Article issued for the third edition of “Ship Arrest in practice”, 2008, published by shiparrested.com network.

By Audun Bollerud
Kluge Advokatfirma
audun.bollerud@kluge.no
www.kluge.no
Postboks 7548 Vika,
117 OSLO, Norway
Tel: 23 13 92 00
Fax: 23 13 92 01

Overview

1.    Please give an overview of ship arrest practice in your country.
In Norwegian law, arrest is a remedy to secure a monetary claim. The rules are general in nature, with certain special rules that apply to ships. Arresting a ship in Norway can be arranged quickly without large costs and can be an efficient tool to secure a maritime claim against a ship owner.
In order to arrest a ship, the claimant must submit an application to the District Court. Pursuant to the Dispute Act section 32-4, the claimant can either submit the application to the court in the judicial district where the defendant resides in Norway, or to the court in the judicial district where the ship is currently located or is expected to be located in the near future.
In order to arrest a ship, the claimant must prove the probability of the maritime claim, that a “ground for arrest” exists, and that the other conditions for an arrest are fulfilled.
As a general rule, the “ground for arrest” is an essential condition for arrest. The Dispute Act provides that an arrest can only be decided by the courts when the behaviour of the debtor gives reason to fear that the enforcement of a claim otherwise will be made impossible or made substantially more difficult, or if enforcement has to take place outside Norway.
However, if the situation is especially precarious, the ship can sometimes be arrested without a “ground for arrest”.
The courts will usually consider the application on the basis of written material without a hearing, as time will often be of major importance.  If the application succeeds, the courts will notify the enforcement authorities. This secures that the ship does not leave the harbour, and that the arrest is correctly reported to the ship register.

Applicable Laws

2.    Which International Convention applies to arrest of ships in your country?
Norway is a party to the 1952 Arrest Convention, which is incorporated in the Maritime Code and in the Dispute Act. Norway has reserved its rights as provided by Art 10 (b). Norway has signed but not ratified the 1999 Arrest Convention.

3.    Is there any other way to arrest a ship in your jurisdiction?
There is really no alternative to the normal procedures for arrest as such. However, once a ship has successfully been arrested, the claimant can request the arrest to be registered as a legal right in the ship register, but without keeping the ship in detention. An arrest will also be registered in the ship register as part of the normal enforcement procedure. The advantage of a register arrest without detention, however, is that the claimant is less exposed to liability if the arrest is subsequently found to be wrongful.

4.    Are there alternatives e.g. saisse conservatoire or freezing order?
A vessel may serve as legal security for a claim in other ways than arrest. One possibility is the ordinary rules on liens and mortgages, under which the claim is secured by a right in the ship. This gives the creditor the right to force a sale of the ship. Such security can be based on contract, order of the enforcement authorities or statute. The creditor’s right of retention, which can be based on contract or statute, may also give security. This is a passive right to retain the ship, but does not give the creditor a right to enforce its claim through forced sale.

Claims subject to ship arrest

5.    For which types of claims can you arrest a ship?
According to the Maritime Code section 92, a ship can only be arrested if the claim is a maritime claim. Section 92 defines “maritime claim” in detail.  In addition, section 93 (1) provides that the claim must be related to the ship, with some exceptions for sister ships.

6.    Can you arrest a ship irrespectively of her flag?
Yes.

7.    Can you arrest a ship irrespectively of the debtor?
No. According to the Maritime Code section 93 (4), the ship can only be arrested if it can serve as an object for enforcement of the claim in question. As a consequence, the debtor has to be the owner of the ship.

8.    What is the position as regards sister ships and ships in associated ownership?
As mentioned above, the main rule is that the claim must be related to the ship. However, some important exceptions from this are made in the Maritime Code section 93.

