The countries of the Black Sea Basin (Ukraine, Russian Federation, Georgia, Turkey, Bulgaria, Romania and Moldova – new Black Sea сountry) have their features of ship arrest. Yes, there are special rules which govern the arrest of ships in each Black Sea Country. Therefore we may say that efforts to create a uniform set of rules have not been fully succeeded, making it difficult to provide legal support and have ships released from detention. But it does not mean that there are no results from efforts of maritime world toward unified law. For example, Russia, Romania and Ukraine are members of the International Convention for the Unification of Certain Rules relating to the Arrest of Sea-Going Ships (Brussels, 10.05.1952). Bulgaria is a member of the separate International Convention on the Arrest of Ships (Geneva, 12.03.1999). Other states are members of neither convention on ship arrest.
Bulgaria is one of few (10) member states of the International Convention on Arrest of Ships that was made in Geneva on 12.03.1999 and entered into force on 14.03.2011. A ship may be arrested in the Bulgarian port both as security for a maritime claim and as the security for a claim under the Civil Procedure Code of Bulgaria dd. 06.07.2007 which entered into force on 01.03.2008. The Merchant Shipping Code of Bulgaria dd. 24.06.1970 does not provide for the right of arrest of associated vessels to secure a maritime claim. But under the abovementioned Convention such an arrest is allowed under the following conditions: at the start of the procedure relating to the arrest of a ship or ships they are owned by a person liable for the maritime claim and which at the time when the claim arose was the owner of the ship in respect of which the maritime claim arose, or charterer or the bareboat charterer, time charterer or voyage charterer of that ship.
In Ukraine, the situation is somewhat similar to Bulgaria, i.e. a vessel may be arrested as security for a claim, to ensure maritime claims, or to satisfy interim measures under Part 4 Article 114 of the Civil Procedural Code dd. 18.03.2004 or under Article 16 of the Commercial Procedural Code dd. 06.11.1991. Of course, Ukraine’s membership in the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships made in Brussels on 10.05.1052 brought an element of order and civility to the practice of ship arrest in Ukraine. It seems now that the extra-judicial arrest of a ship in a modern legal framework of Ukraine is impossible. However, court practices are still controversial and unsettled. Essential uncertainty in the Ukrainian court practice is provided by Clause 1 Part 1 Article 14 of the Merchant Shipping Code which states that regulations upon ship arrest shall be applied only to ships registered in Ukraine.
Although Russia is a party to the International Convention for the Unification of Certain Rules relating to the Arrest of Sea-Going Ships, the practice of arresting ships is still controversial. For example, a ship can be arrested as a result of bankruptcy proceedings and be treated as a piece of property unrelated to a maritime claim. The procedure that exists in the family of common law jurisdictions (in rem) is not available in the Russian Federation. If the defendant appeals for counterclaim against the claimant that appeals on vessel arrest the court usually decides on providing cross-undertaking, although according to many lawyers access to justice is limited in such a case. The Merchant Shipping Code of Russian federation adopted in April 1999 and entered into force on 01.05.1999 includes the modern trends in relationship upon ship arrest which were reflected both in Convention on Arrest of Ships and in the Merchant Shipping Code of Ukraine. In particular, it expanded the list of maritime claims as compared with the Convention dd. 1952. This list corresponds to the list set forth in Article 1 of the Convention dd. 1999.
Romania introduced new rules on arrest of ships as part of its new Civil Procedure Code that entered into force on 01.02.2013. One of the most important provisions is that a ship may be arrested before the statement of the claim on the merits is filed. The statement must be submitted with a court within 20 days from the date of claim on a ship arrest. If the statement of claim is not filed within that period the vessel must be released. In case of need in urgent arrest imposed by harbour master the claimants shall pay fee in the amount of EUR 400 (EUR 800 in the weekends). The evidence which confirms that the person being responsible under the maritime claim is a ship owner shall be submitted to the court which makes a decision on vessel arrest.
The Maritime Code of Georgia dd. 15.05.1997 regulates arrest of ships in a rather simplified form. According to the Civil Procedural Code of Georgia ship arrest is possible only for the purpose of maritime claim security. Hereby the application on claim security shall be submitted to the same court within 10 days, otherwise the vessel shall be released. In case when proceedings are initiated under the claim filed by ship owner’s creditor beyond Georgia, the court can make a decision on vessel arrest. Therefore in Georgia there is a court practice upon ship arrest both under maritime claims and under claim security. Ship owner’s claims on cross-undertaking are usually satisfied by the court. Hereby the claimant shall submit cross-undertaking within 10 days, otherwise the vessel shall be released.
