Arrest of ships in Malta, by Mamo TCV
MAMO TCV ADVOCATES
(Incorporating John Mamo & Associates and Tonna Camilleri Vassallo & Co.)
Palazzo Pietro Stiges
60, St. Christopher Street
Valletta VLT05, Malta
Tel: (+356) 21 231345
Fax: (+356) 21 231298
52, Old Theatre Street
Valletta VLT 08, Malta
Tel: (+356) 21 232271, 21 248378
Fax: (+356) 21 244291
E-mail: info@mamotcv.com
A. Introduction
This article deals with the arrest of ships in Malta as a precautionary measure, either before an action on the merits of the relative claim is brought or, alternatively, during the applicable proceedings (pendente lite).
B. The applicability or otherwise of international conventions
Malta is not a party to the 1952 International Convention for the Unification of Certain Rules relating to the Arrest of Sea-Going Ships. Neither is Malta a party to any of the International Conventions on maritime liens and mortgages (the 1926 and 1967 International Conventions for the Unification of Certain Rules relating to Maritime Liens and Mortgages and the 1993 International Convention on Maritime Liens and Mortgages).
Recently there appears to have been a marked shift in favour of the adoption and incorporation into Maltese law of the 1999 International Convention on Arrest of Ships (signed in Geneva on the 12th March 1999) and the 1993 International Convention on Maritime Liens and Mortgages. Indeed recent amendments made to the Merchant Shipping Act [Cap. 234 of the Laws of Malta] by virtue of section 99 of Act no. XXII of the 4th August 2000 have introduced a new provision in the said Act (section 375). This new provision facilitates the adoption and incorporation of a number of international treaties and conventions addressing merchant shipping matters into Maltese law. In terms of such new provision the Government of Malta is empowered to ratify or accede to (as the case may be) the treaties and conventions mentioned therein, including the 1999 Arrest Convention (section 375 (2)(n)) and the 1993 Maritime Liens and Mortgages Convention (section 375 (2)(m)). Furthermore the Minister responsible for merchant shipping in terms of the Act is empowered, upon such ratification or accession, to make these Conventions applicable domestically by promulgating regulations giving effect to the provisions thereof.
C. Arresting ships in Malta
Clearly the arrest of ships (and therefore the exercise of admiralty jurisdiction) entails two related matters:
the substantive grounds for the arrest of a ship; and
the procedural measures available to arrest a ship.
In Malta these matters are regulated by two separate legal enactments: the Merchant Shipping Act and the Code of Organization and Civil Procedure [Cap. 12 of the Laws of Malta] ( the COCP ).
The judicial authority competent to arrest a ship in Malta is the Civil Court, First Hall (section 32 (2) of the COCP). No other court or institution has the authority to arrest a ship.
D. The substantive grounds for the arrest of a ship under Maltese law
In this regard three distinct possibilities may be identified.
(1) In terms of the COCP, if Maltese courts enjoy jurisdiction over the defendant, any property belonging to such defendant that is present in Malta may be seized by order of the competent court (made subsequent to, or in anticipation of, an action brought against the defendant). The grounds on which Maltese courts will accept jurisdiction are contained in section 742 of the COCP. These grounds are all based on jurisdiction in personam: in other words they pre-suppose the (alleged) liability of the defendant. The civil courts of Malta (including the Civil Court, First Hall) enjoy jurisdiction to try and determine all actions concerning the following persons:
a) citizens of Malta (provided they have not fixed their domicile elsewhere);
b) any person as along as he is either domiciled or resident or present in Malta;
c) any person, in matters relating to property situate or existing in Malta;
d) any person who has contracted any obligation in Malta, but only in regard to actions touching such obligation and provided such person is present in Malta;
e) any person who, having contracted an obligation in some other country, has nevertheless agreed to carry out such obligation in Malta, or who has contracted any obligation which must necessarily be carried into effect in Malta; provided in either case such person is present in Malta;
f) any person, in regard to any obligation contracted in favour of a citizen or resident of Malta or of a body having distinct legal personality or association of persons incorporated or operating in Malta, if the judgment can be enforced in Malta;
g) any person who expressly or tacitly, voluntarily submits or has agreed to submit to the jurisdiction of the court.
(2) Furthermore Maltese civil courts also exercise a special jurisdiction that pre-supposes a right to bring an action directly against a ship (by way of an action in rem). Recent amendments to the COCP have made it possible for a plaintiff to file any judicial act directly against the ship (section 181A (3) of the COCP). This jurisdiction in rem is intrinsically based on three ancient statutes that were originally in force in Malta when it was a dependent territory of the United Kingdom. These enactments are the Admiralty Court Act 1840 (3 & 4 Vict. Cap. 65), the Admiralty Court Act 1861 (24 Vict. Cap. 10), and the Vice-Admiralty Courts Act 1890.
