Associate vessel arrest decision under Chilean courts: M/V Robin 4, January 14, 2022

By Rafael Durán Sanheuza 
Durán & Cía Abogados (Chile)
www.duranycia.cl
rduran(at)duranycia.cl

Associate vessel arrest decision under Chilean courts: M/V Robin 4, January 14, 2022

Chile is an excellent jurisdiction for vessel arrests and a recent decision issued by an Antofagasta Court demonstrates some of the reasons for this affirmation.

On 29 March 2021, a fire was reported in the Vessel’s engine room of the M/V Chiquita Dream (CD) which was under a time charter to charterers Great White Fleet Corp (GWF), the shipping arm of a well-known multinational perishable goods company. As a consequence of the fire, the vessel remained paralyzed and off hire for almost three months.

According to several inspections carried out, the cause of the fire was the Vessel’s unseaworthiness.

GWF chartered the CD to fulfill a supply contract with the perishable goods company (PC) dated November 1, 2010.

Charterers immediately took steps to maintain (as far as possible) the service in the absence of the Vessel and in reasonable mitigation of their losses. Despite the best efforts of Charterers, it was not possible to find an alternative vessel of comparable size and specification for a short period charter to take the Vessel’s place in the immediate aftermath of the incident (it was not envisaged that the Vessel would be out of service for 2.5 months). Charterers took a three-pronged approach to maintain the service, namely (i) re-organisation of Charterers’ own fleet to cover the supply contract, (ii) chartering of substitute vessels to cover positions left open by the re-organisation and (iii) using space on third-party container lines to cover capacity shortfall.

Charterers  claimed damages in the sum of USD 8,025,829.86 against the CD owners under an LMAA proceeding.

Later an LoU was issued by the Gard P&I regarding the cargo damages, leaving an unsecured amount of  USD 7.5M.

On January 14, 2022, Great White Fleet Corp, filed an arrest against an associated ship of the CD, the Robin 4. Both vessels were managed by the same company.

The arrest was submitted before the court in Antofagasta, Chile, requesting the grant of a bank guarantee for the unsecured amount of  USD 7.5M. The court granted the arrest on the same day.

Some details of the case:

1.- In Chile, the arrest proceeds for an alleged breach of a charter contract (any type). In this case, the arbitration is in its first stages under LMAA rules.

2.- The arrest can be filed before any court where the vessel is expected to arrive or has already arrived.

3.- According to Chilean law, the court must grant the request “without further delay” if the supporting documents demonstrate the lien, among the other requirements. As happened in this case, courts usually issue a substantial decree between the same day and 48 hours.

4.- One of the most particular aspects of the Chilean proceedings is the allowance of the associate vessel arrest, expressly recognized by law, so it is not an aspect that is subject to discussion.

The court has considered that an ISM manager fulfills the concept required by the law, since the law does not distinguish.

5.- The court did not require counter security when granting the arrest.

Although in this case, the vessel has not filed an opposition to the arrest, if it does, the entire opposition procedure (first and second instance) is carried out meanwhile the vessel  is arrested.