Although international conventions on ship arrest are not valid in Turkey, the new Commercial Code of Turkey which entered into force on 01.07.2012 includes regulations on ship arrests that are in line with international global practice. Nevertheless, Turkish common practices remain conservative. For example, a ship can only be arrested for the debts of the ship owner or when the vessel is the subject to a maritime lien. A widespread practice is that of requiring some form of cross-undertaking or bail. The size of the collateral, usually a bank guarantee or deposit, rarely exceeds 15-40 percent of the maritime claim. The amount of cross-undertaking required may reach SDR 10,000 regardless of the amount of the claim. Turkish law is rather variable. Under the new rules, a new problem has emerged: proving jurisdiction of the Turkish court.
Moldova has become a maritime nation by gaining access to the Black Sea through the port of Giurgiulesti. Ship arrest practice in Moldova is in its infancy. Although Articles 45 – 51 of the Merchant Shipping Code of Moldova dd. 20.08.1999 provide fairly progressive standards governing ship arrest, Moldova, like Turkey and Georgia, is not a member of any international convention on arrest of ships.
Therefore it is obvious that Black Sea countries: Ukraine, Russian Federation, Georgia, Turkey, Bulgaria, Romania and Moldova have faced a various practice in sea vessel arrest, so to arrest a vessel in any jurisdiction is not that simple even for experts. It is typical for private international law relations in whole that each jurisdiction has its own peculiarities. Nevertheless, all the Black Sea basin jurisdictions belong to the family of civil law and it makes their law systems similar. All these countries are emerging economies. Business here is quite similar by mentality and paperwork approach.
Relations between the parties involved in the vessel arrest procedure are usually quite difficult. The arrest may cause situation which is difficult to settle by legal means, so the arrested vessels may stay idle for months. Therefore we usually advise the parties to search for compromise timely, trying to avoid vessel arrest.
Published in scma.org.sg
Authors: Arthur Nitsevych, Nikolay Melnykov
Vessel arrest and detention in Georgia. Part 2
The meaning of sea vessel arrest as the maritime law institute was implemented in the legal framework of Georgia when the Maritime Code of Georgia (No.715-IIС dd. 15.05.1997) entered into force. The present institute remained neglected till that moment. Like other ex-USSR countries, in the first years of independence Georgia complied with so-called Doctrine of arrest ineligibility in respect of vessels sailing under the flag of other state. It was deemed as offence against sovereignty of the flag state. The present institute as legal instrument in civil circulation was neglected and it has done a disservice to those ex-UUSR countries which used to have their own fleet and lost their expensive motor vessels due to effective arrests for the purpose of obtaining creditors’ maritime claims. Such countries certainly include Ukraine and Georgia.
The institute of vessel arrest appeared in the legal framework of Georgia when there were implemented different forms of ownership on sea transport and, first of all, private ship owners registered under the flag of Georgia. It was certainly caused by entering of the new Civil Procedural Code of Georgia (No.1106- 1С dd. 14.11.1997) into force and by first stage of performing the court reform in whole. As the result the system of justice was deprived of state arbitrations and it was represented by general courts of three instances performing civil, administrative and criminal proceedings. As the result, the procedural form of vessel arrest was created.
The problem of vessel arrest in the Georgian judicial practice is facing essential changes now. International acts and domestic judicial practice cause attempts to make unified standards for settling the issues of vessel arrest in the legal framework of Georgia.
Unfortunately, judicial practice is still controversial and ambiguous. It is caused, first of all, by gaps in legislation and small work experience of judges. Here we will study theoretical and practical aspects of efficient use of the vessel arrest institute within jurisdiction of Georgia.
Article 831 of the Maritime Code of Georgia states, ‘Vessel arrest shall be performed in order to secure a maritime claim only. Maritime claim shall be based on vessel ownership and other property relations arisen in vessel construction, management, operation, commercial use, vessel mortgage or salvage’.
Vessel arrest and release shall be performed only by the court in compliance with the Civil Procedural Code of Georgia.
Unfortunately, all domestic acts of legislation of Georgia which govern maritime industry have no other law regulations of vessel arrest or definition of the sea vessel arrest in fact. Georgia is the member of neither the International Convention Relating to the Arrest of Sea-Going Ships (Brussels, 10.05.1952), nor the International Convention on the Arrest of Ships (Geneva, 12.03.1999). Therefore in performing vessel arrest both the present regulations and judicial practice of Georgia are deemed as the source of law (both substantive and procedural one to some extent).
Let us study the peculiarities of applying the present institute in Georgia.
