Ship Arrests

The port agent who is unfortunate enough to be appointed by the owner or charterer of a ship which is arrested immediately it arrives at the port, can face unforeseen and adverse consequences. The arrest is often by a third party who is totally unknown to the agent, and concerns a dispute which the agent has no knowledge of either. Whilst the shipowner or the charterer may have done something to deserve the expense and inconvenience of having the ship arrested, the innocent ship agent also becomes embroiled in wasted effort and expense. Quite often the arrest indicates that the owners are in a bad financial predicament, which is yet more bad news for the port agent.

If the arrest is resolved quickly, then there will be no problem for the agent. However, if the owner or charterer is insolvent, an arrested ship can remain under arrest for months, until the arresting party (for example a mortgagee bank) applies to the local court for the judicial sale of the ship. The problem for the agent arises because, whilst the ship is sitting in port, it is incurring port charges, which in some jurisdictions (especially common law jurisdictions) are for the agent’s account, even though he has nothing to do with the original arrest. If and when an agent finds himself in this position, it is important, that he takes immediate steps to avoid any unnecessary liability for port disbursements incurred from the date the ship was arrested.

Common law jurisdictions (such as England, Hong Kong, Singapore, Nigeria, Australia etc.)

In common law jurisdictions the Admiralty Marshal is the court official who authorises and controls every arrest. The agent should contact the Admiralty Marshal with the request to be appointed as the Admiralty Marshal’s agent. If the Admiralty Marshall agrees to do this, and he often does, then all port disbursements and the agent’s own fees from the date of the arrest become a preferred charge against the ship and will have to be paid before the ship can be released. If the ship is eventually sold by court auction, these charges become a first preferred charge against the proceeds of sale and they even rank in priority above claims for crew wages and mortgages. The same is also true in South Africa where, if a ship is sold, then at the time of the appraisement and sale of the ship, the court will instruct the Admiralty Marshal to appoint an agent and that agent’s fees will rank first in the order of priorities, on the basis that the agent can claim his fees and disbursements as preservation costs. This means that any port disbursements will be a preferred charge against any fund created by the sale of the ship. There is no reason at all why, in such a case, the original agent appointed by the owner or charterer should not also be the Admiralty Marshall’s agent.

Civil law jurisdictions (such as France, Italy, Belgium and Holland)

In civil law jurisdictions the situation is different. In these jurisdictions the actual arrest is carried out by a bailiff, who is a court appointed official. An agent faced with this problem cannot ask to be the bailiff’s agent in the same way that an agent in a common law jurisdiction can ask to be the Admiralty Marshal’s agent. In civil law jurisdictions it is up to the agent to make sure he is being reimbursed by the owners or the charterers. If the agent is not receiving any payment from his principal whilst the ship is under arrest he should immediately relinquish the agency as, if the ship is eventually sold by court auction, the agent will not have a preferred claim and could end up having to pay the port costs during the arrest while the arresting party walks off with the sale proceeds.