Maritime Claims & Liens, Arrest of Vessels and Estonian Perspective

ChinaOceansLawReview (2012Number1)

MaritimeClaims&Liens,ArrestofVesselsandEstonianPerspective

LindpereHeiki*

* LindpereHeiki,Ph.D,professorontheLawoftheSeaandMaritimeLaw,iscurrentlytheRectoroftheEstonianMaritimeAcademy.E-mail:heiki.lindpere@emara.ee.HehasbeenHeadoftheEstoniandelegationattheGeneva1999ConferenceonArrestofShipsandsignedtheConventiononbehalfoftheEstonianGovernment.HeisaMemberofthePermanentCourtofArbitration,TheHagueandArbitratororConciliatorundertheUN-CLOS.

① FrancescoBerlingieri,BerlingierionArrestofShips:ACommentaryonthe1952and1999ArrestConventions,5thed.,London/NewYork:Lloyd’sShippingLawLibrary,2011.

Abstract:ThispaperexaminestheinternationallegalframeworkoftheconservatoryarrestofvesselsandtherelevantnationallawsandpracticesintheRepublicofEstonia.ItprovidesanoverviewoftherelatedinternationalconventionsaswellasthedevelopmentsofmaritimelawinEstonia.First,thestudyintroducestwoconventionsonthearrestofships:theBrusselsConven-tionof1952andtheGenevaConventionof1999①andtwoconventionsonmari-timeliens& mortgages:theBrusselsConventionof1926andtheGenevaCon-ventionof1993aswellasrelevantdevelopmentsinthenationallawofEstoni-a.Second,itanalyzesthedifferentnatureandqualitiesofmaritimeliens,some-timescalledprivilegedclaimsandrespectiveenforcementprocedures.Throughthispapersomepracticalproblemsarediscussedinrelationtothearrestofves-selsandtheirreleaseinEstoniawhichofcourseareofimportanceforanyflagStateorpersoninvolvedinmaritimebusiness.

KeyWords:MaritimeClaim;MaritimeLien;Arrest;Seizure;Enforcement

Ⅰ.Introduction

Fromworldmaritimepracticehasdevelopedanumberofuniqueinstitutes

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inthefieldofmaritimelawsuchasgeneralaverage,thelimitationoforthere-leasefromtheliabilityofthecarrier,salvageofpropertyatsea,whichmakemaritimelawaninterestingsubjectforlawyers.Amongthem,arrestofships①

onthebasisofamaritimeclaimormaritimelienisaninstrumentwhichpro-videsthepossibilityforacreditortoobtainanacceptablesecurityforhisorhervalidclaimthroughthedetainmentoftheshipbytheresponsibleCourt.Itcouldbeaparadoxbutthisinstituteofarrestofshipshasbeenelaboratednotonlyfortheinterestofshippingserviceprovidersinordertogettheirbillspaidbutalsofortheinterestofshipownersandoperatorswhoaimatthesailingoftheirshipswithoutdelaysinportsbecauseofunpaidinvoicesforthebunker,

othersupplies,portduesetc.Forthisreason,shipownershavetoacceptthiskindofconservatoryarrestofshipsaimingatsecuringclaimsoftheircreditorsagainstdebtorsindefaultorinremproceedingsintheUnitedKingdom(UK)②

gettinginreturnthepossibilitytouseeffectivelytheirmainassets-shipswithoutanyinterruptions.

Notionssuchasmaritimelien,maritimeclaimandarrestofshipshavefoundtheirproperplacesinthenationallawofEstoniaininterestingways.TheRepublicofEstoniawasfirstlyannouncedonthe24thofFebruaryintheyearof1918whileitregaineditstemporarilylostindependenceonthe20thofAugustin1991.InDecember1991shortlyaftertheEstonianindependence,theMerchantShippingCodewith372articleswasadoptedwhichamongotherpro-visionsacceptedthatshipscouldbedetainedinportsformaximum72hoursbytheorderoftheMastersoftheports.These3dayswereprovidedtothecredi-torsforobtainingacourtorderonarrestofthedebtor’svessel.TheprivatelawprovisionsoftheMerchantShippingCodewerereplacedin2002bytheMerchantShippingAct③andtherightofthemastersoftheportstodetainves-selswasabolished.Atthattime,article139oftheLawofCivilProcedure,forinstance,providedforthearrestofshipsinordertosecureclaimsforsalvage

751MaritimeClaims&Liens,ArrestofVessels

andEstonianPerspective

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“Arrest”meansanydetentionorrestrictiononremovalofashipbyorderofaCourttose-cureamaritimeclaim,butdoesnotincludetheseizureofashipinexecutionorsatisfactionofajudgmentorotherenforceableinstrument-InternationalConventiononArrestofShips(adopted12March1999inGeneva,enteredintoforce14September2011)C.N.112.2011.TREATIES-2Art.1(2).RobertGrime,ShippingLaw,2nded.,London:Sweet& Maxwell,1991,pp.11~20.MerchantShippingActofEstonia(adoptedbytheRiigikogu(Parliament)andenteredin-toforce1October2002).SeeOfficialGazette,I,2002,55,345.


rewardsonly.TheShipsPropertyLaw (hereinafterSPL)① whichhasmadeshipsquasiimmovableandremovedtheiroriginalregistrationfromtheEstoni-anMaritimeAdministrationtotheCountyandCityCourtscontainednorele-vantprovisionsforthearrestofvesselsexceptforaclosedlistofmaritimeli-ensaccordingtothemodernGeneva1993InternationalConventiononMari-timeLiensandMortgages.TheGovernmentdidnotpaydueattentionthatac-cordingtotheprincipleofcontinuityoftheState,theRepublicofEstoniawasstillaPartytotheolderBrussels1926InternationalConventionfortheUnifi-cationofCertainRulesRelatingtoMaritimeLiensandMortgages②whichpro-videdforabroaderdefinitionofamaritimelienbyincludingadditionally,forexample,“alldebtsaccordingtothecontractsoroperationswhichthemasterofthevessel(whetherownerofherornot)hasmadeinordertopreservethevesselorcontinuethetrip”.Infact,theRiigikogu(theParliamentinEstonia)

deliberatelycreatedsuchauniquesituationwheretheadoptedlawwasnotinfullconformitywiththeEstonia’sinternationalcommitmentsconsentedbytheratificationintheRiigikoguin1928.Ittookmorethantwoandahalfyearstodenouncetheconventionof1926andliquidatethedispute.Afterall,EstoniahasbeenaPartytothemodernGeneva1993Convention③since5Septemberof2004.

