Article issued for the third edition of “Ship Arrest in Practice”, 2008, published by shiparrested.com network.
By Andrey Kosmachevskiy and Andrey Suprunenko
Law Firm “REMEDY”
40-42 Nevskiy av.
191186 St.Petersburg, Russia
Tel. (+7 812) 703-51-00
Fax (+7 812) 325-32-47
1. Please give an overview of ship arrest practice in your country.
The ship arrest practice in Russia is wide and may be different due to the differences in court practice in regions – west, south, north, east. Basic ports where there is wide practice of ship arrest are: St.Petersburg, Novorossiysk, Vladivostok.
2. Which International Convention applies to arrest of ships in your country?
Russia ratified the International Convention on the Arrest of Sea-Going Ships (10 May 1952, Brussels). The provisions of this Convention are mandatory applicable to all ships flying the flag of another Contracting State and calling at Russian ports.
Merchant Shipping Code of Russia (1999) is the domestic law which implemented basic principles of the 1952 Brussels Convention and even Merchant Shipping Code (1999) is an advance over the 1952 Brussels Convention as it is based on principles of International Convention on Arrest of Ships (Geneva, 1999 ) especially in regard to the wide list of claims subject to ship arrest.
According to both above mentioned Conventions a ship may be arrested only under the authority of a Court. The regulations of procedure for the Court in Russia are defined in two Codes: the Civil Procedural Code of Russia and Arbitration Procedural Code of Russia. In general the Civil Procedural Code defines the procedure for the physical persons acting as claimants or applicants, and the Arbitration Procedural Code defines the procedural for the legal entities.
3. Is there any other way to arrest a ship in your jurisdiction?
Due to absence in above mentioned procedural codes of special clauses devoted to the ship arrest there is a way to arrest the ship as property of the debtor (regardless of status of a ship as special kind of property) by means of filing to the Court the application for the arrest of property of the debtor. Such application is filed together with the statement of the claim.
The ship may be arrested also under criminal or administrative procedure as exhibit of case or as subject of criminal or administrative offence.
4. Are these alternatives e.g. saisse conservatoire or freezing order?
There is a way to arrest the ship as property of debtor in security of civil action as well as in the bankruptcy proceeding.
Claims subject to ship arrest
5. For which types of claims can you arrest a ship?
Under Domestic Law – In Merchant Shipping Code of Russia (1999) the whole list of maritime claims (a to v) from the 1999 Geneva Convention is included. The domestic law is applied by the Russian courts mostly in respect of the Russian flag seagoing vessels.
Under the 1952 Brussels Convention – the Russian courts are more or less in line with the list of the maritime claims indicated in the 1952 Brussels Convention. But the courts apply this Convention mostly to the foreign flag vessels.
6. Can you arrest a ship irrespectively of her flag?
You can arrest a ship irrespectively of her flag.
7. Can you arrest a ship irrespectively of the debtor?
According to the 1952 Brussels Convention which was ratified by Russia a ship may only be arrested in respect of a maritime claim only. Therefore bearing in mind the regulations established in the Arbitration Procedural Code of Russia the claimant first of all should prove the existence of the maritime claim in respect of the specific ship and same time the claimant should prove that the claim arose due to the actions of the specific debtor in respect of this specific ship when (as the claimant supposes) the debtor was the owner/ charterer of this ship. It may lead to that the real owner of the ship will try to object the arrest saying the ship never belongs to the debtor. The claims “in rem” can not be initiated in Russia.
Certain claims may follow the ship regardless in whose hands it may be, e.g. claims for crew wages, salvage, port dues (maritime liens).
8. What is the position as regards sister ships and ships in associated ownership?
It is possible to arrest sister ship as the property owned to same debtor.
9. What is the position as regards Bareboat and Time-Chartered vessels?
The provisions for the arrest of the vessels in accordance with the domestic law are the same as in the Convention, 1999 article 3 par.(1)-(2). If the Convention, 1952 is to be applied then the provisions for the arrest from Convention, 1952 will be applied.
10. Do your Courts require counter-security in order to arrest a ship?
The Courts in Russia may require counter-security in order to arrest a ship but they are not obliged to do so. However, if the applicant is applied to the Court in the order of prior security measures ( that is – before the filing of the statement of claim) the Courts mostly require the counter security in amount of the volume of claim. The ways of the counter security being accepted by the Courts are different: from the cash deposit to different kinds of guarantee.
11. Is there any difference in respect to arresting a ship for a maritime claim and a maritime lien?
There is not difference in respect to arresting a ship.
12. Does you country recognise maritime liens? Under which International Convention, if any?
Russian Federation joined to the International Convention on Maritime Liens and Mortgages (Geneva, 1993) in 1998. Thus Russia recognizes maritime liens. Moreover the domestic law – the Merchant Shipping Code of Russia (1999) includes all clauses and regulations of above mentioned the 1999 Geneva Maritime Liens Convention. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
13. Do you need to provide a POA, or any other documents of the claim to the Court?
In order to apply to the Court the applicant (claimant) should provide the copy of legalized POA (the original of legalized POA is needed upon receiving from the court writs, decisions), documents supporting the claims – copies of receipts, charters, Bs/L. The applicant should pay the court fee.
14. What original documents are required, what documents can be filed electronically, what documents require notarisation and/or apostille, and when are they needed?
The original of legalized (with apostille) POA is needed upon receiving from the court writs, decisions. The original (with apostle) extract from the State Trade Register or any Register in order to prove the existence of the claimant as legal entity is needed in oral hearing but the copy of such original should be attached while lodging the statement of claim or application for the arrest.
15. Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested?
Yes, if there will not be any objections from parties lodged. Courts in Russia shall apply rules of 1952 Brussels Convention (cl.1 art.7) which was ratified by Russia and rules of Arbitration (or Civil) Procedural Code of Russia in order to determine the case upon its merits. The rules of Arbitration Procedural Code of Russia add some following cases – the dispute arose from the contract where the execution of contract shall be on the territory of Russia, the dispute arose from the unjust enrichment on the territory of Russia and some exclusive cases.
16. Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits?
Not more than 15 days.
17. Do the Courts of your country acknowledge wrongful arrest?
The arrestor has a liability for wrongful arrest and is obliged to reimburse the shipowner for his damages and losses due to this wrongful arrest. However, first of all it will be necessary for shipowner to receive the confirmation from the Court about illegality of arrest. In second, the shipowner shall apply with the statement of claim to the same Court where the court order about arrest was issued.
18. Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?
The cases in the Courts in Russia are initiated on base of applications (claims) of persons or legal entities against specific (concrete) persons or legal entities which are (as claimant supposes) responsible for the debts or actions. Therefore the courts will not accept the piercing of the corporate veil in clear way. The claimant should provide clear evidence of responsibility of specific legal entity. Sometimes it is possible to execute of judgment against the part of the capital stock or shares belonged to the debtor.
19. Is it possible to have a ship sold pendente lite; if so how long does it take?
If the vessel was arrested then it is not possible to sell it until the judgment comes in legal force. However there are some exclusive cases in bailiff proceeding.