Note présentée dans le cadre des conférences annuelles des Lloyd's
sur la saisie des Navires. Novembre 2005

par Maître Béatrice FAVAREL-VEIDIG
Avocate au Barreau de Marseille
SELARL Favarel & Associés
Réseau CLé Marseille

THE PROBLEMS INHERENT IN SHIPS ARREST

A /APPLICABLE LAWS


We have to briefly remind for foreign colleagues that ship's arrest and execution are governed in France by the Law n°67-3 of January 3, 1967 and by the Order n°67-967 of October 27,1967, included in our Commercial Code.
The international nature of shipping operations calls for specific rules derived from the International Convention signed in Brussels on May 10,1952.
After the draft reform of this Convention in Lisbon CMI congress in 1985,- which is trade-off between two diametrically opposed anglo saxon and continental view , specifically French law- a new Convention was adopted on the March 12 ,1999 (in DMF 593, p403. Mai 1999.Comment of Mr Berlingieri)

In his comment to the draft convention on ship's arrest, Professor Antoine VIALARD (DMF June 1997, page 563. Le projet de Convention sur la saisie conservatoire des navires) rightly recalls that whi1e the English pass judgements in rem, the French pass judgement in personam."
Under the Anglo Saxon rationale, the leave to arrest must be restricted to creditors whose claim originates from the ship's operation.
Under the continental approach, any creditor enjoys a general lien on the debtor's movables,
therefore the law logically vests in the creditor a right to seize any such movable to safeguard
the claim and, and thus the ship or ships owned by the debtor.

The draft thus follows much as of the International Convention, the sources of the Law are both dual and double:
- the rules of procedures derive from maritime law and from the ordinary law governing enforcement procedures
-the rules on the merits derive from international law and national French legislation.

This contribution will he limited to various precedents of foreign flag ships arrested in France by foreign creditors.
The Convention signed in Brussels in 1952 provides a practical solution to settle conflicts of procedure law and jurisdiction ratione loci to rule on the main issue.
-Conflicts of procedure law under the article 6§2 of the Convention "the rules of procedure concerning the arrest, the leave to arrest and any other possible points of law under an arrest, are governed by the law of the Contracting State in which the arrest was made or applied for"

In case of damages incurred or caused indirectly by the arrest procedure and where the arrestor may be held liable therefore, the law governing the vicarious liability action is the law of the place where the arrest was sought or obtained (art 6§1 of the Convention).
This is the lex fori or lex loci.

-Jurisdiction ratione loci to rule on the merits :under the article .7 of the Convention, the action on the main issue is under the jurisdiction of the State where this arrest was enforced, if such jurisdiction is contemplated by the internal law (Court of appeal of Douai 5/09/i99l, DMF 1992, p.123).

The issue of the jurisdiction on the merits has been , for ten years, a bone of contention
between French doctrine and case law, opposed to this solution in favour of the jurisdiction of the defendant domicile or the flag of the vessel.

The Convention dated 1999 (article 7) fortunately settles and enlarges this issue in favour of the forum arresti since its denial by Supreme Court often ends up in quite incredible situations.

Under the Brussels Convention of 1952, Article 8-1:

"The provisions of this convention shall apply to any versel flying the flag of a
Contracting State in the jurisdiction of any Contracting State ".

in an old decision of the Court of Appeal of Rouen, it was already reminded:
"The law of January 3, 1967 modified by the decree of October 27, 1967 governs the matter of the arrest under national law, but the authority of the International Convention being higher than the internal law, the particular provisions of the decree cannot validly be called upon when Convention is appiicable" (CA of Rouen 15.04.82, vessel GME Atlantico. DMF1982, p744)

-Regarding the jurisdiction of the Court of the arrest:

Articles 7. 1er, §b and § c of the Brussels Convention of May 10, 1952. state:

"the Courts of the country in which the arrest was made shall have jurisdiction to
determine the case anon the merits:
§b)-if the claim arose in time country in wich the arrest was made,
§c)-if the claim concerns the voyage of the ship during wich the arrest was made."
Such rule has been strongly consecrated in a famous leading case served for crew members working on a vessel called OBO BASAK (cf DMF September 2000, page 607).

