Legal System and Sources of Law
When is it Possible to Arrest a Vessel?
Instituting the Main Action in Portugal
Situated on the west coast of the Iberian Peninsula, Portugal has a long coast and an extensive maritime history. There are several important ports on the continental Portuguese coast, such as Lisbon, Leixões, Viana do Castelo, Sines, Setúbal, Aveiro, Figueira da Foz, Portimão and Sesimbra. The most important is the port of Lisbon, which historically has been the main gateway to Portugal and is one of Europe's leading seaports. The Azores Islands and Madeira are also Portuguese territory, but have a different maritime jurisdiction.
The Portuguese judicial system has been seriously discredited, not only from within Portugal but also from abroad, because of the excessive length of judicial proceedings. However, this is not so in the case of maritime law, thanks to the dedicated work of a former minister of justice who happens to be a reputable maritime lawyer.
Arrest is a preliminary seizure of assets ordered by the court to avoid problems that may arise from the inevitable delay of the main legal action. It protects the security which the vessel represents so that it will be available for the applicant if he succeeds in the main action. The proceedings thus follow a simplified structure: the defendant is not heard (in fact, the defendant is not even notified of the institution of proceedings), the evidence to be produced need not be definitive, and the judge's decision must be delivered in a short period of time based on an assessment of the factual and legal grounds of the case.
Certain peculiarities relating to the arrest of vessels are mainly a result of the application of a number of specific procedural rules (established not only by domestic law but also by the 1952 Brussels Convention Relating to the Arrest of Seagoing Ships) and the procedures of a specialized court with some unique characteristics. There is only one maritime court in Portugal, based in Lisbon, with jurisdiction over all the mainland territory.
Legal System and Sources of Law
Portugal has a civil law regime, and the national legal system consists of several codes and separate statutes published daily in the official gazette, Diário da República. While the jurisprudence of the second instance courts and Supreme Court is of some relevance, common law principles are not applicable in Portugal.
The most important sources of law regarding the arrest of ships are:
- the Civil Procedure Code (mainly Articles 381-392 and 406-411);
- the 1952 Brussels Convention (in force in Portugal since 1957); and
- Law 35/86, dated September 4 1986 (principally Article 12).
Portugal made no reservations pursuant to Article 10 of the convention.
When is it Possible to Arrest a Vessel?
It is possible to arrest any vessel that is found in a Portuguese port or that is anchored in Portuguese territorial waters. The case need not be specifically connected with Portugal in any other way.
In those cases where the 1952 convention is applicable, Article 2 of the convention establishes the types of claim that may justify an arrest application. Where the owner of the vessel is liable, any vessel that belongs to that same owner may be arrested.
Arrest is a type of injunction that always depends on a main legal action (or arbitration proceeding), through which the case will be decided on its merits, that is already pending or still to be initiated (the latter is by far the most common situation). The jurisdiction of the Portuguese Maritime Court to order an arrest does not depend on its jurisdiction to decide the main legal action. It is thus possible to arrest a vessel in Portugal even when the main legal action has been or will be instituted in a foreign court, or decided by arbitrators.
In cases where the main legal action or arbitration is to be commenced abroad, the Civil Procedure Code requires that the foreign proceedings be instituted promptly after an arrest has been ordered, as follows:
- The judge orders the arrest.
- The order for the arrest is notified to the defendant.
- The court notifies the plaintiff that the defendant has been notified.
- The plaintiff must then commence the foreign legal action or arbitration within 10 days of receiving notification.
As the 10-day time limit does not accord with the stipulation of Article 7(2) of the 1952 convention, the Maritime Court usually agrees with the claimant to a term of 30 days. Within this term the applicant must commence the proceedings, obtain a certificate proving that the action has begun, translate the certificate into Portuguese and file it with the court. In some special cases it is possible to apply for an extension of this term. If the applicant files no certificate, or if he negligently fails at any time during the 30-day period to perform any act ordered by the judge, the judge will lift the arrest.
Instituting the Main Action in Portugal
Whenever the 1952 convention is applicable, international jurisdiction over the merits of the case will be determined in accordance with Article 7 of the convention. In general, the cases in which the Portuguese court will have international jurisdiction are established by Article 65 of the Civil Procedure Code. These cases include (i) where one or both parties have their head office in Portugal, and (ii) where the cause of action has a close relation with Portugal, such as:
- vessels or mortgages registered in Portugal;
- cargo to be shipped or delivered in Portugal;
- collisions occurred or salvage performed in Portuguese waters; or
- contracts to be fulfilled in Portugal.
In accordance with Article 7 of Law 35/86, any agreement entered into by the parties in order to deprive the Portuguese court of the jurisdiction attributed by Article 65 of the Civil Procedure Code is null and void. However, if the parties are not Portuguese, and if the contract is to be executed abroad and does not relate to assets located in Portugal, an agreement that limits jurisdiction will be valid.
Law 35/86 created the maritime courts and gives them exclusive jurisdiction to decide all cases relating to maritime law. Article 1 of this law provides that there should be five maritime courts, in Lisbon, Leixões (near Oporto), Faro, Funchal (Madeira) and Ponta Delgada (Azores). However, only the Lisbon Maritime Court was actually established, with only one judge. For the first 12 years of its existence this court had competence only in the Lisbon area. Cases relating to other areas (eg, when the vessels were in ports other than Lisbon) were decided by the common courts of those areas. This situation changed in 1999 and since then the Lisbon Maritime Court has jurisdiction in all continental Portuguese territory. (Territorial competence for Azores and Madeira still rests with the common courts of these islands.)
