Changes introduced in the Arrest Convention 1999
Bob Deering and Jonathan Reese, writing in the Ince & Co Shipping E-Brief remind us that the 1999 Arrest Convention came into force on 14th September 2011, having finally been ratified by the requisite ten countries. They remark that this process took over 12 years and reflects the lukewarm reception that the Convention has received from the international shipping community.
The 1999 Arrest Convention contains some notable changes to the 1952 Arrest Convention. Firstly, the list of claims for which arrest is possible has been significantly expanded. Under the 1952 Convention there are 17 categories of claim which can give rise to a right of arrest. Under the 1999 Convention there are 22 categories, with bottomry having been removed and 6 new heads of arrest having been added. Whilst the list in the 1952 Convention is closed, the list in the 1999 Convention contains one category (Article 1(d) - environmental damage) which is somewhat open-ended. In view of the difficulties inherent in defining all possible forms of environmental damage and related costs, this subparagraph lists examples of the type of damage which it envisages and concludes with the open words “…and damage, costs, or loss of a similar nature…”.
Under the 1999 Arrest Convention, in addition to the claims listed in the 1952 Arrest Convention, it is possible to arrest ships in respect of:
damage or threat of damage to the environment
wreck removal
port, canal and pilotage dues
unpaid insurance premiums
unpaid commissions, brokerages and agency fees
disputes arising from contracts for sale of the ship
Unlike the 1952 Convention, the 1999 Arrest Convention allows claimants multiple opportunities to secure their claims. Under Article 5, a claimant can re-arrest a ship after it has been released, and has the option of arresting multiple ships, in order to top up the security for his claim. The right to re-arrest or to arrest multiple vessels arises only when:
the security already provided is inadequate (in the case of re-arrests, the security can never exceed the value of the vessel in question); or
the person who provides the security is not, or is unlikely to be able to, fulfil its obligations; or
the ship or the original security was released either with the consent of the claimant acting on reasonable grounds or because he could not by taking reasonable steps prevent the release.
These are important provisions. They are not, therefore, something which a claimant is likely to be willing to contract out of lightly. The traditional wording of letters of undertaking would remove these rights from the claimant's armoury. It seems likely that claimants arresting in jurisdictions applying the 1999 Arrest Convention will seek to reserve their rights under Article 5 in any letters of undertaking or other agreements relating to the release of a vessel. It is difficult to see how a defendant, when providing security in order to have their vessel released, can reasonably refuse a claimant the right to subsequently top up this security under the circumstances envisaged by the Convention. In the absence of agreement between the parties as to the adequacy of the security provided, the Courts in the arresting jurisdiction shall determine the nature and amount of security required for the release of the ship. In the event of a disagreement between the parties regarding the right to further, future arrests, the Courts are likely to favour the claimants.