In terms of section 370 (1) of the Merchant Shipping Act the competent court in Malta (at present, the Civil Court, First Hall) exercises the jurisdiction previously exercised by the Commercial Court by virtue of the Vice-Admiralty Court (Transfer of Jurisdiction) Ordinance 1892. This latter Ordinance was itself repealed by the Merchant Shipping Act. The 1892 Ordinance provided that: the jurisdiction hitherto exercised by the Vice Admiralty Court, or conferred by the Act of the [British] Imperial Parliament, called The Colonial Courts of Admiralty Act, 1890 , on the Colonial Admiralty Court, shall be exercised by His Majesty s Commercial Court, as part of its ordinary jurisdiction.
Accordingly the grounds for arresting a ship in Malta by virtue of an action in rem are solely the following:
a) all claims and causes of action of any person in respect of any mortgage of any ship, provided such ship, or the proceeds thereof, is arrested by a competent court (section 3 of the 1840 Act);
b) all questions as to the title to or ownership of any ship (or of the proceeds thereof remaining in the registry) arising in any cause of possession, salvage, damage, wages or bottomry instituted in a competent court in Malta (section 4 of the 1840 Act);
c) all questions arising between the co-owners, or any of them, touching the ownership, possession, employment and earnings of any ship registered at any port in Malta, or any share thereof (section 8 of the 1861 Act);
d) all claims and demands whatsoever in the nature of salvage for services rendered to any ship, provided such ship was within the body of a county or on the high seas at the time when the services were rendered (section 6 of the 1840 Act);
e) all claims and demands whatsoever in the nature of damage received by any ship, provided such ship was within the body of a county or on the high seas at the time when the damage was received (section 6 of the 1840 Act);
f) all claims and demands whatsoever in the nature of towage, provided such ship was within the body of a county or on the high seas at the time when the services were rendered (section 6 of the 1840 Act);
g) all claims and demands whatsoever for necessaries supplied to a foreign ship, provided such ship was within the body of a county or on the high seas at the time when the necessaries were furnished (section 6 of the 1840 Act);
h) all claims for necessaries supplied to any ship elsewhere than in the port to which she belongs, unless it is shown to the satisfaction of the court that at the time of the institution of the cause any owner or part-owner of the ship is domiciled in Malta (section 5 of the 1861 Act);
i) all claims for the building, equipping or repairing of any ship (section 4 of the 1861 Act);
j) all claims for damage done by any ship (section 7 of the 1861 Act);
k) claims by any seaman of any ship for wages earned by him on board the ship, whether the same be due under a special contract or otherwise (section 10 of the 1861 Act);
l) claims by the master of any ship for wages earned by him on board the ship (section 10 of the 1861 Act); and
m) claims by the master of any ship for disbursements made by him on account of the ship (section 10 of the 1861 Act).
(3) Finally, in terms of section 50 of the Merchant Shipping Act a ship may also be seized under the authority of a competent court by virtue of the existence of a special privilege (or lien) thereon. The special privileges recognized under section 50 of the Merchant Shipping Act are the following:
a) judicial costs incurred in respect of the sale of the ship and the distribution of the proceeds thereof;
b) fees and other charges due to the registrar of Maltese ships arising under the same Act;
c) tonnage dues;
d) wages and expenses for assistance, recovery of salvage and for pilotage;
e) the wages of watchmen, and the expenses of watching the ship from the time of her entry into port up to the time of sale;
f) rent of the warehouses in which the ship s tackle and apparel are stored;
g) the expenses incurred for the preservation of the ship and of her tackle including supplies and provisions to her crew incurred after her last entry into port;
h) wages and other sums due to the master, officers and other members of the ship s complement in respect of their employment on the ship, including costs of repatriation and social insurance contributions payable on their behalf;
i) damages and interest due to any seaman for death or personal injury and expenses attendant on the illness, hurt or injury of any seaman;
j) moneys due to creditors for labour, work and repairs previously to the departure of the ship on her last voyage: provided that such privilege is not competent where the debt has not been contracted directly by the owner of the ship, or by the master, or by an authorized agent of the owner;
k) ship agency fees due for the ship after her last entry into port, in accordance with port tariffs, and any disbursements incurred during such period not enjoying a privilege under paragraphs (a) to (i), though in any case for a sum in the aggregate not in excess of four thousand units (the value of which is determined by the Minister responsible for merchant shipping in concurrence with the Minister responsible for justice as set out in section 372C of the Merchant Shipping Act);
l) moneys lent to the master for the necessary expenses of the ship during her last voyage, and the reimbursement of the price of goods sold by him for the same purpose;
m) moneys due to creditors for provisions, victuals, outfit and apparel, previously to the departure of the ship on her last voyage: provided that such privilege is not competent where the debt has not been contracted directly by the owner of the ship, or by the master, or by an authorized agent of the owner;
n) damages and interest due to the freighters for non-delivery of the goods shipped, and for injuries sustained by such goods through the fault of the master or the crew;
o) damages and interest due to another ship or to her cargo in cases of collisions of ships;
p) the debt due in respect of the balance of the price from the sale of a ship (as also specified in section 2009 (d) of the Civil Code).
