The Indonesian Shipping Law (Law No. 17 of 2008 regarding Shipping) provides that a vessel may be arrested by the harbormaster at the relevant port, based on a written court order that is issued if the vessel is involved in a criminal or civil case. The Shipping Law further provides that a court order for a vessel arrest in a civil case relating to maritime claims may be issued without initiating civil court proceedings. Further provisions on the procedures for vessel arrest at Indonesian ports are supposed to be provided by Minister of Transportation regulation. However, as of the date of this writing, such regulation has not been issued.
Security for maritime claims
Article 316 of the Indonesian Commercial Code (“ICC”) provides that several receivables over a vessel are given priority right, namely (in order of priority):
- Cost of seizure and auction.
- Receivables of the vessel master and the crew arising from an employment agreement during their tenure in that vessel.
- Salvage reward, pilotage cost, signal cost and port cost, and other shipping costs.
- Collision claims.
Under the Shipping Law, a party may exercise a maritime lien (referred to as “prioritised maritime receivables”) upon claims to receivables for which a vessel acts as a security. Upon such claim against receivables secured by the vessel, the payment of maritime receivables must be prioritised.
The Shipping Law provides that maritime receivables include:
- Payment of wages, costs, and other payments to the master and crew of the vessel.
- Payment for the death or medical expenses for bodily injuries related to the operation of the vessel.
- Payment for the salvage of the vessel.
- Payment of port fees or other shipping routes and pilotage costs.
- Losses arising out of physical loss or damage caused by the operation of the vessel aside from loss or damage to the cargo, container, and baggage.
Under the ICC, the Indonesian Civil Code and the Shipping Law, payment of maritime receivables shall be prioritised over payment of pledges, mortgage, and registered receivables.
If there are no prioritised receivables or maritime liens, then parties may make claims to the district court by way of a regular civil claim.
Indonesia has also ratified the International Convention on Maritime Liens of 1993, by way of Presidential Regulation No. 44 of 2005.
Form of security
There is no mandatory type of security under Indonesian law. However, in practice, a bank guarantee or corporate guarantee is more commonly used than P&I letters of undertaking.