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Arrest of ships under Venezuelan law, by Sabatino Pizzolante Maritime and Commercial Attorneys

 

Arrest of ships under Venezuelan law, by Sabatino Pizzolante
Sabatino Pizzolante Maritime & Commercial Attorneys
C.C. Inversiones Pareca, Piso 2, Ofics. 2-08/2-09, Urb. Cumboto Sur,
Estado Carabobo, Puerto Cabello, Venezuela
Phones: +58-242-3641026/3641798 – Fax: +58-242-3640998
E-mail: mail@sabatinop.com / Website: www.sabatinop.com

1.- Legal Background

Arrest of ships under Venezuelan law is governed: a) By the provisions of Decision 487 on
Maritime Guarantees and Arrest of Ships, issued by the Andean Community, based on the 1993 nternational Convention on Maritime Liens and Mortgages as well as the 1999 International onvention of Arrest of Ships; and, b) The provisions contained within the Law on Maritime ommerce (LMC) enacted in November 2001.

For a review of the said Decision 487, we refer you to the Sabatino Pizzolante Newsletter No. 14 August 2002), that can be downloaded from the Publication section of the firm´s website at ww.sabatinop.com


2.- Claims giving rise to the right of arrest

Specific provisions on the subject, although based on the 1999 Arrest Convention, are found in the MC for which reason it seems appropriate to briefly review its Title III.
Thus, article 93 contains the list of maritime claims giving rise to an arrest (embargo preventivo) of ship:

1.- Loss or damage caused by the operation of the ship;

2.- Loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the ship;

3.- Salvage operations or any salvage agreement, including, if applicable, special compensation elating to salvage operations in respect of a ship which by itself or its cargo threatened damage to he environment;

4.- Damage or threat of damage caused by the ship to the environment, coastline or related interests; easures taken to prevent, minimize, or remove such damage; compensation for such damage; costs f reasonable measures of reinstatement of the environment actually undertaken or to be undertaken; oss incurred or likely to be incurred by third parties in connection with such damage; and damage, osts, or loss of a similar nature;

5.- Costs or expenses relating to the raising, removal, recovery, destruction or the rendering armless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has een on board such ship, and costs or expenses relating to the preservation of an abandoned ship and aintenance of its crew;

6.- Any agreement relating to the use or hire of the ship, whether contained in a charter party or therwise;

7.- Any agreement relating to the carriage of goods or passengers on board the ship, whether ontained in a charter party or otherwise;

8.- Loss of or damage to or in connection with goods (including luggage) carried on board the ship;

9.- General average;

10.- Towage;

11.- Boating (Lanchaje);

12.- Pilotage;

13.- Goods, materials, provisions, bunkers, equipment (including containers) supplied or services rendered to the ship for its operation, management, preservation or maintenance;

14.- Construction, reconstruction, repair, converting or equipping of the ship;

15.- Port, canal, dock, harbour and other waterway dues and charges;

16.- Wages and other sums due to the master, officers and other members of the ship’s complement in respect of their employment on the ship, including costs of repatriation and social insurance contributions payable on their behalf;

17.- Disbursements incurred on behalf of the ship or its owners;

18.- Insurance premiums (including mutual insurance calls) in respect of the ship, payable by or on behalf of the shipowner or demise charterer;

19.- Any commissions, brokerages or agency fees payable in respect of the ship by or on behalf of the shipowner or demise charterer;

20.- Any dispute as to ownership or possession of the ship;

21.- Any dispute between co-owners of the ship as to the employment or earnings of the ship; and,

22.- A mortgage or a “hypothèque” or a charge of the same nature on the ship.

3.- Specific issues related to the arrest under domestic legislation

The provisions set by the LMC allows the arrest of the ship in respect of which the maritime claim arose, as well as the arrest of a sister ship.
Similarly to article 2 of the Arrest Convention, article 94 of the LMC states that a ship may only be arrested: a) In respect of a maritime claim but in respect of no other claim; and b) For the purpose of obtaining security for the eventual execution of the arbitration award or sentence, notwithstanding that by virtue of a jurisdiction or arbitration clause, the maritime claim in respect of which the arrest is effected is to be subject to the jurisdiction in a State other than the State where the arrest is effected, or is to be arbitrated, or is to be subject to the law of another State.
On the other hand, art. 97 of the LMC states that the court as a condition to degree the arrest of the ship may request to the claimant, the submission of a guarantee in the amount and subject to the conditions determined by the former, for the claimant to answer for the damages that may cause as a consequence of the arrest. Usually this guarantee may take the shape of a bond equivalent to 30% of the claim amount as a maximum legal costs, plus the double of the said claim amount.

