Published On: Mon, Sep 4th, 2017

Courts provide welcome clarity on ship arrest jurisdictional issues

Introduction

There has been ongoing debate about the scope of Article 7 of the International Convention Relating to the Arrest of Seagoing Ships 1952, which grants jurisdiction to a court granting leave for arrest to also hear the substantive claims. The debate often boils down to whether Article 7 also applies to vessels flying the flags of countries which are not signatories to the convention. Recent decisions from the Kingdom of the Netherlands (which comprises the Netherlands, Aruba, Curacao and Sint Maarten) – the most recent of which came from Curacao – have reaffirmed that the application of Article 7 is not limited to vessels flying the flags of contracting states.

Background

Article 7 of the convention provides that the courts of the country in which an arrest is made will also be competent to determine the claim on its merits in various situations if the country's domestic law so provides. In addition, Article 8 stipulates that the convention applies to any vessel flying the flag of a contracting state. Hence, it has been argued that jurisdiction cannot be based on Article 7 where the vessel does not fly the flag of a signatory to the convention.

However, one of the convention's aims was to limit the types of claim for which seagoing ships can be arrested in order to promote unhindered shipping. The reference in Article 8 to ships flying the flags of contracting states was intended to serve only as an incentive to states to ratify the convention and thereby gain protection for their fleets against arrest for non-maritime claims.

Despite this, the interpretation of the jurisdiction rules under the convention has varied from country to country. In the Kingdom of the Netherlands, the courts have now established clear guidelines on the issue.

Decisions

In 2012 the Rotterdam Court was the first to hold that it had jurisdiction to hear a claim brought by the owners of a fishing vessel which had suffered severe damage after a collision with the Malta-flag bulk carrier Kaliakra following the latter's arrest in Rotterdam. The Maltese owners of the vessel argued that the Rotterdam Court did not have jurisdiction because it was flying the flag of a state which had not contracted to the convention and referred to the limited scope of the convention as set out in Article 8. However, the court ruled that ships flying the flags of non-contracting states should not be treated more beneficially than ships flying the flags of contracting states. The court subsequently concluded that Article 7(1)(d) of the convention applied equally to vessels not flying the flag of a contracting state, and that the substantive claim could therefore also be brought in Rotterdam, where the Kaliakra had been arrested.

Further, in 2013 the Den Haag Appeal Court ruled in Hero that Article 7 of the convention applies to all vessels, irrespective of flag and owner. The case involved a dispute over the repayment of a loan secured by a mortgage. The court decided that the Rotterdam Court had jurisdiction simply because the mortgage bank had arrested the vessel in Rotterdam, and that the flag and the owner's nationality were irrelevant, pursuant to Article 7(1)(f).

Most recently, the Curacao Court confirmed the jurisdictional principles in Oste in early 2017, adding that if a ship is arrested in the course of a voyage during which a claim arises, those seeking to arrest the vessel will similarly be able to establish jurisdiction under Article 7(1)(c) of the convention.

Comment

In light of these decisions, parties seeking to arrest ships in the Kingdom of the Netherlands can expect the courts to accept jurisdiction for the substantive claims on the basis of Article 7 of the convention. This provides a welcome level of certainty and consistency with regard to the sometimes blurred distinctions surrounding forum arresti, which is in keeping with what can reasonably be expected to have been the intention of the convention's drafters.

By Haco van der Houwen van Oordt

For further information on this topic please contact Haco Van der Houven van Oordt at AKD by telephone (+31 88 253 50 00) or email (hvanoordt@akd.nl). The AKD website can be accessed at www.akd.nl.

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