What does 'flying the flag of a contracting state' mean under the 1952 International Convention Relating to the Arrest of Sea-Going Ships? This was a central question in a recent dispute before the Leeuwarden Court of Appeal.
The dispute involved a vessel that was attached by a creditor for an alleged claim in respect of hire payments under a time charterparty. The vessel, a newbuild destined for Mexico, was registered in the Dutch Ship Register. The owners of the vessel started injunction proceedings in order to have the attachment on the vessel lifted. It was argued that the arrest convention applied because the vessel was flying the Dutch flag, since it was registered in the Dutch Ship Register (if the vessel had had Mexican nationality, the arrest convention would not have applied).
At first instance, the Court of Leeuwarden ruled that the arrest convention did apply because the attached vessel enjoyed Dutch nationality on the basis that it was registered in the Dutch Ship Register.
The creditor appealed, arguing that the arrest convention did not apply since the vessel did not have Dutch nationality. The creditor argued that the vessel's registration in the Dutch Ship Registrer did not consequently mean that it also had Dutch nationality.
The creditor argued that only vessels meeting the requirements of a Dutch vessel, as stipulated in the Commercial Code and the Certificate of Registry Act, should be deemed to have Dutch nationality. The creditor disputed that the requirements were met in this case, since the owners of the vessel were not based in the European Union and did not have a head office within the European Union.
The Leeuwarden Court of Appeal held that the arrest convention applies when a vessel is flying the flag of a contracting state, as stipulated in Article 2 of the convention. Although it did not establish the nationality of the vessel, it held that a vessel is deemed to be flying the flag of a contracting state when it is entitled to do so under the national rules and regulations of that state. In this respect, the appeal court did not explicitly refer to the UN Convention on the Law of the Sea 1982.
Whether a vessel is entitled to fly a particular flag thus depends on the law of the contracting state of the flag which the vessel is allegedly flying. Since the vessel in this case was registered in the Dutch Ship Register, the appeal court subsequently investigated whether this was the case under Dutch rules and regulations.
The appeal court noted that Article 3 of the Certificate of Registry Act stipulates that a vessel is entitled to fly the Dutch flag once it has obtained a certificate of registration (ie, a 'sea letter'). In this regard, it referenced Article 91, Paragraph 2 of the UN convention, which obliges a contracting state to provide documents proving that a vessel is entitled to fly its flag.
Article 4 of the Certificate of Registry Act stipulates that a sea letter may be provided only for vessels which are registered in the Dutch Ship Register. According to Article 8:194 of the Civil Code, a vessel whose construction has been completed can be included in this register when it meets the criteria set out in Article 311 of the Commercial Code, under which ownership must lie with either an EU-registered company or, at least, a company which has its head office in the European Union.
However, Article 12 of the Certificate of Registry Act stipulates that an extraordinary sea letter can be provided for a vessel that is being built in the Netherlands on behalf of a non-EU company. Under this sea letter, the vessel is allowed to fly the Dutch flag for sea trials or for a one-way voyage from Dutch territorial waters directly to the place of delivery. In such case, according to the appeal court, it is immaterial whether the vessel meets the requirements of a Dutch vessel under Article 8:194 of the Civil Code in connection with Article 311 of the Commercial Code. In this case the vessel had been provided with such an extraordinary sea letter.
The appeal court therefore decided that as the vessel did have a sea letter, it was entitled to fly the Dutch flag and thus the arrest convention applied. In addition, the appeal court considered that even if the sea letter had been issued on the wrong grounds, the vessel was entitled to fly the Dutch flag until the sea letter had been officially revoked.
Since the attachment did not meet the demands of the arrest convention (for reasons that are not relevant here), the attachment of the vessel was accordingly lifted.
This appears to be one of the first cases – at least in the Netherlands – which deals with the definition of 'flying the flag of a contracting state'. This issue was also dealt with in an Irish decision regarding a Crownline 270 CR yacht. In that case, the Admiralty Court referred to Article 91 of the UN convention.
For further information on this topic please contact Ellen Saman-Kole at AKD by telephone (+31 88 253 5000), fax (+31 88 253 5400) or email ([email protected]).