Article issued for the third edition of “Ship Arrests in Practice”, 2008, published by shiparrested.com network.
By George Zambartas
Zambartas Law Offices
gz.law@cytanet.com.cy
www.zambartaslawoffices.com
Office 61, 6th Floor Gregoriou Building,
95 Griva Digenis Street, 3101 Limassol
Tel. + 357 25373734
Fax. + 357 25 725502
Overview
1. Please givw an overview of ship arrest practice in your country.
The Cypriot Legal system was developed on the basis of English Law from 1878 until its independence on 1960. Thereafter, even though new Cypriot Laws and regulations where enacted and Cypriot case law was applied, the Cypriot Legal System was to a large extent modelled on its English counterpart. Furthermore, although the divisions of the English courts are not binding to the Cypriot Courts, they are very persuasive
In order for the claimant to apply for a warrant to arrest the ship, he must bring an action in rem against the vessel.
Rule 50 gives an absolute right for arrest of property once the Admiralty Court is satisfied with the following points:
· There are issues which must be tried between the parties and
· The claimant has a right to have those issues tried
It is necessary for the Admiralty Court to be satisfied that there is a serious question to be tried at the hearing and that on the facts presented there is a probability that the claimant is entitled to relief. In the event that the application for the arrest of a vessel is successful, the Admiralty Court will require the following from the claimant
· Lodgement of a deposit for the expenses which may be incurred by the marshal in connection with the custody and supervision of the vessel whilst under arrest
· Lodgement of any other amount of money required by the Registrar for the expenses of the arrest and
· Posting a security bond by way of a Cyprus Bank Guarantee.
Failure to comply with the above requirements will automatically result in the release of the vessel.
Applicable Laws
2. Which International Convention applies to arrest of ships in your country?
Cyprus is not a party to the Arrest Conventions nor to the Liens and Mortgage Conventions. The UK signed the Convention in 1952 and the Administration of Justice Act Part 1 was subsequently passed in order to enable the UK to ratify the Convention.
The above administration of Justice Act is applicable in Cyprus virtue of 5.29(2) (a) of law 14/60.
3. Is there any other way to arrest a ship in your jurisdiction?
In cases where the claimant cannot proceed with the arrest of a vessel, for example due to the fact that Admiralty Courts do not have jurisdiction, he may seek a Mareva Injunction(“asset freezing injunction”)
Are there alternatives e.g. saisse conservatoire or freezing order?
As stated above a “ freezing injunction” is an option.
4. Are there alternatives e.g. saisie conservatoire or freezing order?
As stated above a “freezing injuction”is an option.
Claims subject to ship arrest
5. For which types of claims can you arrest a ship?
Maritime claims covering:
· To the possession or ownership of a vessel or to the ownership of any share
therein
· Any question arising between the co-owners of a vessel as to the possession,
employment, or earnings of that vessel;
· In respect of a mortgage of or charge on a vessel or any share thereof;
· For damage done by a vessel;
· For damage received by a vessel;
· For loss of life or personal injury sustained in consequence of any defect in a
vessel in her apparel or equipment, or of a wrongful act, neglect, or default of
the owners, charterers, or persons in possession or control of a vessel or of
the master or crew thereof or of any other person for whose wrongful acts, neglects, or defaults the owners, charterers, or persons in possession or control of a vessel are responsible, being an act, neglect or default in the navigation or management of the vessel, in the loading, carriage, or discharge of goods on, in, or from the vessel or in the embarkation, carriage, or disembarkation of persons on, in or from the vessel;
· For loss or damage to goods carried in a vessel;
· Arising out of any agreement relating to the carriage of goods in a vessel or
to the use or charter of a vessel;
In the nature of salvage ;
· In the nature of towage in respect of a vessel ;
· In the nature of pilotage in respect of a vessel ;
· In respect of goods or materials supplied to a vessel for her operation or
maintenance;
· In respect of the construction, repair, or equipment of a vessel or dock
charges or dues;
· By a master or member of the crew of the vessel for wages and any claim by
or in respect of a master or member of the crew of a vessel for any money or property which, under any of the provisions of the Merchant Shipping Acts 1894-1954, is recoverable as wages in the court or in the manner in which wages may be recovered;
· By a master, shipper, charterer, or agent in respect of disbursements made
on the account of a vessel;
· Arising out of an act which is or is claimed to be general average act;
· Arising out of bottomry; and
· For the forfeiture or condemnation of a vessel or of goods which are being
or have been carried, or have been attempted to be carried, in a vessel, or for the restoration of a vessel or any such goods after seizure, or for droits of admiralty.
