Download here the chapter on Bulgaria from the last edition of our Ship Arrests in Practice publication.
The law is stated as at December 1st 2011.

By Rumen Lyutskanov & Tsvetelina Stoilova
Dobrev, Kinkin & Lyutskanov
Tel: (003592) 980 46 59, 981 92 03
fax. (003592) 980 42 61
e-mail: lyutskanov@lawfirm-bg.org
web: http://www.lawfirm-bg.com/

Overview

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

In principal, the arrest of a ship according to the Bulgarian law is a procedure which provides pre-judgment security for future claims. The arrest of a ship shall be allowed, if without it, will be impossible or difficult an eventual future court decision to be executed, until the necessary guarantees are provided by the shipowner. Notwithstanding the relatively formal character of the procedure according to the Bulgarian law, after the country became a party to the International Convention on Arrest of Ships, 1999, the number of maritime claims, grounds for an arrest was increased, as well as the terms and condition for its allowance were unified.

Applicable Laws

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

The Republic of Bulgaria is a State party to the International Convention on Arrest of Ships, adopted on March 12, 1999 at the United Nations/International Maritime Organization Diplomatic Conference on Arrest of Ships, held in Geneva (“The Convention”). The Republic of Bulgaria has signed the Convention on July 27, 2000 and ratified it in accordance with the constitutionally established procedure.
In accordance with its Article 14 (1), the Convention went into force on September 14, 2011, six months after the Republic of Albania became the 10th State to accede it. State parties include Albania, Algeria, Benin, Bulgaria, Denmark, Ecuador, Estonia, Finland, Latvia, Liberia, Norway, Pakistan, Spain and the Syrian Arab Republic.

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

In addition to the provisions of the Convention, a ship might be arrested on the grounds of the procedures stipulated in the domestic law. The grounds, as well as the procedure and competent authority to arrest of a ship in order to secure a maritime claim according to the domestic law are regulated by the Bulgarian Merchant Shipping Code and the Code of Civil Procedure.

Arrest of a ship, according to the domestic law might be allowed:
3.1. By the Bulgarian Maritime Administration for specified in the Bulgarian Merchant Shipping Code grounds, namely for claims arising of averages, collisions, rendered assistance, other services or of performance of carriage contracts, until the necessary guarantees are provided by the shipowner. The arrest of the ship shall be terminated after 72 hours, if within this period the district court at the location of the ship does not rule accordingly in a procedure for securing of a future claim;
3.2. By the district court at the location of the ship (the respective port) in a procedure for securing of a claim, including a future claim, by imposing of a collateral measure “arrest of a ship” under the provisions of the Bulgarian Civil Procedure Code for a claim arisen in connection with the ship.

In addition to the above, the Bulgarian Merchant Shipping Code stipulates also a specific procedure for arrest of a ship and cargoes only for unpaid sums of customs, port and other fees, taxes and fines. The Executive Director of the Bulgarian Maritime Administration or the captain of a port may arrest Bulgarian or foreign ships for such claims, if the request is made on behalf of governmental and judicial authorities, by the State Enterprise “Port Infrastructure” or by a foreign maritime administration. The arrest shall continue until elimination of the grounds of it.

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

Such instruments are not provided and applicable according to the Bulgarian law.

Claims subject to ship arrest

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

Grounds for arrest of a ship, according to the Convention are maritime claims, as defined in Article 1 (1) of the Convention. The competent authority is the Court.
The grounds for arrest of a ship, if it is subject of an allowance by the Bulgarian Maritime Administration on the grounds of the Bulgarian Merchant Shipping Code are:
- claims arising of averages, collisions, rendered assistance, other services or of performance of carriage contracts, in case that the procedure is initiated by an interested Bulgarian or foreign physical person or legal entity are or;
- unpaid sums of customs, port and other fees, taxes and fines, in case that the procedure is initiated by governmental and judicial authorities, by the State Enterprise “Port Infrastructure” or by a foreign maritime administration

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

The Bulgarian Merchant Shipping Code does not specify exceptions to this general rule, stipulating that authorities “may arrest Bulgarian or foreign ships and cargoes”.
Article 8, para 1 of the International Convention on Arrest of Ships, 1999 states that the rules and regulations set by the Convention apply to any ship within the jurisdiction of any State Party, whether or not that ship is flying the flag of a State Party. Article 8, para 2 however makes and exception, declaring that said rules and regulations do not apply to any warship, naval auxiliary or other ships owned or operated by a State and used only on government non-commercial service.

