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

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

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. Regrettably, claims in regard to repair, maintenance works are not included in the exhaustive list under the above article. The significance of the above findings is that because the above international conventions are stipulated that way, domestic laws of most Member (and non-Member) states to regulate them 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.

This raises two 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 did 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 was 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 in 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.

Our lawyers at ANHISA have recently advised and assisted in a case where the repairer did keep the vessel in his docks, the contracting party disappeared, and the actual vessel owner threatened legal action. With our first-hand involvement, the remaining parties sat down and negotiated an amicable settlement so that the repairer could recoup some of his losses, and the vessel owner could retrieve his vessel at a reasonable price. Our ultimate goal is to provide clients with an outcome that is favorable to our clients.

If you seek assistance in preparing for arbitration before the LMAA, please do not hesitate to contact us via:

ANHISA

Mr. Dang Viet Anh

Email: anh@anhisa.com

T: (+84) 28 5416 5873

M: (+84) 983 467070

Mr. To Vu Nhat Minh 

Email: minh@anhisa.com

T: (+84) 24 320 47609

M: (+84) 36 426 0088