Shiparrested.com Network » South America

Ship arrest in Argentina is a practical and legal alternative designed to ensure that credit holders against national or foreign vessels should collect their debt. Embargo involves the possibility of banning sailing of embargoed vessels, thus ensuring collection preventively while leaving open the possibility of foreclosure. The formality is usually swift and simple, matching the pace of foreign trade and the eventual change of jurisdiction of vessels liable to be embargoed. Let it be noted that embargo can be requested in advance to arrival of a vessel to an Argentine port.

Applicable Laws

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

The Argentine Republic has not subscribed any international conventions that regulate ship embargo or arrest. However, these institutions are present in its legislation, namely in Navigation Act Nª 20,094 of 1973, published on February 2, 1973, which reflects some provisions of the Brussels Convention of 1952. According to the provisions of the Argentine Navigation Act, ship arrest in Argentine territory is fast, swift and favorable to the creditor´s interest.

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

There are two ways of obtaining an embargo and banning navigation: preventive embargo and foreclosure. Both options require action on the part of a judge with jurisdiction over the issue giving rise to credit justifying the embargo. Both can and should bring about interdiction of sailing. The difference between them is that the former requires court order and the latter requires court ruling following due judicial process.

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

Under Argentine legislation we see two types of unavailability, namely:
a) legal unavailability – embargo – and/or
b) physical unavailability – detention or arrest.
Thus our legislation provides the tools to obtain not only legal but also physical unavailability of a ship.

Claims subject to ship arrest

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

In order to answer this question we must first ascertain that no matter the origin of the credit, any claim can lead to ship arrest, following court order or court ruling. Any credit, ordinary or privileged, stemming from a maritime claim or not is valid to request ship arrest or embargo. Requirements for the embargo or arrest to be granted depend on credit origin. Our Act, in sections 531 et al., as well as in section 482, draws the relation between the credit envolved and the ship liable to be embargoed or arrested.

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

Absolutely: ship arrest is irrespective of her flag for privileged credits. Foreign (non Argentine) ships can be arrested due to:
i) debts incurred in in Argentine territory with respect to the ship involved or to another that belongs or belonged at the time of the credit origin to the same owner (principle drawn from the Brussel Convention of 1952) and,
ii) debts stemming from ship activity or from credits alien to it when they are recoverable before Argentine courts.
This last option widens the chances of arrest and embargo of a ship when it is moored in Argentine territory.

Regarding national vessels, the conditions for embargo and arrest are three:
I) privileged credits;
ii) other credits at the port of the owner´s domicile or main facility;
iii) credits alien to the ship, in which case the ordinary legal requirements must be filled.

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

Yes. A ship may be arrested irrespectively of the debtor. The prohibition to embargo or arrest does not fall on the character of the debtor but of the ship. According to the provisions of section 541, there is an absolute prohibition to embargo or arrest:
a) war ships, national or foreign;
b) ships under construction with a view to join military forces of a State;
c) ships at the service of national, provincial or municipal governments.
And there is a relative prohibition to embargo or arrest ships belonging to national, provincial or municipal governments and ships loaded and ready to depart.

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

There is no mention of sister ships in our legislation. Regarding associated ownership, our legislation says that a ship belongs or belonged to the same owners when all and every part of it belongs to the same owners. E.g. Supposing I intend to embargo and arrest ship Z by virtue of a credit generated by ship Y, which at the time of credit origin belonged to A, B and C, the cautionary measure on Z will be relevant provided Z belongs to A, B and C.

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

Our legislation deals with this issue under the category “Buque locado”. If the ship that caused the credit was at the time chartered, operated by its shipowner/builder or by a time freighter, any other boat owned by the shipowner or the time freighter is liable to embargo, but not another ship belonging to the same owner. In this case the law restricts the possibility of issuing cautionary measures with respect to a ship different from the one that originated the credit owned by somebody who did not have direct or personal intervention in the original obligation.

Arrest Procedure

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

According to the provisions of the Argentine law, the court, more specifically the judge, who is dealing with the request for embargo or arrest will assess the need or otherwise of requiring counter security. This is in answer to two clashing interests, both relevant. On the one hand is the advisability of clearing obstacles to navigation, which is the main purpose of a ship; on the other hand, releasing the ship to navigate freely would eventually jeopardize the credit generated by its own activity. Let it be noted that the counter security that is customarily is responsibility of the intervening Court.

