Maritime Law: What To Do When Your Vessel Is Arrested

No ship owner wants to risk their vessel being subject to arrest, and if this becomes a reality – the implications for the owner, the crew on board a ship, its cargo and reputation could be significant. The ship will seek to avoid arrest by complying with the national and international law and regulations.

Arrest of ship is a legal process for the lawful arrest of a vessel by way of court order to secure a maritime claim or to enforce a court’s jurisdiction over the ship for other reasons. It is a powerful remedy available in admiralty law and is typically invoked when there is a dispute involving the ship, such as unpaid debts, breach of contract or damages caused by the ship.

If your ship is arrested and action against the ship commences, the practical and financial consequences and the inconvenience can be serious. If you’re facing a vessel arrest – don’t wait: contact the experts at ParrisWhittaker now for immediate legal assistance. Protect your rights and secure your vessel’s release swiftly.

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Understanding Ship Arrest

Ship arrest is a legal procedure in admiralty and maritime law allowing creditors or other parties to secure a claim against the ship in order to secure a maritime lien or safeguard a legal claim. The arresting party cannot have your vessel arrested without a warrant to arrest from the court. Only if a warrant is issued is it possible for a claimant to arrest your vessel and detain it in the port.

Once your vessel is under arrest the Admiralty Marshal has custody of the ship and it cannot usually leave the port in the Bahamas until the court releases the ship or the claims against the vessel are resolved. In short, ship arrest is intended to protect the interests of those with valid claims or liens linked to the vessel. A foreign ship can also be arrested within Bahamian waters.

However, the owner of the ship also has legal rights and our experienced ship arrest lawyers will support you in protecting your rights and working to resolve the dispute promptly.

Reasons for Ship Arrest

A vessel cannot be arrested simply on the whim of another party – they must have a valid claim giving the right to arrest. A ship arrest can occur where a valid maritime claim or lien has arisen. This means the ship must be connected somehow to the claim. You can prevent arrest by ensuring any outstanding debts or claims are resolved before action is taken by a claimant to arrest your vessel.

Reassuringly, the arrest of a ship in the Bahamas is usually a last resort to enforce compliance, protect maritime liens and mortgages and ensure maritime safety, environmental protection, and other legal obligations are met.

These are the most common types of claim against a ship that can risk a ship arrest.

Maritime Liens

A maritime lien is a particular type of debt owed which can be enforced by way of a claim against a vessel. It provides the creditor with the right to seek payment from the ship itself, rather than from the owner. The law governing maritime liens is found in English common law and Bahamian legislation, such as the Merchant Shipping Act.

This type of lien can arise in different circumstances, such as creditors under a ship mortgage, unpaid seafarers’ wages or ship repairers and where another ship has been damaged as a result of a collision caused by the arrested ship.

Ship arrest can also be used to secure the creditor’s statutory right to payment – the statutory lien is attached to the ship itself rather than its owner.

Contract Disputes

Unresolved contract disputes can lead to a ship arrest. In certain circumstances, a contract breach can automatically give rise to a maritime lien in common law – and the right to have a ship arrested. For example, a ship owner may be in breach of an agreement to pay port fees; in breach of charterparty in failing to pay hire charges; maintenance disputes; purchase contract disputes; and loan defaults and a lien is contracted.

Crew Wage Disputes

It is possible for the property to be arrested to secure claims related to unpaid seamans’ wages and unpaid Master’s wages and disbursements. The ship arrest may occur prior to determination of Court proceedings, ensuring that the necessary funds will be available to settle outstanding wages.

Damage Claims

• Cargo Damage – In maritime law, a lien can arise from damage to cargo or other items brought onto the vessel or damage caused by or to the vessel. A claimant may arrest the vessel in rem to secure their claim, especially in cases of unseaworthiness.

Such actions highlight the complexities of maritime disputes where various factors, including the condition of the vessel and the nature of the cargo, can influence the outcome. Ultimately, the law provides mechanisms for securing claims and addressing damage-related grievances that arise in the shipping industry.

