Security and enforcementi Arrest (attachment)
The term 'arrest' will be used in the meaning of a detention or restriction on removal of an asset to secure a claim. It does not include the seizure of such asset in execution or satisfaction of a judgment or other enforceable instrument. Arrest in such meaning is not a step, at least not a necessary step, to a judicial sale.
The arrest does not require an enforceable title. The arrest as such does not cause a priority ranking not otherwise acquired. The purpose of the arrest is not to proceed to the judicial sale, although it may so end up, but on the contrary, the release against payment or security. In practice, the arrest in Belgium, except of airplanes, proves to be an extremely fast and effective tool for the collection of receivables.Aeroplanes
Belgium is a party to the 1933 Airplane Arrest Convention, which, by virtue of its Article 3, heavily restricts the creditor's ability to arrest an airplane. It should be stressed that this is the arrest as defined hereabove. This does not preclude at all the executory seizure for the purpose of a judicial sale on the basis of an enforceable title (see Section IV.iii).Ships
A ship arrest will be authorised and maintained on the mere but serious allegation of a claim, not requiring an enforceable title. Arrest of bunkers may be an alternative to a ship arrest, if for some particular reason a ship arrest is not permissible.
Creditors have a clear preference for arresting ships in Belgium.
The reasons are:
- some 15,000 calls a year at just one of its sea ports (Antwerp);
- by far the highest number of ships sheltering in locked docks on the European Atlantic coast, avoiding the risk of escaping while under arrest;
- the ability to cash or secure a claim related to the ship, regardless of whether or not the shipowner is the debtor;
- the ability to arrest sister ships;
- the countersecurity being very seldom required.
Belgium ratified the 1952 Ship Arrest Convention and incorporated these provisions in the Belgian Judicial Code. As a result of the incorporation in domestic law, the rules as set out in the 1952 Ship Arrest Convention apply, whether or not the ship to arrest is flying the flag of a state party to the 1952 Arrest Convention.Requirement
The judge shall authorise the arrest if the applicant presents the allegation of a maritime claim. A maritime claim is a claim in the meaning of the aforementioned 1952 Arrest Convention, which includes more or less all types of claims, except insurance premium or calls. A judgment on the substance is not required to obtain the authorisation to arrest.No escape route
Besides the fact that sailing while under arrest would constitute a penal fact, the arrested ships cannot, as a practical matter sail, because in most cases docks are behind locks and because she will need a pilot to reach the sea. The arrest is notified to the lockmaster and to the corporation of pilots.To secure shipowner's or charterer's debt
To arrest a ship, it is not required that the shipowner is, on the substance, the debtor of the maritime claim to secure. As an example, a ship arrest will be authorised and maintained to secure a bunker claim, although it is expressly agreed only the time or bare boat charterer is held and not the registered shipowner.Sistership
A creditor can arrest any ship in the ownership of his or her debtor to secure his or her maritime claim. Courts hold that if it derives from a set of facts and circumstances that are consistent in pointing to piercing of the corporate veil between the debtor and the registered owner of another ship so that the assets of the debtor and of the registered owner of the other ship are co-mingled and form one whole, this other ship would qualify as a sister ship for arrest purposes.Countersecurity
According to Article 6.1 of the 1952 Ship Arrest Convention, the judge can impose a countersecurity to be posted, but that is seldom ordered.Wrongful arrest
The court may impose a compensation for wrongful arrest. The judge authorises the ship arrest following an ex parte application to that end. The arrestee may oppose this authorisation. The mere fact that, after hearing the arrestee, the judge lifts the arrest does not, in se, establish a liability of arrestor. Neither does the sole fact that the claim secured by a ship arrest eventually fails before the court judging the claim on its substance cause a liability for wrongful arrest. A careful inspection of the claim and a carefully drafted application do protect the arrestor against a risk of liability. A court would impose a compensation for wrongful arrest if the arrestee establishes that his or her ship was arrested for no other purpose than damaging while the arrestor knew perfectly well the arrest would be lifted by the judge when hearing the opposition of the arrestee.Cash or security
The result of the arrest is that the ship remains detained until the claim is settled or secured by a bank guarantee. When the debtor has no good defence on the merits, the shipowner will often pay cash because when the claim is not reasonably disputable that is by far the best option (even if the charterer and not the shipowner is the debtor). The other option is the security: the ship should be released against posting security. Such security shall be so worded to secure the claim even if the shipowner is not the debtor. One way to realise the security is to obtain a judgment on the merits. For undisputed claims it is rare that the shipowner will resist as far.Insolvency order
Insolvency orders seek to hinder the individual pursuit of claims. However, the 1952 Arrest Convention shall, in most cases, prevail over provisions prohibiting actions of individual creditors resulting from an insolvency order. To put it another way, an insolvency order will often not preclude a creditor to arrest a ship.Rolling rail assets
Rail assets are characterised as any other chattel for the purpose of arrest. The judge shall authorise the arrest thereof to secure a claim that is due, assessed or assessable and certain. There is no need to submit an enforceable title.Funds and revenue
Funds and revenue may be attached, even without court authorisation, to secure a claim that is assessed or assessable and certain.ii Self-helpAir and rail assets
In the event of the pledgor's serious shortcoming, the judge may, at the pledgee's demand, order the remittance of the pledged asset to the pledgee or a custodian. The pledgee is entitled to proceed to the sale of the pledged assets and can instruct a bailiff to do so, whether by means of a public auction or a private sale, upon prior notification to the pledgor. The pledgee shall not acquire the pledged assets in a private sale, but he or she can in a public auction, or upon the pledgor agreeing thereto. Indeed, the pledgor and pledgee may agree thereto in the pledge agreement, or thereafter, but such clause shall state that the value of the goods shall be determined by an expert, or, for goods traded on a market, at market rate. Both during and after the self-help foreclosure, any interested party may apply to the judge to solve any dispute that may arise.Ships
The judge of seizures and arrest of the place of the registration shall authorise the mortgagee to take possession, if a clause to that end is included in the mortgage deed and has so been registered. As a result of this competence and jurisdiction provision, the ability to exercise the right to take possession is restricted to ships registered in Belgium.