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

From a procedural point of view there are no significant differences, except in cases when credit stems from matters alien to the ship activity. In these cases the parties must appear before the court that has jurisdiction in the matter of the credit, e.g. credit stemming from a bank loan to the ship owner, or credit for compensation for damages generated by a car crash due to fault or negligence of the owner of the ship.

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

Yes. Our country recognizes lien with respect of debt or credit that is relevant to move on to ship embargo.

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

Once in possession of the relevant documents, the time to draw an embargo or arrest will vary depending on the next port of call. The possibility of application in the port of Buenos Aires should take a reasonable time period, in the understanding that we must file the claim before the competent court, and provided that the ruling is issued before the ship leaves Argentine port.

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

To act in the name and representing an individual or a legal entity we need a POA apostilled by The Hague.

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

The documents required to embargo or arrest a ship are those that prove the existence and nature of a credit (contracts, invoices, etc) in the original and/or notarized, apostilled copy and the POA mentioned above. They must all be submitted at the time of request of arrest, which means that this firm should have access to them in advance.

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

The Argentine court dealing with the arrest must take the substantive claim, which means that the preventive embargo must be followed by foreclosure.

Miscellaneous

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

There is no term, only the terms provided for in the context of the statutes of limitation.

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

No. Both embargo and arrest are legal remedies and call for immediate compliance, both on the part of the court and the law enforcing agency, in this case the Coastguards.

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

Argentina has a lengthy sea coast, and Argentine judges have long experience in maritime law. Judges have been in office for many years and are well acquainted with the particulars of the activity. They will bear in mind the best interest of the claimant as well as the rights of the defendant.

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

The option to sell a boat for the purpose of collecting the credit that gave way to the embargo involves a court procedure that the parties have to follow. Both parties are entitled to procedural tools which may speed or slow the process of liquidation. The final duration of the process may be influenced by many factors, both intrinsic and external, so much so that we are not in a position to estimate a term.

Ship Arrest In Brazil, by Cláudia Haidamus Perri, FELSBERG E ASSOCIADOS

editor — Tue, 26 Oct 2010 11:04:01 +0000

FELSBERG E ASSOCIADOS
Av. Paulista, 1294 2º andar
01310-915, São Paulo – SP, Brasil
Website: http://www.felsberg.com.br/
Tel: +55 (11) 3141-9106
Fax: +55 (11) 3141-9150
Email: claudiaperri@felsberg.com.br

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

In a broad sense, arrest is a specific or typical provisional remedy provided by law so as to ensure satisfaction of a judgment in a future action at law brought to enforce collection of a debt (mainly as regards collection of a certain sum) through a preventive and provisional seizure of assets of value sufficient for settlement of the debt.

The circumstances in general in which such provisional remedy may be requested are explained in Article 813 of the Brazilian Code of Civil Procedure. In short, such measure may be adopted when, in certain situations and in an attempt to evade the payment of its debts, a debtor intends to leave its civil domicile or perform certain acts envisaging the alienation of property, thus disposing of the assets necessary for the settlement of all its liabilities.

Further, in general, Article 814 of the Code of Civil Procedure establishes that the requirements for the judge to grant the provisional measure upon examining the motion for arrest are: i) unquestionable evidence that the debt is certain and indisputable ; and ii) proof of the existence of one of the circumstances foreseen in the aforementioned Article 813 is actually the case at hand, whether through supporting documents or evidence produced in a hearing specifically held for this purpose (“justification hearing”), which may be avoided if the creditor posts a bond, pursuant to Article 816, subparagraph II.

The arrest of ships, also known as “embargo” of ships, like arrest in general, is a typical provisional remedy adopted to secure future collection of a debt. However, the difference lies in the nature of the asset to be provisionally and preventatively seized: debtor’s ship or ships.

Therefore, in view of the distinctive characteristics of the commercial relationship, especially within the scope of Maritime Law, such type of arrest received special treatment by the Brazilian legislature, by the inclusion of provisions for specific events and requirements, mostly regulated by Articles 479 to 483 and 607 to 609 of the Brazilian Commercial Code and by the International Brussels Convention of 1926, in force in Brazil by virtue of Decree No. 351 of 10.01.1935.

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

Only the International Brussels Convention of 1926, has been signed and ratified by Brazil and is promulgated in Brazilian territory by virtue of Decree No. 351 of 10.01.1935.

