Arresting Vessels in the United States

by Don Soutar,
UK Solicitor.

Background to US arrest:

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.

In the USA and most other jurisdictions, the arresting party is in effect, taking the place of the actual owner/operator and has to give an undertaking to the court. As such he will become responsible for the vessel and akin to its manager/operator. He will therefore become a “caretaker” with all the responsibilities and liabilities that that entails. He should be aware of certain aspects of ship management, some of which are:
The particular features of the harbor or anchorage where the vessel is found
Expected weather conditions
Crewing aspects
Cargo operations
Insurance
Need for repairs or any ongoing maintenance work on the ship
Security ordered by the court or otherwise
Fuel and provisioning
Immigration regulations
Liability issues and appropriate insurance.

All of the foregoing are issues ideally suited for resolution by a court appointed substitute custodian. They involve detailed attention by professional experienced personnel, backed by substantial financial resources needed to keep a ship under arrest over the long term.

The Arrest:

Arrest by its nature usually involves an element of surprise to the ship and crew. The USMS personnel are always armed and appear with authoritative force to accomplish the terms of the court order to seize the vessel. The message is ‘comply or jail”. In any case, it is a stressful situation for crew and owners, not to mention passengers if a cruise ship is involved, which happened in one case where National had to repatriate over 1200 passengers and crew in a couple of days. The arrestor and their advisors should be ready to identify the nationalities of the people on board and have interpreters at the ready.

On gaining access to the vessel, the ships documents that would be required to obtain port clearance and other important papers must be seized and put in safekeeping under lock and key. This will consist of flag documents, IMO registrations, certificates, logbooks, class records, etc.

A meeting of all the owners representatives, crew and passengers should be held immediately, while the USMS is aboard. This is the time to explain what the arrest is all about and to explain that the court through the USMS has terminated the owner’s rights, the control of the vessel is now in the custody of the U.S. Government, and that National has been appointed the Marshal’s court appointed substitute. At that point, provided all agree to comply, the USMS can depart the vessel after completing the “chain of custody” paperwork and the substitute custodian can then take control and perhaps provide a meal for the crew to foster good relations. National would then be involved making a full inventory of the vessel and its contents, taking video/photos, with surveyors if necessary.

Post Arrest:

Once the arrest has been accomplished, it is usual to cease all cargo operations and works. If these are going to be necessary, it would be advisable for the arresting party to ask the Judge to allow for this in his arrest order, or that the vessel should be moved from an expensive berth to anchorage for example. This can be accomplished later by court application.

It will be necessary to consider in short order, manning requirements and crew who are superfluous, should be repatriated. Attention should be paid to safe manning levels at all times and extra thought given during areas with hurricanes as the vessel may have to slow steam on approach of a storm. Cargo interests should be advised and required to undertake action to remove their cargo.

If the facts of the case show that the vessel will not be released on provision of security or bond and that the arrest is likely to continue for some time, as with bank foreclosures, the substitute custodian on behalf of the arresting party will assist with longer term planning in order to save costs such as moving the vessel to anchorage, reducing the number of watchmen or crew etc. They will consider obtaining court orders to approve their recommendations such as delivery of spare parts or fuel for generators, repatriation of crew, immigration issues, provisions, surveys of ship and also preparing for a private or court ordered sale if necessary.

In the case of a bank foreclosure, it is usually the case that if an owner is in default with the bank, he also more than likely owes the crew too. The arresting party may be well advised, after consideration of the evidence, to pay the crew’s wages and take an assignment or subrogation position into this preferred maritime lien. The last thing a bank would want is the crew arresting the vessel and/or other interveners, complicating the mortgagee’s ability to resolve the claim via settlement, or worse, sabotage of ship’s systems. National will explore solutions to avoid complications.

For these reasons, a substitute custodian is an invaluable asset in such a situation and if negotiations to release the vessel exceed two days, will recommend working with the attorneys to obtain a Motion for Interlocutory Sale. This would allow the vessel to be sold and the funds paid into court to replace same. It may be granted where the evidence shows there may be excessive deterioration, excessive costs and unreasonable delay in handling the release. The precedent for this is Supplemental Admiralty Rule E (9)(b). A further ground for requesting immediate interlocutory sale is that a foreign ship’s mortgage may very well be at the bottom of the maritime lien priorities and where the vessel is sold quickly, reduces the chance of other lienholders or neccessariesmen intervening in the lawsuit, thus maximizing the recovery for the arresting party.

Summary:

Arrest is never a straightforward option as each one is different. Nevertheless, if previous attempts to resolve the matter have been fruitless, the best option would be to work with a firm such as National Maritime Services Inc. who will co-ordinate with a local attorney in the district to ensure that the arrest proceeds smoothly and for the least cost. NMS will take such steps as to minimize the vessel’s deterioration in condition while serving as security for a loan. Careful consideration will be given to crew issues to avoid complications and we will work closely with an attorney to set up a comprehensive plan to obtain court orders for the smooth arrest and sale of the vessel to maximize recovery for the arresting party.