The above mentioned special privileges will also apply against any proceeds from any indemnity arising from collisions and other mishaps, and against any insurance proceeds, payable to the owner(s) of a ship secured thereby (section 50 of the Merchant Shipping Act).
E. Procedural measures available to arrest a ship in Malta
A ship belonging to a proper defendant may therefore be arrested in Malta (even as a precautionary measure) provided the relative claim is based:
either, on any one of the in personam grounds of jurisdiction set out in section 742 of the COCP - in which case any ship belonging to such defendant may be arrested;
or, on one of the in rem grounds of jurisdiction applied in terms of section 370 of the Merchant Shipping Act - in which case only the ship belonging to such defendant and having given rise to the cause of action in question may be arrested;
or, on the basis of one of the special privileges contemplated in section 50 of the Merchant Shipping Act - in which case only the ship in respect of which the privilege has arisen may be arrested.
In either hypothesis the arrest is made by virtue of the issue of one or more precautionary acts or warrants.
Under Maltese law a precautionary act or warrant may be issued and carried into effect without the necessity of a previous judgment (section 829 of the COCP). The application (in the prescribed form) for the issue of any such act or warrant must state the origin and nature of the debt or claim and the approximate amount or value thereof, and must be confirmed on oath by the creditor (sections 831 (2) and 832 of the COCP). The creditor must also make the appropriate declaration on oath if the warrant is, for reasons of urgency, to be served after eight o clock at night and before six o clock in the morning (sections 280 (2) and 838 of the COCP). The application must also indicate the place where the notice of execution is to be given or left (section 834 (2) of the COCP). Any such warrant may only be issued under the authority (in exceptional cases even oral) of a competent court (section 831 (4) of the COCP).
In terms of section 836 (1) of the COCP any precautionary act or warrant may be revoked by the competent court upon a demand to that effect by the debtor (or other person against whom the precautionary act or warrant has been issued) on any of the following grounds:
a) if the precautionary act or warrant ceases to be in force (lapse of time to bring the action on the merits of the claim: infra); or
b) if any one of the conditions requested by law for the issue of the precautionary act or warrant does not in fact subsist; or
c) if other adequate security is available to satisfy the creditor s claim; or
d) if it is shown that the amount claimed is not prima facie justified or is excessive; or
e) if the security provided is deemed by the court to be sufficient; or
f) if it is shown that in the circumstances it would be unreasonable to maintain in force the precautionary act or warrant in whole or in part, or that the precautionary act or warrant in whole or in part is no longer necessary or justifiable.
The court may also (in terms of section 836 (8) and (9) of the COCP) condemn the creditor who has issued a precautionary act or warrant to pay a penalty and damages in favour of the debtor in each of the following cases:
a) if the creditor does not bring the action in respect of the claim within the time established by law;
b) if the circumstances of the debtor were such as not to give rise to any reasonable doubt as to his solvency and as to his financial ability to meet the claims of the applicant, and such state of the debtor was notorious;
c) if the creditor s claim is malicious, frivolous or vexatious.
The competent court may also, upon a demand by the debtor, order the creditor issuing a precautionary act or warrant to give, within a time fixed by the court, sufficient security for the payment of the penalty that may be imposed and of damages and interest and, in default, to rescind the precautionary act or warrant (section 838A of the COCP).
In terms of the provisions of the COCP a ship may be arrested by serving thereon through the relevant court machinery a warrant of impediment of departure. The warrant may only be issued in respect of claims amounting to at least Lm3,000 (section 861 of the COCP). The object of such warrant is to secure a claim that may be frustrated by the departure of the ship in question. A statement to such effect must therefore be made on oath by the creditor in order for the warrant to be issued (section 860 of the COCP). By virtue of such warrant the court marshal is ordered by the court to detain a ship and to deliver to the Comptroller of Customs and the officer responsible for ports in terms of law a copy of the warrant enjoining them not to grant clearance to that ship (section 856 of the COCP). A copy of the warrant is also served on the owner or the master or the agent of the ship (section 857 of the COCP). Any person who disobeys such order will be guilty of contempt of court and a warning to such effect is contained in the warrant (section 858 of the COCP).
