NAVIGATING SHIP ARREST: SECURE TO CLAIM FOR PAYMENT OF REPAIR COSTS

Foreword

In the maritime industry, vessel repair is a vital service that ensures the safe and continuous operation of ships. However, when disputes arise over unpaid repair fees, the legal remedies available to ship repairers may not be as straightforward as expected. Many repairers assume that they can arrest a vessel to secure payment, but the reality under international and domestic maritime law is more complex.

This article explores the legal nature of claims for ship repairs, focusing on whether such claims allow the arrest of a vessel. Drawing on relevant international conventions and Vietnamese law, we examine the legal position of ship repairers and highlight practical challenges they face in recovering their dues. A recent case handled by our legal team at ANHISA illustrates these issues and offers useful lessons for those engaged in ship repair services.

Legal Classification of Ship Repair Claims under International and Vietnamese Maritime Law

Claims for goods, materials, and labor involved in the repair of a vessel, as well as dock charges and dues during such repair, are widely recognized as a species of maritime claim in maritime laws. They are defined as such under the 1952 Brussels Convention on Arrest of Seagoing Ships, and subsequently the 1999 Geneva Convention on Arrest of Ships, and are recognized in Vietnam, accordingly under the 2015 Maritime Law and the Ordinance on Vessel Arrest.

Pursuant to the above, repairers wishing to arrest a vessel to secure their claim for the sum payable in their favor shall have the option of invoking a maritime claim against the party who owed them money, instead of the vessel. This is because, according to the above-mentioned international treaties, maritime claims are in personam in nature. This means that they are attached only to the owner/charterer of a vessel and are not attached to the vessel itself.

For a maritime claim to “follow a vessel” (be an in rem action, as opposed to in personam), it must be secured by a maritime lien. Maritime liens arise only from some maritime claims under Article 4.1 of the 1993 Geneva Convention on Maritime Claims and Maritime Liens.

Why Ship Repairers Cannot Arrest a Vessel Without a Maritime Lien?

Regrettably, claims regarding repair, maintenance works are not included in the exhaustive list under the above article. The significance of the above findings is that the above international conventions stipulate that way, domestic laws of most Member (and non-Member) states regulate them in the same way. Consequently, ship repairers can expect that their claim will most definitely be a maritime claim against the owner/demise charterer who defaulted on their payments, and not to chase the vessel itself.

Legal Dilemmas for Ship Repairers

This legal limitation raises two critical practical issues. Firstly, if a party does not retain ownership of a vessel, yet still manages to acquire repair services for that vessel and manages to leave without paying, then the repairer in this instance is put in a difficult position. He could not arrest the ship on its own to recover his dues because his claim does not generate a maritime lien. Also, he could not bring his maritime claim against the actual owner of the ship because he did not have a contract with that owner. While he could come after the party who signed his contract, he could not use this maritime claim to arrest the vessel because the defaulting party under his contract is not the owner of the vessel. Secondly, in expanding from the above, the only way for a repairer to exercise his maritime claim for his dues is to lock the vessel in his docks to force payment.

However, this results in economic losses to the repairer because he would have to close an entire lot in his facility to keep a vessel hostage, and risks of litigation in case the actual owner of the vessel decides that he will not negotiate to pay something he did not commit to. Ship repairers who unknowingly release a vessel in these kinds of situations find themselves deprived of measures to protect themselves and are constantly on the back foot in their quest to recoup their payables.

ANHISA LLC AND OUR EXPERTISE

ANHISA LLC is a boutique law firm specializing in Dispute Resolution, Shipping and Aviation. Being the leading lawyers in various fields of law, our qualified, experienced, and supportive team of lawyers know how to best proceed with a case against or in relation to Vietnamese parties and are well equipped to provide clients with cost-effective and innovative solutions to their problems.

Regarding dispute resolution, we have represented Vietnamese and foreign clients in the resolution of disputes involving maritime, construction, commercial and civil matters. Our lawyers are well-equipped to offer services on a wide range of disputes and conflicts, whether cross-border or purely domestic, to appear before any Judges or Arbitral Tribunals. The firm is prepared to assist clients in designing the appropriate dispute resolution procedure to help resolve conflicts as efficiently and cost effectively as possible, which may involve combining elements of mediation and other methods such as arbitration.

AUTHORS

DANG VIET ANH

Managing Partner

Mobile: (+84) 983 467070

Email: anh@anhisa.com

NGUYEN THI TUYET MAI

Senior Associate

Mobile: (+84) 939 117398

Email: mai@anhisa.com

This article aims to furnish our clients and contacts with general information on the relevant topic for reference purposes only, without creating any duty of care on the part of ANHISA. The information presented herein is not intended to serve, nor should it be considered, as a substitute for legal or other professional advice.