• Collisions – Claims arising following a collision typically relate to damage to a vessel and, sometimes, potential injuries. When a vessel is responsible through negligence or carelessness, damage caused to another vessel can result in significant financial losses.

To recover damages, it is possible to arrest the ship and seek a settlement.

Salvage Claims

Ship arrest can mean a vessel is detained to secure salvage claims. A lien can arise from the costs incurred during the lifting and repair of a vessel following a shipwreck or other type of incident at sea, and if it remains unpaid, give rise to the arrest of a ship.

In such cases, the ship can be arrested until the outstanding claims are settled, ensuring that salvors are compensated for their efforts in recovering the vessel, and in minimizing environmental damage.

Environmental and Pollution Claims

Ship arrest can also occur if a lien arises out of incidents causing environmental disasters and other pollution. This is especially true if your vessel is responsible for pollution, such as an oil leak or chemical spillage. Ship arrest action and legal claims are intended to recover financial damages for clean up and damage, as well as secure compensation to any victims affected by the marine pollution and other harms caused.

Breach of Charterparty Agreements

When a charterparty agreement or other agreement relating to the use of the vessel is breached, shipowners may resort to legal action, and the arrest of the vessel involved. This process serves as a means to secure claims and enforce contractual obligations. The arrest can significantly disrupt operations, impacting both parties financially and operationally.

Safety and Regulatory Violations

Safety and regulatory violations can trigger an arrest warrant against the ship under international maritime law and the laws of individual states such as the Bahamas. Where a ship owner/crew is responsible for violations relating to the safety, security, and environmental standards set by national rules and international conventions – you may face the prospect of ship arrest.

The Bahamas Maritime Authority has legal authority to detain a vessel that poses an immediate threat to safety, for example where it has identified serious safety deficiencies.

While such detentions are initially administrative, a formal arrest of the ship can follow if the issues are not resolved or legal proceedings are initiated.

Examples of regulatory breaches that could result in the arrest of a vessel include:

• Violating the International Safety Management (ISM) Code (part of the International Maritime Organization (IMO) regulations); Breaches of the International Convention for the Safety of Life at Sea (SOLAS)
• Labor law, security or safety breaches
• Unqualified crew or Failure to Meet Minimum Safe Manning Requirements
• Unseaworthiness
• Environmental violations in the Bahamas’ protected areas and failure to comply with MARPOL (Marine Pollution)
• Failure to comply with port rules and regulations
• Non-compliance with Ballast Water Management Regulations
• Failure to maintain valid certificates
• Human trafficking and other illegal activities

The Legal Procedure for Ship Arrest

An arresting party is required to follow due process before a ship arrest is made. The application to arrest a ship is made to the Supreme Court prior to an arrest. A successful arrest application will result in a warrant permitting the arrest of the particular ship.

The legal framework is set out in:

• The 1999 Convention on the arrest of ships (to which the Bahamas is party) states that a ship within the country’s jurisdiction may be arrested for the purpose of obtaining security notwithstanding a jurisdiction or arbitration clause to the contrary; and
• Bahamas national laws – the Supreme Court Act, The Merchant Shipping Act 1976 (and associated court rules also govern arrest on a ship where, for example, it is necessary in respect of any maritime claim) but not limited to.

An applicant for a warrant for arrest must have a valid maritime claim arising in relation to the arrest sought, in order to arrest a ship or other property.

The Legal Procedure for Ship Arrest

The arresting party must correctly file an admiralty claim form to initiate the arrest process, along with the necessary documentation and evidence. It will be an ex parte application (which means an Owner of a Vessel you will have no notice that the application has been made).

The Claim form must be supported by an affidavit in which the applicant must demonstrate that the vessel is connected to the claim and that the Court has jurisdiction under section 8 Supreme Court Act. This involves verifying claims and providing appropriate documentation to support the request.