Brazil has not ratified any international convention regarding the arrest of ships (neither the International Convention to the Arrest of Sea-Going Ships 1952 nor the International Convention on Arrest of Ships 1999 has been ratified and promulgated).

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

As was mentioned in item 1, our legislation makes arrangements for arrests where the subject is a shipping vessel (articles 813 to 821 of the Code of Civil Procedure).

However, where this concerns a foreign creditor, a situation involving the obtaining of a preliminary measure would be difficult considering the conditions included in the law.

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

If the debtor: (i) pays the debt and the process expenses which the creditor has had; (ii) has a reliable guarantor or pledges to guarantee the debt, the arrest order shall be suspended. Should the parties renew or reschedule the debt, this shall also be considered a situation in which the arrest will be suspended.

Another hypothesis in which the arrest may be suspended would involve the presentation to the Court of an appeal demonstrating that the preliminary measure conceded by the Judge was made in a manner contrary to the law.

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

The applicability of a measure resulting in the arrest of a vessel, whether Brazilian or foreign, under Brazilian commercial law must take into account the distinction between two possible situations: a) the arrest is grounded on one of the credits qualified by the Commercial Code as “privileged” (the arrest is in rem); and b) the arrest is grounded on credits qualified by the Commercial Code as “not privileged” (the arrest is in personam).

Below is a brief analysis of such events:

1) ARREST GROUNDED ON “PRIVILEGED CREDITS”:
Privileged credits are not only those listed in Articles 470 and 471 of the Commercial Code, but also those provided by complementary legislation, which, under Brazilian law, are binding upon the ship wherever it may be, namely:
i. Taxes due to the State and court costs and expenses;
ii. Salaries due for services rendered aboard ship;
iii. Salvage indemnity claims;
iv. Obligations assumed by the ship master while exercising the powers conferred upon him by law, falling upon the ship’s hull or equipment, whether or not represented or not by notes (promissory notes, bills of exchange, etc.) signed by the master;
v. Indemnification for general average;
vi. Indemnification for marine accidents;
vii. Credits secured by marine mortgage;
viii. Debts owed to private port operators;
ix. Expenses with depositaries, as well as storage costs relating to the ship’s instruments;
x. Expenses incurred with the ship’s costs and maintenance;
xi. Shortages on delivery of cargo and damage thereto;
xii. Debts deriving from the contracts for construction and purchase of the ship; and
xiii. Debts deriving from costs incurred in the repair of the ship and its installations and equipment.

2) ARREST GROUNDED ON “NON-PRIVILEGED” CREDITS:
Any other credit of nature and origin other than as stated above, is qualified under Brazilian law as “non-privileged”, therefore it does not accompany the vessel wherever it may be.
Therefore, the arrest based on such type of credit is enforceable only at the port where the vessel has been registered and, even so, only upon the posting of a bond and after the filing of the applicable action to collect the debt of whatever nature. This means that in such event, the provisional measure requesting the arrest may only be instituted as an ancillary proceeding, not before the main action is filed.

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

If the above listed requirements are contemplated, as a general rule a ship may be arrested irrespective of her flag.

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

If the above listed requirements are contemplated, the credits have in rem effects and follow the vessel, not the debtor, being possible to arrest the vessel, whether Brazilian or foreign, in a Brazilian court.

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

Within our legal system, the arrest of sister ships and ships in associated ownership is only admitted when the credit arising from a judicial or extrajudicial security (and recognized as such by Brazilian law) was against the ship owner and not the ship, i. e., if the arrest is in personam, it may be possible to file a precautionary lawsuit against the shipowner, in order to detain a sister ship and request security, even if the debt is not directly related to such vessel.

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

Should the debt be contracted by the vessel (for example: loading of the ship, services provided to the ship), Brazilian law states that it is the vessel which is responsible for the debt, and thus, an arrest would be possible, it being of little matter who owns such vessel or is in possession of such.

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

The Court may impose, at its discretion, a counter-security. Additionally, in the event of a foreign plaintiff who does not own real estate in Brazil, the plaintiff may be ordered to provide security for costs and legal fees incurred by the defendant’s lawyer, corresponding to 10% to 20% of the total claimed amount. A letter of credit issued by a first-line bank headquartered in Brazil may alternatively be offered instead of depositing such amount.

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

As a general rule, there is no difference.