WhiletheGeneva1999ConferenceonArrestofShipswasannounced,theEstonianGovernmentdecidednottobecomeaPartytotheBrussels1952In-ternationalConventionfortheunificationofcertainrulesrelatingtoarrestofsea-goingships④buttothenewerone,althoughtheGeneva1999International

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LawofMaritimePropertyActofEstoniahasbeenpassedbytheRiigikoguon11March1998andenteredintoforce1July1998).SeeOfficialGazette,I,1998,30,409.InternationalConventionfortheUnificationofCertainRulesofLawRelatingtoMaritimeLiensandMortgages(adopted10April1926inBrusselsandenteredintoforce2June1931.See120LeagueofNationsTreatySeries187;accordingtotheCMIthereare23StatesonlyasPartiestothatolderconvention,athttp://www.comitemaritime.org/sta-tus-of-ratifications-of-maritime-conventions,20December2011.SeeOfficialGazette,II,2002,37,176.ConcerningthePeoplesRepublicofChinaitshouldbementionedthatithasneverbecomeaPartytothisandseveralotherBrusselsconventions,butHongKonghasaccededon29March1963tothisarrestconvention.Withaletterdated4June1997theEmbassyofthePeople’sRepublicofChinaintheKingdomofBelgiuminformedtheMinisterforForeignAffairsofBelgiumthattheArrestConventionwillcontinuetoapplytotheHongKongSpecialAdministrativeRegionwitheffectfrom1July1997.InitslettertheEmbassystatedthattheresponsibilityfortheinternationalrightsandobligationsarisingfromtheapplicationoftheaboveConventionwillbeassumedbytheGovernmentofthePeoplesRepublicofChina.

Convention①onArrestofShipshadverylittlechangesinthetext.ThisCon-ventionhaspromptlycontributedtothefulfillmentofthegapintheEstoniannationallawrelatedtothearrestofshipsbyamendingaccordinglytheSPL.TheonlyprobleminapplyingthisGeneva1999ConventioninEstoniahasbeenthepresenceofsomelapsuslinguaeintheEstoniantranslationofthetextwhichlawyersshouldbeawareof.②Similarly,lawyersshouldtakeintoconsid-erationthatinanycasetheGenevaConventionof1999shouldbereadtogetherwiththeamendedSPLandincasesofnecessitywiththeCodeofCivilProce-dure(hereinafterCCP)becausenotalloftheprovisionsoftheConventionareproducedintheaforementionedlaws.

TheSPLrefersto“MaritimeClaimsandSecuringActionsbyArrestofShips”inPartIVinthreeparagraphs(§§781-783)whichwereaddedbyanamendinglawactincludingthemostimportantprovisionsoftheGeneva1999Convention.IntheGeneralPartoftheSPLisstatedthat“bothregisteredandunregisteredshipsarearrested,inordertosecureamaritimeclaimoranac-tion,pursuanttothisActandinternationalconventionstowhichEstoniahasacceded.”③Additionally,itisprovidedin§782(1)that“Ashipmayonlybe

arrestedinrespectofamaritimeclaimspecifiedin§781ofthisAct.Provi-sionsofcivilprocedureconcerningthesecuringactionsapplytothearrestofshipsforthepurposeofsecuringanaction,takingintoconsiderationthespeci-ficationsestablishedinthisAct.”ThesecondsentenceofthisprovisionmakestheSPLlexspecialisinrelationtotheCCPwhichinpracticehascreatedsomeproblemsforjudgeswhohavebeenusedtoturningfirstlytotheCCP(whichdoesnotincludesimilarkindofreferencetotheSPL)andsometimesrefusetoissueordersforarrestongroundsnotknownforthiskindofaction.Thisur-gesadvocatesofcreditorssometimestopresenttheirapplicationsforarrestre-



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ThisConventionisinforcesince14September2011.Forexample,Art.4(1)oftheGeneva1999Conventionprovidesthatajudgeshallreleasethevesselincasethatsufficientsecurityisprovidedtothemaritimeclaim,butintransla-tiontheword“shall”issubstitutedwiththeword“may”!? Thecourthasdiscretiononlytoassesswhetherthesecurityprovidedissufficientforthereleasebutnotwhethertore-leaseornotiftheaimofthisarrestisfulfilled-sufficientsecurityhasbeenprovided.Seedetailsin:LindpereHeiki,Merinõuejamerivõlg:nendeerinevusestninglaevaarestimis-est,Juridica,2008,Vol.1,pp.57~61.Inprincipleandaccordingto§123oftheConstitutionoftheRepublicofEstoniathetreatiesratifiedoraccededonthebasisoflawpassedbytheRiigikogu(Parliament)willprevailincasesofconflictoveranylegalactofnationallaw,excepttheConstitutionitself(theprinciplepactasuntservandaisfollowed).


peatedlyuntilthedebtor’sshipisfinallyarrested.Shipsarenormallyarrestedwhilebeinginaportoranoffshoreterminal

althoughtheyarereadytosail.However,article28underthetitle“Civiljuris-dictioninrelationtoforeignships”oftheUNCLOS(UnitedNationsConven-tionontheLawoftheSea,1982)allowsexceptionsintwocases,providingthat:“(2).ThecoastalStatemaynotlevyexecutionagainstorarresttheshipforthepurposeofanycivilproceedings,saveonlyinrespectofobligationsorliabilitiesassumedorincurredbytheshipitselfinthecourseorforthepurposeofitsvoyagethroughthewatersofthecoastalState.(3).Paragraph2iswith-outprejudicetotherightofthecoastalState,inaccordancewithitslaws,tolevyexecutionagainstortoarrest,forthepurposeofanycivilproceedings,aforeignshiplyingintheterritorialsea,orpassingthroughtheterritorialseaaf-terleavinginternalwaters.”