This decision set up the rule of the "Forum Arresti" , to bring the wages claim upon the merits before the judge having authorized the arrest, corresponding to the place of the last voyage of the vessel.

The Supreme Court confirmed this solution in a recent decision on December 7, 2004 (Vessel JERBA - DMF February 2005, page133) where it poses in one Attendu:
"The arrest of a ship for a maritime claim born during the voyage is sufficient, pursuant to the article 7,10 of the Convention of Brussels of May 10, 1952. to give Jurisdiction to the Court of the State in which the arrest was operated to determine the case upon the merits".

In the same way, several decisions of the Court dealing with the merits of a case confirm the application without reserve of the principle of the forum arresti.

Thus, in a decision of November 30, 2004, (Ship ZAMOURA OF ZERMATT, DMF February 2005, page 151), the Court of Appeal of Rennes includes the same solution as regards wages.

In addition, the doctrines are unanimous to underline the rules of the forum arresti as posed by the Convention of Brussels. (cf La saisie des navires en droit français, C Navarre-Laroche, Moreux editions)

As stressed by Mrs REMOND-GOUILLOUD, the forum arresti is a common, sense rule, and it appears natural to return a judgement where its enforcement is secured by the existence of a security.

As a conclusion, under the current wording of the article 7 of the Convention, the courts in the State of the arrest has no jurisdiction to rule on the merits, except in the six exclusive cases
listed by the Convention.
It should nonetheless be recalled that a French creditor, arresting a vessel in France can obtain a ruling on the main issue from a French court, either under the article 7 of the Convention dealing with the petitioner's usual residence, or under the attachment of privilege
contemplated by the article 14 of the Civil Code.

B/ PROCEDURE IN FRANCE APLICABLE TO SHIP ARREST:

In France the ship's arrest procedure is governed by French law, with again creates a problem of conflict of laws since the Court handling a motion for arrest should apply the Ordinance of October 27, 1967, enacting the law of January 3 1967, which defined the status of ocean going vessels, and also the Law of July 9 1991 and enactment of July 31 1992 which reformed the execution procedures under civil law.

It is essential to recall that the new law did not introduce major variations since the maritime law, provisions remained unaltered.
However, the general principles underlying the new law will have to be applied on maritime cases (DMF 1992 .Mr BONASSIES p 11 n°12).

In all cases, even though the claim should be of civil, and not commercial nature, the Court of jurisdiction will be the Commercial court of the port of arrest (the case of Dame Piaget versus Mr Ian (vessel Fio San Yas), Cannes commercial court, May 1998, is an illustration of this).
In this case, having to rule on a motion for arrest to secure a claim for alimony, the commercial court was highly hesitant to sign an order which it considered under the civil jurisdiction of the Grasses high instance court.

Except with respect to some provisions of law of July 9 1991, the article 29 of the Enactment of October 27 1967 only is applicable: "the arrest shall be authorised by the president of the commercial court, or by the county court judge if unavailable".
The county count court's jurisdiction is only subsidiary and intented to make up for the lack of a commercial court in the port where the ship is moored.

The jurisdiction of the county court isn't avoided by the existence of an arbitration clause, which even after reference to the arbitration court, does no prohibit a motion for arrest in the conditions contemplated by the applicable law (Cassation June 8 1995 SNTM HYPROC versus/ACH),
Similarly, the commercial court's jurisdiction rules out any action from the judge in charge of execution which, contrary to what the Cannes court repeatedly attempted to apply in various rulings under appeal, has no authority to act.
There is a consistent line of precedents on this principle which was recently recalled by a judgement from the Cour de Cassation (DMF 1997, p 616, Ship Tagamona & Razna).

