Shiparrested.com Network » Middle East

Ship Arrest in Israel, by John Harris & Yoav Harris, John Harris & Co.

editor — Tue, 08 Nov 2011 10:07:20 +0000

By John Harris & Yoav Harris
jharris@017.net.il & yoavh@taxlawyers.co.il
2 Palmer’s Gate/36 Hanamal St.
P.O. BOX 33199, 31331 Haifa, Israel
Tel: 972-4-8627067
Fax: 972-4-8625257

1. Please give an overview of ship arrest practice in your country

1.1 Sources of the Admiralty Court’s Jurisdiction

The jurisdiction of the Israel Admiralty Court (which sits in Haifa) is established by the 1840 and 1861 English Admiralty Acts. These acts were extended to the Dominions and Possessions of the United Kingdom by the Colonial Courts of the Admiralty Act 1890. Under the Palestine Admiralty Jurisdiction Order of 1937 these acts were extended to Palestine, then a British mandated Territory.
When the State of Israel was established in 1948, under the Law and Administration Ordinance, the Admiralty Court Acts of 1840 and 1861 became part of the domestic legislation of the newly established State.

In the year 1960 the Israel Shipping Law (Vessels) was enacted. Section 41 of this law determines the Maritime Liens and their priorities, as follows:
(1) The official expenses of selling a vessel pursuant to a judicial sale,
(2) Port and port related charges and expenses,
(3) The costs of preserving a vessel pending Judicial sale,
(4) Payments due to the master and crew including damages for personal injury,
(5) Salvage expenses relating to the vessel, its cargo and equipment on board and expenses incurred in saving the lives of the crew and passengers.
(6) Damages for personal injuries to passengers
(7) Damages resulting from collisions or damage caused by the vessel to port installations and buildings, dry docks, and loss or damage to cargo and to passengers personal effects,
(8) Mortgages – no distinction is drawn between a local or foreign registered Mortgage,
(9) Necessaries.

The question of the existence of a Maritime Lien or a Statutory Claim in Rem is determined by the “Lex Causa” and the priorities, being procedural by the the “Lex Fori”. If a party wants to prove the Lex Causa this is done by providing the Court with an expert opinion. If no such opinion is provided in accordance with the identity of a laws principle, Israel law will be applicable.

1.2 The Application for Arrest

The Application for Arrest must be filed with the Claim in Rem.
The Application must be supported by an Affidavit. In practice a scanned Affidavit confirmed in front of the foreign lawyer or by an Israeli lawyer (by fax or e-mail) will be sufficient. Additionally the Affidavit can be given by the arresting attorney. Copies of all the relevant documents in support of the arrest are attached to the Affidavit.
A Power of Attorney is not required.

The Court has a discretion to order that the arresting party furnish security. The Court will order so on rare occasions such as when there is a serious doubt as to the validity of the documents constituting the application for arrest.

Special mention should be made of the Haifa Admiralty Court’s rather liberal attitude when ordering an arrest for necessaries. The Court will order an arrest even if the necessaries were not supplied directly by the Claimant (for example when they were supplied by a subcontractor or a local agent) and even if the Master did not sign the agreement for the supply of the necessaries.

The arrest procedure is relatively swift and the arrest can be effected within 24 hours of receiving instructions.

If the application is made on a Saturday or Public holiday, this period may be extended as a result of the necessity to appear before the roster Judge and obtaining the formal Order of Arrest which is issued by the Marshal of the Admiralty Court.

The Order of Arrest will be normally discharged by the provision of a P&I Club or other acceptable guarantee. In the latter case this would be normally a local bank guarantee.

The Vessel can apply to set aside the Arrest by contesting the merits of the claim or, on the grounds that the claim does not constitute a maritime lien or a statutory right in Rem under the Lex Causa or that the Admiralty Court does not have jurisdiction.

In order to avoid delay to the vessel, security can be furnished without prejudice and subject to the vessel’s rights to contest the Arrest and to have the security provided cancelled.

Upon serving the Order of Arrest on the vessel’s Command, the Port Authority and Border Police, the Arrest becomes effective.

