Article issued for the third edition of “Ship Arrests in Practice”, 2008, published by shiparrested.com network.
By Alberto Batini
BB & Partners
Via Di Franco 9
57123 Livorno, Italy
Tel: +39 0586 883232
Fax: +39 0586 884233
1. Please give an overview of ship arrest practice in your country.
Italy is a party to the 1952 Arrest Convention, ratified in 1979. Moreover the Italian Code of Navigation provides a set of domestic rules applicable when the Convention does not apply in whole or in part. Arrest is possible in Italian Ports also where there is no jurisdiction on the merits. The procedure is fairly quick and informal. No counter security is required. Appeal is possible and usually heard and decided in few weeks. P&I Clubs Letters of Guarantee are widely accepted if issued by one of the IG Pool. Alternatively bank guarantees or cash deposit are available to release the vessel.
2. Which International Convention applies to arrest of ships in your country?
The 1952 Brussels Convention on Arrest of Sea Going Ships has been ratified on 9.11.1979 in Italy and applies to all vessels flying the flag of one Contracting State. It will also apply, pursuant to article 8, to those vessels flying the flag of a non-Contracting State in respect of any claim for which the law of the Contracting State seized with the case permits arrest. In addition our Code of Navigation provides subsidiary rules applicable when the Convention cannot be applied in whole or in part or to arrest issues not ruled by the Convention (articles 643-686).
3. Is there any other way to arrest a ship in your jurisdiction?
A Vessel may be detained pursuant to an arrest order issued within a criminal proceeding by a Prosecuting Judge (i.e when the Vessel can be considered as corpus delicti) or pursuant to an administrative detention order of a Public Authority (i.e. the Harbour master Office in case of damage to public properties like a berth, a quay, a light buoyancy).
4. Are these alternatives e.g. saisie conservatoire or freezing order?
In respect of the same claim usually arrest orders are alternatives and not cumulative. It is anyway possible that under special circumstances, where different interests are involved, a single event generates more detention orders (i.e in a pollution case arising out of collision the interest of the State and those of cargo owners, the colliding vessel, the salvors, the victims). From a strict procedural profile an arrest order under the 1952 Arrest Convention for a particular maritime claim is always alternative to any likewise detention order to secure the same claim.
Claims subject to ship arrest
5. For which types of claims can you arrest a ship?
A Vessel can be arrested in Italy for any maritime claim among those listed under art. 1(1) of the 1952 Arrest Convention. For Vessels flying the flag of a non-Contracting State an arrest is possible also in respect of any other claim for which the law of the court seized with case permits arrest. This in Italy includes any debt of a contractual or non contractual nature but in this case the arrest can only be obtained if the Vessel is owned by the debtor.
6. Can you arrest a ship irrespectively of her flag?
A ship can be arrested irrespectively of her flag.
7. Can you arrest a ship irrespectively of the debtor?
A ship can be arrest irrespectively of the debtor but, if the debtor is a State or other Public body, then the ship might be regarded as immune from arrest. Whether and to what extent immunity may be invoked is left to the law of the forum arresti. Immunity is related to the ownership or operation of the ship, not to the nature of employment. For example the fact that a privately owned ship is employed on a liner service which is of public interest should not justify immunity from arrest.
8. What is the position as regards sister ships and ships in associated ownership?
Sister-ships, meaning ships owned by the same Company owning the particular ship in respect of which the maritime claim arose, can be arrested under art. 3 (1) of the Arrest Convention. A similar principle is provided at Italian domestic law (art. 2740 Italian Civil Code). Ships in associated ownership (or management) cannot be arrested unless the Claimant can pierce the corporate veil. This is not impossible in Italy but is certainly a difficult exercise, which implies a rigorous burden of proof on identity of shareholders and management of the two companies.
9. What is the position as regards Bareboat and Time-Chartered vessels?
In cases where the bareboat charterer is liable in respect of a maritime claim and not the registered owner, the situation is different if the Arrest Convention applies or not. If the Convention applies, art. 3 (4) enable arrest of such ship or any other ship in the ownership of the bareboat charterer, but no other ship in the ownership of the registered owner. The last sentence of Article 3, para. 4 seems to extend the rule to any case in which a person other than the registered owner of the ship is liable (i.e the time charterer, the ship manager, etc.). This is anyway in conflict both with the literal meaning of the provision and with the travaux preparatoires of the Convention. When Italian domestic law applies arrest of a ship under bareboat charter to secure a claim against the bareboat charterer, the time charterer or the ship manager is not possible unless the Claimant has a maritime lien assisting his claim. The main reason for this is that a creditor cannot arrest a ship to secure a claim if he can never be authorised to enforce the final judgment on the merit against the registered owner and auction the vessel. This is the worldwide unsolved problem of the Arrest Convention and Italy is no exception. Only maritime liens give right to enforce a claim against the vessel, even if she is property of someone different than the liable party. Not all maritime claims under the Arrest Convention are maritime liens under the different national domestic law systems. Not the 1926 Liens and Mortgages Convention enjoyed a wide acceptance around the world. The Lisbon Draft attempted to clear things as well as the 1999 Arrest Convention, not yet in force.
