By Efe Ülken
Ülken Law Firm
Tel: +90 242 241 97 00
Ship Arrest and Maritime Claims in Turkish Legislation
The route passing through the Dardanelles (Çanakkale Strait), Bosphorus (Istanbul Strait) and the Sea of Marmara and the connecting the Black Sea to the Aegean and the Mediterranean Seas, is one of the most significant sea routes in the world. According to the data given by the Turkish Ministry of Transport and Infrastructure, 38.404 ships (619.758.776 gross tonnage) passed through the Bosphorus and 42.036 ships (858.844.972 gross tonnage) passed through Dardanelles in 2020. İstanbul is a leading maritime center in the World and the Bosphorus is known as one of the world’s busiest waterways. Especially cargo vessels, ferries, local passenger ships and fishing boats are keeping the Bosphorus busy all day long.
In the field of arrest of ships, three international conventions have been adopted. These are;
- Convention on the Territorial Sea and the Contiguous Zone, 1958
- United Nations Convention on the Law of the Sea, 1982
- International Convention on the Arrest of Ships, 1999
Turkey is not a party to any of the international conventions on the arrest of ships. The arrest rules under the Turkish Commercial Code (“TCC”) reflects the provisions of the 1999 Convention. Following the entry into force of the TCC, Turkey has also ratified the 1999 Convention as well as the International Convention on Maritime Liens and Mortgages 1993. During the preparatory stage, the committee that has prepared the TCC looked the arrest rules of various states such as England, Germany, US, as well as international arrest conventions. After the date that TCC entered into force, Turkey has ratified the International Convention on Maritime Liens and Mortgages, signed in Geneva on 6 May 1993 and the International Convention on the Arrest of Ships, signed in Geneva on 12 March 1999 and both conventions came into force in Turkey on 25 March 2017. This article aims to provide a brief overview of ship arrest procedure under Turkish law.
I.1.Maritime claims are stipulated under article 1352 of TCC for which the claimant would be entitled to request for a precautionary attachment from the relevant court. Provisions set forth under such article are mostly adopted from the International Convention on the Arrest of Ships, 1999. A ship may only be arrested for the maritime claims which are stipulated in the TCC. As such, where non-maritime claims are made against the shipowner, the claimant may apply for an arrest under the general provisions of Turkish Enforcement and Bankruptcy Code numbered 2004 (“EBC”) to be enforced on any property other than a ship.
According to article 1352 of TCC, a maritime claim is defined as a claim arising out of one or more of the following:
- a) Loss or damage caused by the operation of the ship.
- b) Loss of life or personal injury, whether on land or on water, in direct connection with the operation of the ship.
- c) Salvage operations or any salvage agreement, including, if applicable, special compensation relating to salvage operations in respect a ship, by itself, or its cargo, threatens damage to the environment.
- d) Damage, or threat of damage caused by the ship to the environment, coastline, or related interests. Measures taken to prevent, minimize, or remove such damage; compensation for such damage; cost of reasonable measures of reinstatement of the environment actually undertaken, or to be undertaken; loss incurred, or likely to be incurred, by third parties in connection with such damage; and damages, costs, or loss of a similar nature to those identified in this subparagraph.
- e) Costs or expenses relating to the raising, removal, recovery, destruction, or the rendering harmless of a ship that has sunk, has been wrecked, stranded or abandoned, including anything that is, or has been on board such ship, and the costs or expenses related to the preservation of an abandoned ship and the maintenance of its crew.
- f) Any agreement relating to the use or hire of the ship, whether contained in a charter party or otherwise.
- g) Any agreement relating to the carriage of goods or passengers on board the ship, whether contended in a charter party, or otherwise.
- h) Loss of or damage to, or in connection with, goods, including luggage, carried on board the ship.
- i) General average.
- j) Towage.
- k) Pilotage.
- l) Goods, materials, provisions, bunkers, equipment (including containers) supplied, or services rendered to, the ship or its operation, management, preservation or maintenance.
- m) Construction, reconstruction, repair, converting or equipping of the ship.
- n) Quarantine fees, port, canal, dock, harbor, and other waterway dues and charges.
- o) Crew 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.
- p) Disbursements incurred on behalf of the ship or its owners, including loans obtained with respect to the ship.
- r) Insurance premiums with respect to the ship, payable by, or on behalf of, the shipowner or demise charterer.
- s) Any commissions, brokerages or agency fees payable with respect to the ship by, or on behalf of, the shipowner or demise charterer.
- t) Any dispute as to ownership or possession of the ship.
- u) Any dispute between the co¬-owners of the ship as to the employment or earnings of the ship.
- v) A mortgage or a “hypothèque”, or a charge of the same nature on the ship.
- y) Any dispute arising out of a contract for the sale of the ship.
In principle, arrest orders are given for claims fallen due. The Claimant is required to prove, the existence of a maritime claim under Article 1352 of the TCC, and the amount of the claim. On the other hand, in accordance with Article 257 of EBC, the TCC provides for ship arrest for claims not yet fallen due, if the debtor has resorted to fraudulent transactions to relieve him/herself from his/her obligations, or if the debtor is planning to disappear, or has disappeared.
