Russin & Vecchi L.L.C. International Legal Counsellors, Vladivostok Branch Office
Office 1, Sukhanova St. 6-v, Vladivostok 690091
Tel.: 7 (423) 243-30-33
Fax: 7 (423) 243-23-66
E-mail: vladivostok@russin-vecchi.ru
Introduction
The present article provides an overview of the Russian legislation applicable to ship release and court practice related to ship release.
In accordance with Article 388 of the Merchant Shipping Code of the Russian Federation dated April 30, 1999 No. 81-FZ (hereinafter – RF MSC) arrest of a ship is deemed as any detention or restriction in movement of a ship within the jurisdiction of the Russian Federation, carried out under a decision of a court, state arbitration (commercial) court or maritime arbitration court authorized by law to impose arrest on a ship to secure a maritime claim, except for seizure of a ship effected in execution of a decision of a court, state arbitration (commercial) court or arbitration tribunal which has come into legal force. [1] For more details on the ship arrest procedure in Russia, as well as the applicable legislation, please review the article “Ship Arrest in the Russian Federation, by Natalia G. Prisekina, Russin & Vecchi”. [2]
The ship release procedure in Russia is governed by Article 391 of RF MSC. The Article is brought into conformity with Article 5 of the International Convention for Unification of Certain Rules Relating to Arrest of Sea-going Ships, signed in Brussels on May 10, 1952 and Item B, Article 4 of the International Convention On Arrest of Ships, Signed in Geneva on March 12, 1999. Moreover, court practice confirms that a ship cannot be released from arrest except on the grounds set out in the Convention of 1952 and RF MSC in accordance with the provisions specified in Article 5 of the Convention of 1952. As the state arbitration (commercial) court pointed out, regulation of ship release established by the International Convention differs from the regulation on cancellation of interim measures imposed by the Arbitration Procedural Code of the Russian Federation and the Law On Bankruptcy, therefore, the reference to these laws in a ship release dispute is unreasonable. [3]
However, in case of arrest of a ship under the flag of the Russian Federation by a resident of the Russian Federation, arrest of the vessel may be revoked according to legislation of the Russian Federation – including the provisions of the Federal Law On Bankruptcy. [4] As noted by the Supreme Arbitration (Commercial) Court of the Russian Federation in case №VAS-1506/13, application of the Convention 1952 is excluded once the legal relations do not have international character. [5]
Pursuant to the Russian legislation ship release is executed by the same court which had issued the arrest warrant, after producing sufficient security in the applicable form.
Sufficiency of security is determined by considering all possible creditors’ claims and interest payable.
As a rule the debtor and the creditor come to a settlement prior to applying to the court. In accordance with the Civil Code of the Russian Federation, one of the types of security form may be surety commitment and bank guarantee. The provision herewith should specify that it is granted as security of execution of any judgment which ultimately may be imposed by a court having jurisdiction to consider the merits of the case.
In case the debtor and the creditor failed to come to a settlement with regard to the form and sufficiency of security, it is determined by the court. The amount of security herewith should not exceed value of distrained property. Also, after the security transfer the debtor is entitled to petition the court for decrease, alteration or cancellation of security. Article 391 of RF MSC emphasizes that the debtor’s petition for release and provision of security cannot be considered as confession of guilt and acknowledgement of liabilities to creditors.
Since the Russian Federation has ratified the International Convention Relating to the Arrest of Sea-Going Ships of 1952, its provisions are respectively enforced by Russian courts at ship release. Thus, pursuant to Article 7 of the Convention there are two cases provided, when the court which had executed conservatory attachment determined the term for filing the claim in another court.
First, the court establishes the term within which the person having claim against the debtor should file the claim in the competent court. Next, if the parties have agreed to refer the dispute to a specific court or an arbitration (commercial) court for resolution, the court which has put a lien on the ship is entitled to establish the term within which the person having the claim may bring a suit.
In both cases the defendant is entitled to petition the court for the ship release or security or other guarantee if the suit has not been brought within the established term.
The ship arrest also may be cancelled upon the petition of the claimant if the parties have reached reconciliation. [6]
This article is only an overview of ship release topics and procedures in Russia. For concrete up-to date legal advice please do not hesitate to contact our offices at the coordinates provided in the website and letterhead.
Natalia G. Prisekina, Anton О. Iuzhhanin.
© Russin & Vecchi, L.L.C. International Legal Counsellors
[1] As amended on July 13, 2015;
[2] Web-link https://www.shiparrested.com/ship-arrest-in-the-russian-federation.html;
[3] Ruling of the Federal Arbitration (Commercial) Court of the Far Eastern District, case №A51-1943/2011, December 03, 2012;
[4] Federal Law on № 27-FZ of October 26, 2002 “On Insolvency (Bankruptcy)”;
[5] Ruling of the Supreme Arbitration (Commercial) Court, case №A51-1943/2011, August 05, 2013;[6] Clause 14 of Information letter of Presidium of the Supreme Arbitration (Commercial) Court №78.