ThelastexceptionisnotapplicableinEstoniabecauseofthelackofspe-cificprovisionsintherespectivelaws.

Ⅱ.ArrestofShips:EstonianNationalLaw&Practice

Thefirsttimewhenthepossibilityofarrestofaforeigndebtor’sshipinEstoniawasreallyquestionedwasintheyearof1998.ShewasM/V“Unisel-va”flyingtheflagofDutchAntillesandownedbythePerucompanyUniselvaNavieraUniversalS.A..Thejudge,Mrs.MareOdakas,oftheTallinnCityCourtarrestedherbyorderof18November1998.TheshiphadarrivedinTallinnafterrepairsataGermanshipyardwithtwoinvoiceswithatotalvalueof4.3mlnDEMleftunpaid.Actually,thisshipyarddeliberatelygaveawaythesecurity-possessorylienbylettingM/V“Uniselva”sailalthoughthecontractonpaymentofdebtswasconcludedon9August1998.

TheYardhadapproachedthesolicitorMr.AskoPohla,aMemberoftheEstonianBar,whosucceededinpersuadingthejudgetoarresttheshiponthebasisof§139(3)and(10)oftheCivilProcedureLaw.Basedonsubsection3oftheaforementionedarticle,thevesselwasconsideredaneconomicunitofthedebtor.Similarly,subsection10gavetherightofarrestattheplaceofthedebtor’spresence.Buttherewasanotherinterestinglegalissue-namelytheshiphadbeendulymortgagedinfavorofaGermanbankaswell.Thiswasacourtcasewherethedefinitionofamaritimeliencouldhavebeenreallyques-tionedbecausesomeofthisdebttotheYard-mastersdisbursements-couldbeconsideredonthebasisofthe1926Conventionasaprivilegedmaritimelien

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infavoroftheYard.Judgmentonthislegalissuewasnotmadebytherespon-siblecourt,whichonlyhadtoaccepttheagreementofthetwoGermancredi-torsaboutthedistributionoftheproceedsofaforcedsalewhichwaseffectedinRotterdam.

EverycoastalStateshouldincludeinitsrelevantnationallawsprovisionsforarrestofshipscallingatitsportsinagoodandapplicableorder.Forin-stance,inFebruary2003,theMaltaflaggedvessel“Megaluck”ownedbyBalli-toBayLtd.calledatthePortofMuugainTallinnandtheGreeksailorEfstra-tiosN.Leontarashadamaritimeclaimforunpaidwagesin1999intheamountof23,167USD.Itisnoteworthythatheappliedforthearresthavinglostmar-itimelienaspledgeonthevesselasthedurationofoneyearhadalreadylapsed.①ThisshowsthattheonlyconnectionwiththatclaimforanEstonianlegalorderwasthepresenceofthisvesselinTallinn.Thelexforiarrestiap-pliestoallvesselswhicharearrestedinEstoniairrespectiveoftheirflagandconsequentlyirrespectiveofflagStatesparticipationininternationalconven-tionsonarrestofships.Theclaimanthasalwaystherightof“forumshop-ping”becauseitisuptohisorherchoicetoapplyforanarrestofthevesselatthemostresponsiblejurisdiction.

AssistedbyABLawin,LeontarashadtoapplytotheTallinnCityCourttwicebecausethefirstjudgedeniedthearrestonfalsegroundsinthatcase.Morespecifically,thejudgebasedherrefusalonthegroundsfirstthatinsol-vencyofthedefendanthadnotbeenprovenandsecondthatnothinghadpre-ventedthesubmissionoftheclaim.ObviouslyshehadonlyreadtheCCPpro-visionsandhadnotpaidanyattentiontothefactthatsubmittingaclaimto-getherwithpaymentofstate(court)feesisauselessactioniftheshipisnotarrestedandsailsaway.Thenextmorningthesameapplicationwaspresentedtoanotherjudgeandsheimmediatelyissuedacourtorderforthearrest.

Maritimeclaims.Maritimeclaimisaclaimrelatedtotheoperationofavesselagainsttheownerofthevessel,whichentitlesacreditortoapplyforthearrestofthevesselorashipownerandhisservantstolimittheirliabilities.

Ashipmayonlybearrestedinrespectofamaritimeclaim,andaccordingtotheprovisionsoftheSPLaslexspecialisandtheCCPprovidingforsomegenerallegalnorms.②Thearrestofadebtor’spropertyisconsideredinthe



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HehadbeencontractedtoworkonMV“Megaluck”in1999from MaytoOctober.Aclosedlistofmaritimeclaimsisgivenin§781in21itemscoveringthecatalogueoftheGeneva1999Conventioninfull.


CCPanactionsecuringaclaimandthebasicrequirementisforapetitionertoprovethatitisquiteprobabletothinkthatwithoutdoingsoitisdifficultorimpossibletoenforcethejudgment.ThereforethequestionofurgencyofthematterisnotmadedirectlyinEstoniaasageneralrequirementforaconserva-toryarrestasitisthepracticeinmanyothercountries.

Acompletelistofmeasuresatthedisposalforacourttosecureaclaimisprovidedin§378(1)oftheCCPincludingthearrestofdefendants’propertyinparagraph2whichreferstothearrestofships.Inprinciple,itisnecessaryforaclaimanttoeffectthearrestofashipquicklywhilesheisintheportandobviouslybeforesubmittingaclaimwhichwilltakesometimeandpresumethepaymentofacertainstatefee.Thispossibilityofsecuringaclaimbeforeitissubmittedisforeseenin§382(1)butitisalsostipulatedinsubparagraph2thatincasesofthecourtorderonarrestofthevesseltheclaimantisobligedtosubmittheclaim withinamonthasmaximumforthepurposeofpreservingthisarrest.Adetailedlistofitemswhichshouldcontainsuchapetitionispro-videdin§381oftheCCP.