9.    What is the position as regards Bareboat and Time-Chartered vessels?
The power of arrest in Norwegian law is narrower than the power in the 1952 Arrest Convention. This is due to the requirement in the Maritime Code section 93 (4), which establishes that an arrest can only be granted where the debtor is the owner of the ship. Where a bare boat or time-chartered vessel causes damage, it is normally the bare boat charterer or time charterer who will be liable, and not the owner. Accordingly, it will not be possible to arrest the vessel in these cases according to general law. However, there are some important exceptions from this as regards maritime liens.

Arrest Procedure

10.    Do your Courts require counter-security in order to arrest a ship?
Section 33-3 of the Dispute Act provides that the court can require the claimant to deposit securities as a condition for the implementation of the arrest. The security is fixed at the courts discretion.

11.    Is there any difference in respect to arresting a ship for a maritime claim and a maritime lien?
Section 92 (2)(q) of the Maritime Code exempts maritime liens from the definition of a maritime claim. However, as a general rule, a maritime lien will fall within the other categories of the definition in section 92 (2). Consequently, there is usually no difference in respect to arresting a ship for a maritime claim and a maritime lien.

12.    Does you country recognise maritime liens?  Under which International Convention, if any?
Yes, maritime liens are recognized under Norwegian law. The provisions on maritime liens are found in the Maritime Code section 51. However, the 1967 Maritime Lien Convention is not effective in Norway.

13.    What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
Kluge law firm recognize the need for swift action in cases regarding arrest of ships, and we will normally be able to arrange for arrest of a vessel in any Norwegian port within 24 hours after receiving necessary documentation.

14.    Do you need to provide a POA, or any other documents of the claim to the Court?
No. It is advisable and sometimes even required that the claimant appoints legal counsel to represent him with the claim. According to the law, an application for an arrest can be submitted orally to the courts, but this is more theoretical than practical and it is normal procedure to issue a written petition signed by either the claimant or his legal counsel.

15.    What original documents are required, what documents can be filed electronically, what documents require notarisation and/or apostille, and when are they needed?
There are no formal requirements as to what documents can be presented to the courts. However, it is advisable to submit any documentation relevant to the substantive claim together with the petition. This increases the chance of a successful arrest, as in most cases the claimant must prove the substantive claim on a balance of probabilities.

16.    Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested?
Yes. Subject to any agreements on venue or arbitration, legal proceedings regarding the substantive claim can be instituted in the courts of the judicial district where the ship has been arrested.

Miscellaneous

17.    Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits?
The defendant can request the courts to fix a time-limit by which the claimant must institute legal proceedings. If no such time-limit has been fixed by the court, the period will be one year from the issue of the arrest order. If proceedings are not instituted within the time-limit, the arrest order will be quashed. The courts can, at their own discretion, extend the one-year time limit if a request is submitted within the time-limit.

18.    Do the Courts of your country acknowledge wrongful arrest?
Yes. Section 32-11 of the Dispute Act imposes on the claimant a wide-ranging duty to indemnify the defendant for any economic loss he has suffered if the claim did not exist at the time of the arrest. The same applies if the claimant by negligence or intent has given wrongful or misleading information regarding the “ground for arrest”.

19.    Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?
As a general rule, the shareholders of a company with limited liability will not be personally liable for the obligations of the company.
However, the courts will make an overall evaluation and, in exceptional circumstances, the possibility of piercing and lifting the corporate veil cannot be ruled out. Important factors in the overall evaluation will be whether it would be unreasonable towards the creditor to uphold the corporate veil in the particular situation, or whether the companies have been mixed in such a way that the upholding of the corporate veil does not deserve preservation from the courts.

20.    Is it possible to have a ship sold pendente lite; if so how long does it take?
When a ship has been arrested, the effect of the arrest is that the owner looses his complete control over the ship. This means that the owner cannot decide to sell the ship as long as the arrest is upheld.
An arrest does not give the claimant the right to a compulsory fulfilment. Such sale would require an enforcement ground. The claim is considered to be pendente lite until a legally binding judgement has been delivered by the courts. As a consequence, the claimant cannot demand that the ship is sold pendente lite. However, the courts can permit this if the arrest holder requests it, and it is necessary to avoid substantial decrease in value.