Article issued for the third edition of “Ship Arrests in Practice”, 2008, published by shiparrested.com network.
By Vytas Ramanauskas
Ramanauskas ir Partneriai Law Firm
v.ramanauskas@rplaw.lt
www.rplaw.lt
S.Daukanto 9, LT-92234,
Klaipeda, Lithuania
Tel. +370 46 303430
Fax. +370 46 312393
Overview
1. Please give an overview of ship arrest practice in your country.
The International Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Ships, Brussels, 1952 (1952 Arrest Convention) was ratified by the Seimas of Lithuania in March of 2002 and is successfully applied by the Lithuanian Courts.
Depending on the amount of the security required a request to arrest a ship should be submitted either to the City Court of Klaipeda or to the District Court of Klaipeda. The city court deals with the claims in the amount up to 100 000 Litas only. When the amount of claim is higher, then an arrest application should be made to the District Court of Klaipeda. There is no specialized maritime court or judges in Lithuania. Most frequently ship arrest applications are heard by the District court of Klaipeda. That court is also the court of appeal for the decisions of the City Court. The judges of the District court of Klaipeda are well experienced. Ship arrest procedures are clear and provided that the request for ship arrest complies with the procedural requirements, the Court will issue a ship arrest order.
For smaller cases (in the amount up to 100 000 Litas) a ship arrest application should be presented to the City court of Klaipeda. That court has about 30 judges and some of them have very limited practical experience. They might not know the relevant practices that are applied by the District Court and the Court of Appeal of Lithuania in respect of ship arrest and dismiss arrest application for any formal reason. Therefore decisions made by the City Court’s judges are always unpredictable.
There is a stamp duty payable on the civil claims that are pursued in the Lithuanian Courts, 50% of which is payable before an arrest application is presented to the Court. The amount of stamp duty payable is calculated on basis of the claim amount. It is limited by maximum amount of 30.000 LTL (about 8.700 EUR). No stamp duty is payable on ship arrest applications when claim on the merits will be pursued in arbitration or foreign jurisdiction.
Applicable Laws
2. Which International Convention applies to arrest of ships in your country?
The International Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Ships, Brussels, 1952 (1952 Arrest Convention) and The International Convention on Maritime Liens and Mortgages (Geneva 1993) are ratified by Lithuanian Seimas and applicable.
3. Is there any other way to arrest a ship in your jurisdiction?
The Ships that are registered and flying the State flags of the States that are Members to the 1952 Arrest Convention can be arrested only in respect of the claims enumerated in the Article 1 of the Convention. The other ships can be arrested applying general civil procedural rules as debtor’s assets in respect of any other claims.
In accordance with the Article 12(1) on the Law of Klaipeda State Sea Port the Harbour Master may deny permission to sail of the vessel out of the port in case that there are unpaid port charges or fines in respect of the vessel or the vessel caused damage to the port’s infrastructure.
4. Are these alternatives e.g. saisse conservatoire or freezing order?
No.
Claims subject to ship arrest
5. For which types of claims can you arrest a ship?
The basis for obtaining an arrest in accordance with the Arrest Convention is a maritime claim enumerated in littera a) to q) of the Article 1(1). The list is “closed” by excluding any other claims than those found in the list in respect of the vessels that are flying the flag States that are Members of the 1952 Ship Arrest Convention. All other ships can be arrested for any type of claim.
6. Can you arrest a ship irrespectively of the flag?
In accordance with the Article 8(1) of the 1952 Arrest Convention a ship flying the State flag of the Member State of the Convention can be arrested only for the claims enumerated in the Article 1 of the Convention. The Ships that do not fly the State flag of the State that is Member to the 1952 Arrest Convention can be arrested for any claims under provisions of Code of Civil Proceedings. This option is based on Article 31 of EC Regulation 44/2001 and jurisprudence of European Court of Justice, which confirmed the application of this regulation to ‘extra-Community conflicts’.
7. Can you arrest a ship irrespectively of the debtor?
The interpretation of the Article 3 part 1 of the 1952 Arrest Convention by the Lithuanian Courts is not clear yet. We believe that the Courts would grant arrest of the particular vessel in respect of which the maritime claim arose irrespectively whether she is owned at the time of presenting the arrest application to the Court by the debtor or another person. Such Order might be changed later if appealed.
8. What is the position as regards sister ships and ships in associated ownership?
Under provision of the Arrest Convention claimant may arrest the particular ship in respect of which the debt arose or any other ship owned by the debtor. Therefore arrest of a sister ship is permitted, except in respect of the claims mentioned in the Article 1(1), o-q.
Ships in the associated ownership can be arrested if it can be proved that they are beneficially controlled by the same person. Demonstration on the company’s website a list of vessels under the name of company’s fleet might be sufficient to prove that.
