Is it a requirement that the owner or demise charterer of the vessel be liable in personam? Or can a vessel be arrested in respect of debts incurred by, say, a charterer who has bought but not paid for bunkers or other necessaries?

Shipping

Australia Small Flag Australia

As detailed above, the type of maritime claim asserted will have a bearing on who the "relevant person" is (i.e. the person who would be liable in personam) and therefore whether an arrest can be maintained.

As far as demise charterers are concerned, an applicant may bring a general maritime claim or proprietary maritime claim against a ship if the relevant person:

  • was the owner or charterer or was in possession or control of the ship at the time the cause of action arose; and
  • is a demise charterer when the proceedings are commenced (s18).

Accordingly, a vessel can be arrested (provided the above conditions are met) in respect of debts incurred by a demise charterer but will not be recognised as a maritime lien.

China Small Flag China

Yes, it is a requirement that the owner or demise charterer of the vessel be liable in personam.

If the owner or demise charterer of the vessel is not liable for the unpaid bunkers or other necessaries, the vessel shall not be arrested. However, a claimant may attach the bunker or other necessaries if they are supplied by the liable party, say the time charterer in most circumstances.

Croatia Small Flag Croatia

Except where the arrest is sought in relation to a claim secured by a maritime lien or a mortgage over the vessel, it is a requirement that the vessel be in the ownership of the “personal debtor”, i.e. a person who is liable for the claim under the applicable law, and who at the time the claim occurred was in the capacity of the owner or operator or demise charterer or time charterer or voyage charterer or buyer under a shipbuilding contract.

Colombia Small Flag Colombia

The general rule under Art. 41 of Decision 487 is that an arrest could proceed: i) against a ship in respect of what a claim is alleged if the person who was the owner of the vessel at the time the credit arises is obliged as a consequence of said credit, and whenever he is the owner of the ship in the moment in which the arrest is effected (Art. 41.a); or ii) if the bareboat charterer at the moment in which the credit arises is obliged in virtue of such credit and it is the bareboat charterer or owner of the ship when the arrest is effected (Art. 41.b). Apart from these situations the arrest would proceed in any case if the credit is based in a mortgage or other liens of such nature (Art. 41.c), or if the credit refers to the property or possession of the ship (Art. 41.d). Lastly the arrest could proceed if the credit is against the owner, bareboat charterer, manager or carrier and it is guaranteed with a maritime lien in accordance with Art. 22.

Art. 43 of Decision 487 further pointed out that, despite what is mentioned in Art. 41 and 42, an arrest of a ship that is not owned by the person presumably obliged in virtue of such credit would only be admissible if in accordance with local law of the member country in which the arrest is requested, it is possible to execute against said ship a judicial decision in relation to such credit through its judicial or forced sale.

Cyprus Small Flag Cyprus

When a claim gives rise to a maritime lien or is for the enforcement of a mortgage on the vessel, an arrest warrant may be issued against the vessel irrespective of any personal liability of the owner or demise charterer. Where the claim does not give rise to a maritime lien and is not for the enforcement of a mortage, it must necessarily be shown that the owner would be liable in personam for the claim.

Unless the demise (or time charterer) is, at the time when the action against the vessel is brought, the beneficial owner of all the shares in the vessel, the vessel may not be arrested in respect of the debts of the demise (or time) charterer, unless such debts may be said on the facts to have been incurred on behalf of the owner.

Israel Small Flag Israel

There is no such direct requirement. However, in the matter of the M/V Ellen Hudig (2004) the Maritime Court denied a maritime lien for “indemnities for loss or damage to cargo” reasoning that the alleged damage of additional expenses and freight payments related to the discharge of claimants’ cargo from an arrested vessel as a result of the vessel’s arrest by the crew claiming unpaid wages and owners subsequent appearance before a Belgian Court under bankruptcy proceedings, do not fall under the owner’s personal liability.