The complicated issue of reconciliation between legislation on seizure under ordinary law with snip's arrest legislation was also elucidated by (Cour de Cassation ruling of October 14 1997 (DMF p 24 Vessel Evangeline.)
This ruling recalled the arrestor's obligation to seek on the merits within one month follow the
arrest.

As a matter of fact, the articles 70 of the Law passed on July 9 1991 and 21 5§1 of the Enactment of July 31 1992 on civil execution procedure require the creditor, under the penalty of avoidance, to institute or continue proceedings to obtain a writ of execution.
This derives from the fact that such legislations are only concerned with the initiation of proceedings, and not with the effects.

As underlined by Councilior REMERY in his comment. they do not address all difficulties encountered in practice, since they are silent about the methods of execution.

The obligation to institute or to continue proceedings on the main issue is indeed the natural counterpart of the extremely easy remedy available to the creditor to obtain leave to arrest a vessel.
The avoidance of the arrest for lack or action on the merits within the stipulated time is therefore accepted by the Doctrine.
As confirmed by the foregoing ruling of the Cour de Cassation, a uniform legal period of one month will henceforth replace the time period set by the court, under the article 70 of the law of July 9 1991.

The wording of the Convention's future article 7 should clarify this aspect as it is now contemplated that if a court of the State where the arrest was ordered or a security tendered to stall the arrest or to release the ship:
- should not have jurisdiction to nile on the main issue
- or disclaimed jurisdiction
such a court may and shall set a deadline for the creditor to institute proceedings on the main issue before a court or a qualified arbitration panel.

If such proceedings should be instituted before deadline, or before a qualified court arbitration panel in another State, failing any indication of a time period, any final judgement so returned shall be enforceable on the arrested vessel or on the security tendered to stall the arrest or release the vessel.

C/ CONDITONS GOVERNING SHIPS ARREST

Under international and domestic law, there is no need to prove a liquidated claim.

The Convention only allows to arrest a ship for a maritime claim, which ipso facto deprive other creditors from any possibility of enforcing their rights on the debtor's vessels.
And so the ships and liability underwriters are ruled out, even though their claims are connected to the ship or her operation
17 maritime claims which allow to arrest a ship are listed in the current wording of the Convention, and 21 are contemplated by the draft.
The underlying motivation of the authors was to set up a strong link with the Convention signed in Geneva on May 6 1993 on maritime liens and mortgages.
In the next draft, insurance premiums will be deemed maritime claims.

Under French law, the creditor should prove a good arguable cause ("créance paraissant fondée en son principe") (cf. Navire African Star DMF 187, page 645 - Navire Mora DMF 1992, page 134 - Navire Nobles DMF 1993. page 58 - Navire Roman Juris Data 050824)

Under the Cour de Cassation's view, whenever the international Convention is used as foundation, the court is merely expected to ensure that he claim falls the list, and is not required to ascertain whether it is a liquidated claim.

While the procedure is open ended, if the action is under French law, the court will be more cautious for any type of claim, whether civil, commercial, in contract or in tort.
If the arrest should be granted under French law, the creditor can arrest any vessel owned by
the debtor.
The claim needs not be inherent to the arrested vessel.

An interesting ruling returned on December 6 1995 by the Aix en Provence Court of Appeal is deserves attention with respect to the requirements to be met by the claim under the 1952 Convention to grant leave to arrest.
It concerned a claim for the supply of various items of equipment to operate a sail boat (awning, rigging), which the owner argued was barred under the statute of limitation.
The Court of Appeal found that the court was not required to ascertain the validity or time limitation of the claim and confirmed the ruling in chambers giving leave to arrest (Yacht FRIDAY STAR, DMF 1997 p 591).

In another case returned on November 14 1996, mv "Zamoura" (DMF 1997 p 608). the Aix en Provence Court of Appeal found that a claim for a loan obtained to pay for ship repairs on a pleasure boat failed the test of a maritime claim, since it did not fit into any class contemplated by the 1952 Convention.

