Supreme Court permitted the arrest of a ship even though the owner was not liable for damages

The Port of Assens arrested a ship which had collided with the jetty in the Port of Assens and caused damage. The ship owner was of the opinion that the Port Authority was to cancel the arrest. The district court agreed. However, the High Court assessed that the Port Authority was entitled to arrest the ship for its claim against the charterer regardless of the shipowner's objection. The case was thereafter heard by the Supreme Court.

Provisions of the Merchant Shipping Act on the arrest of ships

The Danish Merchant Shipping Act permits the arrest of ships. Arrest implies that the ship is physically detained.

A ship cannot be arrested unless there is a maritime claim. The situations triggering a maritime claim include cases where the ship has damaged property or injured persons e.g. in a collision.

On the arrest of a ship, it is relevant to determine whether the ship owner is liable for the claim. In bare-boat chartering where the ship owner is rarely liable for damage caused by the ship, the Danish rules require security for the maritime claim in the ship, i.e. a maritime lien. In this case, it was consequently vital to the legality of the arrest that the Port of Assens had ensured that both conditions were met.

Special Danish rules

The reason why both the condition for a maritime claim and the condition for a maritime lien must be met when the ship owner is not liable for the claim is that Denmark has chosen to make more demands on the arrest of ships than those following from the International Convention Relating to the Arrest of Sea-Going Ships from 1952. According to the International Convention, ships can be arrested even in cases where the ship owner is not liable for damages. In Denmark, legislators have chosen to also demand that it must be possible to levy execution for the maritime claim. This makes it more difficult to arrest ships in Denmark as a creditor (in this case, the Port of Assens) must prove that both conditions are met.

The Danish demands also apply even though the legitimate party comes from a country which has adopted the International Convention Relating to the Arrest of Sea-Going Ships without a similar reservation.

Decision of the Supreme Court

After the district court and High Court hearings, leave was granted to appeal to the Supreme Court.

First, the Supreme Court decided that the ship owner was not liable to pay compensation for the damage to the jetty as the ship was chartered on bare-boat terms.

However, it was the assessment of the Supreme Court that there was a maritime claim because the charterer had collided with and damaged the port. Also, the Supreme Court found that the claim for damages was secured by a maritime lien because the damage to the port arose in direct connection with the operation of the ship. As the claim was thus a maritime claim and was also secured by a maritime lien, it was possible to arrest the ship even though the ship owner was not liable for the claim.

IUNO's opinion

The judgment shows how the conditions in the Danish Merchant Shipping Act are applied in practice

There are many advantages of arresting ships, but it is not risk free. If you arrest a ship and it later shows that you did not have a claim for damages, you must pay damages to the ship owner for his financial loss and for loss of his reputation. In this context, Danish liability for damages is stringent. In this type of cases, Denmark applies strict liability which means that there is liability even in the absence of mens rea or negligence.

If a claimant intends to arrest a ship, it is therefore important for the claimant to ensure that both the conditions for the award of damages to the person making the arrest and the conditions for arrest of the ship are met at the same time.

[Supreme Court judgment 37/2011 4 December 2012]