As per art. 98 of the LMC the defendant may oppose the arrest or request the lifting of it, if in the opinion of the court sufficient security has been provided, save in cases in which a ship has been arrested in respect of any of the maritime claims enumerated in letters s) and t) of art. 93 above mentioned. In these cases, a bond or a Letter of Undertaking issued by a reputable P&I Club is accepted.

Eventual damages for wrongful arrest are prescribed by article 99 of the LMC, according to which the court which grants the arrest of a ship, will be competent to determine the extent of liability of the claimant, for any loss which may be incurred by the defendant as a result of the arrest in consequence of: a) the arrest having been wrongful or unjustified; or b) excessive security having been demanded and provided.

It is interesting to point out that together with the exercise of the arrest of a ship in terms referred to in previous paragraphs, art. 103 of the LMC includes another mechanism for guarantee of a maritime claim. Thus, the article in question prescribes that the holder of a maritime claim in respect of a ship, may request from the competent court a “precautionary measure of prohibition from sailing”, in order to guarantee the existing maritime claim. The court shall agree on the petition without mayor formality, provided antecedents are submitted from which it can be inferred presumption of the right that is claimed. If these antecedents are not sufficient, the court may request a guarantee to decree this precautionary measure.

The arrest or the prohibition from sailing will be carried out by notification effected by the court to the Port Captaincy where the vessel is found. In urgent cases, the legislation allows to inform prohibition from sailing by electronic means, as prescribed by article 104 of the LMC.

Art. 106 of the LMC states that after 30 continuous days following the arrest of the ship, without the shipowner not attending to proceedings, the court at the request of the claimant, may order the anticipated auction of the ship, subject to the claimant submitting sufficient guarantee, provided the claim exceeds the 20% of the value of the ship and it is expose to ruin, obsolescence or deterioration.

4.- Finally remarks

Generally speaking, it could be said that the rules related to the arrest of ships in Venezuela have significantly improved with the enactment of the Law on Maritime Commerce. To some extent the notion of an action in rem has been included in the LMC, in the sense that actions can be exercised against the ship and her Master, without being necessary to make mention of the owners (art. 15 LMC), whereas the writ can be served hand it over to anyone onboard the ship, and even by fixing one cartel in the ship in the presence of two (2) witnesses, if there is no anybody onboard (art. 110 LMC).

Petition of arrest has to be filed before the First Instance Maritime Court, and formalities can be arranged preferably 48 hours in advance. Power of Attorney will be needed to appear in court; however, one of the innovative features of the Law on Maritime Procedures (published in the Official Gazette Extraordinary No. 5,554, dated 13-11-2001), aimed to set the procedural rules to be used in the aquatic jurisdiction, is that contained in article 18 related to the use of the electronic Power of Attorney, in line with the need to facilitate the access to domestic courts to those trading with Venezuela. According to the said provision, for the purposes of submittal and admission of a lawsuit or any other petition, representation of the plaintiff may be proved by written or electronic
means, provided it is accompanied by a guarantee of 10,000 units of account. Nevertheless, it is important to mention that the same article requires that within the ten days following admission of the writ, the original document proving legal representation, i.e. the original POA, must be submitted to the court, in compliance with the formalities of law; otherwise, the court may declare the action extinguished and will execute the guarantee filed with the court. On the contrary, when the original POA is submitted, the court shall release the guarantee in question. There is no doubt that this mechanism allows for foreigners to act promptly in court, while awaiting for the POA to be properly granted or in compliance with the Apostille formalities, since it is important to point out that Venezuela is signatory to the 1961 Hague Convention abolishing the Requirement of
Legalization of Foreign Public Documents.


IMPORTANT NOTICE
: This summary is not designed to provide legal advice on the
matters referred to, as it is only intended to provide the reader with a briefing on the
subject. Should you need any assistance or detailed information regarding specific issues
dealt with, the firm would be pleased to help you, in which case please write, fax or send
an e-mail to the attention of Mr. José Alfredo Sabatino Pizzolante.