AccordingtotheSPL(§782(2))arrestispermissibleofanyshipinre-spectofwhichapetitionisfiledwithacourtforsecuringamaritimeclaimif:

(1)thepersonwhoownedtheshipatthetimewhenthemaritimeclaima-roseisliablefortheclaimandisowneroftheshipwhenthearrestiseffected;

(2)thedemisechartereroftheshipatthetimewhenthemaritimeclaimaroseisliablefortheclaimandisdemisechartererorowneroftheshipwhenthearrestiseffected;

(3)theclaimisbasedontherestrictedrealrightsestablishedontheship;(4)theclaimrelatestotheownershiporpossessionoftheship;(5)theclaimisagainsttheowner,demisecharterer,manageroroperator

oftheshipandissecuredbyamaritimelien.Inallcasesrelatedtothedecisionofwhetherashipshouldbearrestedor

not,thejudgeshouldfirstacknowledgethatavalidmaritimeclaimexistsandtheapplicationisagainsttherightperson.Additionally,incaseswhentheclaimisvalidandsecuredbyamaritimelien,itisessentialtobeidentifiedthatthisisthesameship(byIMOregistrationnumber)tobearrested.

Thedoctrineof“sistership”arrestisalsoprovidedinarticle3(2)oftheGeneva1999Conventionand§782(3)oftheSPL,whichprovidethatarrestisalsopermissibleofanyothershiporshipswhichisorareownedbythepersonwhoisowneroftheshipordemisechartererorvoyagechartereroftheshipinrespectofwhichthemaritimeclaimarises,exceptiftheclaimarisesfromadis-

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puteconcerningtherightofownershiporpossessionofaship.Butanyothershipwhichwouldotherwisebesubjecttoarrestinrespectofthesamemari-timeclaimshallnotbearrested,unlessthenatureoramountofthesecurityal-readyprovidedisinadequateortheshipisarrestedonthebasisofsuchmari-timeclaimsasa)lossoflifeorpersonalinjuryoccurring,whetheronlandoronwater,indirectconnectionwiththeoperationoftheship;andb)salvageopera-tionsoranysalvageagreement,including,ifapplicable,specialcompensationrelatingtosalvageoperationsinrespectofashipwhichbyitselforitscargothreatensdamagetotheenvironment.

SomecountrieslikeFranceandSouthAfricaareapplyingthisdoctrineinamuchbroadersense,namelyallowing“associatedship”arrest,whichmeansthearrestofashipwhichisbeneficiallyownedbythesamecompanyastheshiponwhichdebtsand/ormaritimeclaimshavearisen.Neverthelesstheoverwhelm-ingshippingpracticeinordertoavoidsistershiparresthasgonethewaythateachvesselshouldbeownedbyaseparateformal-juridicalownercompanywhichisultimatelyownedbythebeneficialowner.TheassociatedshipandthejurisdictiontoarrestsuchashipcreatedintermsoftheAdmiraltyJurisdictionRegulationActNo.105of1983isauniquelegalinstitutionintheworldofmaritimelawandjurisdiction.InSouthAfricanmaritimepracticetheassociat-edshipjurisdictionhasprovedtobeanimportantinnovation,especiallyincon-junctionwiththepowertoarrestashipforthepurposeofobtainingsecurityforproceedingsinaforeigncourtorarbitrationtribunal.① Thisexceptionalkindofarrestisobviouslygoingagainsttheprincipleembodiedinarticle7(1)

oftheBrussels1952ArrestConventiongivingtotheclaimantapossibilityofsocalled“forumshopping”prescribingthatthecourtsofthecountryinwhichthearrestismadeshallhavejurisdictiontodeterminethecaseuponitsmerits.ButtheGeneva1999ArrestConventionsolvesthiscontroversybystatingasfollows:“TheCourtsoftheStateinwhichanarresthasbeeneffectedorsecuri-typrovidedtoobtainthereleaseoftheshipshallhavejurisdictiontodeterminethecaseuponitsmerits,unlessthepartiesvalidlyagreeorhavevalidlyagreedtosubmitthedisputetoaCourtofanotherStatewhichacceptsjurisdiction,ortoarbitration.”(highlightedbyHL).Thiskindofinnovationwitharrestoftheassociatedshipisaunilateralmeasurewhichwillleadshipownersofseveralvesselstokeepthemselveswellupdatedwithrelatednationallegislationsof



① SeeMalcolmJohnDavidWallis,TheAssociatedShipandSouthAfricanAdmiraltyJuris-diction,athttp://hdl.handle.net/10413/678,20December2011.


countrieswhichtheirshipsarevisitingontheonehandbutacounter-measurewhichwillinclinesomeofthemtohidebettertherealbeneficialownershipofthevesselinquestion.TheGovernmentofEstoniaisfavoringunificationofmaritimelawprinciplesandnormsbutnotunilateralactionsnomatterhowin-novativetheyare.InthatsenseEstoniawillfollowthemajorityofmaritimenations.

Ashipcannotberearrestedorhavemultiplearrestsforthesamemaritimeclaimunless:(a)thenatureoramountofthesecurityinrespectofthatshipal-readyprovidedinrespectofthesameclaimisinadequate,onconditionthattheaggregateamountofsecuritymaynotexceedthevalueoftheship;or(b)thepersonwhohasalreadyprovidedthesecurityisnot,orisunlikelytobe,abletofulfillsomeorallofthatperson’sobligations;or(c)theshiparrestedorthesecuritypreviouslyprovidedisreleasedeither:(i)upontheapplicationorwiththeconsentoftheclaimantactingonreasonablegrounds,or(ii)becausetheclaimantcouldnotbytakingreasonablestepspreventtherelease.