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

The general rule, according to the Bulgarian law is that a ship arrest is permissible for maritime claims, as defined and specified in point 5 above against the shipowner. The shipowner is the owner of the ship, entered as such in the register of the ships or any other person, which utilized the ship on its own behalf on other legal grounds (by example on the ground of a bareboat charter agreement) at the time when the maritime claim arose and the arrest is effected.

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

With regard to the arrest procedure, the Bulgarian Merchant Shipping Code does not stipulate the possibility to be arrested a sister ships and ships in associated ownership for a claims arisen from other ship, notwithstanding that the shipowner is the same person or legal entity.

According to the Convention, under certain terms and condition, the arrest is permissible of any other ship or ships which, when the arrest is effected, is or are owned by the person who is liable for the maritime claim and who was, when the claim arose:(a) owner of the ship in respect of which the maritime claim arose; or (b) demise charterer, time charterer or voyage charterer of that ship.

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

The ship might be arrested for maritime claims, as defined and specified in point 5 above against the shipowner, irrespectively whether it is the owner of the ship, entered as such in the register of the ships or any other person, which utilized the ship on its own behalf on other legal grounds at the time when the maritime claim arose and the arrest is effected (please see point 7).

Arrest Procedure

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

While counter-security is not a mandatory prerequisite for arrest of a ship, the Convention states that the Court may, as a condition of the arrest, or of permitting an arrest already effected to be maintained, to impose such measure upon the claimant for any loss which may be incurred by the defendant as a result of the arrest, and for which the claimant may be found liable.
Similar decision has been made in the internal Bulgarian legal system. According to the law, the competent court may require a security from the claimant as a guarantee for a future claim by the defendant for incurred damages, which guarantee has to be proportionate to the actual losses of the ship and/or cargo.

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

The maritime claims, grounds for arrest of a ship are specified in point 5 above. There is not difference, as well as specific rules in the arrest procedure for maritime liens.

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

The Republic of Bulgaria is not a party to an International Convention, which regulates maritime liens.
The Merchant Shipping Code recognizes maritime liens as priority (privileged) claims. They have superiority over ship mortgages, regardless of the order of their registration. The privileged claims and their order are the following:
a) the judicial expenses and the expenses made in common interest of the creditors with the purpose of preserving the ship, subject to public sale, or related to the sale of a ship and apportionment of the sum received;
b) the claims for ship or port fees and the payments for services rendered in the port, pilotage services and the expenses related to the supervision of the ship and her condition, made after the entrance of the ship in the port in question;
c) the claims of the employees arising of employment contracts, the claims related to the social insurance and the claims for disability or death, as far as all specified claims are related to the ship;
d) the claims for salvage rewards and the allowance in general average;
e) the claims for compensation due for damages caused by collisions or other accidents, as well as the claims for damages caused to the passengers, including the members of the crew; for compensation of damages caused by loss or damage of the cargo or the baggage;
f) the claims arising of the acts of the master pursuant to his legal competences, if these acts are caused by actual needs for preserving the ship or to continue her course, regardless of whether the master is also the shipowner and whether the claim belongs to the master or to a third person.

These claims may be discharged from the value of the ship; the freight and the fees for carriage of passengers and their baggage for the course during which the priority claim has arisen; from the allowance for the ship in general average, as well as from the compensations for damages suffered by the ship and still non-recovered or resulting from the loss of the carriage price; from the reward due to the ship for salvage before the completion of the course, while deducting the sums due to the master and the crew of the ship. Some priority claims may also be discharged from the value of the cargo and from the compensation for damaged cargo or for general average due for the cargo.

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

If we are provided with all required documents (as described in point 14 below), the next steps are their official translation into Bulgarian language by a sworn translator and legalization. Normally, depending of the urgency of the case and the number of the documents, this procedure continues from 2-3 business days to one week. After that, it could require about 1-2 days for arrest of the ship as from its arrival on a Bulgarian port by the Bulgarian Maritime Administration, which arrest of the ship shall be terminated after 72 hours, if within this period the district court at the location of the ship does not rule accordingly. If the arrest is to be allowed directly by the court, about 1-4 business days are needed as from the arrival of the ship on a Bulgarian port.

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

In order to carry out the arrest procedure, we need to be provided with an explicit Power of Attorney, signed by the authorized representative of the claimant, as well as:
- all documents, which prove the respective claim (contract, invoices, invitations for payments etc);
- documents, which certify the rights of the debtor over the vessel, subject of the arrest (certificate for its entering in the respective Register of ships);
- documents, related to the corporative status of the claimant (most frequently legal entities) and the representative power – Certificate of Good Standing or respective document regarding the Company and Articles of Association/By laws of the Company;
- documents, related to the corporative status of the debtor – Certificate of good standing or respective document

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

Taking into consideration, that in all cases the arrest is subject of a review by the Court (notwithstanding whether the procedure before the Bulgarian Maritime Administration is carried out or not) we need to be provided with original documents or notary certified copies of all documents. All official documents (excerpts, certificates etc.) require Apostille.

