In December 2011 the Supreme Court handed down a ruling which consolidates the reputation that the Netherlands has established for itself over a number of years as a comparatively friendly jurisdiction in which to effect the arrest of a ship. In essence, the court ruled that a ship may be arrested as security under the 1952 Arrest Convention even if it is not a sister ship to the vessel in connection with which the maritime claim arose.
A dispute arose from an Italian shipowner's refusal to pay for and take delivery of a tanker – the Stromboli M – from a Turkish shipbuilder. The shipbuilder responded by seeking to arrest another tanker – the Costanza M – owned by the Italian shipowner. However, the shipowner maintained that under Articles 1 to 3 of the 1952 Arrest Convention, only the ship which is the subject of the claim - or alternatively, a sister ship - can be arrested. It emphasised that in this case, the subject of the claim was the Stromboli M, which was not a sister ship of the Costanza M; and because the Turkish shipbuilder remained the Stromboli M's owner, the arrest was unlawful under the convention.
Article 3(4) of the convention states that:
"When in the case of a charter by demise of a ship, the charterer and not the registered owner is liable in respect of a maritime claim relating to that ship, the claimant may arrest such ship or any other ship in the ownership of the charterer by demise, subject to the provisions of this convention, but no other ship in the ownership of the registered owner shall be liable to arrest in respect of such maritime claim. The provisions of this paragraph shall apply to any case in which a person other than the registered owner of a ship is liable in respect of a maritime claim relating to that ship."
The Supreme Court noted that under Article 3(4), the convention allows for the arrest of any ship which is the property of the debtor in a claim, provided that:
- the claim is a maritime claim as defined in Article 1 of the convention; and
- it is recoverable against the ship under national law, as applied under conflict of law rules.
If the vessel is the property of the debtor and the claim may be recoverable against the vessel pursuant to the applicable law, the vessel can be arrested in the Netherlands. The debtor of a claim need not be the owner or charterer of a vessel in relation to which the maritime claim arose.
This decision is in line with the Hague Court of Appeal ruling in the Ibn Badis case in 1989, since which time there have been conflicting judgments from the appeal courts in Amsterdam(1) and Leeuwarden.(2)
The Supreme Court judgment has strengthened the Netherlands' position as a comparatively friendly ship arrest jurisdiction, and illustrates how the Dutch courts differ in their interpretation of the 1952 Arrest Convention from a number of other leading jurisdictions, including England.
For further information on this topic please contact Lotte Schat at AKD by telephone (+31 88 253 5353), fax (+31 88 253 5430) or email ([email protected]).
(1) Costanza M, March 16 2010.