Filingofapetitionforthearrestofashipisnotdifficultinlegalsensebuttherearesomelimitationsandrecommendationstobenoted.Firstly,§389(2)oftheCCPprovidesthatacourtwillnotarrestashipenteredintotheEs-tonianRegisterofShipsifthevalueofthemaritimeclaimislessthan640eu-rosandthereareotherpossiblemeansofsecuringthisclaim.StrangelythislimitdoesnotapplytothearrestsofvesselsregisteredattheEstonianMari-timeAdministrationintheRegistryofBareboatCharteredShipsalthoughtheconditionsfortheregistrationarebasicallythesame.Secondly,itisadvisableinsuchapetitionnotonlytospecifythevalueofthemaritimeclaimbutalsotospecifyalltherelatedcoststotheapplicationofthispetitionincludinglegalfees,notarizedtranslationsofdocumentsetc.Thisisnecessaryinordertofa-cilitatethatthesecostswillbetakenintoaccountbythejudgeinorderingtherightsumofdepositforthereleaseofthevessel.Thirdly,judgesinHarjumaaCountyCourthaveindicatedproblemscloselyrelatedtoshipsaccordingtowhicharrestsarelastingsixandmoremonthsandclaimantsareforgettingtoapplyforaforcedsale,whilethecourtcannotactsowithitsowninitiative.Notimelimithasbeenprescribedforthischangeofpetitionorclaim.

Itisprovidedin§384(1)thatanapplicationforthearrestshouldbefiledandrespectivemotivatedorderordenialofarrestissuedatleastbytheendofthenextworkingdaysubsequenttothefiling.Anydeficienciesinthatpetitionshouldbeclarifiedwithintheperiodspecifiedbythecourt.

Courtorderforthearrestofashipwillbeeffectedbyabailiffinawayof

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presentingittothemasterofthisshipandseizingthedocumentsoftheship.TheformoftheStatementofseizureofshipisapprovedbytheMinisterofJusticeorderNo.13of19February2001(RTL,19.02.2001,22,303)accordingtowhichtheseizureofthelisteddocumentsinthestatementshouldbesignedbythebailiff,themasterasrepresentativeofthedebtor,therepresentativeofclaimantandanywitnesses.Descriptionoftheshipinthestatementshallcor-respondtoitsdescriptionintheregistrationdocuments.

Counter-security.Anapplicantforarrestofashipcan,atthediscretionofthecourt,beorderedtoprovideacounter-security“ofakindandforana-mount,anduponsuchterms,asmaybedeterminedbythatCourtforanylosswhichmaybeincurredbythedefendantasaresultofthearrest,andforwhichtheclaimantmaybefoundliable,includingbutnotrestrictedtosuchlossordamageasmaybeincurredbythatdefendantinconsequenceof:(a)thearresthavingbeenwrongfulorunjustified;or(b)excessivesecurityhavingbeende-mandedandprovided.”

Theprovisionofarticle6(1)oftheGeneva1999Conventionisnotrepro-ducedintheSPLbutalmostthesameisstipulatedin§383oftheCCP.Infact,thisCCPof2005includedarelevantprovisionin§141whichmadeitob-ligatorybylawforanapplicanttoprovidecertaincounter-securitybutnotatthediscretionofacourtwhichcouldbeseenascontradictorytothelegalobli-gationsassumedbytheGeneva1999Convention.§141oftheCCPwasdele-tedbyanamendinglawon1January2009(RTI2008,59,330).However,

withthesameamendinglawtherehasbeenintroducedin§383oftheCCPanadditionalprovision(11)whichprovidesforsomelimitsforacounter-security:

ifacourtdecidestoaskcounter-securitythenitshouldbeincaseofamonetaryclaimnotlessthan5%ofitsvalueor32eurosandnotmorethan32,000eu-ros.Atthesametimein§383isalsointroducedtheprovision(12)accordingtowhichacourtmayexceptionallywaiveitsobligationtoprovidecounter-se-curity,partlyorfully,ororderpaymentinseveralinstallmentstakingintoac-countthefinancialstandingoftheclaimantandthecircumstancesofaspecificcase.CourtpracticeoftheHarjumaaCountyCourtinarrestingvesselsshowsthatcounter-securityisasked15%oftheclaimvaluewhichsometimescouldbetooburdensomeforanapplicant.

Theapplicanthastocompensatethedamagecausedtothedefendantwiththepetitionofanarrestif:a)ajudgmententersintoforcewhichdoesnotsatis-fythesecuredmaritimeclaimpetitionorthecourtprocedurewillbestoppedonothergroundsthananapprovalofthecompromisebetweentheparties;b)it




appearsthatthemaritimeclaimisabsent;c)thecourtorderisrenouncedandthearrestliftedbecausetheclaimitselfhasnotbeensubmittedintime.Anac-tionforaskingsuchdamagetobecompensatedisbarredafteralapseof2monthscountedfromthemomentsspecifiedinabovecitedpointsa-c.

Releasefromthearrestandsubstitutionofarrestwithotherformofsecu-rity.Both,theGeneva1999Convention,article4andtheSPL,§783,provideforreleaseofthearrestedvesselincaseswhensufficientsecurityhasbeenpro-videdinasatisfactoryform,saveincasesinwhichashiphasbeenarrestedinrespectofanyofthemaritimeclaimsonbasesofdisputesonownershiporpos-sessionofthevesselanddisputesbetweenco-ownersoftheshipastotheem-ploymentorearningsoftheship.Intheabsenceofagreementbetweenthepartiesastothesufficiencyandformofthesecurity,theCourtshalldetermineitsnatureandtheamountthereof,notexceedingthevalueofthearrestedship.Anyrequestfortheshiptobereleaseduponsecuritybeingprovidedshouldneitherbeconstruedasanacknowledgmentofliabilitynorasawaiverofanydefenseoranyrighttolimitliability.

Ⅲ.MaritimeLiensandEnforcement

MaritimeliensaregovernedinEstoniaby§§72-78oftheSPLandtheGenevaConventionof1993.Nevertheless,article13(2)ofthisConventionwhichprovides:“NothinginthisConventionshallcreateanyrightsin,orena-bleanyrightstobeenforcedagainst,anyvesselownedoroperatedbyaStateandusedonlyonGovernmentnon-commercialservice”isnotreproducedintheSPL,whichis“thelawoftheland”.Article1(3)oftheSPLprovidesthefol-lowing:“MaritimeliensarecreatedandextinguishedpursuanttothisActandinternationalconventionstowhichEstoniahasacceded,regardlessofwhethertheclaimssecuredbymaritimeliensareagainstregistered(read:quasiim-movable)orunregistered(read:movables)ships.”