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

There is not an Admiralty Court of Bulgaria or other special jurisdiction which is authorized to hear especially and only maritime claims. According to the Bulgarian laws for the substantive claim the general terms of the International Private Law shall be applicable.

Miscellaneous

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

As mentioned above, depending on the chosen and possible option of action, it is possible: i) the Bulgarian Maritime Administration to allow the arrest, which arrest is required to be additionally confirmed in a term of 72 hours by the respective competent District Court or ii) the request for allowance of arrest of a ship to be directly submitted and reviewed by the Court. Notwithstanding the chosen option, with its decision the Court sets a term for the claimants to initiate the substantive procedure and to present the respective evidences that the procedure is initiated, which term cannot be longer than a month.

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

The court orders in the arrest procedure are subject of an appeal. According to the law, in case of wrongful arrest the liability shall be borne by the person to the request of whom the arrest is imposed. Condition precedent for such liability is an entered into force decision of a higher court instance, which acknowledges that the arrest is wrongful, namely not corresponding to the law. The guarantee in the arrest procedure, if required by the court (please see point 10) secures the execution of a possible future court decision recognizing liability for wrongful arrest.

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

Piercing the corporate veil is generally not possible according to the Bulgarian law. The only exceptions are some types of partnerships, regulated in the Bulgarian law, since the shareholders are personally liable for the debts of the company.

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

In general, an enforcement procedure according to the Bulgarian law could start on the basis of an entered into force court/arbitral decision with regard to the substantive claim (if this is a foreign courts’ decision, its execution in Bulgaria has to be sanctioned by the Bulgarian court, except for some court decisions of EU Member States according to a Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters). Some exceptions are permissible, but this depends on the particular case.

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Contact 1: Vladimir P. Penkov – Managing Partner
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Charterparties, Dispute Resolution, Ship Arrest, Shipbuilding contracts and Ship Registration.

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Contact 1: Roumen Lyutskanov
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Ship arrest, shipbuilding contracts, carriage of goods, bearboat charter, insurance, registration.

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Sofia, Bulgaria

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Contact 1: Mr. Vladimir Vladimirov
Contact 2: Mrs. Svetlana Iraasek
Contact 3: Mrs. Ralitsa Kostadinova

Arrest of ships, maritime & admiralty , dry & wet claims, marine insurance, marine surveys.

I. ARREST CONVENTIONS AND LAWS APPLICABLE:

1.Bulgaria is not a member of the Brussels Convention 1952 relating to the Arrest of Sea-Going Ships.

2. Bulgaria signed and ratified International Convention on Arrest of Ships 1999.

3. The provisions of Bulgarian Merchant Shipping Code and Civil Procedure Code deals with arrest of vessel and/or cargo.

4. The cargo also might be subject to arrest under Bulgarian Law.

II GROUNDS FOR ARREST:

1. According to Article 365 of Bulgarian Merchant Shipping Code the arrest of a vessel might be allowed for Claims originating from:
Accidents;
Collisions;
Assistance or other services rendered;
Performance of the carriage contract;

2. In addition, according to Article 364 of Bulgarian Merchant Shipping Code the Executive Director of the Maritime Administration Executive Agency is entitled to detain vessels due to outstanding customs, harbour and other dues, and for fees, charges and fines requested by executive or judiciary authorities. In such cases the detention will continue until removal of the grounds.
Such detention may also be ordered upon request of a foreign Maritime Administration.

The vessel subject to arrest might be of any type: cargo, passenger, yachts etc…

III. ARREST PROCEDURE – STEP ONE:

Application before Executive Agency Maritime Administration

1. The arrest procedure is simple and starts with an application before Executive Agency Maritime Administration at the Ministry of Transport filed by the Arrestor or lawyer.

2. Power of Attorney duly executed with Apostille is required.

3. The application must be in Bulgarian language and supported by evidences as to the claim.

4. All documents have to be translated in Bulgarian language.

5. If the Executive Agency Maritime Administration finds the application in order it should issue a Detain Order, arresting the ship for 72 hours.

6. The arrest of the vessel shall be lifted upon expiry of 72 hours unless within that period the District Court at the vessel’s location reconfirms the detention.

IV. ARREST PROCEDURE – STEP TWO:

Continuation of Arrest by District Court

1. Within 72 hours counting from issuing of Detain Order by Executive Agency
Maritime Administration the Arrestor has to obtain confirmation for continuing the arrest from the District Court.