Obtaining a Warrant of Arrest

A ship can only be arrested if the necessary legal criteria are met. Only once the requirements of the law of ship arrest are satisfied, and a warrant for arrest has been issued, can steps then be taken to place a ship under arrest.

The arrest of the vessel is one of several events in the legal process.

If a vessel has been arrested, the Owner of the Vessel will be seeking to understand what notice of the arrest they are entitled to; the time of arrest; grounds for the arrest; whether the Claimant has a maritime claim secured by a maritime lien; whether any sister ship arrest is possible; how long the vessel may remain under arrest; how you can preserve the ship; and so on.

Execution of the Arrest

The role of the Admiralty Marshal in the ship arrest process is crucial. When a warrant issued by the Supreme Court is received, it authorizes the arrest which will allow the ship to be detained, enabling the Claimant to start action for enforcement of maritime claims. The Admiralty Marshal is responsible for serving the warrant to the vessel’s master or representative.

Once successfully served with the warrant, the ship is arrested and the vessel detained. The warrant is executed by the Admiralty Marshal, who physically arrests the ship. The Admiralty Marshal is responsible for both the arrest and securing the vessel – working with the police, coast guard, and other relevant bodies to ensure that the vessel is detained in port or at anchorage and does not leave Bahamian waters before the dispute or claim is resolved.

Post-Arrest Procedures

On a more practical note, if your ship is detained, you will be concerned about whether the arrest papers are valid; how to release the vessel from arrest; how long it may remain under arrest; whether moving the ship is possible; continued access to the ship without hindrance; and so on.

Notification and Hearing

The shipowner (or their agent or legal counsel) will be notified of the arrest. If you have been notified that your ship is under arrest, contact the expert maritime and ship arrest lawyers at ParrisWhittaker immediately before taking any further action.

The Shipowner or its representatives will receive a copy of the arrest warrant and related legal documents from the Admiralty Marshal. On your behalf, we can commence negotiations with the claimant to resolve the dispute as promptly as possible.

Note that the relevant authorities, such as customs and immigration, are also notified of the arrest of your vessel.

You should be given the opportunity to respond to the arrest warrant in court, and we will be pleased to represent you. The options include settling the claim against you, negotiating a fair resolution, and offering security, such as a P&I Club letter of guarantee or bank guarantee, for the release of your vessel.

If we believe the arrest is wrongful, we can robustly contest the arrest in court on your behalf.

Maintaining the Vessel

The cost to the shipowner of continued detention of the ship in the port can be high, whether the ship is released promptly or the period of arrest is substantial. There are the costs of maintenance and upkeep of the vessel; paying the crew and providing provisions; the Admiralty Marshal’s costs, 24-hour security; berthing and dockage fees; anchorage fees; towage and potential pilotage fees.

If your vessel needs additional inspections because of its condition or the arrest situation, additional inspection fees may also be charged. There will also be the costs of the arrest itself.

The costs will depend on the nature and complexity of the dispute and will increase the longer the vessel is detained. How you respond to the arrest of your ship will be crucial to the outcome achieved.

Potential Outcomes

Once a ship is placed under arrest, the options are essentially the release of the vessel, challenging the arrest, settlement of the dispute, or a forced sale.

It is important that the shipmaster promptly responds to the situation with a clear plan of action. Whatever your response, immediate cooperation and communication with the Admiralty Marshal are essential to understand the legal basis for the arrest and the required steps for resolution.

The most important thing you should do is contact expert legal counsel for robust assistance. Our team of experienced maritime attorneys is here to provide the professional, authoritative, and reassuring support you need to protect your interests. Contact ParrisWhittaker today for a consultation and let us help you navigate the legal challenges with confidence.

You must also notify your insurers without delay as required by your policy of insurance.

Challenging the Arrest

A ship owner should check the details on the warrant are accurate, ensuring all documentation and information regarding the vessel’s status are correct to avoid further complications. This proactive approach can help prevent the ship from being arrested longer than necessary. Check the date: a warrant for the arrest of a ship is valid for 12 months from the date of issue. If the warrant has expired, the arrest will not be valid (the applicant will need to apply for a new warrant).