- MARITIME LIENS
TCC regulates the types of debts providing a right for maritime lien to the creditor. Such article has mostly been adopted from the Article 4 of the International Convention on Maritime Liens and Mortgages. In this respect claims providing a right for maritime lien to the creditor under Turkish Law are;
- Claims for wages and other sums due to the master, officers and other members of the vessel’s complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;
- Claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;
- Claims for reward for the salvage of the vessel;
- Claims for port, canal, and other waterway dues, quarantine payments and pilotage dues;
- Claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passengers’ effects carried on the vessel;
- Claims for general average pro-rata shares.
As it is seen above, although the article 1320 of TCC has mostly been adopted from the article 4 of the International Convention on Maritime Liens and Mortgages, provisions of TCC are setting forth some differences as well in regards of the above indicated points 4 and 6.
Any maritime lien, whether has duly and officially been registered before the relevant registry or not, shall always take priority in confront of any other registered claims and mortgages. However, it should also be noted that maritime liens shall be extinguished after a period of one year unless, prior to the expiry of such period, the vessel has been arrested or seized, such arrest or seizure leading to a forced sale. This has also exactly been set under the article 9 of International Convention on Maritime Liens and Mortgages.
According to article 1369 of TCC;
“Arrest of ships is permissible of any vessel in respect of which a maritime claim is asserted if:
- a) the person who owned the vessel at the time when the maritime claim arose is liable for the claim and is owner of the vessel when the arrest is affected,
- b) the person who was the charterer of the vessel at the time when the maritime claim arose is liable for the claim and is owner of the vessel when the arrest is affected,
- c) the claim is secured with a maritime pledge, maritime mortgage or a charge of the same nature on the vessel,
- d) the claim relates to the ownership or possession of the vessel; or
- e) the claim gives rise to a maritime lien right pursuant to article 1320 (maritime lien).”
III.JURISDICTION FOR THE ARREST
With regards to jurisdiction, the TCC adopts the principle of lex fori and, therefore, all matters relating to the procedure of enforcement are subject to the law of the State where the enforcement takes place. In this respect, Article 1350 of the TCC provides that the precautionary attachment, or executive attachment of the vessels, judicial sale of vessels, and all of its consequences including, as well as transactions in relation to, the enforcement proceedings are subject to the laws of the country wherein the vessel is located at the time of the enforcement. In this respect, apart from the fact that whether the vessel is foreign-flagged or Turkish-flagged, if the vessel is located within Turkish waters, Turkish law will be applicable to the arrest application, and to all stages of procedure and enforcements.
- CONDITIONS FOR OBTAINING AN ARREST OF A SHIPS ORDER
As per the article 1353 of the TCC, the court must decide arrestment only in order to guarantee the maritime claims and precautionary attachment or arrest of ships by means of other legal procedure cannot be decided. In other words, arrest of ships is the only way to guarantee the claims arisen from the maritime claim stated in article 1352 and arrest of ships should be decided as long as the claims are based on any topic in article 1352 by the Courts. Additionally, it must be noted that the concept of “Maritime Liens” stated in article 1520 of the TCC does not out of the concept of maritime claims. Therefore, the maritime liens are also in nature of maritime claims.
The essence of arrest of ships procedure is the jurisdiction and choosing the authorised court. In this respect, it must be stated that regardless of the flag of a ship, if the vessel is located within the Turkish waters, Turkish Law will be applicable those vessels whether they are Turkish-flagged or not due to the reason that the TCC adopts the principle of lex fori.
According to article 1354 of the TCC; the courts being in place where the vessel is anchored, berthed or dry-docked or the below mentioned courts are authorised to render arrest of ships decision against the Turkish-flagged vessels.
-With regards to the vessels registered under a Turkish Ship Registry, the courts being in the place of the registry
-With regards to the vessels which are not registered, the courts being in the place where the owner of the vessel is located,
-With regards to the vessels which are subjected to special registry registry as per the article 941 of the TCC, the courts being in the place where the charterer of the vessel is located.
In addition of that, arrest of ships decision could only decide against the Foreign-flagged vessels by the courts where the vessel is anchored, berthed or dry-docked or the below mentioned.
The TCC requires the applicant to provide a counter-security. The amount of the security is fixed to an amount equal to Special Drawing Rights (“SDR”) 10,000. The guarantee can be provided as a cash deposit or as a Bank Guarantee Letter. The court will not review the application if the guarantee is not deposited. However, it should also be noted that the above indicated amount may also be increased at any stage upon the application of defendant.
The TCC provides for an exemption from the requirement of guarantee for the holders of maritime liens in respect of the claims for wages and other sums due to the ship’s crew in respect of their employment on the vessel.
- ENFORCEMENT PROCEDURE
When the arrest order is granted by the court, the claimant must apply to the enforcement office to proceed with the enforcement of the order. The application to the enforcement office must be made within three working days as of the date of the order, failing which the order will be rendered null and void. The enforcement office enforces the order promptly upon the application, takes the vessel under the custody by arresting the vessel. Notification that the vessel has been arrested and taken under the custody shall be served on the master of the ship or the shipowner, operator, or one of their agents. The enforcement office also notifies the coast guard, harbor master, and customs authority wherein the ship lies with respect to the arrest of the vessel.
Turkey is following the developments in the maritime industry and implementing legislation. When we reviewed the provisions related to arrest of ships of the Turkish Commercial Code (“TCC”), it could be seen that the Turkish procedure with regard to the arrest of ships is stated parallel to the current international maritime legislation. With regard to ship arrest, maritime claims must be correctly determined. Turkish Enforcement and Bankruptcy Code numbered 2004 and Turkish Commercial Code numbered 6102 are main legislation about ship arrest in Turkey.