12. Does your country recognize maritime liens? Under which International Convention, if any?

As previously informed, only the International Brussels Convention of 1926, has been signed and ratified by Brazil. Any maritime lien that is not contrary to Brazilian public order may be recognized.

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

If all the documents are available, it can be done in a couple of days.

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

To file this kind of lawsuit it is necessary to provide the court with: i) all available documents that evidence the existence of the credit and its amount (for instance, invoices, delivery notes and receipts executed by the master, and any other related documents that may be supportive of the claimed credit); ii) a Power of Attorney for the Plaintiff’s lawyers; and iii) evidence that the pertaining court costs have been duly paid.

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

All documents (mentioned in item 14) should be presented in the form of certified copies which have been ratified by a Judge. There is no method other than this existing in Brazil.

Documents in a language other than Portuguese must be translated in Brazil by a sworn public translator. Regarding the Power of Attorney, the signatures must be duly notarized and afterwards consularized at the nearest Brazilian Consulate. If the Notary Public is not able to certify that the undersigned are authorized to execute the Power of Attorney on behalf of the grantor, it will be necessary to provide the court with a notarized and consularized copy of the by-laws or any other official document to the same extent. Anyway, if, for any reason, there is not enough time to obtain the notarizations, consularizations and translations before the arrest is filed, it is possible to provide the court with scanned copies of the documents and ask for additional time to submit the notarized and consularized originals and its translations.

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

Our Courts acknowledge jurisdiction based our Code of Civil Procedure. Pursuant to article 88 of the BCCP, Brazilian courts may accept jurisdiction when: (i) the defendant, regardless of his/her nationality, is domiciled in Brazil; and/or (ii) the obligation is to be performed in Brazil; and/or (iii) the proceedings originate from events occurred or actions performed in Brazil. Further, pursuant to article 89 of the BCCP, Brazilian courts have exclusive jurisdiction for: (i) hearing legal proceedings relating to real estate located in Brazil; and (ii) conducting probate and distributing estates, even if the deceased is a foreigner and lived outside of Brazil.

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

As a general rule, thirty (30) days.

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

Yes, our Courts do acknowledge wrongful arrest in cases which the plaintiff did not properly prove that its credit gave rise to the remedy of arrest, i. e., if it is ruled that the debt does not exist.

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

Not only will our courts pierce and lift the corporate veil when appropriate, but our Civil Code specifically provides for such remedy (article 50).

As per article 50, the application of the disregard of the legal entity doctrine is allowed only upon evidence and verification by the court that the legal entity has been involved in a so-called “abuse of corporate personality”.
The abuse of corporate personality, according to this provision, can be characterized when at least one of two requirements is present:
a) The legal entity is not used for the purposes for which it was set up by the legal system (the so-called “deviation of purposes”); and/or
b) There is confusion between the partner’s or subsidiaries’ or associated companies’ assets and those of the company whose veil is expected to be pierced (the so-called “confusion of patrimony”).

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

As long as it has judicial authorization, the company may suspend the arrest. This judicial authorization may only be given if the company provides another guarantee in the place of the vessel (for instance: a letter of credit issued by a first-line bank headquartered in Brazil). It can be done in a couple of days.

(1) In Brazil, provisional measures are classified as “nominada” or “típica” (specific or typical) meaning that they are specifically provided by law, such as arrest, seizure, judicial notification, etc. “Inominada” or “atípica” (non specific or non typical) measures are remedies not specifically provided by law, which may be claimed by the plaintiff and granted or not, according to the discretion of the court.

(2) Pursuant to the sole paragraph of Article 814 of the Code of Civil Procedure, a judgment ordering the debtor to pay its debt in cash, or through any other means that can be converted into cash, is held to be sufficient proof that the debt is certain and indisputable. However, a judgment rendered in a foreign country will require prior ratification by the Federal Superior Court in order to produce effects in Brazil.

(3) Nevertheless, whatever the nature of the credit (privileged or non-privileged), pursuant to Article 479 of the Commercial Code, only ships without cargo or with no more than 25% of its cargo capacity onboard may be arrested. However, whatever the amount of cargo onboard, by virtue of the same legal provision the arrest will never be allowed if the ship has already obtained all required authorizations to depart, given by the competent port authorities, unless the credit being claimed arises from bunkering and catering carried out at the same port and for the same voyage.

(4) Although both requirements may be deemed as a complement of the other.