If the warrant expires while the vessel is detained (i.e., it’s as yet unsold and debts not yet paid), the warrant will need to be reissued. It means shipowners can challenge the warrant once the time limit has expired.

It is possible to claim wrongful arrest following a ship arrest in the Bahamas, for example, if it was unjustified, motivated by malice or gross negligence, or another form of significant abuse of legal process. In circumstances where a shipowner has strong grounds to challenge an arrest in this way, we will not hesitate to help you claim compensation for the arrest and any subsequent detention.

Releasing a Ship from Arrest

Posting Security

Release of the vessel may be secured by providing security in the form of a bank guarantee or a letter of undertaking, which assures the court that any potential claims can be satisfied. Common options for acceptable security include:

• Cash – A straightforward method.
• P&I Club Letter of Undertaking – This provides assurance from the International Group of Protection & Indemnity Clubs.
• A bank guarantee – often a viable alternative, offering financial security from a reputable financial institution.

Ultimately, the choice of acceptable security is often determined by the parties’ agreement. The calculation of an appropriate security amount includes various elements to ensure the release of the vessel. This amount typically includes interest and the costs of arrest, along with other expenses incurred during the process, such as the Admiralty Marshal’s costs in executing the warrant and the costs of serving the warrant.

Additionally, the security amount must cover the 24-hour security of the vessel itself and associated fees. An undertaking may also be required to guarantee that all costs will be settled.

Negotiating Settlements

An acceptable resolution to the dispute – and securing the release of your vessel – is to negotiate a prompt settlement with the claimant. The parties will need to be open, transparent, and cooperative with each other. The validity and value of the claim will need to be carefully considered and evaluated before a fair settlement can be proposed.

Once a settlement is on the table, the parties can negotiate the terms and reach a final settlement agreement – incorporating a court order if necessary to formalize it (this protects both parties). The court can then be asked to approve it – and order the release of your vessel.

The process of securing an acceptable settlement takes time and skill. We are available to help you from the outset, representing your interests and working to achieve the best settlement while recognizing that you need your vessel to be released promptly.

Sale of the Vessel

If no settlement is reached and no security is put up for release, the possibility of a judicial sale of the ship may arise. A sale may be the only option to satisfy outstanding legal claims by realizing the value of the ship to resolve the dispute. A sale may, for example, be required to discharge an outstanding mortgage or other substantial debt related to the vessel itself.

The court can order the ship to be sold where the claimant has obtained a court judgment against the ship or its proceeds.

Court Procedures for Release

The release of your vessel is your priority. To achieve its release, you will most likely need to provide security or reach a settlement (or other resolution) of the substantive legal claim against you.

Once you are in a position to seek a release order, an application can be made to the Bahamas Supreme Court for an order for the release of your vessel. To support your application, the court will need a signed formal settlement agreement outlining the terms you and the claimant have agreed, including any payments or security provided. You will also need to provide proof of payment or security and any other affidavit or documents the court may require.

A court hearing is required to obtain the release order. Your lawyer will be able to represent you in satisfying the court that all the conditions for the vessel release have been met. The judge will issue a court release order formally directing that the vessel be released from arrest.

The Admiralty Marshal will need a copy of the court release order in order for the warrant of arrest to be lifted and the vessel released from detention. You will be expected to pay any outstanding port charges or fees incurred during the arrest period. Once your vessel is released and you can resume operations, make sure you request and retain documentation to confirm release.

Conclusion

Claims arising from ship-related disputes can lead to your vessel being seized and further legal action being taken against you. A party seeking to arrest a vessel must apply for a warrant from the court before the arrest of a ship becomes a reality.

If you are a shipowner facing the arrest of your vessel – you need clear guidance and effective legal advice from specialist maritime law experts.

Facing a vessel arrest? Don’t wait—contact the experts at ParrisWhittaker now for immediate legal assistance. Protect your rights and secure your vessel’s release swiftly. Contact Us Today!