Competence of the court which performs arrest
According to the general rule provided by Article 831 of the Maritime Code of Georgia, general court is the only body empowered to consider vessel arrest and release in the legal framework of Georgia. The procedure of arrest and release shall be performed in compliance with the Civil Procedural Code of Georgia. Taking into account structure and regulations of the Civil Procedural Code, we may state unambiguously that vessel arrest can be performed as claim security only (as maritime claim in our case).
In cases of arrest of the vessel sailing under the flag of Georgia, irrespective whether is stays within or beyond the territorial sea of Georgia, the regulation is imperative anyway. The problems arise in case of arrest of the foreign vessel within jurisdiction of Georgia. In order to assess the opportunities of arrest of such vessel by general courts of Georgia let us study the present issue in the following way.
Like other civil law countries Georgia has the standard rule of case consideration with a foreign element. In particular, the court shall:
— determine court jurisdiction in respect of the claim/application being considered;
— determine qualification and nature of the claim subject to settlement.
Therefore, in case of claim consideration on vessel arrest, there shall prevail justification of competence of the Georgian court which considers a certain claim.
In such cases general competence is usually grounded by the main international act of maritime law, the United Nations Convention on the Law of the Sea dd. 1982 (Georgia has been Party to this Convention since 09.09.1995). Article 28 “Civil jurisdiction in relation to foreign ships” states that the coastal State may not levy execution or arrest the foreign ship passing through the territorial sea for the purpose of any civil proceedings, save only in respect of obligations or liabilities assumed or incurred by the ship itself in the course or for the purpose of its voyage through the waters of the coastal State. This provision does not touch the right of the coastal State to levy execution or arrest the foreign ship anchored in the territorial sea or passing through the territorial sea after leaving the internal waters for the purpose of civil proceedings.
Other international act which regulates jurisdiction of application on vessel arrest for general courts of Georgia is he United Nations Convention on the Carriage of Goods by Sea dd. 1978 (Hamburg Rules; Georgia has been Party to this Convention since 09.09.1995). Due to limitations of regulations of the present Convention in respect of private law, its provisions are recommended to be applied in order to justify court jurisdiction in cases of disputes arisen from cargo transportation by sea. Here we should mention two particular items of this Convention in determining court jurisdiction in the present issue:
1. In case of performing arrest, applicable rules of the law of the Contracting State shall prevail.
2. Provisions on place of commencement of court proceeding under this Convention do not constitute an obstacle to the Jurisdiction of the Contracting States for provisional or protective measures.
Having generalized the present provisions and practice of applying thereof by courts of Georgia we should sate that in such cases the courts of Georgia shall perform vessel arrest only when the corresponding court is competent for case consideration in fact.
Let us study domestic regulations of court competence. The main regulation is provided by the Law of Georgia on Maritime Spaces (No.1756 dd. 24.12.1998). In particular, Article 26 states that it is possible to take enforcement measures regarding the foreign ships passing through the territorial sea, having left the internal waters of Georgia, or staying in the territorial sea of Georgia for the purpose of civil claim security.
General court is the only body empowered to secure civil claim within the jurisdiction of Georgia including the territorial sea thereof. But application of the present provision may be expanded due to the fact that it does not define directly a certain court empowered thereto. Therefore such provision may justify not only jurisdiction of the first instance court having its authorities within the territory of vessel location, but also jurisdiction of the appeal court empowered to take security measures upon the dispute settled at arbitration courts, as well as jurisdiction of the cassation court in the procedure of recognition and enforcement of court decision or arbitration award of the foreign state (international arbitration) if the vessel is within jurisdiction of Georgia. It is noteworthy that we already have practice of justifying court jurisdiction in Georgia.
The next important standards of justifying competence of Georgian courts are provided by the Law of Georgia on Private International Law (No.1362- IIс dd. 29.04.1998). As compared to the Maritime Code or the Law on Maritime Spaces, this law is one of the most applicable at courts.
General provisions of the present Law regarding competence of the courts of Georgia state that:
— general courts of Georgia have special international competence in applications on enforcement measures taken or required for taking in Georgia;
— the court of Georgia is deemed as competent if security measures are enforceable in Georgia or the courts of Georgia have international competence.
We should also state that application on vessel arrest may be taken into consideration as private law claim security measure taken by courts of Georgia in two cases:
— if the court of Georgia has international competence;
— if claim security measures are enforceable.
© A. Nitsevych, 2013
Head of the Nautical Institute of Ukraine, MNI
Ukraine, Kiev – Odessa
© P. Kopaleishvili, 2013
Marine Legal Adviser, Georgia
Specialy for «Transport» magazine
Author: Arthur Nitsevych