The Antwerp Court of Appeal recently considered the arrest of a merchant vessel for claims against a company which did not own the vessel. No lien was involved and the claim did not concern the arrested vessel. The owner of the vessel and the debtor against which the claim was brought maintained that there were no grounds to allow the arrest. However, the arrestors maintained that the owner and the debtor had fraudulently colluded to the creditors' detriment. Morover, they claimed that the two corporations in question did not themselves respect the distinction between them as separate legal entities; consequently, the creditors could not reasonably be expected to do so. The arrestors maintained that the corporate veil could be pierced for the purposes of such an arrest.

In a 32-page decision the Antwerp Court of Appeal analysed the facts and concluded that:

"[The] aforementioned elements, taken in their totality, establish sufficiently important, specific and concurring indications and... presumptions to conclude with sufficient certainty that the assets of the corporations of [the shipowner] and [the debtor] are interspersed to such an extent that these corporations did not have a really separate existence and merge into one; that the separation of the corporations is purely superficial and the sole purpose of the corporate structure is to escape creditors; that [the owner] and [the debtor] in other words fraudulently cooperate to harm the rights of creditors.

Consequently, the veil of a separate legal identity can be pierced and [the creditor] can step over this fraudulent construction."

Therefore, the creditor could arrest the vessel in respect of maritime claims against the debtor.

Piercing of the corporate veil - with the result that all corporations involved become liable for the debts owed to all of the corporations' creditors - is extremely difficult under Belgian law. The burden of proof for the arrestor is much greater than that required for an associated ship arrest. It is necessary to establish that the separate legal nature of the corporations is not respected by the company or companies holding the targeted assets or the company or companies holding the debt. The court's decision was fully in line with previous decisions; as in previous case law, it was a matter of evidence, not principle.

For further information on this topic please contact André Kegels or Ben Muyshondt at Kegels & Co by telephone (+32 3 257 1771), fax (+32 3 257 1474) or email ([email protected] or [email protected]).