9. What is the position as regards Bareboat and Time-Chartered vessels?
Part 4 of the Article 3 of the 1952 Ship Arrest Convention shall apply in respect of arrest of a Bareboat chartered vessels. Such vessel can be arrested in respect of maritime claims created by the Bareboat Charterer, or any other vessel that is owned by the Bareboat Charterer can be arrested.
In case of Time-chartered vessel the position is uncertain. We believe that the first instance court would grant an arrest of a Time-Chartered vessel, but such arrest might be lifted if appealed against it.
Arrest Procedure
10. Do your Courts require counter-security in order to arrest a ship?
No counter security is required to establish before arresting the vessel. The court on request of the ship’s owners may order the arrestor to establish counter-security within certain period of time. If this is not complied with the Court makes an order to lift the arrest. However such order can be appealed within seven days. It can take up to three months then until the Court of Appellation makes decision. All that time the ship will remain arrested. Therefore very rarely counter-security is requested and established.
11. Is there any difference in respect to arresting a ship for a maritime claim and a maritime lien?
In case of maritime claim it is allowed to arrest either the ship in respect of which the maritime claim arose or any other sister ship. The subject to the maritime lien is the offending ship only. It can be enforced against the ship regardless of who was in control or possession of the vessel when the events which gave rise to maritime lien occurred. Maritime lien is not enforceable against a sister ship.
12. Does your country recognise maritime liens? Under which International Convention, if any?
Lithuania does recognise maritime liens. The International Convention on Maritime Liens and Mortgages, 1993, has been ratified and is applicable in Lithuania.
13. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
It depends on the number of the documents that need to be attached to the arrest application and in what language they are. If many invoices, long Charter-parties, correspondences or other claim documents need to be attached to the application they have to be translated into Lithuanian language and that takes time. It is possible however to attach such documents without their translation into Lithuanian language pleading to the Court an urgency and providing an undertaking to provide their translation within few days. Therefore an arrest application can be submitted to the Court on the same day when the instruction to apply for ship’s arrest is received. The Court rarely issues the arrest order on the same day on which the arrest application has been registered with the Court. Normally the arrest order is available on the following day. It can take up to three days in some cases. If a ship arrest application is registered with the Court on Friday the arrest order normally is ready on the following Monday afternoon or on Tuesday. The courts are closed during Saturdays, Sundays and National Holidays.
14. Do you need to provide a POA, or any other documents of the claim to the Court?
We require a written legal service agreement that needs to be signed by the Client. Faxed or emailed copy of the legal service agreement is sufficient to present a ship arrest application to the court on behalf of the Client. An original copy of the agreement must be available if requested by the judge. No notarization or legalization is practically required. Basic claim documentation and correspondence evidencing that the debtor failed to pay the claim or provide security in respect of it must be attached to a ship arrest application.
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 documents can be filed electronically for the purpose of ship arrest. Only original legal service agreement should be available to provide to the court if so requested by the judge. To a ship arrest application normally to be attached:
– a copy of legal service agreement between the lawyer and the Arrestor;
– a copy of an extract from the Company Register of the Arrestor’s State, confirming that the Arrestor indeed exists as a legal entity and providing the names of the persons who are entitled to represent the company.
– Basic Claim documents that will depend on the type of the claim;
– Copy of an agreement containing the arbitration clause in case that the arrest is for obtaining of security in respect of maritime claim that is to be pursued in the Arbitration or an agreement to litigate in a foreign State Court, or an evidence that such proceedings have been commenced.
16. Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested?
Yes, the Lithuanian courts will have jurisdiction over the substantive claim once a vessel has been arrested, subject that there is no agreement between the relevant Parties to litigate in other jurisdiction or in the arbitration.
Miscellaneous
17. Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits?
According to the provisions of Code of Civil Proceedings of Lithuania the Court may not allow more than 14 days from the day of ship arrest commence legal action on the merits of the claim with the competent court. Therefore within 14 days from the day on which ship arrest order is made the legal action on the merits must be started in order to maintain the arrest.
18. Do the Courts of your country acknowledge wrongful arrest?
There is no such definition as “wrongful arrest” in Lithuanian law. However the arrestor can be liable to pay the damage compensation to the vessel’s owner in two cases:
a) After the claim in respect of which the vessel was arrested is lost;
b) In case of misuse of the procedural rights to seek the ship arrest, for example arresting the vessel despite the fact that an adequate security has been provided, submitting to the court knowingly wrong information when seeking a ship arrest etc.
19. Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?
This issue has never been solved by the Lithuanian Courts yet. We believe that this might be possible if there is sufficient evidence to prove that the vessel is beneficially controlled by the other person than her registered owner.
20. Is it possible to have a ship sold pendente lite; if so how long does it take?
Theoretically such legal possibility exists, but it has never been tried in respect of a ship. It should be demonstrated to the Court that the vessel is abandoned by her owners and there is a risk that she might sunk or her value will be diminished to the amount that is insufficient to secure the Claimant’s claim. In most optimistic scenario it would take minimum three months until the vessel is sold.
