Article issued for the third edition of “Ship Arrests in Practice”, 2008, published by shiparrested.com network.
By Don Soutar
National Maritime Services Inc.
dons@vesselarrest.com
www.vesselarrest.com
1915 Southwest 21st Avenue, Fort Lauderdale
FL 33312, United States of America.
Tel: 954 990 1290
Fax: 954 602 9127
By Patrick Novak
Horr, Novak and Skipp
Overview
1. Please give an overview of ship arrest practice in your country.
The structure of the US Judicial system is such that the Constitution is the supreme law of the land in the United States. It creates a federal system of government in which power is shared between the federal government and the state governments. Due to federalism, both the federal government and each of the state governments have their own court systems. There are 13 U.S. Courts of Appeals, and 94 U.S. District Courts. Each of the states belongs to one of the 11 federal circuits. There is only one Supreme court and this is the court of last resort in the federal system. There are no special courts in the state or federal system to hear admiralty matters, although most arrests are in federal court. It is also possible to arrest in state court at much less cost. There is therefore, a myriad of courts both state and federal applying the law and early consultation with your local contact is important as rules and practice vary widely.
Art III sec. 2 of the Constitution confers admiralty and maritime jurisdiction. The authority of the court is limited to geographical limits. 28 USC sec. 566 provides the authority for the court to involve the US Marshal. As such, the US Marshal’s Service (USMS) authority to arrest is limited to vessels or cargo within the territorial jurisdiction of the district in which the property is found. The arresting party will issue a warrant of arrest which will direct the marshal to arrest, attach or garnish the vessel or property and hold it pending further order of the court. Once issued by the court, the marshal will serve the order of the court on the vessel or property. Seizure of a vessel and tangible property in the US is exclusively the duty of the USMS. Supplemental Rules of Admiralty and Maritime Claims, do provide for others named in a court order to seize other property, eg: to attach bank accounts under Supplemental rule B, which can be done by anyone named, but with vessels or property thereon, only a Marshal is authorized to do this. Once the documents are served and due to the particular requirements of court rules that the Marshal shall keep the property, it is customary and in many cases, cheaper to use the services of a substitute custodian to hold the vessel as the agent of the Marshal. This is what National does in large part.
2. Which International Convention applies to arrest of ships in
your country? None
3. Is there any other way to arrest a ship in your jurisdiction?
No
4. Are these alternatives e.g. saisse conservatoire or freezing
order? Yes, Rule B Attachment of the ship if the owner cannot be found in the district for purposes of service of process
Claims subject to ship arrest
5. For which types of claims can you arrest a ship? Maritime liens
giving rise to in rem claims
6. Can you arrest a ship irrespectively of her flag? Yes
7. Can you arrest a ship irrespectively of the debtor? Yes, with
one caveat, the arresting party must be a “stranger” to the ship. That is, an owner, part owner or joint venturer cannot arrest its own ship
8. What is the position as regards sister ships and ships in
associated ownership? No sister ship arrest
9. What is the position as regards Bareboat and Time-Chartered
vessels? Pursuant to the personification theory, the ship is the offending “person” and is therefore liable in rem irrespective of charter status
Arrest Procedure
10. Do your Courts require counter-security in order to arrest a ship?
No
11. Is there any difference in respect to arresting a ship for a maritime claim and a maritime line? The “maritime claim” must give rise to a maritime lien
12. Does you country recognise maritime liens? Under which International Convention, if any? Yes, under U.S. law – The Commercial Instruments and Maritime Lien Act 46 U.S.C 31301 and under the General Maritme Law of the United States.
13. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm? Twenty four to forty eight hours.
14. Do you need to provide a POA, or any other documents of the claim to the Court? For tort claims no. if contract claims, a copy of the contract or mortgage and promissory note
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 originals documents required. The in rem complaint must be verified by the claimant, or if the claimant is not in the District by the claimants attorneys, and the verification must be notarized. The initial complaint must be filed with the clerk of court and thereafter all documents must be filed electronically.
16. Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested? Yes, the court will apply the procedural law of the forum and the substantive law governing the tort or contract.
Forum selection and arbitration clauses will be enforced, with the court maintaining jurisdiction over the security and choice of law clauses.
Miscellaneous
17. Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits? A person or entity asserting a right of possession or ownership of the ship must file a Claim of Owner within 10 of the arrest and serve a response to the complaint within 20 days of filing a claim of owner
18. Do the Courts of your country acknowledge wrongful arrest? Yes, but only in the most extraordinary circumstances where it is clearly established the claimant acted in bad faith, i.e. the claimant knew it had no maritime lien or right of arrest and nonetheless proceeded with the arrest
19. Do the Courts of your country acknowledge the piercing and lifting of the corporate veil? Yes, when it can be shown the corporate entity was used for an improper purpose.
20. Is it possible to have a ship sold pendente lite; if so how long does it take? Yes, the court can order the “interlocutory” sale of the ship prior to judgement if (1) the property is perishable or liable to deterioration, (2) the expense of keeping the property is excessive or disproportionate to its value, or (3) there is an unreasonable delay in securing the release of the proerty