1.3 Court Fees and Legal Costs

The Court fees payable are 2.5% of the amount claimed in the Claim in Rem of which half is payable at the time of filing the claim. No additional Court fee is payable for the Application of Arrest.

The legal fees for attending to the Arrest excluding VAT (at present 16%) and disbursements, are between US$3,000.- and US$6,500.-, depending on the complexity and urgency of the matter.

2. Which International Convention applies to arrest of ships in your country?

There are no International Conventions which apply to the arrest of ships in Israel.

3. Is there any other way to arrest a ship in your jurisdiction?

Ships or any other property of the debtor can be provisionally attached in a normal civil claim. This requires that the cause of action is within the Court’s normal civil jurisdiction and the provision of a guarantee.

4. Are these alternatives e.g. saisie conservatoire or freezing order?

Apart from arrest or attachment no other alternatives for detaining the debtors property are available.

5. For which types of claims can you arrest a ship?

Those claims in respect of which the Admiralty Court has jurisdiction in terms of the enactments stated in Clause 1 above.

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

A ship can be arrested irrespective of its flag except an Israel registered vessel cannot be arrested for necessaries supplied in Israel.

7. Can you arrest a ship irrespectively of the debtor?

Israel law follows the Procedural Theory of Arrest so that there must be also a valid claim in persona – unless the maritime lien or statutory right in rem is clearly available irrespective of ownership or control of the ship.

8. What is the position as regards sister ships and ships in associated ownership?

It is not possible to arrest sister ships and ships in associated ownership. It is possible to attach same. See Clause 3 above. In the case of ships in associated ownership, attachment would be subject to “lifting the corporate veil”.

9. What is the position as regards Bareboat and Time-Chartered Vessels?

A ship can be arrested for an obligation incurred by a Bareboat Charterer. It is doubtful whether an arrest can be made for an obligation of a Time Charterer unless the maritime lien or statutory right in rem clearly confers this right.

10. Do your Courts require counter-security in order to arrest a ship?

Not normally, only in exceptional cases where the Court has material doubts as to the cause of action as same appears from the documentation filed in support of the Arrest.

11. Is there any difference in respect to arresting a ship for a maritime claim and a maritime lien?

For Arrest purposes the Courts make no distinction between the historical maritime liens which are embodied in the 1840 and 1861 Admiralty Acts and the additional maritime liens (which are in effect statutory claims in rem) constituted by the Section 40 of the Shipping Law 1960.
See Clause 1 above.

12. Does you country recognise maritime liens? Under which International Convention, if any?

Yes, as in Clause 11 above. None of the International Arrest Conventions apply in Israel.

13. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?

Normally one day.

14. Do you need to provide a POA, or any other documents of the claim to the Court?

A POA is not obligatory. The Claimant must furnish an Affidavit which should clearly set out the cause of action and the documents in support thereof should be attached to the Affidavit.

15. What original documents are required, what documents can be filed electronically, what documents require notarisation and/or apostille, and when are they needed?

For the Arrest Application and Order no original documents are required, but the originals would have to be produced if the claim proceeds to trial.

16. Will your Courts accept jurisdiction over the substantive claim once a vessel has been arrested?

The Court will only accept jurisdiction if the Claim in Rem is recognised under the laws mentioned in Clause 1 above. The Application for Arrest is ancillary to the Claim in Rem which means that if there is no jurisdiction over the Claim in Rem – an arrest cannot be effected.

17. Which period of time will be granted by the Courts in order for the claimants to take legal action on the merits?

After preliminary hearings the matter is normally concluded within one year as from the date of filing the Claim in Rem. As a matter of practice the Arrest in itself normally determines the matter.

18. Do the Courts of your country acknowledge wrongful arrest?

The Court can award damages for wrongful arrest if the arrest or attempted arrest is malicious or grossly negligent.

19. Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?

The Corporate veil can be lifted in circumstances of fraud, deceit or maliciousness.

