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A ship Arrest in Russia, by Igor Nikolaev, IN Law Office

IN Law Office

P.O. 10
St. Petersburg 194214, Russia
Telephone / Facsimile: +7 (812) 320 12 18
Web: www.inlaw.ru

A ship arrest in Russia became a real possibility when the new Merchant Shipping Code of the Russian Federation came into force on 1 May 1999. Only a few months before in January 1999, Russia acceded to the Brussels Arrest Convention 1952. But the chapter of the Merchant Shipping Code Arrest of ships took into consideration not only the definitions of the Brussels Arrest Convention 1952, but partly innovations from the Arrest Convention 1999 which was adopted at the conference in March 1999. Before the 1st May 1999 the arrest of a vessel could be done in Russia only as security for a claim in specified cases in accordance with the Civil Procedure Code of the Russian Federation or the Arbitration Procedure Code of the Russian Federation. (This possibility still exists).

In accordance with the Merchant Shipping Code of the Russian Federation, a vessel can be arrested only by a court’s decision as security for a maritime lien or a maritime claim. This rule does not relate to the rights of a Harbour Master, a Port Authority or State official to detain a vessel in situations stipulated elsewhere by Russia Law. For example, a vessel can be detained by the customs authorities if they discover smuggling on board.

The Merchant Shipping Code of the Russian Federation declared that a vessel can be arrested regardless of an existing arbitration clause or even if the dispute is to be judged in a jurisdiction other than the Russian Federation. (In reality, the existing practice of Russian Courts can be very contradictory and it is very difficult in practice to arrest a vessel if the case is not tried in that Russian Court).

But if the particular incident that gave rise to the claim, (a collision or damage to the cargo, etc.) occurred on the territory of the Russian Federation or the port of destination of the cargo is in Russia a claim can be brought in the Russian Court and an additional petition can be lodged to arrest the vessel as security for the claim. This petition would normally be decided by the Court in a day. The Claimant (as well as a Defendant ) needs to provide to the Court a duly authorised Power of Attorney that must be notarized and legalized if the party is not a Russian legal entity.

(The Court by its own initiative or by the petition of the opposite party could strictly require from the Claimant counter-security for any possible damages and losses but as a rule it does not.)

The Court issues a ruling to arrest the vessel as security for the claim in accordance with documents evidencing the claim and that the vessel is the only property of the foreign legal entity within the territory of the Russian Federation. The Court?s ruling will then be presented to the Bailiff?s office and the Bailiff will issue his own order to arrest or detain the vessel. That document the Court Bailiff then presents to the Master of the arrested vessel and to the Port Authority.

The vessel can be released from arrest on the provision of whatever type of security is acceptable to the claimant but if agreement cannot be reached then cash can be paid into court in Russian Roubles. The Court then issues an order canceling the arrest of the vessel and the vessel will be released. The arrested vessel can only be released by a Court order and that order can be as a result of the provision of security or the result of trying the case in the Court (including settlement of the case).

The cost of arresting a ship in Russia is equivalent to the Court fee that the Claimant must pay when the claim was lodged. It is about five percent of the amount of the claim. This sum can be recovered from the opposite party if the claim is successful. But if the claim is lost, the shipowner has a right to claim all damages and losses resulting from the arrest of the vessel.