The present situation is very convenient. The Maritime Court of Lisbon is a small, specialized court (unlike the common courts, which have broad jurisdiction), with only one judge and very few court officials. As there are relatively few lawyers in Portugal who practise maritime law, they know the judge and the officials personally. For this reason there is usually a good atmosphere in the Maritime Court which is very different from other courts and which occasionally contributes to the smooth resolution of problems that arise. In spite of the extension of its jurisdiction to all continental territory, the court still has an acceptable number of pending cases, making swift resolution possible.
There is only one problem. During the court vacation, ordinary legal cases are not processed. However, urgent cases - such as arrest applications - are instead decided by the Civil Court. This is usually bad news for the applicant. As a rule, neither the court officials nor the judges of the Civil Court understand the urgency that always exists when the arrest of a vessel is involved. Proceedings can thus be delayed and lawyers are powerless to rectify this situation.
The Maritime Court and all other courts in Portugal are on vacation from December 22 to January 3, from Palm Sunday to the Monday after Easter, and from July 16 to September 16. These are not good times to arrest vessels in Portugal.
In accordance with the rules established by the Civil Procedure Code, the applicant must be represented by a lawyer. This lawyer will prepare a written application detailing all relevant facts of the claim. It is also advisable to demonstrate that all legal requisites for the order of an arrest have been met. One important exception to the general legal regime applicable to arrests is that in the case of the arrest of a vessel, the applicant is not required to prove that the arrest is absolutely necessary in order to avoid losing the security that the vessel represents. It is assumed by law that the aim of the arrest is to avoid irreparable damage.
Photocopies of the following documents must be annexed to the written application:
- documents proving the existence of the debt (eg, orders and invoices);
- documents proving the identity of the vessel's owner (usually a copy of the Lloyd's Register of Ships or Shipowners); and
- power of attorney, in accordance with the draft provided by the lawyer. There is no need for any legalization or notarization, and it is sufficient to file a faxed copy of it together with the initial application, and to supply the original at a later stage.
In some cases the written application must also include a copy of correspondence exchanged between the parties (mainly documents from the debtor acknowledging the debt), and a certificate from the harbourmaster confirming that no outward clearance was granted to the ship. (Independently of Article 3(1) of the 1952 convention, in some cases it is necessary to prove that such clearance was not applied for.)
It is almost always mandatory to file Portuguese translations of all documents with the court at a later stage, although theoretically this is at the judge's discretion.
Finally, the applicant must designate one or two witnesses to prove the facts alleged in the written application and confirm the authenticity of the documents filed. The witnesses are examined in the Lisbon Maritime Court of Lisbon and if they do not speak Portuguese, an interpreter must also attend.
Upon presentation of the application in court, the clerk must immediately issue to the applicant the document needed for payment of the initial court fees. This payment can be made in a bank or directly in the court, although the latter option is preferable. The file will only be presented to the judge upon payment of these court fees.
Detention of the vessel
The application must be presented to the judge within 24 hours of being filed in court. However, the Maritime and Civil Courts only work from 9:00am to 4:00pm, and only on working days (usually Monday to Friday). No developments take place out of this period, including at the weekend.
If the judge considers that the application is in order, the court will order the provisional detention of the vessel and schedule a date for a court hearing to take place within the following five days. At this hearing the witnesses will be examined and a final decision about the arrest application will be made. The order regarding the provisional detention is immediately transmitted by fax to the maritime police of the area where the vessel is anchored.
At this stage there is no 'arrest, but only a 'detention'. There are no rules regarding the manner in which the detention order should be transmitted to the harbourmaster. However, if an outward clearance is requested from the port authorities, it will not be granted. So if outward clearance is not requested, the defendant may not be immediately aware of the detention of the vessel.
In practical terms, the maritime police in some ports (eg, Lisbon) have a blackboard on which the names of detained or arrested vessels are written. Further, in practice the plaintiff usually informs the defendant of the detention.
At the subsequent hearing the witnesses are interrogated by the judge and by the claimant's lawyer about the factual grounds of the case. Once all facts are confirmed, the judge will immediately order the definitive arrest. In this order the judge will also specify the term in which the applicant must prove that the main legal action or arbitration has commenced abroad, if this is the case. The defendant is formally notified of the court's decision immediately thereafter.
Rights of the defendant
The defendant is allowed at any time to lodge security with the court with the purpose of lifting the arrest. If the applicant agrees with the type of security proposed, the judge will accept it and lift the arrest. Even if the applicant does not agree, the judge will lift the arrest if he considers the proposed security to be acceptable.
Beyond this, the defendant may lodge an appeal to the second instance court, but only in order to contest the legal grounds of the judge's decision. If the defendant intends to allege new facts or present new evidence (eg, different witnesses), then he may contest the decision in the Maritime Court. In both cases the arrest is only lifted if the defendant lodges satisfactory security.
Portugal has an efficient system for arresting vessels and resolving arrest disputes, at least where its continental ports are concerned. The claimant must remember that one cannot apply to the Maritime Court after weekday business hours, on weekends or during the various court holidays. If an arrest is desired during the court holidays one can still apply to the common courts, but this may involve the problems that can arise from dealing with courts which are unfamiliar with the maritime process.
For further information on this topic please contact Henrique dos Santos Pereira at Sociedade Civil de Advogados by telephone (+351 213 712 630) or by fax (+351 213 712 631) or by e-mail ([email protected]).
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