Amaritimelienisaccordingto§72oftheSPLapledgeonashipcreatedbylawinordertosecureclaimsprovidedbylaw.Maritimeliensarenoten-teredintheregisterofships.Amaritimelieniscreatedonthebasisofcertainclaimsinconnectionwiththeuseofshipsagainstashipowner,operatorofashipormasterofaship.Thereforesomelimitednumbersofmaritimeclaimsareprivilegedcomparedtoothersbecauseofthefactthattheyarepledgesontheship.

Specificqualitiesofamaritimeliencouldbeseeninthreeaspects.First,a

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maritimelienisalwaysconnectedwiththeshipduringitsexistenceofoneyear.Amaritimelienistransferredtogetherwiththeshipuponitstransferre-gardlessofwhethertheacquireroftheshipknewoftheencumbranceoftheshipwithamaritimelienornotandamaritimelienisalsotransferredwiththeshipuponchangeoflocationoftheregistrationoftheshiporflagoftheship(SPL§73).Thisshouldbedulynotedbyabuyerofasecondhandvesselanditscreditor.Amaritimelienmakesiteasierforajudgetoorderanarrestofsuchavesselbecauseitisimportantbesidesthevalidityofaclaimtoidentifythevesselonlybutnotwhethertheownerorthedemisechartereristhesamepersonatthetimeswhenthemaritimeclaimarisesandwhenthearrestiseffected.Additionally,onecouldalsonoticethataccordingto§782(section2,

paragraph5)oftheSPL,amaritimelienprovidesforthearrestoftheshipawiderlistofpersonsagainstwhomaclaimisdirected.Whileanarrestofavesselincaseofamaritimeclaimisacceptedifitisagainsttheownerorthedemisecharterer,incaseofamaritimelienotherdebtorsarealsoincluded-personslikemanagersoroperators(anyreeder①).Second,amaritimelienasapledgegivestheinterestedpartiesthepossibilitytodemandforcedsaleofthevesselfromtheverybeginningofthecourtproceedings.Third,themainprivi-legeofaclaimsecuredbyamaritimelienisrelatedtoitsrankingbygivingtothoselistedin§74(1)oftheSPLpriorityofsatisfactionbeforeotherclaims,

includingclaimssecuredbymaritimemortgage.Extinguishmentofamaritimelienisprovidedin§75oftheSPL.Amar-

itimelienextinguishesafteroneyearhaspassedfromtheduedateandrunningofthisperiodisinprincipleuninterrupted,andsuspensionisacceptedonlyfortheperiodduringwhich,pursuanttolaw,itisprohibitedtoseizetheship.Thetermofoneyearshallbecalculatedincasesofwagesandothersumsduetothemasterandcrewfromthedateofpay-offandincasesofothermaritimeliensstartingfromthedateofcreationoftheclaimwhichissecuredbylien.

Thetransferofaclaimsecuredbyamaritimelienresultsinthetransferofthemaritimelientotheacquireroftheclaim.Buttheownerofaclaimsecuredbyamaritimeliendoesnothavetherighttoclaimindemnityonthebasisofaninsurancecontract(SPL,§76).



① Accordingto§68oftheMerchantShippingActthenotion“reeder”isdefinedas“aper-sonwhousesashiponhisorhernameineconomicaffairsandtowhomthelicencetocar-ryonwithmaritimetransportactivitieshasbeenissued”.ThisgeneralkindoflicencewillbeissuedbytheEstonianMaritimeAdministration.


CategoriesofMaritimeLiensandtheirranking.Themaritimeliensenu-meratedin§74(1)oftheSPLandinarticle4oftheGenevaConventionof1993aredividedinfivecategoriesandrepresentaclosedlist.Both,theSPLandthe1993GenevaConventionacceptthatlawcouldalsoestablishothermaritimeliensbutinsuchacasetheywillhavelowerrankingthanamaritimemortgage.Accordingly,thereexistnootherkindsofmaritimeliensinEstoniatodaythanthesefivecategoriesmentionedabove.

Thesefivecategoriesofclaimsaresecuredbyamaritimelienandarepro-videdinthefollowingorder:

(1)claimsforwagesandothersumsduetothemaster,officersandothermembersofthecrewinrespectoftheiremploymentontheship,includingcostsofrepatriation and socialsecurity contributions payable on theirbehalf;①

(2)claimsinrespectoflossoflifeorpersonalinjuryoccurring,whetheronlandoronwater,indirectconnectionwiththeoperationoftheship;

(3)claimsforrewardforthesalvageoftheship;(4)claimsforport,canalandotherwaterwayduesandpilotdues;(5)claims(basedontort-HL)whichariseoutofdirectdamagecaused

bytheoperationoftheshipotherthandamagetocargo,containersandproper-tyofpassengers.

AquestionmayarisewhethertheexpensesoftheMaritimeAdministra-tionrelatedtotheremovalofaship,wreck,cargoorwreckageassunkenprop-ertyundertheauthorityof§§110-118②oftheMerchantShippingCode(MSC)couldbesecuredbyamaritimelien.TheMaritimeAdministrationisauthorizedtorequesttheremovalofsuchpropertybytheowneranddeterminethedeadlineaswellasthewaysandmeansofremoval(exceptforthedeadlineifsuchpropertybelongstotheStatenavyorothermilitaryforces)orarrangesuchremovalorevendestroyitattheexpensesoftheownerincaseswhenawreck,wreckageetc.isposingdirectthreattothesafetyofnavigation,lifeor

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①

②

ItshouldbenotedthatthetranslationintoEstonianofArt.9(2)(a)oftheGenevaCon-ventionof1993isincorrect.Namely,theone-yearextinguishmentofthesemaritimeliensaccordingtotheConventionistobecalculatedupontheclaimantsdischargefromtheves-selinthisConventionwhichistranslatedasfromthedatewhentheclaimantdischargesthevessel! ThistranslationisunofficialandArt.75(2)(a)oftheSPLcorrectlyStates“fromthepay-offoftheholderoftheclaim”.Thesearepubliclawparagraphsamong28outof372oftheMSCwhichremainedintheCodeafteradoptionoftheMerchantShippingActasapieceofprivatelawin2005.