20. Is it possible to have a ship sold pendente lite; if so how long does it take?

A ship can be sold pendente lite if it can be shown that the continuation of the arrest will substantially affect the value of the ship. In this case the net sale proceeds are regarded as having substituted the ship for all purposes, including the eventual determination of the validity of the claims in rem and the priorities.

Al Rowaad Advocates & Legal Consultancy

editor — Mon, 06 Jun 2011 09:58:42 +0000

Monarch Office Tower Office no. 602, 6th Floor
One Sheikh Zayed Road
Dubai, United Arab Emirates

Tel: 0097143254000
Fax: 0097143589494

Email: awf@awfuae.com
Web: www.awf.ae

Contact 1: Hassan Mohsen Elhais

Corporate & Commercial, Private Equity, Maritime & Transport, Litigation & Arbitration

Generalities of arrest procedure in Iran, by Dr. Hassan Amirshahi, Partner, Law Offices of Dr. Hassan Amirshahi & Associates

editor — Thu, 15 Jul 2010 08:22:41 +0000

Dr. Hassan Amirshahi, Partner
Law Offices of Dr. Hassan AMIRSHAHI & Associates
http://www.amirshahilaw.com/
Tel: (98-21) 88319672
Fax: (98-21) 88823698
Telex: 226451 HAAM IR
Email: info@amirshahilaw.com

It is noteworthy that a number of international conventions apply to arrest of ships in Iran top among which is the Brussels Convention of May 1952.Document relating to the claims arising out of the privileged rights are stipulated under article 29 of the maritime law of Iran and other provisions of the said law. Every kind of official and commercial instrument including cheques, promissory notes, drafts and /or contracts wherein the ship indebtedness is reflected, taking into account the preference of the privileged rights and chooses in possession over the ship (mortgage).

Considering that a ship holds juridical personality, it is possible to submit a motion to the Iranian competent courts for arresting any ship where the subject-matter o the claim has no relationship with Iran and Iranian nationals, even if the cargo is not shipped from or to Iran and the parties to the contract of sale or the charter party are not of Iranian nationality.

The Iranian courts may issue an attachment order against the properties and the vessel for the acquisition of appropriate security and agreed jurisdiction , upon the claimant’s motion to this effect.

According to the general principles of law, the Iranian courts are inclined to extend their judicial jurisdiction. However, under the special laws, as applicable to the above question, the Iranian courts, after issuance of the attachment order and arrest of the vessel, do not insist on examining the merits of the case without the claimant’s motion to this effect. However, in case of the claimant’s failure to request the court ( within 10 days from the issuance of the attachment order and the subsequent arrest of the ship ) to take cognizance of the merits of the case, the respondent may request the court to revoke the said order.

The Iranian courts do not accept a P. & 1. Club letter of guarantee as good security and their acceptance of the foreign letter of guarantees is contingent upon their issuance through the Iranian banks. The Iranian courts, a fortiori , accept cash as good security.

By virtue of the provisions of the Civil Procedure Code of Iran, if the claimant has intended to arrest a ship as a certain rem, its conversion into the letter of guarantee or cash is subject to the claimant’s consent (Art. 122 of Civil Procedure Code). But, in the event that the ship is merely arrested for the purpose of securing the claimant’s claim, the respondent may request the court to convert it into cash, letter of guarantee or any other property which in the latter case the value of the property must be equivalent to the amount of the relief sought and, further, its marketability and ease of sale must not be lower than the arrested ship. (Art.124 ibid)

By virtue of article 108, Para. d , of the Civil Procedure Code of Iran, the claimant is bound to deposit in cash the amount of damages which might be incurred by the opponent party with the Justice Administration’s Fund . However, in certain instances, such as the lawsuits which are instituted on the strength of promissory notes or bills of exchange (in case of these instruments being protested within the legal respite by their holders), and in the same manner in lawsuits which are instituted on the basis of cheques and notarial documents, the claimant is exempt from depositing the above cash counter-security . The Iranian courts usually determine an amount between 10 to 25% of the relief sought as counte-rsecurity .