Ever since, the Ellen Hudig matter has been cited by the Haifa Maritime Court as authority establishing the need to show owner’s liability in order to have the Court recognize a maritime lien. In the matter of M/V Emmanuel Tomasos (2004) the actual bunker supplier's claim was denied reasoning that only the contractual supplier who contracted with the owners can be a creditor under the necessaries lien. In the matter of the M/V Nissos Rodos (2016) it was held that the local agent which was nominated by the operator of the vessel, and paid the port dues for the 17 calls of the vessel at Haifa Portis is not entitled to the maritime lien for “port dues of any kind…been paid by a third party” reasoning that the agent had no agreement with the owners and that there was no personal liability on behalf of the owner to pay the agent, as commercial relations were between the owner and the operator and the operator and the agent, but not directly between the agent and the owner.

In the matter of M/V Captain Hurry (2016), while dismissing a suppliers’ claim due to a lack of owner’s liability, the Haifa Maritime Court mentioned that the maritime liens differ from each other and that, for example, the maritime lien for salvage exists even if the owners are not liable for the circumstances which led the vessel to distress.

Therefore, a path to diversity in relation to the requirement of owner’s liability, might exist.

Italy Small Flag Italy

A vessel can be arrested in Italy not only in respect of claims for which the registered owner is liable: the particular vessel (in respect of which the claim arose) can be arrested also in respect of maritime claims for which the demise charterer, or the time charterer or even the voyage charterer of the vessel is responsible.

However, according to the prevailing opinion of Authors, such extension (of the possibility to arrest a vessel) only occurs in the event that the claim for which security is demanded gives rise to a maritime lien on the vessel. Therefore, according to such interpretation, a debt of the time charterer for unpaid bunker can cause the arrest of the vessel (in favour of which the bunker was actually supplied) only if – pursuant to the law of the vessel’s flag state – the claim is assisted by a maritime lien.

Italian Courts, on the contrary, are more inclined to grant the arrest of a vessel (for a case where a person other than the registered owner is liable) even if the claim does not give rise to a maritime lien, as long as it falls within the category of the maritime claims set out under article 1 of the 1952 Brussels Convention on the arrest of ships.

Japan Small Flag Japan

As described in question 5, if the vessel is arrested based on a provisional attachment order, the shipowner (registered owner) must be a debtor and be liable in personam. If the claimant is entitled to exercise a maritime lien as listed in the revised Commercial Code 2019 or a ship mortgage, it is not necessary for the shipowner to be the debtor. If the debtor is a charterer who has bought but not paid for necessities for the specific vessel, an arrest based on a maritime lien will be successful in relation to the said vessel.

A claim for the necessities to continue a voyage, including a claim for unpaid bunkers, is secured by a maritime lien (see item (a) in question 7 above). Therefore, a bunker supplier, who sold the bunker to a charterer, is basically permitted to arrest the vessel under Japanese law; however, it should be noted that there are several issues with respect to the interpretation of ‘necessities’ under the Commercial Code and in the governing law of the fuel supply contracts which may bar the creation of a maritime lien.

Norway Small Flag Norway

Arrest of a vessel on basis of a claim secured by maritime lien is possible irrespective of who the debtor is at the time of the arrest.

Where arrest is sought on basis of a maritime claim (i.e. a claim that is not secured by a lien but part of the type of claims that 1952 Arrest Convention recognise as maritime claims), then it is a requirement that the owner of the vessel is liable in personam. Hence, the vessel cannot be arrested for debts incurred by a charterer. This is also the situation for bunker claims where the charterer is the debtor, but in such cases it may under the circumstances be possible to obtain an arrest in the bunkers that is onboard the vessel (provided it is still the property of the liable charterer).

See question 9 for sister vessels.

Philippines Small Flag Philippines

Yes, there must be a liability in personam.

Singapore Small Flag Singapore

It is a requirement that the owner or demise charterer of the vessel be liable in personam. Under Section 4 of the High Court Admiralty Jurisdiction Act, the arresting party must identify the party who would be liable in an action in personam.