6. Can you arrest a ship irrespectively of her flag?
You can arrest a ship in Cyprus irrespective of her flag.
7. Can you arrest a ship irrespectively of the debtor?
You can arrest a ship in Cyprus irrespective of the debtor unless the debtor is in a position to claim Sovereign Immunity.
8. What is the position as regards sister ships and ships in associated ownership?
Cyprus law does not recognise sister ships and ships in associated ownership.
9. What is the position as regards Bareboat and Time-Chartered vessels?
Bareboat Owners and Time Charterers are viewed as ‘disponent owners’ of vessels.
Arrest Procedure
10. Do your Courts require counter-security in order to arrest a ship?
The Claimant is required to post a security bond by way of a Cyprus Bank Guarantee in respect of damages that the defendant vessel might suffer if the arrest proved to be wrongful. The amount of the security to be provided is at the discretion of the court which will take into account all of the circumstances of the case in assessing this amount. In any event the security should not exceed 30% of the amount of the claim.
11. Is there any difference in respect to arresting a ship for a maritime claim and a maritime lien?
There is no difference in the procedure between a maritime lien and a maritime claim but it should be noted that under Cyprus Law Maritime liens enjoy certain advantages over all other permitted actions in rem.
12. Does you country recognise maritime liens? Under which International Convention, if any?
Under the English administration of Justice Act 1956, the following Maritime liens are recognised under Cyprus Law:
· Bottomry
· Salvage
· Wages
· Master’s Wages;
· Disbursements and liabilities; and
· Damage done by a ship.
13. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
It will normally take between 2 – 4 business days to arrest a Vessel from the moment we receive the file of papers and the required instructions
14. Do you need to provide a POA, or any other documents of the claim to the Court?
No POA is required to bring the claim and present the Arrest Application to the Court.
15. What original documents are required, what documents can be filed electronically, what documents require notarisation and/or apostille, and when are they needed?
All Admiralty actions whether in rem or in personam are instituted with the issue of a writ of summons.
The name, the place of residence, occupation of every claimant and defendant and a concise statement of the claim made or the relief or remedy sought, should be included in the structure of the writ.
The issue of the writ permits the claimant a right against the vessel which originates from the courts of action in rem and materialises upon the arrest of the vessel.
The claimant should file with the court an affidavit appertaining to the nature of the claim and stating that the aid of the Court is required. The deponent to this Affidavit could be us in our capacity as the instructed law firm but this is not advisable as the respondent to the Arrest Application has the right to cross examine the deponent as to the subject matter of the Affidavit. For this reason it is highly preferable that a representative of the claimant with direct knowledge of the claim comes to Cyprus to swear the Affidavit.
16. Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested?
The substantive claim must be issued in the Cyprus Court by writ of summons for the arrest to granted.
Miscellaneous
17. Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits?
As stated above the Claimant must issue a writ of summons in conjunction with the Arrest Application.
18. Do the Courts of your country acknowledge wrongful arrest?
Cyprus courts do acknowledge the concept of wrongful arrest, hence the requirement for the Claimant to post security.
19. Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?
Cyprus courts will only pierce and lift the corporate veil in very exceptional circumstances ( basically fraud).
20. Is it possible to have a ship sold pendente lite; if so how long does it take?
It is possible to have a ship sold pendent elite; the court will order the sale of a vessel which remains under arrest and against which expenses are accumulating, and which is deteriorating, if in the interest of all parties a speedy sale would appear to be desirable. Typical grounds for an application are that a vessel is costing a disproportionate amount in daily expenses or is deteriorating owing to being under arrest for a long time or that a cargo is perishable. Therefore, the continuing and mounting expenses of arrest and the fact that goods are deteriorating among the good reasons which a court may consider in ordering the property to be sold pendente lite.
It is very difficult to advise on the precise timescale involved as this will largely be determined on a case by case basis and any objection by the Respondent to the Application will greatly prolong the process.