In order to arrest a ship within the territorial jurisdiction of Iran, the claimant is obliged to make payment of the amount which is revised upwards annually and which represents costs of a civil law suit on account of its plaint for the issuance of the attachment order plus a sum of IR Rls 2000 (approx. twenty cents) for each photocopy of the exhibits attached to the plaint together with an amount representing the court’s expenses for the attachment proceeding. Also, certain other unforeseeable costs are involved including, for example, the cost on account of translation into Farsi (around USD forty per page), publication of relevant notices, expertise fees, etc. The attorney’s fees will be as per amount agreed upon by the parties (attorney and client). The Marine Marshal’s fees will be determined according to the tariff approved by the maritime law of which depends on the tonnage and power of the ship as well as the length of time the ship is under arrest.

Release procedure

Upon the claimant’s renouncement of the ship arrest and/or the cessation of the reasons of arrest, such as the court’s finding to the effect that the ship is not owned by the claimant, the court shall render an order for lifting the arrest which has to be served on the Ports and Maritime Organization within certain days, taking into consideration the distance between the court and the harbor. Consequently, the said organization shall release the arrested ship immediately upon receiving the port charges and dues.

In principle, the Iranian courts will not insist that a vessel be kept under arrest. However, if the claimant fails to request the court to take cognizance of the merits of the case (warranting payment of court costs) within 10 days , and the respondent does not request the setting aside of the attachment order, the ship will remain under arrest pending the examination of the substance of the claim by any court. Appeals against such civil lawsuits will be taxed at 3% or 4% depending on whether they are before the courts of appeal or the Supreme Court.

Translation of documents and legalized power of attorney

By virtue of article 58 of the Civil Procedure Code of Iran “where the document is not in the Farsi language, besides the certified copies, the certified true translation thereof should also be attached to the plaint”.

Under article 34 of the Civil Procedure Code of Iran: “In the case where a power of attorney has been given outside Iran, it must be certified by one of the Iranian diplomatic agents or the Iranian consulates”. The power of attorney has to be approved by the official authorities of the claimant’s country and has to be officially translated into Farsi from its original text in order to be presented to the Iranian courts.

Arrest processing time

Pursuant to article 115 of the Civil Procedure Code of Iran : “Where the application for attachment has been moved, the chief clerk of the court is required to present the file to the court immediately. The court shall ………….take cognizance of the evidence presented by the applicant immediately and issue an order of acceptance or rejection of the application for attachment”. In view of the above-mentioned article and taking into account the probability of submission of defective documents, the turnaround time needed to lay said security attachment depends on court congestion and completion of documents. A processing time of 7-10 business days should be allowed. It is to be noted that, in the event that the claimant is non-suited by virtue of a final judgment, the defendant has the right to file a claim, within 20 days as of the date of Service of the final judgment, for award of documented damage which it has suffered because of the said attachment order without having to pay, this time, any court cost. The claim shall be served on the other party to present its defense within ten days and the court shall meet out of docket to decide on the case which decision shall be final. In case the defendant does not move any application for damages within the specified deadline, the counter-security shall be returned to the claimant upon moving simple application.

It is to be noted that Iranian courts are reluctant to accept facsimile documents unless they have been legalized or the other party does not raise the issue of originals or there could, reasonably, be no originals as in correspondence exchanged between the two parties which engaged in no other means of communication. New legislation, however tends to more flexible admitting production of faxes and emails as supporting evidence .

Temporary restraining orders

By virtue of Art.316 of Iranian Civil Procedure Code, application for temporary restraining orders can be moved with courts of law either for seizure of property or for a court order preventing or commanding an action. Again counter-security is needed and in case no lawsuit has been filed, the applicant must do so within 20 days as of the date of issuance of temporary restraining orders failing which the court, upon motion by the other party, shall revoke the order. Provisions (similar to those laid down under pre-litigation attachment) exist for application for damage by the party against which a temporary restraining order has been issued and for return of courter security to the applicant for temporary restraining order in case the judgment creditor fails to sue for damages within one month as of the date of service of the final judgment.

Last but not least , Iran is signatory to a number of international conventions dealing with the question of ship arrest. However, it is basically the Brussels Convention of May1952 which applies to ship arrest in Iran.