This warrant may not be issued against:
any ship wholly chartered in the service of the Government of Malta (section 870 (1) of the COCP);
any ship employed in any postal service either by the Government of Malta or by any other government (section 870 (1) of the COCP); and
any ship of war (section 870 (2) of the COCP).
In all other cases if the warrant is issued upon a demand made maliciously the creditor may be condemned to a penalty being not less than Lm3,000 (sections 836 (8) and 864 of the COCP). If the warrant was otherwise unjustly obtained the creditor may be held liable for damages and interest in addition to the aforesaid penalty (section 865 of the COCP). The owner, master or other person in charge of a ship detained by such warrant may accordingly demand from the court an order to the creditor to give, within a time fixed by the court, sufficient security in an amount not less than Lm3,000 for the payment of the penalty, damages and interest and, in default, to rescind the warrant (section 866 of the COCP).
Whenever such warrant is issued as a precautionary measure the creditor must bring the action on the merits of the claim within six working days from the issue of the warrant (section 867 of the COCP). Moreover, in such case, the creditor may be held liable in damages and interest (section 867 of the COCP).
The warrant of impediment of departure of a ship may be revoked (in terms of the provisions of section 836 (1) of the COCP) if other adequate security is available to satisfy the creditor s claim. However in such case the debtor must also appoint a regular attorney or mandatory to judicially represent the ship (section 870 (2) of the COCP).
In addition to the warrant of impediment of departure, in practice a warrant of seizure (also in terms of the provisions of the COCP) is also served on the ship in order to secure its arrest. Ships wholly chartered in the service of the Government of Malta are also not subject to seizure under such warrant (section 304 (f) of the COCP). By virtue of such warrant the court marshal is ordered by the court to seize from the possession of the debtor the ship or any other movable object indicated in the warrant (sections 284 and 846 (1) of the COCP). Such seizure may be partial (for example limited to the seizure of the ship s certificates which would then be delivered to the court registrar, or the removal from the ship of certain parts which prevent her from sailing) or total (in which case a representative is appointed by the marshal for the safe keeping of the ship and the shipowner is thus fully dispossessed of the ship). The court marshal may also appoint (even upon the request of the creditor) a suitable person as a consignatory to take charge of the ship (sections 291 to 299 of the COCP).
Whenever such warrant is issued as a precautionary measure the creditor must bring the action on the merits of the claim within four working days from his receipt of the notice of execution of the warrant or within twelve days from the issue of the warrant, whichever is the earlier (section 846 (2) of the COCP). Otherwise the warrant shall cease to be in force (section 846 (2) of the COCP). Once the action on the merits of the claim is commenced the court may also, upon an application by the creditor, order the sale pendente lite of the ship seized if it appears that the debtor is insolvent or otherwise unlikely to be able to continue trading and maintaining the ship (section 847 of the COCP).
In order to obtain the issue of either of the warrants the claimant must file an application before the court requesting the issue of the warrant. Where the plaintiff is applying for a precautionary warrant the contents of the application must be confirmed on oath. No other evidence is required and the application for the issue of the warrant is considered by the court in camera and no hearing takes place in open court.
Any such warrant may be rescinded if the defendant provides an adequate security to safeguard the claim (section 830 (2) of the COCP).
Joseph Caruana Scicluna LL.D.
Richard Camilleri LL.M. (Lond), LL.D.
David Tonna LL.D.
Andrew Muscat LL.D., LL.M. (Lond), M.Litt. (Oxon), Ph.D. (Lond)
Franco B. Vassallo LL.D.
Joseph Borg Bartolo A.C.I.I., LL.D.
Antoine Camilleri B.A., LL.D.
Jean C. Farrugia B.A., LL.D.
Simon Schembri B.A., LL.D.
Brigitte Zammit B.A., LL.D.
Christina Zarb Adami B.A., L.P.
Christine Aquilina B.A., L.P.
Christopher Vella LL.D Adv. Trib. Eccl. Melit. M. Jur.
Louise Sant Fournier LL.D.
Joseph Saliba LL.D. M.A. (Fin. Serv.)
Ivan Vella LL.D., LL.M. (IMLI)
Neville Camilleri B.A., LL.D. M.A. (Fin. Serv.)
Michelle Pace B.A., LL.D.
Sharon Fenech B.A., LL.D.
Consultants:
Prof. John Mamo LL.D. M.Litt (Oxon), B.A.
Prof. Peter G. Xuereb LL.D., LL.M. (Lond), Ph.D. (Contab)