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Ship Arrests in New Zealand, by Felicity Monteiro and Kerryn Webster, Wilson Harle


Ship Arrests in New Zealand, by Felicity Monteiro and Kerryn Webster
Wilson Harle
64 Fort Street
1010 Auckland, New Zealand
Tel: 00649 915 5700
Fax: 00649 915 5701
A.O.H.: 006421 558327 / 006421 2955695
Email: firm@wilsonharle.com
Web: www.wilsonharle.com

1. Please give an overview of ship arrest practice in your country.
Initial ship arrest in New Zealand can be fast and relatively inexpensive.  It requires a notice and application, supported by affidavit, to be filed and does not require a hearing.  An undertaking to meet the costs of the Registrar is also required.  The time and cost involved in maintaining the arrest and claim against the ship, and possibly obtaining judicial sale, will depend upon a range of factors.

2. Which International Convention applies to arrest of ships in your country?
New Zealand is not a signatory to any International Conventions dealing specifically with arrests. Ship arrests in New Zealand are governed by the Admiralty Act 1973 and the High Court Rules.

3. Is there any other way to arrest a ship in your jurisdiction?
No (although note the comments on freezing orders in response to question four, below). Arrests in New Zealand are obtained by filing in the High Court, a Notice of Proceeding relating to an in rem claim against the vessel and an application for arrest, supported by an affidavit.  The proceeding must relate to a claim falling within the heads of jurisdiction set out in the Admiralty Act 1973.

4. Are there alternatives e.g. saisie conservatoire or freezing order?
The New Zealand High Court also has jurisdiction to grant freezing orders over any type of asset and, while such orders could extend to ships, the powers do not relate specifically to vessels.  It is harder to obtain a freezing order than it is to arrest a vessel: an application is usually made without notice and the applicant must, usually by way of a contested hearing, demonstrate a good arguable case, show that there is a risk of dissipation of the relevant asset and give an undertaking as to compensate the respondent for any damages caused by the order, before a freezing order is made.  In contrast, for an arrest, the applicant will need file an in rem notice of proceeding, with a concise statement of the nature of the claim and of the relief or remedy sought, an application for a warrant of arrest and an affidavit in support setting out the details of the parties, the ship and the claim.  No real interrogation of the matters set out in the notice and affidavit is carried out and the warrant for arrest is issued without a hearing.  The applicant is required to provide an indemnity to the Registrar but this is limited to the costs of arrest are does not cover any damages suffered as a result of the arrest.

5. For which types of claims can you arrest a ship?
Arrest is available for claims coming under s 4(1) of the Admiralty Act 1973, which lists:
a) any claim to the possession or ownership of a ship or to the ownership of any share therein.
b) any question arising between the co-owners of a ship as to possession, employment, or earnings of that ship.
c) any claim in respect of a mortgage of or charge on a ship or any share therein:
d) any claim for damage done by a ship.
e) any claim for damage received by a ship.
f) any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or of the wrongful act, neglect, or default of the owners, charterers, or persons in possession or control of a ship or of the master or crew thereof or of any other person for whose wrongful acts, neglects, or defaults the owners, charterers, or persons in possession or control of a ship are responsible, being an act, neglect, or default in the navigation or management of the ship, in the loading, carriage, or discharge of goods on, in, or from the ship or in the embarkation, carriage, or disembarkation of persons on, in, or from the ship.
g) any claim for loss of or damage to goods carried in a ship.
h) any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship.
i) any claim in the nature of salvage.
j) any claim in the nature of towage in respect of a ship or an aircraft.
k) any claim in the nature of pilotage in respect of a ship or an aircraft.
l) any claim in respect of goods, materials, or services (including stevedoring and lighterage services) supplied or to be supplied to a ship in its operation or maintenance.
m) any claim in respect of the construction, repair, or equipment of a ship or for dock or port or harbour charges or dues.
n) any claim by a master or member of the crew of a ship for wages.
o) any claim by a master, shipper, charterer, or agent in respect of disbursements made on account of a ship.
p) any claim arising out of an act which is or is claimed to be a general average act:
q) any claim arising out of bottomry.
r) any claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried, in a ship, or for the restoration of a ship or any such goods after seizure, or for droits of admiralty.