South Korea Small Flag South Korea

As discussed in Q7 above, the claims that trigger maritime lien under Korean law are limited to certain maritime claims closely connected with operation of the ship. Therefore, general understanding is that insofar as the creditor hold claims stipulated in Article 777 of the KCA, such creditor will be entitled to exercise maritime lien against the vessel, even when the creditor does not have a direct contractual relationship with the shipowner. In this regard, there has been a recent case precedent (Korea Supreme Court Case No. 2017 Ma 1442 delivered on 24 July 2019), where the Korean court ruled that unpaid towing fees under the contract with the charterer of the vessel trigger maritime lien under Korean law.

Taiwan Small Flag Taiwan

In principle, if the debtor is not the ship owner, it will be difficult to arrest the vessel. However, if the bunkers are ordered by a charterer and if the charterer is considered by the court as an agent of the ship owner, or the bunker supplier's claim against the chartere is secured by the maritime liens with regard to the vessel, it is possible for the bunker supplier to apply for the arrest on that vessel.

United States Small Flag United States

There is no requirement of in personam owner or demise charter liability in order for a vessel to be arrested. Under the Commercial Instruments and Maritime Lien Act (46 U.S.C. § 31301 et seq.), vessel arrests may proceed in rem against the vessel so long as necessaries are supplied on the order of the owner or a person authorized by the owner. Under the statute, charterers are generally presumed to have authority to procure necessaries for the vessel and suppliers of necessaries are also generally presumed to rely on the credit of the vessel and will typically be entitled to a maritime lien unless they have actual notice of a “no lien” clause in the charter. Vessels are routinely arrested to enforce necessaries liens and many ship mortgage foreclosures are commenced by such suppliers rather than mortgage banks.

United Kingdom Small Flag United Kingdom

Yes. A ship may only be arrested if the person liable in personam is either her owner or demise charterer.

In English law, the supply of bunkers or other necessaries does not give rise to a maritime lien, and thus claims against a time charterer who contracted for the bunkers or other necessaries do not give a right to arrest the ship.

Malta Small Flag Malta

A vessel may not be arrested in rem unless the ‘relevant person test’ has been satisfied. Article 742D of the Code of Organization and Civil Procedure dictates that an arrest in rem is possible where the party who would be liable on the claim for an action in personam (‘the relevant person’) was when the cause of action arose, an owner or charterer of, or in possession or in control of, the ship or vessel AND that same relevant person is either the owner, beneficial owner o bareboat charterer at the time of the arrest of the ship.

There are a number of exceptions where the relevant person test is not required. If the claim is a special privilege listed in Section 50 of the Merchant Shipping Act, then a creditor may arrest the ship irrespective of who incurred the debts.

Likewise, there is no need to satisfy the test when the underlying claim relates to the possession, ownership or title of a ship, or to any issue arising between co-owners of a ship in so far as the ownership, possession, employment or earnings of that ship are concerned, or to a claim in respect of a mortgage, hypothec or charge registered over the ship.

Panama Small Flag Panama

The arrest of an asset from a Panama law, which is civil system based, would be relevant to the asset being owned by the defendant or the vessel being liable in-rem, regardless of who incurs the underlying obligation, which includes necessaries.

Considering that in accordance with conflict of law rules, foreign substantive law could apply, then it would be relevant to view certain aspects of the arrest from such perspective.

Brazil Small Flag Brazil

The vessel can be arrested by debts incurred by charter if it is considered a Maritime Lien. Note that credits relating to ship suppliers out of the port of registry, included bunkers, are considered privileged by our local Law.

Therefore, due to nature of such credits, they have in rem effects and follow the vessel, independent of who is the debtor.

Thus, being possible to arrest the vessel if the bunker supply contract was entered with the charterer and not with the owner.

Updated: December 11, 2019