Preventive ship seizure has become a crucial tool in international maritime law, especially for creditors seeking to secure the payment of debts from foreign companies that own vessels. Spain, due to its strategic geographical location and extensive coastlines, has emerged as a key jurisdiction for executing these seizures.
Applicable Legal Framework
Since March 2012, the legal regime governing the preventive seizure of ships in Spain has been primarily regulated by the International Convention on the Arrest of Ships, done in Geneva on March 12, 1999 (CEP 99), complemented by the twenty-sixth final provision of the Spanish Civil Procedure Law. This legal framework establishes a unified system that applies to all ships, regardless of their flag, significantly simplifying the process for international creditors.
The Concept of Maritime Credit
At the heart of the ship arrest system is the concept of “maritime credit.” According to Article 1.1 of CEP 99, a maritime credit is a claim arising from one or more causes listed in the convention. This list is exhaustive and covers a wide range of situations related to the operation and commercial use of ships.
Some examples of maritime credits include:
- Damages caused by a ship, whether from collision or otherwise.
- Loss of life or bodily injury occurring on land or water, directly related to the operation of the ship.
- Contracts related to the use or lease of the ship.
- Contracts for the transport of goods or passengers on the ship.
- Loss or damage to goods and luggage carried on the ship.
- General average.
- Towage.
- Pilotage.
- Supply of products or materials for the operation or maintenance of the ship.
- Construction, repair, equipment, or dry dock expenses for the ship.
It is important to note that to request a seizure, it is sufficient to allege the existence of one of these maritime credits, without initially needing to prove its existence or amount, greatly facilitating the rapid adoption of precautionary measures.
Limitations on Seizable Ships
CEP 99 introduces certain limitations regarding the ships that can be subject to arrest. Generally, only the ship to which the maritime credit refers (known as the “offending ship”) or any other ship owned by the debtor can be seized. If the debtor is not the owner of the ship, the seizure will only be possible if the claimed credit has privileged status, is secured by a maritime mortgage, or pertains to the ownership or possession of the ship.
Application and Jurisdiction
To obtain a seizure, the creditor must submit their request to the competent Spanish courts, which are those of the port where the ship is located or expected to arrive. In certain cases, it is allowed to record the seizure in the Registry of Movable Property as an alternative to the physical immobilization of the ship.
Creditor’s Bond
A crucial aspect of the process is the creditor’s obligation to provide a bond to cover any potential damages that the seizure may cause. This bond acts as a counterbalance to the ease of obtaining a seizure, protecting the debtor from unjustified or excessive seizures.
Debtor’s Options after Seizure
Once the seizure is decreed, the debtor has several options:
- They may oppose the seizure by alleging non-compliance with the requirements set out in CEP 99.
- They may request the lifting of the seizure by providing sufficient security. This security allows the ship to be released and continue its commercial activities.
Jurisdiction for the Main Dispute
A particularly relevant aspect for international creditors is the issue of jurisdiction for resolving the main dispute. CEP 99 establishes as a general rule that the court that orders the seizure will have jurisdiction to decide the main claim, unless there is an agreement between the parties to submit the dispute to another forum or arbitration. This forum arresti provision can be very advantageous for creditors, allowing them to litigate in the jurisdiction where the seizure was enforced.
Practical Example: Seizure of a Marshall Islands-flagged Ship for Debts Owed to a Greek Company
To better illustrate how the system works, let’s consider the following scenario:
A Marshall Islands-flagged ship is docked in the port of Barcelona. A Greek company that carried out repairs on the ship a few months ago has not received payment for its services. The Greek company wishes to seize the ship in Spain to secure payment of its debt.
Step 1: Identification of Maritime Credit
In this case, the Greek company’s credit falls squarely within the category of “construction, repair, equipment, or dry dock expenses for the ship” (Article 1.1(l) of CEP 99). Therefore, it is a valid maritime credit for requesting the seizure.
Step 2: Request for Seizure
The Greek company can submit a seizure request to the commercial courts of Barcelona, alleging the existence of the maritime credit for the repairs carried out. At this stage, there is no need to prove the exact existence or amount of the credit, only to allege its existence and the cause behind it.
Step 3: Jurisdiction and Application of the Convention
Although the ship flies the Marshall Islands flag and the creditor is Greek, Spanish courts are competent to decree the seizure because the ship is located in a Spanish port. CEP 99 applies regardless of the ship’s flag.
Step 4: Creditor’s Bond
The court will require the Greek company to provide a bond to cover any potential damages and losses the seizure may cause if it turns out to be unjustified. The amount of this bond will be determined by the judge.
Step 5: Seizure Decree
If all requirements are met, the judge will decree the seizure of the ship, resulting in its immobilization in the port of Barcelona.
Step 6: Debtor’s Options
The ship’s owner may:
- Oppose the seizure by arguing that the requirements of CEP 99 have not been met.
- Provide a guarantee (for example, a bank guarantee) to release the ship.
Step 7: Main Proceedings
The Greek company will need to initiate the main proceedings (the claim for the debt) within the time determined by the judge. In principle, Spanish courts will have jurisdiction to handle this procedure unless there is a prior agreement for submission to other courts or arbitration. For instance, if a contract had been signed between the two companies expressly submitting to the jurisdiction of Greek courts, those courts would have exclusive jurisdiction over the main dispute.
Conclusion
The example illustrates how the preventive seizure of ships in Spain, based on CEP 99, provides an effective tool for international creditors to secure their maritime credits. The broad concept of maritime credit and the relative ease of obtaining a seizure (without exhaustive initial proof) make it an attractive option for many creditors.
However, creditors must be aware of the system’s requirements and limitations, as well as the need to act quickly and seek specialized legal advice. Preventive ship seizure in Spain can be a very effective strategy for debt recovery in the complex world of international maritime trade, provided it is used appropriately and responsibly.
If you need specialized advice on executing a preventive ship seizure or any other aspect of maritime law, Navas&Cusí has a team of experts to guide you every step of the way. Consult with maritime lawyers to ensure the success of your credit recovery efforts.
