World Bunkering > News > Spring 2010 > Legal eagle

All of a sudden the ship arrest conference is fashionable again. After a few years where the Informa Lloyd’s Ship Arrest conference became a modest and clubby affair, this year saw 50-odd delegates from many countries and many different parts of the shipping industry convene for a close look at the current state of ship arrest around the world at the Informa Lloyd’s Ship arrest conference on 7-8 December. Given the current state of shipping markets there seems little doubt that people expect more, perhaps much more, such activity. Once again 2010 is expected to be a very rough year indeed.

The demise of Rule B attachments was a major topic, and it was noted that Rule B had by no means gone away. But Rule B remains a dynamic and fast-moving area in New York and there will be many more surprises before it settles down again. As addressed by Michael Frevola of Holland & Knight’s New York office in his presentation, The Federal Court of Appeals in New York, in the Jaldhi decision, held that it must follow New York law but failed to address the most recent New York State Appeals Court decision on the issue. How this issue plays out in subsequent cases remains to be seen.

As Rule B recedes for the moment, a new US judgment has appeared with the capacity to make life very difficult for debtors in New York, whether or not they have actual property there. Brought to the conference’s attention by Michael Frevola, this is the ‘Koehler’ judgement enforcement decision by the New York Court of Appeals, which provides that a garnishee bank (or other entity, such as a party owing money to the judgment-debtor) located in New York can be ordered to turn over property of a debtor with a US presence, even when that property is not located in the US. This has enormous potential, and is not limited to marine cases. Enforcement of arbitration awards elsewhere, when they can be converted to US enforcement, are an obvious example.

The conference provided somewhat of a world tour of arrest jurisdictions, some good and some less so. Gibraltar, highlighted by Christian Hernandez of Isolas, is as accommodating, quick and effective as ever, but much the same can be said of most common law jurisdictions. Holland, introduced again by Haco van der Houven van Oordt, of now renamed AKD, remains a helpful place to arrest and sell ships even if the auction process is strange to common law practitioners. South Africa’s associated ship provisions, introduced by Tony Norton of Garlicke & Bousfield, are as helpful as ever and it appears the country is a busy place for ship arrest and sale. Courtesy of its geographic location and helpful laws, it seems likely to remain so.

Then there is a descending order of convenience around the world. France remains good for the arrest, at least from Monday to Friday, but the follow-up can be slow. Scandinavia varies, with Finland somewhat more difficult. China, as highlighted by Kevin Cooper of Ince & Co, is more modern than might be expected and not bad but can be uncertain, and as for Mexico, introduced by Omar Olvera Monroy, it sounds like a place to be kept clear of – in ship arrest terms, anyway. The UK’s freezing orders were discussed by David Semark of Quadrant Chambers, and for those of us who have used them in the past, the range of complications sounded more formidable than might have seemed at the time. But where there is a genuine fear that assets may be disposed of or moved out of the country, the remedy can be quick and effective.

By no means least in the packed two-day session, Bob Toney of National Maritime Services looked at the practical issues around ship arrest – managing ship and crew affairs, maintaining the condition and value of assets, insurance cover etc. And the factors a foreclosing bank has to consider: flag, ownership, value, is the arrest worth it, other claims (remembering that not all jurisdictions rank the mortgage first) the general suitability of any jurisdiction for the arresting party’s purposes. Which was what the conference was about and illuminated so well.

This article first appeared in the Maritime Advocate Online.