D/ THE CONCEPT OF AERESTABLE VESSEL

This issue will be approached by taking the claim as legal foundation for the arrest. As stressed by M. TASSEL, three key questions must be answered:
1) Is a creditor allowed to arrest a ship which is not owned by debtor?
2) Is a creditor allowed to arrest a ship which is not the origin of the claim ?
3) Is a creditor allowed to arrest a ship which is not under the debtor's control?

1) Is a creditor allowed to arrest a ship which is not owned by the debtor ?

Under French law and in line with French understanding of the "patrimony", the answer is no.

Under international law, the issue is dealt with by the article 3 which gives a positive answer according to §4, sub-para. 1, in the case of charter "with transfer of nautical management", that is to say, a bare-boat charter, time-charter or voyage charter, providing the petitioner should prove a maritime claim deriving from the vessel whose arrest is being sought.

Therefore, to arrest a vessel in order to secure a debt of the character, the only test is to find out whether the creditor can prove a maritime claim concerning the particular vessel.
Through this concept, the ship's arrest ties up with concept of maritime liens largely set aside in English maritime law.
Maritime liens are virtual proprietary rights which can be enforced by suits in rem.
Therefore, the list of maritime claims entitling the creditor to arrest is rather close to the list of maritime liens on the vessel, and this is no coincidence.

In short, the proof of a maritime claim arising out of the vessel, is the necessary and sufficient requirements to arrest a chartered vessel, while it is not necessary for the claim to succeed the test of a maritime lien.

2) Is a creditor allowed to arrest a ship which is not the origin of the claim?

Under French law, a creditor to seize all assets owned by the debtor (art 2093 of French Civil Code).
If the shipowner owns a fleet, the creditor can arrest any vessel thereof, including one which is not the origin of the claim.
According to the Convention, and specifically its art 3. several options are open to the creditor:

- pursuant to the first § of the article 3, the creditor can arrest any vessel belonging to the debtor, whether as owner or only charterer of the vessel from which the claim arises (Douai Court of Appeal February 8 1990 DMF 1992 p 259).

- where the debtor was the charterer of the vessel, § 4 reads "no other vessel of the shipowner can be arrested under such maritime claim".
The right to arrest the vessel which is not owned by the debtor, is not extended to the fleet of the arrested vessel owner, but is restricted to that vessel out of which to claim arose.

-the option to arrest any other vessel of the debtor is ruled out with respect to 3 maritime claims:
- challenged title on the vessel,
- challenged title, possession or operation of the vessel,
- any maritime lien and mortgage

In fact the foregoing claims provide cause action in rem and, thus, the impossibility of arresting another vessel should be understood as a concern for the interests of other creditors.

However, another provision of the Art 3 should be emphasised "Vessels are deemed owned by the same person where all ownership shares belong to the sale person or persons".
This provision raises the issue of associated vessels, or those owned by different, closely linked companies.
Two theories emerged in the precedents out of this provision, the so-called "theory of the colour of law" and "theory of legal fiction".
Except on very few occasions, case law is in favour of arresting associate vessels.

From now on, the courts ruling on the main issue (since the fudge in chambers is only required to find a good arguable cause, he is not qualified to deal with the issue), now demand solid evidence to demonstrate that companies are working at arm's length or are closely linked within a group.

3)Is creditor allowed to arrest a ship which is not under the debtor's control ?

