Changing arrest

Ann Fenech, partner at Fenech & Fenech Advocates, looks at Malta’s ship arrest procedure following its accession to the EU earlier this year

WITH Malta’s accession to the European Union on May 1, 2004, the regime governing ship arrest has remained essentially unchanged provided that the owner of the vessel is not domiciled in another European member state.

If the owner is domiciled in a European member state then EC regulation 44/2001 applies, making it obligatory, with some exceptions, for such a person, corporate or physical, to be sued before the courts of his domicile. As ship arrest and jurisdiction are closely linked in Malta, the arrest of vessels belonging to member state domiciliaries now requires some specific attention.

If the owner of the vessel is not domiciled in a member state, then it remains possible to ‘arrest’ a vessel in Malta in support of both in rem and in personam proceedings, provided the Maltese courts have jurisdiction over the merits. (The word ‘arrest’ is being used here for the purposes of clarity because, in reality, we do not have a warrant of arrest as such in Malta, but we achieve the same result by issuing a warrant of seizure and warrant of impediment of departure.)

As far as in rem claims are concerned, the grounds upon which the court will exercise jurisdiction, and therefore the grounds upon which it is possible to ‘arrest’ a vessel, are still regulated by the British Admiralty Court Acts of 1840 and 1860. Malta is not a signatory to either of the two arrest conventions, so the grounds for ‘arresting’ a vessel in support of in rem proceedings are limited to the few claims listed in the above-mentioned laws.

With regard to in personam claims, Malta’s courts may exercise jurisdiction over those claims contained in Article 742 of the country’s Code of Organisation and Civil Procedure. If the courts have jurisdiction then it is possible to arrest a vessel as security for the claim as you would seize the defendant’s bank account. A comparable procedure in the English system would be the old Mareva Injunction, or Freezing Order.

The above scenario may change if the owner of the vessel which is the subject of ‘arrest’ is domiciled in another member state. In that case, it is arguable that the Brussels Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters 1968, which was turned into a regulation and therefore applicable to Malta on Malta’s accession in May, kicks in.

The basic tenet of the convention and of the regulation is that a defendant domiciled in a member state may only be sued in his domicile. The first questions which arise - and which arose in the UK when it passed the Civil Jurisdiction and Judgements Act in 1982 incorporating the Brussels Convention - is, “Does the convention apply to ships at all? Does a ship in in rem proceedings have a ‘domicile’?”

If a ship is not capable of having a domicile then the convention simply does not apply. The English courts refrained from taking the easy way out and ruled that a ship does not have a domicile and therefore the convention is inapplicable. Instead the courts concluded that the convention did not apply to maritime claims because Article 57 of the same convention states that it does not affect any convention to which the contracting states were parties, which in relation to particular matters governed jurisdiction or the recognition and enforcement of judgements.

As England was a signatory to the Arrest Convention of 1952, granting jurisdiction over maritime claims to those states in which an arrest was effected in accordance with the convention, the Brussels convention on jurisdiction did not create this type of problem.

Malta, however, is not yet a signatory to the 1952 Arrest Convention. Given that its domestic law allows for ‘arrest’ only if the courts have jurisdiction over the merits, it may at first give the impression that if the Maltese courts are unable to exercise jurisdiction over defendants who are not domiciled there, then we cannot effect the arrest of such ships belonging to domiciliaries of other member states.

On closer consideration of the convention, it becomes clear, however, that Article 31 of the regulation would allow the Maltese courts to permit an arrest in Malta even if the merits of the case are heard before the court of the defendant’s domicile. Article 31, in fact, allows any application for protective measures to be taken (such as an arrest) even if, according to the regulation, the courts of another member state have jurisdiction over the merits.

This seems to offer at least an interim solution until Malta adopts the Arrest Convention of 1952, which, once adopted, would enable a plaintiff to arrest and commence proceedings on the merits in Malta irrespective of the defendants’ domicile, apart from enabling the Maltese courts to exercise jurisdiction over many more claims than at present.