healthofpersonsortothemarineenvironment.TheowneroftheremovedpropertyhastherighttoclaimitwithintwoyearsfromactualremovalandisobligedtocoveralldirectandrelatedexpensesoftheMaritimeAdministrationandthedamagecaused.Thewordingof§117oftheMSCgivestheMaritimeAdministrationthepossessorylienonremovedpropertybecauseitisauthor-izedtosellthepropertyinquestioninordertorecovertheexpensesanddama-gesandtherestislefttotheowner.Iftheproceedsfromsuchasaledonotcoveralltheexpensesofremoval,storageandsale,thentheownerofthisprop-ertyisconsideredtoowethedifferencetotheMaritimeAdministration.Aban-donmentoftheremovedpropertywillnotreleasetheownerfromtheseobliga-tions.

ItisconsideredinEstoniathataclaimoftheMaritimeAdministrationonexpensesanddamagesagainsttheownerofaremovedpropertyisdeemedtobesecuredbyamaritimelienofcategory5.Itismoreunderstandableifoneusesthefollowingwordingofarticle4(1)(e)oftheGenevaConventionof1993:“claimsbasedontortarisingoutofphysicallossordamagecausedbytheoper-ationofthevessel”.Thisopinionisnotyetconfirmedinacourt.Thecontraryopinioncouldbedrawnfromtheinterpretationof§91oftheSPLwhichdealswiththeorderofsatisfactionofclaimsuponforcedsaleofashipandgivesinsection1thefirstpreferencebyreferringto:“theexpensesconnectedwiththeforcedsaleandseizureoftheship,andexpenseswhichtheStateincursforre-movaloftheshipfromthewaterwaysinordertosecuresafenavigation”andtheninsection2areseparatelylisted“theclaimssecuredbymaritimeliens”.Thelatterisinfullconformitywitharticle12(3)oftheGenevaConventionof1993.

§74(2)oftheSPLespeciallyexcludesandprovidesthat“nomaritimelienshallbeattachedtoashiptosecureclaimsspecifiedincategories2and5if:

(a)damagehasariseninconnectionwiththecarriageofoilorotherhaz-ardousornoxioussubstancesbyseaforwhichcompensationispayabletotheclaimantspursuanttointernationalconventionsorlawsprovidingforstrictlia-bilityorcompulsoryinsuranceorothermeanssecuringtheclaims;and

(b)damagehasariseninconnectionwiththeradioactivepropertiesoracombinationoftheradioactivepropertieswithtoxic,explosiveorotherhazard-ouspropertiesofnuclearfuelorofradioactivewaste.

Rankingofclaimssecuredbymaritimelienisprovidedin§77and§78oftheSPL.Thefirstoneprovidestheprinciplethataclaimsecuredbya




maritimelienspecifiedin§74(1)oftheSPL(inanyoneofthose5catego-ries)shallbesatisfiedbeforeotherclaims,includingclaimssecuredbyamari-timemortgage.Accordingly,§78providesthatanyadditionalmaritimeliensestablishedaccordingtoanylawshallberankedlowerthanamaritimemort-gagebuttheyhaveapreferentialrightwithrespecttoalltheotherclaims.

§78setstheorderofsatisfactionofclaimssecuredbymaritimelienandconsiderablygivespreferencetothesalvageclaims,asthemotivationandsuc-cessofasalvorisessentialinordertomakeitpossibleforothermaritimelienstobecollectedatall.Ifthereareseveralsalvageclaims,thenthemaritimeli-enssecuringclaimsforrewardforthesalvageofthevesselshallrankinthein-verseorderofthetimewhentheclaimssecuredtherebyaccrued.Suchclaimsshallbedeemedtohaveaccruedonthedateonwhicheachsalvageoperationisterminated.Ofcourse,claimsagainsttheshipownerforpaymentofthecontri-butionsofgeneralaverageaswellasforcollisiondamagearesecuredbymari-timelienintheparttheycorrespondtothesalvagereward.Otherfourcatego-riesofmaritimelienssecuringmaritimeclaimsofthesamerankingareequalandsuchclaimsaresatisfiedproportionally(shallrankparipassuasbetweenthemselves).

EnforcementofMaritimeLiens.Anyownerofaclaimsecuredbymari-timelienbyvirtueof§74(1)oftheSPLandarticle10oftheGenevaCon-ventionof1993,canenforceit.Theoriginalcreditoraswellasathirdpartysubrogatedintherightsofanoriginalcreditorisalsoallowedtoenforceamar-itimelien.§83oftheSPLontheapplicationofenforcementprocedurestatesthatitcouldbedirectedagainstthepossessorofaship.Insuchacase,execu-tionalsoappliestotheowner.EnforcementprocedureprovisionsareprovidedinPartV,Chapter1“EnforcementProcedureProvisions”,§§79-93oftheSPLandarethesameforbothmaritimeliensandmaritimemortgagesanddealwithclaimsforpaymentagainstaship.

Themaritimeliensdonotapplytothefreightearnedforthevoyagedur-ingwhichtheclaimgivingrisetothelienarises.Thecargoonboardisalsoex-cluded.Boththecargoandfreightupontheseizureofashipareexplicitlyex-cludedbyvirtueof§84oftheSPL.

Accessoriesofships,accordingto§2(2)oftheSPL,aredeterminedpur-suanttotheprovisionsconcerningaccessoriesprovidedforintheGeneralPartoftheCivilCode,namely§57and§58(RTI2002,35,216asamended,thelatestversioninforcesince1July2009).Thelastoneconsidersthedocumentsofaship(incl.technical)asheraccessories.Section3of§57presumesthat

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obligationsarisingoutofthetransferofownershiporanyencumbrancetothatmovablealsogoestotheaccessories.Incaseofdoubt,athingisdeemedtobeanaccessoryifitisenteredintheinventorylistofaship.