This raises the issue of chartered and redelivered ships arrest and vessels sold.
In a ruling of February 28 1996 (mv Cordigliera DMF 1997 p 594) the Aix Court of Appeal reversed the order in chambers giving leave to arrest a chartered vessel, redelivered to ??
whereby the vessel was released.
The Court found that the arrestor had proved a maritime lien and thus it was possible to arrest the chartered vessel even after her redelivery.
About the matter of sold vessels, a decision of the Court of Appeal of Montpellier on. July 31 1991 (mv Zaher, DMF 1997 p 31)is to be compared with another one from the Aix Court of
Appel (mv Tavo, DMF1997 p 598) as both where based on the art.9 of the Convention, which reads as follows "nothing in this Convention, would not exist in the law to be applied by the court ruling on the dispute".
The convention does not vest in petitioner any mortgage's right except as granted by such law or by convention on maritime liens and mortgages, so far as it is applicable thereon.

As a conclusion, if the vessel is sold, the creditor's right will only survive if on the day of the arrest, the arrestor still enjoys a maritime lien on the vessel to be arrested.

E/ CUSTODY OF ARREST VESSELS

Who is liable for the damages caused by an arrested boat in a marina?
Who is liable for the damages sustained by the arrested boat?

Throughout the arrest process, the Master continues to discharge his duties since under the art. 71 of the law passed on January 3 1967 on ship's status, the Master's assignment is only ended after the auction sale.
Therefore, under the art.2 of the French Code de Discipline de la Marine Marchande (Merchant Shipping Code), the Captain "is the person properly in command of the vessel", Also the art.4 of the law of fan. 3 1969 reads "the Captain is appointed by the true shipowner or by the managing-owner in case of charter".
Compared with the art. 1384 of the Civil Code the foregoing provisions show that as long as the Captain is in office , the ship custody remains with the owner or managing owner.
In the relationship between the debtor and arrestor, it appears logical to refuse to deprive the debtor of the vessel custody which would then he vested in the creditor.
On March 3 1998, (Gazette du Palais , May 2 p 14) a ruling of the Cour de Cassation confirmed the court of appeal's findings that an arrest which does not infringe the rights of the owner shall not transfer on the creditor the onus of the routine maintenance of the arrested vessel.
It follows that the arrestor cannot be blamed for the loss of a ship for lack of maintenance, unless the owner should demonstrate that he was prevented by the arrestor from keeping up the vessel.
Earlier on, in a ruling passed in I973 (Dalloz 1973.p544) whereby the Cour de Cassation found that as result of a tidal wave, causing the loss of an arrested vessel, the arrestor who had chosen the custodian, was responsible for preserving the vessel as contemplated by the article 1962 of the Civil Code, which obligation remained only with the custodian, and not with debtor thereby deprived of the ship's custody.
in the case in point, the custodian was deemed the agent of the arrestor.
The situation may change depending on whether the arrestor has appointed a custodian or not, and also on the nature and object of the service rendered.
In that respect, two remarks by M. REZENTHEL should be quoted (DMF 1997 n°649) and also "legal regime of ships custody" (DMF 1998 p 179).

At all events, the port authority is not expected to interfere with the custody of a private
property on which no custodian was named.
Except in exceptional circumstances, the debtor is liable for the custody or arrested vessel but it will belong to the arrestor to appoint a custodian. In case of a bad choise, the arrestor may be sue for damages caused by the ship. Unfortunately on this point the case law does not bring a precise solution.

As a conclusion, we have to note that the arrest of ship is a very efficient and strong mesure. Its originality requires in France the adoption of more specific and complete rules to avoid lost of time before proceeding to the auction of the vessel , that is the very final and ultimate issue in case of insolvency of the ownership or impossibility to release the ship. Such proceeding called in French saisie execution shall be presented before the Civil Court under very strict delay and proceeding rules .If the parties belong to EEC countries, the Reglement 2000 shall be applied and the writ can be delivered by bailiff in the hand of the Master of the boat to avoid distance time. Such matter, that deals with the question of maritime liens and secured claims shall need another conference!

Maître Béatrice FAVAREL-VEIDIG
D.E.S.S. Juriste d'Affaires Internationales
D.E.S.S. de Droit Maritimes et des Transports
Avocate au Barreau de Marseille
18, Quai de Rive-Neuve - 13007 Marseille

Accueil - Dossiers