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

7. Can you arrest a ship irrespectively of the debtor?
For some claims, yes, except in cases of foreign state immunity.  For certain claims, however, the debtor against whom the in personam claim arises must also be the owner or charterer of the vessel at the time that the action is brought.

8. What is the position as regards sister ships and ships in associated ownership?
For some claims, a sister ship may be proceeded against.  Claims which cannot be transferred to a sister ship are claims for:
1.1.a) possession or ownership;
1.1.b) claims between co-owners;
1.1.c) claims in respect of a mortgage; and
1.1.d) claims for forfeiture, restoration or droits of admiralty.
For other claims falling within s 4(1) of the Admiralty Act, a sister ship may be proceeded against if the person liable on the claim was owner or charterer of the ship when the cause of action arose and was the beneficial owner or demise charter of the other ship when the action was brought.

9. What is the position as regards Bareboat and Time-Chartered vessels?
A ship can be arrested if the relevant person was the owner or charterer, or in possession or control of the ship when the cause of action arose and, when the action was brought, was beneficial owner or demise charterer of the ship.  Arrest of a ship that is under time charter is not available in relation to claims against the time charterer.

10. Do your Courts require counter-security in order to arrest a ship?
No.  However, a party seeking the arrest of a ship is required to provide an indemnity to the Registrar for the costs likely to be incurred by the vessel to be arrested, such as Harbour dues and crew expenses. The Registrar requires some payment upfront to cover initial arrest costs and then to be kept in funds in anticipation of subsequent costs.

11. Is there any difference in respect to arresting a ship for a maritime claim and a maritime lien?
Yes.  A maritime lien entitles the claimant to arrest the relevant vessel regardless of beneficial ownership.  For other claims, the person against whom the claim arises must also be owner or demise charter at the time the action is brought.

12. Does your country recognise maritime liens?  Under which International Convention, if any?
Yes, for certain types of claims, but they are defined and recognised under the Admiralty Act, not an international convention.

13. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
Provided that all of the necessary information (including translations if required) is available, the proceeding can be prepared and the application for arrest made on the same day as the instruction is received.  It is then in the hands of the Court to arrest the vessel, although this is usually done within a few days.

14. Do you need to provide a POA, or any other documents of the claim to the Court?
No. See 15 below.

15. What original documents are required, what documents can be filed electronically, what documents require notorisation and/or apostille, and when are they needed?
In order to obtain the arrest of a vessel, a notice of proceeding, application for arrest, supported by affidavit, and filing fee must be filed in the High Court Registry.  The required documents are standard form documents and, while originals of these documents need to be filed, they can be prepared by the New Zealand law firm instructed.  Usually, the documents would need to be physically filed with the Court but in cases where there is extreme time pressure, the documents may be accepted electronically in the first instance.  No other original documents are required nor do any documents need to be notarised. A statement of claim which sets out the nature of the claim must also be filed, but can be done after the vessel has been arrested.

16. Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested?
Yes.  There may, however, be issues of jurisdiction if the claim is contract based or if a cross-border insolvency is involved.

17. Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits?
If the defendant enters an appearance following the arrest, then a statement of claim must be filed within 10 working days.  The Courts will apply relevant limitation provisions to any claims.

18. Do the Courts of your country acknowledge wrongful arrest?
Yes, where the party arresting has acted in bad faith or with gross negligence.  It is not enough that the claim is made on a mistaken basis.

19. Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?
Only in exceptional circumstances where a failure to do so would cause substantial injustice.

20. Is it possible to have a ship sold pendente lite; if so how long does it take?
Yes.  The time will depend on the urgency of the claimant’s application, whether the application is opposed, whether there is a ready market for the vessel and whether the ongoing costs of arrest are likely to exhaust the security in the ship.