ASSOCIATED SHIP ARREST

Unpaid disbursements are not the only problem which face ship agents.  In many countries ship agents have a joint and several liability with their principal for cargo claims, customs penalties, dock damage, etc.  If a principal who has operated a regular service becomes bankrupt, the agent will have to defend and pay numerous claims which should properly fall on his principal. 

ITIC does, of course, cover the agent's exposure to such liabilities, but if the claims go back over many years, the deductibles which apply to each voyage could be substantial.  If the shipowner is bankrupt there is not much that can be done, but what if the shipowner discontinues his service and simply walks away from the claims? In a recent case the problem was made worse by the fact that the shipowner was selling his ships (which were each owned by a separate Liberian company).  The shipowner knew that if he failed to defend and pay the cargo claims his agent would have to do so, but this did not change his attitude.  The Club managed to find the owner's last ship, fully loaded with cargo, in a jurisdiction which allowed the arrest of an "associated" ship and recovered all amounts paid out to cargo interests and lawyers.

"Associated" ship arrest is the arrest of a ship which is beneficially owned by the same company as the ship (or ships) on which debts and/or claims have arisen.  The law in most countries only allows the arrest of a "sister" ship (i.e. a ship owned by the same company), but some (notably France and South Africa) extend this right to arrest to associated ships.