Maritime law is a unique and fascinating branch of law that governs disputes and liabilities related to seagoing vessels. Two significant legal tools stand out when enforcing maritime claims: the arrest of ships and the Mareva injunction. These mechanisms are powerful weapons in the hands of maritime claimants seeking justice or compensation, allowing courts to exercise control over a vessel or the assets of a defendant.
Let’s explore these legal remedies, their origins, and their modern-day relevance.
The Difference Between Ship Arrest and Mareva Injunction
The arrest of a ship and a Mareva injunction serve similar purposes—securing a maritime claimant’s interests—but operate under different principles.
1. Arrest of a Ship:
- Rooted in an action in rem, the ship itself is treated as the defendant.
- This allows for the physical detention or judicial sale of the ship to satisfy a maritime claim.
- It is commonly used in Admiralty Courts worldwide.
2. Mareva Injunction:
- This remedy is linked to an action in personam, directed at the defendant’s assets to prevent their dissipation.
- The Mareva injunction freezes assets (including ships) and prevents the defendant from evading legal claims.
Understanding the Arrest of Ships
The right to arrest a ship is an ancient concept, dating back centuries. Traditionally, it was used as a means to compel the shipowner’s appearance in court or to secure a claim. Over time, this remedy evolved into a well-established rule of Admiralty law.
Legal Framework: The Arrest Convention
The 1952 International Convention for the Unification of Certain Rules Relating to the Arrest of Seagoing Vessels (known as the Arrest Convention) harmonized ship arrest laws globally. It allows a ship to be arrested for 17 types of maritime claims, including:
- loss or damage to goods carried on a ship,
- Charter Party disputes,
- Salvage claims,
- Damage caused by a ship.
Notably, Greece ratified the Arrest Convention in 1967, solidifying its role in maritime legal proceedings.
Key Legal Principles of Ship Arrest
1. Maritime Liens
A maritime lien is an exceptional feature of Admiralty law. Unlike registered mortgages, maritime liens are “secret” claims that attach to the vessel itself, regardless of ownership changes. Maritime liens arise for claims related to:
- Salvage,
- Seamen’s wages,
- Damage caused by the ship,
- Bottomry and respondentia (ancient loan-based claims).
Once a lien attaches, it follows the vessel wherever it goes, and it can be enforced by in rem proceedings even if the ship is sold to a third party.
2. Sister Ship Arrest
Under English law (Supreme Court Act 1981), if a claimant cannot arrest the offending vessel, they may arrest its sister ship—a vessel owned by the same party. This widens the claimant’s ability to secure their claim. However, ownership must be clear and direct, as courts typically respect corporate structures (the “corporate veil”), unless fraud or unfair dealing is suspected.
South African law, on the other hand, goes even further by allowing the arrest of “associated ships” owned by companies linked to the same parent entity.
The Arrest Process and Practical Considerations
For a ship to be arrested, it must be physically within the court’s jurisdiction. The ship cannot be detained while exercising the right of “innocent passage” through territorial waters. Once arrested, the shipowner must settle the claim or post security (e.g., a bank guarantee) to release the vessel.
Lord Denning famously stated:
“By the maritime law of the world, the power of arrest should be, and is, available to a creditor wherever the ship is to be found.”
—The Lisboa (1980)
The arrest of a ship is often a turning point in maritime disputes. Since a vessel is a profit-generating asset, immobilizing it forces shipowners to act quickly—either by resolving the dispute or providing adequate security.
Priority of Claims Against a Ship
When a ship is sold (e.g., via judicial auction), the proceeds are distributed to creditors. However, claims are prioritized differently depending on jurisdiction:
English Law
Under English Admiralty law, claims rank as follows:
1.Statutory rights of detention and Admiralty Marshal’s expenses,
2.Costs of the arrest,
3.Possessory liens,
4.Maritime liens (e.g., salvage, damage, seamen’s wages),
5.Mortgages, based on registration date,
6.Statutory rights in rem,
7.Other claims.
United States Law
U.S. maritime law prioritizes claims as follows:
1. Special legislation rights (e.g., wreck removal),
2. Custodia legis expenses,
3. Preferred maritime liens (e.g., wages, salvage, tort claims),
4. Preferred ship mortgages,
5. Maritime contract liens,
6. Foreign ship mortgages,
7. Unregistered mortgages.
Mareva Injunction: Freezing Assets
While a ship arrest targets the vessel directly, a Mareva injunction freezes assets (e.g., bank accounts, other property) to prevent a defendant from evading liability. This remedy is particularly valuable in cases where the defendant’s assets are movable or at risk of being hidden.
For instance, if a shipowner is likely to transfer ownership to escape arrest, a Mareva injunction can freeze related assets, ensuring the claimant’s rights remain protected.
Maritime Claims and the Conflict of Laws
The legal status and priority of maritime claims vary depending on jurisdiction. While conventions like the Arrest Convention and the International Maritime Liens and Mortgages Conventions (1926 and 1967) exist, international uniformity remains elusive. Claimants must consider:
1. Status of their claim – How the jurisdiction recognizes and classifies it.
2. Priority of their claim – How it ranks in comparison to others.
Courts typically resolve these issues by applying:
- Lex loci: The law of the place where the claim arose.
- Lex fori: The law of the arresting forum (used in England).
- Flag state law: A few jurisdictions follow this.
Claimants often engage in forum shopping to improve their claim’s status or ranking.
Considerations for Jurisdiction Selection
Claimants should evaluate:
- Recognition, classification, and priority of their claim.
- Procedures like ship arrest, sister-ship arrest, and associated-ship arrest.
- Conditions for deposit, ship sale, proceeds transfer, mortgages, and maritime liens.
The Mareva Injunction
The Mareva Injunction, introduced by English courts in 1975, allows a claimant to freeze a defendant’s assets to prevent them from being dissipated before a judgment is issued.
Key points:
- 1.Origin: Nippon Yusen Kaisha v. Karageorgis (1975) and Mareva Compania Naviera S.A. v. International Bulk Carriers S.A. (1976).
- 2.Legal Basis: Section 37 of the Supreme Court Act 1981.
- 3.Scope: Initially applied to foreign defendants but now covers both domestic and foreign defendants.
- 4.Purpose: To ensure the plaintiff can recover funds if their claim succeeds, not to secure priority over other creditors.
Conditions for Granting a Mareva Injunction
The plaintiff must:
1. Show a good arguable case that would otherwise risk an unsatisfied judgment.
2. Prove assets exist within the jurisdiction.
3. Show risk of dissipation of those assets.
4. Provide an undertaking in damages in case the injunction is later found unjustified.
Operational Aspects
- The injunction applies to all assets within the jurisdiction, unlike arrests, which only attach to maritime property.
- Third-party interests (e.g., banks or port authorities) are protected through indemnities.
- Worldwide Mareva Injunctions are rare and rely on foreign courts for enforcement.
Limitations
- The Mareva Injunction does not attach to the assets or provide the plaintiff with priority.
- Its sole purpose is to prevent the defendant from defeating a judgment by moving or dissipating assets.
Conclusion
The right to arrest a ship and the Mareva injunction are cornerstone tools in maritime law, ensuring claimants have access to powerful remedies when enforcing their rights. Whether through in rem proceedings against the ship or freezing a defendant’s assets, these legal mechanisms provide the leverage needed to secure claims, resolve disputes, and uphold justice on the high seas.
In the competitive and often volatile maritime industry, these remedies serve as vital safeguards for cargo owners, charterers, seafarers, and shipowners alike.