Article issued for the third edition of “Ship arrests in Practice”, 2008, published by shiparrested.com network.

 By Henrik Kleis
DELACOUR
hk@delacour.dk
www.delacour.dk
Lille Torv 6
DK-8000 Arhus C, Denmark
Tel: +45 7011 1122
Fax: +457011 1133

 

Overview

1.    Please give an overview of ship arrest practice in your country.
Arrest of vessels in Denmark can be made very fast and on an informal basis, i.e. without POA, original invoices and notarized and authenticated documents. The rules are quite flexible and the Danish court system works efficiently. The costs of an arrest in Denmark are low.

Applicable Laws

2.    Which International Convention applies to arrest of ships in your country?
Denmark is party to the 1952 Arrest Convention and the provisions of this convention have been implemented in Chapter 4 of the Danish Merchant Shipping Act. The Danish law on arrest of vessels thus to a high extent reflects the provisions of the Arrest Convention.

3.    Is there any other way to arrest a ship in your jurisdiction?
Yes. An arrest according to the Danish Administration of Justice Act prevents the owner from transferring title to the vessel or issuing new mortgages when the arrest is registered in a Ship Register but the vessel is not detained in a port or otherwise prevented from operating. Therefore, an arrest of a vessel according to the Administration of Justice Act is often of no interest; however, it may be applied when there is no maritime claim or when an arrest is made in cargo, freight, or bunkers etc.

4.    Are these alternatives e.g. saisse conservatoire or freezing order?
No. The only alternative is an arrest according to the Danish Administration of Justice Act which the courts only grant in rare circumstances.

Claims subject to ship arrest

5.    For which types of claims can you arrest a ship?
Maritime claims are the basis for arrests according to the Merchant Shipping Act and are defined in accordance with the Arrest Convention. For a list of the individual maritime claims reference is made to Arrest Convention art. 1.

6.    Can you arrest a ship irrespectively of her flag?
Yes.

7.    Can you arrest a ship irrespectively of the debtor?
Contrary to the Arrest Convention and the laws of some other countries, arrest in Denmark requires that execution of the claim can be levied against the owner of the vessel, meaning that the registered owner of the vessel must be liable for the claim/the debtor of the claim, unless the claim is secured by a maritime lien. Consequently, claims for which a charterer of the vessel is liable, do not form basis for arrest of the vessel as the owner of the vessel is not liable and no execution of the claim against the owner is possible. However, assets owned by the charterer, e.g. bunkers, may be arrested in accordance with the Administration of Justice Act.

8.    What is the position as regards sister ships and ships in associated ownership?
Sister ship arrest is possible, i.e. vessels that are owned by the same legal entity. Arrest of vessels in associated ownership is not possible as the vessel is not owned by the same legal entities.

9.    What is the position as regards Bareboat and Time-Chartered vessels?
Arrest of a vessel under a bareboat or time charter party is not possible as the registered owner is not liable for the claim/the debtor of claim. Only in case the owner is found to be the debtor of the claim an arrest is possible.

Arrest Procedure

10.    Do your Courts require counter-security in order to arrest a ship?
The bailiff’s court usually decides that the claimant has to provide a guarantee issued by a Danish bank or insurance company as security for claims for unlawful arrest and detention of the vessel. According to the Merchant Shipping Act, the security equals 5 days’ loss of hire for the vessel, whereas the security is individually fixed by the court when an arrest is made under the Administration of Justice Act. The arrest will not have any legal effect until adequate security is provided.

11.    Is there any difference in respect to arresting a ship for a maritime claim and a maritime line?
Maritime claims secured by maritime liens have better priority than other claims, e.g. debts secured by mortgage, and include

1.    wages and other employment payments due to the master and crew,
2.    harbour, canal, and other waterway dues and pilotage dues,
3.    claims for compensation for personal injury in connection with the operation of the vessel,
4.    claims for compensation for damage to property provided that the claim is not based on agreement, e.g. claim for damage to cargo carried of  the vessel.
5.    claims for salvage, wreck removal, and contributions to general average.

A vessel can be arrested on the basis of a claim secured by a maritime lien whether or not the owner of the vessel is liable for the claim.

The maritime lien is subject to a 1 year time limitation upon which the lien as security is lost – the claim itself is often subject to longer statutory limitations. An arrest for a claim secured by maritime lien prevents the maritime lien from being time barred.

12.    Does your country recognise maritime liens?  Under which International Convention, if any?
Yes. The rules on maritime liens are based on the 1967 Brussels Convention.

13.    What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
We are able to prepare the arrest application within 1-2 hours provided that no further information or documents are necessary. The arrest will often be accomplished in the afternoon, if the court receives the application in the morning.

14.    Do you need to provide a POA, or any other documents of the claim to the Court?
No. Copies of the invoices or other documents are required to substantiate the claim.

15.    What original documents are required, what documents can be filed electronically, what documents require notarisation and/or apostille, and when are they needed?
None. If the opponent questions the authenticity of the documents it may be required to provide the original documents.

16.    Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested?
Yes, unless the dispute is subject to a arbitration or foreign jurisdiction/venue; this might be the situation if an arbitration or jurisdiction clause is agreed upon in a contract between the parties. If arbitration or a foreign jurisdiction has been agreed, the court will postpone the confirmatory proceedings until a decision regarding the merits of the claim is made by the foreign court or Arbitration Tribunal.

Miscellaneous

17.    Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits?
7 days.

18.    Do the Courts of your country acknowledge wrongful arrest?
Yes. The liability of the claimant for wrongful arrest is strict according to the Administration of Justice Act section 639.

19.    Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?
Piercing the corporate veil is very difficult under Danish law. In general, a limited company in Denmark (A/S and ApS) is the only liable party for its actions.

20.    Is it possible to have a ship sold pendente lite; if so how long does it take?
No. The vessel may only be sold by a forced auction at the bailiff’s court. The forced auction procedure can be commenced when the court has rendered its decision in the confirmatory proceedings, i.e. approved the claimants claim. The forced auction procedure often takes up to ½ year, even longer for vessels with foreign owners due to service of court documents abroad.