It is untested whether the mortgagee could, on the basis of a right to sell clause and without the consent of the owner or mortgagor, proceed to a non-judicial sale. In any event, it is as a practical matter, never an option, because it would neither lift the arrests nor free the ship of debts.iii Judicial saleMovable air and rail assets
Upon the pledgor's default, the pledgee is authorised to proceed to a self-help foreclosure, without the need of an enforceable title (Section IV.ii 'Air and rail assets').Ships
The judicial sale of ships speeded up significantly over recent years as a result of the ability to very quickly obtain an enforceable title and the abolishment of the second auction.
A judicial sale of a ship shall be organised and completed upon the submission of a title enforceable in Belgium to a court bailiff and conducted in accordance with the articles 1545 to 1559 Jud. Code, which provide for the notifications to the shipowner and known creditors.
A foreign insolvency order, whether issued in an EU Member State or not, shall not hinder the judicial sale.
A mortgage deed bearing the order to enforce, an enforceable domestic payment order, an enforceable EU order for payment, an enforceable judgment or an enforceable arbitration award are enforceable titles.
If such titles are originating from a Belgian authority, then they will allow the court bailiff to proceed immediately with the executory seizure leading to the judicial sale. Hereafter we deal with enforceable titles not originating from a Belgian authority.EU Member State
If not originating from a Belgian authority but from an authority of another EU Member State, then the judicial title will be enforceable in Belgium as an enforceable judgment rendered by a Belgian court, without the need of a court declaration of enforceability. The court bailiff shall also proceed to the executory seizure and subsequent judicial sale upon the submission by the claimant of documents listed in Article 42.1. Among which are the certificate according to the form as in Annex I for decisions and Annex II for deeds and settlements to the Regulation Brussels I Recast. Prior to relying on a mortgage deed, one should check whether an Annex II certificate can be obtained.Switzerland, Norway, Iceland, Singapore, Mexico and Montenegro
If the title originates from Switzerland, Norway or Iceland, then the enforcement thereof will be governed by the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, signed in Lugano on 30 October 2007. Its effects are materially the same as the (old) Brussels I Regulation of 2000.
If the judgment was rendered by a Court of Singapore, Mexico or Montenegro, then the enforceability of the judgments shall be governed by the 2005 Convention on Choice of Court Agreements, which provides for a swift exequatur without review on the merits, and provides for a restriction of grounds for refusal of enforceability.All other
According to article 22, Section 1, Code IPL, a foreign judgment, which is enforceable in the country where it was rendered, shall be declared enforceable in Belgium by a Belgian Court of First Instance judging upon an ex parte application to that end.
The Court shall not review the matter on the merits and the court can only refuse the enforceability on restricted grounds provided for in Article 25, Section 1, Code IPL.
Article 27, Code IPL provides for a simple and straightforward exequatur of non-judicial enforceable titles, such as mortgage deeds.'No deal' Brexit
At the time of writing, the UK is scheduled to leave the EU on 29 March 2019 without a deal, so that the rejected deal, which included provisions in respect of the enforceability of judgments, is not material for the time being.
The 'no deal' Brexit will cause the Brussels I Recast Regulation of 2012 to become ineffective for the enforcement of UK judgments in the EU.
If there is no convention instead of the Regulation Brussels I Recast, a limited court intervention will be required, and restricted grounds for refusal will apply as provided for either by the 1934 bilateral Convention for the Reciprocal Enforcement of Judgments between Belgium and the UK, or the 2005 The Hague Convention on Choice of Court Agreements, or the Belgian Code IPL. It will bring back a system rather comparable to the earlier Brussels I Regulation of 2000.Arbitration awards
The exequatur of arbitration awards is governed by Articles 1719 to 1722 of the Jud. Code without prejudice to the 1958 New York Convention and other Conventions.