10. Do your Courts require counter-security in order to arrest a ship?
Italian Court does not require counter-security to issue an Order of arrest nor to enforce such Order. It might be possible anyway that the arrested party apply for a counter security at a later stage pending enforcement. The court can always amend the original order and impose a counter security. For this to occurs anyway the arrested party should be successfully proving not only considerable damages but also a lack of a prima facie claim, circumstances not easy to be proven especially when acting under the auspices of the 1952 Arrest Convention.
11. Is there any difference in respect to arresting a ship for a maritime claim and a maritime line?
There is no procedural difference in the two types of arrest.
12. Does your country recognise maritime liens? Under which International Convention, if any?
Italy recognizes maritime liens both under art. 552 of the Code of Navigation and in compliance with 1926 Liens and Mortgages Convention, to which Italy is a Contracting State.
13. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
A reasonable lapse of time needed to file an arrest application since the moment of instructions is one or two days in advance.
14. Do you need to provide a POA, or any other documents of the claim to the Court?
Our system requires a POA. Anyway, in order to file an arrest application within one day from instructions pending legalisation of the POA, is usual practice for the Claimant to grant an agency appointment via fax (without legalisation formality) to a Colleague of our firm who, in turn, will grant a POA locally in few hours. The agent in Italy is enabled to instruct lawyers to attend urgent matters, including arrest of ships. Subsequently the formal POA will contain a ratification of the agent’s activity.
15. What original documents are required, what documents can be filed electronically, what documents require notarisation and/or apostille, and when are they needed?
No original documents are required. Copies are generally accepted in whichever form of transmissions they are obtained. Informal or free translations are also admitted. Some judges are familiar with English language and will not require official translation unless the issue is debated with the opposing party. Only the official POA needs to be notarised and apostilled, except if issued in some countries (like Germany, Denmark, France, etc..) where simple notarisation is required without apostille legalisation.
16. Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested?
The Italian Courts will not accept jurisdiction on the substantive claim unless jurisdiction on the merit is afforded on the particular dispute by the governing contract or the applicable EU Regulations or International Conventions. In other words the fact that the Court where the arrest must be enforced has jurisdiction on the arrest does not imply that such Court or any other Italian Court has substantive jurisdiction on the claim.
17. Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits?
The period of time to activate substantive (or merit) proceedings is 60 days starting to count from the date the original arrest Order is confirmed by the Court. An arrest Order is usually granted and enforced upon an ex parte application. An inter parties hearing is thereafter scheduled within a few days or weeks for the opposing party to appear and file defences. When security is posted this process interrupts and the arrest is over. If the arrested party wish instead to continue litigation on the arrest the inter parties hearing will be the ultimate occasion for the arrested party to defend his case and obtained a revocation or amendment of the arrest Order. If the arrest Order is confirmed the 60 days to activate substantive proceedings will start to count. This time limit is interrupted, in case of arbitration, by simple service of a Notice of Appointment of Arbitrator. In case of lawsuit by service upon the opposing party of the writ of summons. Failure to commence substantive proceedings will enable the arrested party to apply to the Court of the Arrest for the immediate revocation of the Order.
18. Do the Courts of your country acknowledge wrongful arrest?
Italian domestic law recognizes the issue of wrongful court actions, including arrests. Anyway, as in many other countries, in Italy is extremely difficult to obtain a condemnation to damages for wrongful arrest. The Claimant should activate an ordinary lawsuit in tort against the arrestors aimed to demonstrate the he acted in the clear and unambiguous knowledge that the asserted maritime claim was not existing. This is basically impossible when acting in good faith under the auspices of 1952 Arrest Convention because the definition of each maritime claim is so widely drafted to make unlike to an arrested party to demonstrate that Arrestor was deprived of any right to arrest at all.
19. Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?
The piercing of corporate veil is admitted by some Court authorities and in principle not impossible in Italy. It is anyway a difficult exercise, which implies a rigorous burden of proof on identity of shareholders and management of the two companies.
20. Is it possible to have a ship sold pendente lite; if so how long does it take?
Is possible to sell a ship only pending an arrest proceeding (i.e. while the ship is either under arrest or seized following enforcement of a final ruling). In this case the requirement which the party applying for the sale should demonstrate is that the condition of the ship is rapidly deteriorating and the vessel will soon be a constructive total loss or will see her value highly diminished. The Court will appoint an expert to estimate the value of the vessel, following which the Court will schedule a session to hear all creditors and the ship owner. A court auction will therefore be organised by the Court and the applicant will have the burden to advertise the sale, anticipating costs, on some national and international specialised press or via internet as order by the Judge. The entire process may take from 6 to 12 months depending from complexity of sale (i.e. age of vessel, other problems), number of creditors, difficulty in processing service of deeds, others.