How to collect your money in Spain

SPAIN is almost like an island. It is in fact a peninsula. The strategic ports of Ceuta, Algeciras, Las Palmas and Tenerife function as gas stations for the majority of the world fleet which one day or another passes through Spanish territorial waters. In addition there are ports like Bilbao, Barcelona, Valencia and Vigo at which many vessels call to load and unload cargo.

Spain has ratified most of the international conventions on ship arrest and on arbitration. It is easier to arrest a ship, a cargo or bunkers than it is to arrest a house or a car.

The Internal Law of April 8, 1967, which implemented the Brussels Convention of 1952, says, "It is enough to allege the right of the credit claimed and the cause which motivates it". So it is not necessary to produce any documentary or evidential requirements at the first arrest stage.

It is necessary, as a condition to arrest, to give counter-security. The counter-security is fixed by the court in ex parte proceedings. The criterion governing the counter-security is the vessels costs during the three or four days which it typically takes to obtain a bank guarantee or to oppose the court arrest order. In practice, it is better to offer a guarantee covering the cost of these days, but the most recent trend is for the judge to fix on an amount which is double this cost, rather than agreeing a percentage of the amount claimed, as in the past.

There are no court costs involved. The only thing to pay is the lawyers' fees, which can now be freely negotiated following the decision of the Court of Competence that there should be no minimum fee, as argued by the lawyers, and that fees can be agreed between the client and the lawyer.

There is no marine marshall. The court advises the port authority and the pilots that the vessel is under arrest. In theory, the vessel can leave, but the master would be committing a criminal offence in allowing it to do so. Meanwhile, the costs of the arrest can be recovered if the merits of the claim are accepted.

A court of first instance at the place where the vessel is to be arrested has the power to grant the order. There is no admiralty court specialised in maritime law. The court system is available day and night, including during holidays. It doesn't matter if the courts are specialised or not.

A vessel can be arrested at any port in Spain within two or three hours of the documents being put in the hands of the lawyer. When asking the court for an arrest order, it is also possible to give the court a suitably worded guarantee to lift the arrest where relevant.

It is possible to claim in US dollars or in other currencies. But the currency exchange rate must be produced in court in order to provide an indication of the value in pesetas. It is possible to arrest a sister vessel in associated ownership, and to pierce the proverbial corporate veil in cases of fraud.

In the big cities like Algeciras, Barcelona, Bilbao and Valencia, there are numerous courts of first instance. In Barcelona alone, for example, there are more than sixty. The first step is to get your case allocated to one of these courts. This takes just an hour or two. Once the case is allocated, you have to negotiate with the judge over the amount of the counter-security.

The guarantee can be posted in the form of a bank guarantee or in cash, payable to the court's bank account at the Banco Bilbao Vizcaya, which is the only bank in which all the courts have an account. Once the amount of the counter-security is known, it usually takes an hour or more to get it into the bank. As soon as the deposit is received, you can obtain the order of arrest from the court.

A vessel can be arrested in any port in Spain within two to three hours of the documents being in the hands of the lawyer

The court order itself has to be notified to the Capitania Maritima and the master. This takes a further hour. Capitania Maritima closes at 1400hrs. The courts close at 1500hrs. So, to obtain a court order of arrest in a single morning, you have to be pretty athletic.

If the Spanish courts have jurisdiction on the merits of the case, the dispute will be heard in the court of first instance within a year. But it varies according to the court's workload. Any appeal should be heard within a further year, and any supreme court appeal within another three years.

So a final judgment may take between four and seven years. This is a serious problem, notwithstanding the fact that interest rates of just seven per cent can be obtained on the amount at issue. So it is wise to include an arbitration clause which avoids the need to litigate in Spain. An arbitration can be arranged within two or three months, and any amount awarded at arbitration can be collected directly from the bond posted in Spain to lift the arrest, so long as this has been agreed in the bank guarantee. If no such arrangement has been made, you are looking at a further delay of nine months/one year.

In summary, Spain is a forum shopper's paradise for obtaining security for arbitration through the arrest of vessels, cargoes or bunkers within the jurisdiction of its courts.