On March 3 2015 the Hamburg Local Court (67a IN 400/14) expressly contradicted the Bremen Regional Court's August 14 2011 decision (2 T 435/11) regarding whether vessels are protected from arrest during preliminary insolvency proceedings (for further details please see "Are vessels protected from arrest during preliminary insolvency proceedings?").
During preliminary insolvency proceedings, the law permits the insolvency court to prohibit any measures of execution, including arrest, against the debtor's moveable property, but not its immoveable property. For immoveable property, the preliminary insolvency administrator must apply to the court of the place where the immoveable asset is located in order to stay any execution proceedings.
In 2011 the Bremen Local Court, followed by the Bremen Regional Court, decided that vessels are, in principle, 'immoveables' for the purpose of this rule, meaning that during the preliminary phase of the insolvency proceedings the insolvency court cannot prohibit measures of execution (including arrest) concerning vessels. However, the Bremen courts were aware that the preliminary insolvency administrator's application to the court where the immoveable asset is located will not be an option where the vessel is located (ie, registered) abroad. The Bremen courts, therefore, were of the opinion that the insolvency court can prohibit execution measures, including arrests of vessels, as long as the vessels are located abroad.
The Hamburg Local Court, acting as insolvency court, was confronted with a similar situation and had to decide on the preliminary insolvency administrator's application to prohibit measures of execution and arrest against vessels of the debtor that are located abroad.
Unlike the Bremen courts, the Hamburg court held that it is not possible to prohibit such execution measures or arrest. The Hamburg court agreed with the Bremen courts that vessels should be treated as immoveables. However, unlike the Bremen courts, the Hamburg court made no exception for vessels that are located abroad. According to the Hamburg court, the law allows for no distinction between immoveables located in Germany and those located abroad. The court therefore decided that it cannot prohibit execution measures or the arrest of vessels.
Section 21(2)(3) of the Insolvency Act makes no distinction between immoveables located abroad and immoveables located in Germany. However, this does not mean that the courts cannot elaborate further on the statute. The Bremen courts showed how this could be done.
However, the real problem is that the Hamburg court and the Bremen courts were mistaken in assuming that vessels should be treated as immoveables in the first place. Many provisions of enforcement law treat vessels similarly or even identically to immoveable property, but in each instance there is a separate rule expressly requiring this. In contrast, this is not the case for the insolvency law rule in question. The preferable solution seems to be that vessels be treated as moveable property. After all, there is nothing more 'moveable' than a vessel.
For further information on this topic please contact Olaf Hartenstein at Dabelstein & Passehl by telephone (+49 40 31 77 970) or email (email@example.com). The Dabelstein & Passehl website can be accessed at www.da-pa.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.