of
Arrest in U.S.A.
Documentation
To commence a Rule C proceeding, the following additional documents
are required:
- Affidavit containing the grounds for arrest - Motion for Issuance of Warrant for Arrest
- Proposed Order for Issuance of Warrant Arrest – authorizing Clerk of the Court to issue a Warrant of Arrest providing the U.S. Marshal with authority to arrest the vessel
- Motion to Permit Vessel to Continue Cargo Operations and to Shift Berths (not mandatory) – requests authorization for the vessel to continue cargo operations during the period of arrest and to move within the district
- Proposed Order Allowing Vessel to Shift Between Berths – allows the Marshal or substitute custodian to move the vessel without petitioning the Court
Arrest in U.S.A.
Documentation
The Complaint must be verified by the Claimant, but if the Claimant
resides outside the district where the arrest application is filed, the Complaint must be verified by the Claimants’ attorneys.
The verification must be notarized.The verification must be notarized.
The original documents required by each Court and the documents
which may be electronically filed vary by jurisdiction. Most Courts require an original signature on all initiating documents, but require electronic filing of subsequent documents. Other Courts permit a claimant to commence an action by filing the Complaint and all
Arrest in U.S.A.
Counter-Security
U.S. Courts do not require counter-security in order to arrest a ship. However, Rule E(7) provides that when a Defendant who has posted
security for damages in an action asserts a counterclaim arising from the same transaction, a Plaintiff must post counter-security in from the same transaction, a Plaintiff must post counter-security in the amount of damages demanded in the counterclaim (unless the Court, for good cause shown, directs otherwise).
Rule E(2)(b) allows the Court to require any party to post security, in
an amount directed by the Court, to pay all costs and expenses that shall be awarded against the party by any interlocutory order, final
Arrest in U.S.A.
Substantive Claim
Once a vessel has been arrested, U.S. Courts will assume in rem
jurisdiction up to the amount of the claim.
Accordingly, the Courts will have jurisdiction over the substantive
claim, unless a forum selection clause requires that the claim be brought in a foreign jurisdiction.
Although there is no set period of time in which a Claimant that has
caused a vessel to be arrested must commence substantive
proceedings, it will depend largely on the judge assigned to the
Arrest in U.S.A.
Wrongful Arrest
An arrest will only be set aside as wrongful in exceptional
circumstances, i.e. if the Defendant shows that the
claimant acted with bad faith, malice or gross negligence claimant acted with bad faith, malice or gross negligence
Summary
Security is important
No one wants paper judgment
Sounds simple
Legally complicated – especially in sister / associated
vessels situation vessels situation
Issue with Counter-security
Issue with notarisation and legalisation
Instruct a firm of competent lawyers!!!
Name: Ronald Sum Position: Partner
Email: [email protected] Tel: 9122 5964 / 3528 8338
