In these difficult times for the shipping industry a claim is only as good as the security held. Ship arrest is often seen as a necessary first step to obtain security and in some cases to obtain favourable jurisdiction.
The Australian Federal Court offers a favourable and efficient jurisdiction for arrest. An arresting party can issue an application in Sydney for an arrest in any port across Australia. Nine times out of ten we can have the ship arrested within the day. This is in part down to the good work of the Sydney Admiralty Marshal who handles a great number of arrests and is prepared to assist in achieving a swift and efficient process. The Marshal works closely with local Harbour Masters and Customs officials across Australia to affect and maintain arrests; for example the Marshal has recently started to use Customs Helicopters at no cost to effect service of the Arrest Warrant.
The Procedure is straightforward. An In Rem Writ providing brief particulars of claim is filed at the Federal Court Registry. The Application for Arrest is also filed supported by an Affidavit affirmed by the solicitor setting out the necessary jurisdictional elements for arrest. The application is immediately considered by the Admiralty Registrar and, if jurisdiction to arrest exists, an Arrest Warrant issued within a matter of minutes. The Admiralty Marshal will then contact the Port Authority and his most local Marshal to serve the Writ and Arrest Warrant on the vessel. Release from arrest is an equally efficient process.
The arrest jurisdiction in Australia as set out in the Admiralty Act 1988 (Cth) is wide and includes:
- Common law maritime liens that survive a change in the ownership of a vessel are claims in respect of salvage, damage done by a ship, wages of the master and crew and the masters disbursements.
- Proprietary maritime claims relating to the possession, title, ownership or mortgage of a ship as well as claims between co-owners of a ship relating to possession, ownership, operation or earnings of a ship.
- General maritime claims encompassing almost every other type of maritime claim including for example: collision clams, personal injury, damage to goods, salvage, general average, necessaries and services provided to a ship, charterparty and carriage claims, insurance premiums, construction and repair claims and enforcement of arbitration awards.
- Tortious claims – In Daebo Shipping Co Ltd v Ship Go Star the claim was for the tort of interference in contractual relations and we have recently successfully arrested a vessel for a claim phrased in the tort of conversion for bunkers not paid for by owners on redelivery.
- Commission claims – Following the New Zealand High Court decision in SOS Maritime Brokers v The Ship Dana Star arrest is also possible for a chartering broker’s commission.
- There is also scope for arrest in respect of foreign maritime liens so broadening the arrest jurisdiction further.
- Arrest for demise charterers’ liabilities.
- Surrogate ship arrest is also permitted although the owner of the surrogate ship must be liable in personam. The recent decision in the Bulk Peace further reinforced the ownership test.
- Arrest for security only – We often arrest purely for security in support of a London Arbitration. Security is obtained and proceedings in Australia discontinued or stayed pending the outcome in London.
- Arrest to found jurisdiction – By arresting a vessel in Australia the Court’s jurisdiction is founded and substantive proceedings will progress unless the defendant ship owner can persuade the court otherwise. Of note here is the Australian “clearly inappropriate forum” test (Voth v Manildra Flour Mills) which requires the applicant to establish that the Australian court is a clearly inappropriate forum rather than establish that some other jurisdiction a more appropriate forum.
The arrest of a ship offers great leverage to the arresting party. In Australia the risks and costs are relatively low and the efficiency of the Federal Court in arrest and release of ships keeps commercial losses to a minimum. Further, the queuing periods for bulk carriers visiting our busy coal and ore ports often provide an ideal window of opportunity. While the Admiralty Act does include a wrongful arrest provision to date no finding of wrongful arrest has ever been made by an Australian Court.
We hope that this summary provides you with a useful snapshot of the scope of our arrest jurisdiction. Please do not hesitate to contact us if you would like to explore the possibilities further.
This article was written by Joe Hurley, Partner and Chris Sacré, Senior Associate.