2. As the arrest is a security measure, the court is not going in deep to investigate the merits of the case. But the court must be satisfied that the claim most probably exists.

3. According to the provisions Bulgarian Civil Procedure Code, security of the claim shall be admitted where without it, the enforcement of the judgment would be rendered impossible or substantially more difficult and if the claim is well supported by written evidence or if a guarantee at the size determined by the court is presented.

4. Mostly the courts decide the application without a hearing.

5. The District Court may:
grant the arrest without requesting counter – security;
grant the arrest but under condition the Arrestor to provide for counter-security at the amount specified by the court;
reject the application and lift the arrest.

6. The District Court decision is subject to appeal.

V. DOCUMENTATION:

The Arrestor has to present in original (or notary attested copies) all kind of documents.
Documents needed for arrest with Executive Agency – Maritime Administration:

1. Written statement by the arrestor, showing the grounds of the request, subject to arrest
details of the vessel subject to arrest; vessel’s present position, flag, registration;

2. Documents supporting the Claim:
Contracts for supply or Request for supply; Invoices; Confirmation Receipts; Reminders for payment, Charter- Parties, Bill(s) of Lading etc..;

3. Document proving payment of State fees in favour of Executive Agency Maritime Administration;

4. Document(s) proving identity and present status of the Arrestor. (Goodstanding Certificate or similar document as per Arrestors’ domestic laws).

5. Document(s) showing the representing powers of the person authorized to sign for and bind the Arrestor’s Company.

6. Power of Attorney – signed before Notary Public and with Apostille.

Same documents required for application before a District Court.

It should be taken in to account that when the documents are presented not in required form the court may consider such documents as not presented.

VI.COUNTER – SECURITY:

1. According to Bulgarian Laws it is exclusively court decision whether or not counter-security shall be required. The court decision should be taken on the basis of the documents presented.

2. The counter-security should safeguard the ship-owners’ claim for compensation and therefore the amount of such guarantee is not related to the creditor’s claim but to the damage the ship owners may suffer by detention of the ship.

3. The actual amount is in the sole discretion of the judge and sometimes experts might be appointed.

4. Therefore, it is strongly suggested the Arrestors to present as much as possible relevant documentation in order to satisfy the court that the claim is really existing and in attempt to avoid counter-security.

VII. TIME BARS:

In the event the court allows the arrest, the court shall set a deadline for the Arrestor to file his main action on the merits. If that deadlines elapses without the main action being filed, the arrest will be lifted. Such deadline is in the discretion of the judge but, as practise shows, will be between one and three months.

VIII. RELEASE FROM ARREST:

The Owners/Managers of the arrested ship have two options in their defence:

1. To demand release of the ship, upon presentation of payment in cash of the amount of the Claim in favour of the court or upon presentation of acceptable Bank Guarantee.

2. To appeal the District Court decision before Court of Appeal.

3. There is no established practice as to whether P&I Club letters are accepted.

IX. LIABILITY FOR WRONGFUL ARREST

The Arrestor bears the risk of wrongful arrest.

X. COSTS:

1. Per today State Fees for obtaining arrest payable in favour of executive Agency Maritime Administration are EUR 1000.

2. The court costs to arrest the ship and to lift the arrest afterwards can be estimated at approx. EUR 100.

3. Lawyer fees are based on an hourly rate, or on a lump sum fee agreed with the client. The respective lawyer’s charges depend on the urgency factor, the complexity of the issues, the work done and the time spent in initiating and conducting the arrest proceedings.

For particular advice please, contact: Georgi Filaretov at Agency EuroBalkanConsult Ltd., (Tel:00359.2.9811761/00359.888.137018) or see our website at www.eurobalkanconsult.com

Dated: 25 March 2008

Dobrev, Kinkin & Lyutskanov

EuroBalkanConsult Ltd.

Ilieva, Voutcheva & Co Law firm

Penkov, Markov & Partners

Vladimirov Law Office

INFO Port of Ruse

About Ship Arrests / Releases in Ruse

About Ship’s management, ownership or port detentions

Dobrev, Kinkin & Lyutskanov

EuroBalkanConsult Ltd.

Ilieva, Voutcheva & Co Law firm

INFO Port of Lom

About Ship Arrests / Releases in Lom

About Ship’s management, ownership or port detentions

Dobrev, Kinkin & Lyutskanov

EuroBalkanConsult Ltd.

Ilieva, Voutcheva & Co Law firm

Penkov, Markov & Partners

Vladimirov Law Office

INFO Port of Bourgas

About Ship Arrests / Releases in Bourgas

About Ship’s management, ownership or port detentions