Re-arrest of ship was necessary and lawful
A shipping company and a shipyard chose to arrest two ships as security for their claims due to disagreements with the shipowner. Initially, they arrested one ship, but it was not certain that the value of this ship could secure the entire claim. Then, another ship was arrested. The Maritime and Commercial High Court found that the arrest of both vessels was legal.
A shipowner entered into an agreement with a shipping company and a repair shipyard to ready two ships for towage. The ships were going to be towed to Turkey, and the preparations were required to do so. The owner disagreed with the shipping company and the shipyard about the cost of the works and refused to pay the costs demanded by the shipyard. To obtain security for their claim, the shipyard and the shipping company then arrested one of the ships.
The owner did not respond to the arrest and continued making the other ship ready. The shipping company and the shipyard became concerned that the arrested ship would not provide sufficient security for their claim. They thought that it was unlikely that the sale price at foreclosure would cover the claim for the work. Therefore, they proceeded with the arrest of the other ship.
The shipping company and the shipyard sued the shipowner, demanding payment for the work they had done. Conversely, the shipowner argued that the arrest of the second ship was unlawful and claimed compensation for the loss suffered as a result of the arrest. The owner also claimed that the shipping company and the shipyard’s claim was too high. They argued that this was because the owner rather than the shipyard had done some of the work.
The Maritime and Commercial High Court: Special grounds for arrest
The Court found that there were grounds for arrest under Section 93(5) of the Danish Merchant Shipping Act. It was considered doubtful that the first ship represented sufficient value to cover the claim. Therefore, the second arrest was lawful, and the Court also rejected the owner’s claim for compensation. However, the Court also found that the shipping company and the shipyard had not invoiced correctly and assessed the claim for the work at a lower amount.
IUNO's opinion
This is one of the rare cases where two arrests for the same claim are legal. Generally, only one arrest is permitted to obtain security. There must be good reasons for a new arrest to be legal. The case reminds us that such reasons may exist and then a new arrest is legal.
IUNO recommends keeping this in mind both as a shipowner – you are not always sure that a new arrest is not possible – and as a claimant, who is entitled to arrest until full security is obtained.
[The Maritime and Commercial High Court’s ruling in case BS-40562/2020-SHR of 23 August 2021]
A shipowner entered into an agreement with a shipping company and a repair shipyard to ready two ships for towage. The ships were going to be towed to Turkey, and the preparations were required to do so. The owner disagreed with the shipping company and the shipyard about the cost of the works and refused to pay the costs demanded by the shipyard. To obtain security for their claim, the shipyard and the shipping company then arrested one of the ships.
The owner did not respond to the arrest and continued making the other ship ready. The shipping company and the shipyard became concerned that the arrested ship would not provide sufficient security for their claim. They thought that it was unlikely that the sale price at foreclosure would cover the claim for the work. Therefore, they proceeded with the arrest of the other ship.
The shipping company and the shipyard sued the shipowner, demanding payment for the work they had done. Conversely, the shipowner argued that the arrest of the second ship was unlawful and claimed compensation for the loss suffered as a result of the arrest. The owner also claimed that the shipping company and the shipyard’s claim was too high. They argued that this was because the owner rather than the shipyard had done some of the work.
The Maritime and Commercial High Court: Special grounds for arrest
The Court found that there were grounds for arrest under Section 93(5) of the Danish Merchant Shipping Act. It was considered doubtful that the first ship represented sufficient value to cover the claim. Therefore, the second arrest was lawful, and the Court also rejected the owner’s claim for compensation. However, the Court also found that the shipping company and the shipyard had not invoiced correctly and assessed the claim for the work at a lower amount.
IUNO's opinion
This is one of the rare cases where two arrests for the same claim are legal. Generally, only one arrest is permitted to obtain security. There must be good reasons for a new arrest to be legal. The case reminds us that such reasons may exist and then a new arrest is legal.
IUNO recommends keeping this in mind both as a shipowner – you are not always sure that a new arrest is not possible – and as a claimant, who is entitled to arrest until full security is obtained.
[The Maritime and Commercial High Court’s ruling in case BS-40562/2020-SHR of 23 August 2021]
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