Accordingto§79(1)oftheSPL,aclaimforpaymentagainstaregisteredshiporsea-goingvesselwhichissubjecttomandatoryregistrationismadepur-suanttotheprovisionsformakingaclaimforpaymentagainsttherealproper-tyofadebtorprescribedintheCodeofEnforcementProcedureof2005(here-inafterCEP,asamendedandthelatestversioninforcesince1January2010)

takingintoaccountthepeculiaritiesoftheSPL.Theseizureandmaintenanceofashipiseffectedpursuanttotheprovisionsprovidedfortheseizureofmov-ableproperty,exceptfromthemakingofanotationintheregisterofshipswhichiseffectedpursuantto§64oftheCEP.However,somemisunder-standingorconfusioncouldbecreatedbecausethenotions“arrest”and“sei-zure”inPartVoftheSPLandintheCEParecoveredbyoneandonlyEstoni-anword“arestimine”.

Themakingofaclaimforpaymentagainstanunregisteredshipwhichgoestoanyshipregisteredinotherstatesiseffectedpursuanttotheprovisionsformakingaclaimforpaymentagainstmovablepropertyofadebtorpre-scribedintheCEP(§79(2)ofSPL).ThenextsectionofthisparagraphStatesthat“inmakingaclaimforpaymentagainstashipwhichshouldbereg-isteredintheregisterofships,theprovisionsoftheCEPconcerningregisteredshipswhichdonotpresumeanentryintheregisterforshipsapply.”

MakingaclaimforpaymentagainstaregisteredshipisanotherimperativenormintheSPL,inwhich§80providesforthefollowing:“(1)themakingofaclaimforpaymentagainstthethingsspecifiedinsubsection79(1)ofthisAct(read:registeredships-HL)ispossibleonlybywayofacompulsoryauction:

compulsoryadministrationisexcluded;(2)compulsoryauctionwithrespecttoashipunderconstructionispossibleasofregistrationthereof.Apetitionmaybesubmittedbeforeregistration.”

Applicationofanenforcementprocedurecouldbedirectedagainstthepos-sessoroftheship.Insuchacaseexecutionalsoappliestotheowner.Upontheseizureofaship,itisspeciallystatedthatthisactiondoesnotextendtothecargoorfreightchargesoftheship.

Aseizureaswellasanarrestofashipwillbeeffectedbyabailiffwhoshallremovetheshipdocumentsfromthemasterandfulfillarespectivestate-ment,thestandardformatofwhichisestablishedbytheMinisterofJustice.Thedescriptionofashipinsuchastatementshallcorrespondtothedescrip-




tionintheregistryofships.Additionally,thecourtassignsanadministratortoaseizedshipforherupkeep.Theadministratorissubjecttojudicialcontrolandtotheinstructionsofthecourtandshallnotusetheship.

AcompulsoryauctionofashipcontainssomearrangementslikenoticesandannouncementswhichareobligatoryandprescribedindetailintheSPL.Thenoticeofacompulsoryauctionshallbegivento:1)theregistryofshipswithwhichtheshipisregistered;2)allknownpledgees;3)allknownownersofclaimssecuredbyamaritimelien;and4)theshipowner.Anannouncementofacompulsoryauctionshallcontainexpressreferencetoallrightssecuredbyamaritimelienandbecarriedoutaccordingtotherequirementsof§84(2)oftheCEP.Thisprovisionstipulatesthatanannouncementshallbepublished10daysbeforetheauctionin“AmetlikudTeadaanded”(OfficialAnnouncements)

andapublicinternetnetwork.Ifthevalueofashipexceeds6400euros,anan-nouncementshallbepublishedatleastinonenewspaperdistributedatthelo-cationofthiscompulsoryauction.Attherequestofaclaimantoradebtor,thebailiffshallpublishannouncementinanyotherpublicationattheirexpense.Inboth,anoticeoranannouncementofacompulsoryauction,thedescriptionofthevesselshallcorrespondtothedescriptionoftheshipintheregisterofships.

Thetransferofownershipuponcompulsoryauctionofaregisteredshiporashipsubjecttomandatoryregistrationiseffectedupontheenforcementofthestatementofacompulsoryauction,buttheownershipofanunregisteredshipistransferreduponthetransferofpossessionoftheship.

AnenforcementprocedureconcerningashipmaybeterminatedinadditiontothecasesprovidedforintheCEP,ifitisapparentthatalargeramountofmoneywouldbereceivedupondismantlingoftheshipanditssaleinpartsthanbywayofacompulsoryauction.

Incaseofacompulsoryauctionofashipthemoneyreceivedshallbedis-tributedaccordingto§91oftheSPLinthefollowingorder:

(1)theexpensesconnectedwiththeforcedsaleandseizureoftheshipandexpenseswhichtheStateincursforremovaloftheshipfromthewaterwaysinordertosecuresafenavigation;

(2)claimssecuredbyamaritimelien;(3)claimssecuredbyamaritimemortgage;(4)otherclaims.Asaresultofacompulsoryauctionofashipthebailiffshallissueatthe

requestofthepurchaseracertificatethattheshipisfreeofmaritimeliens,

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mortgagesandotherencumbrancesandonthebasisofthiscertificateallen-cumbrancesshallbedeletedintheregisterofshipsprovidedthatallentitledpersonsarenotifiedofthecompulsoryauctionasrequired.However,encum-brancestowhichthepurchaseragreesarenotdeleted.

Ⅳ.Conclusions

QuiteobviouslymuchhasbeenachievedinregulatingmaritimeaffairsinEstoniasofar.Especially,itgoesforuniversallyagreednormsandprinciplesrelatedtothearrestofships,maritimeclaimsandmaritimeliensetc.Havingbeenamaritimenationforages,thoughofasmallsize,Estoniaseekstouseitsstrategicgeographicalpositionforinternationaltradeandthereforewilladaptsmoothlytotheinternationallyacceptedrulesandregulationsforshipping.



Maritime Claims & Liens, Arrest of Vessels and Estonian Perspective

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