Ship arrest the Baltic way

Estonia

TALLINN, Estonia's main seaport, has experienced considerable growth in the transit of cargo since 1990. Estonia has ratified the 1999 ship arrest convention and incorporated its principles into its national legislation. The legislation in question is the Law of Property of Ships and the Code of Civil Proceedings. Today, Estonia's courts and bailiffs have extensive experience in arresting ships.

The presence of a ship in Estonian territorial waters is sufficient to found jurisdiction in Estonia. An application for ship arrest, as a tool to secure the claim, should be presented to the court which, according to jurisdiction rules, will rule over the principal claims.

The Law of Property of Ships is responsible for determining the meaning of a maritime claim and states that ship may be arrested to secure a maritime claim only. It is worth noting that maritime claims in Estonia have a much wider meaning than in the conventions mentioned above.

If the court orders the arrest of a ship as a provisional security measure before the principal claim is submitted to the court, the principal claim must be submitted within thirty days. Failure to submit the principal claim in time will result in the interim security measure being repealed.

While deciding over a claim involving the arrest of a ship, the court may require the plaintiff to submit security to cover any losses the defendant may face in relation to the arrest. Once the ruling of the court has entered into force, if the principal claim is declined the defendant has the right to claim for damage incurred as a result of the unjustified arrest.

Courts must issue their ruling in connection with a claim involving the arrest of a ship not later than the day after they receive the claim from the plaintiff. The court can issue its ruling without informing the defendant or any other interested parties. Appeals against the ruling can be submitted but will not suspend the enforcement of the ruling.

The court's ruling to arrest a ship has to be enforced quickly. The bailiff's office, having received the ruling, must start proceedings immediately. It should be noted that the court's ruling does not apply to the cargo of the ship. The arrest of a ship registered in Estonia is enforced by entering the respective notes into the ship register and appointing someone to be responsible for the ship's maintenance. Arresting foreign ships, however, involves presenting an Act of Arrest to the port authorities.

Upon application by the defendant, the court may decide - but is not obliged - to lift the arrest of the ship subject to the provision of suitable security, such as a deposit or bank guarantee. No release from arrest may occur if the plaintiff is claiming ownership of the ship or is in dispute with the owners over the use of the ship. If the parties are unable to agree on the security, the court may have to decide this.

Any document of foreign origin submitted to the court must be translated and, in some cases, legalised. Documents should also be originals or certified copies, except in urgent cases when it is possible to submit documents as originals after initially submitting copies only.

Latvia

Riga, Ventspils and Liepaja are Latvia's main seaports. As a party to the Brussels arrest convention of 1952, the rules of which have been incorporated into the Maritime Code of Latvia, Latvia has a good legal framework when it comes to ship arrests. However, successful arrests sometimes face procedural difficulties as defined in the Civil Procedure Law.

As in Estonia and Lithuania, the presence of a ship in territorial waters is enough to establish jurisdiction in Latvia. An application for ship arrest as a tool to secure a claim must be presented to the court with authority over the principal claims. However, if the value of the claim exceeds Lats 30,000 (about $50,000), either Liepaja (for the ports of Ventspils and Liepaja) or Riga's district courts will have jurisdiction over the principal claims and any claim on security measure such as arrest.

The Civil Procedure Law establishes that the arrest of assets belonging to and in possession of the defendant or other persons is one of the measures available for securing the principal claim. However, difficulties may arise when the dispute is subject to foreign law and/or court or arbitration proceedings.

If the court authorises the arrest of a ship as a provisional security measure before the principal claim has been submitted to the court, it must specify the term for submitting the principal claim. This varies between two weeks and one month. However, the plaintiff submitting a claim involving the arrest of a ship may be required to prove that, in the absence of the arrest, enforcing the court's judgement may be burdensome or even impossible.

Security and arrest order requirements in Latvia are the same as those in Estonia. However, in Latvia the bailiff must also take measures to find the debtor's other property.

Upon application by the defendant, the court may decide - but again is not obliged - to lift the arrest of the ship subject to a security deposit. This must be paid in local currency into the bailiff's account, where it must remain interest-free until the case is resolved.

The practical difficulties related to ship arrest are connected with getting the power of attorney duly legalised in good time. Latvia's arrest procedures remain unpredictable due to the courts' limited experience of applying the Civil Procedure Law jointly with the arrest convention. But a new maritime code is in the pipeline and amendments to the Civil Procedure Law may provide for the possibility of weekend arrests.

Lithuania

Klaipeda is Lithuania's main seaport. Of all the Baltic states, Lithuania is the most difficult country in which to enforce a ship arrest. Although it may ratify it soon, Lithuania is not a party to the Brussels arrest convention of 1952. Ship arrest in Lithuania, therefore, is regulated by the Code on Civil Proceedings.

The rules regarding Lithuania as a jurisdiction for ship arrest are the same as those for Estonia and Latvia. However, in Lithuania, if the principal claim exceeds Litas 100,000 (about $25,000), the Klaipeda District Court has jurisdiction over the principal claim and the claim on security measure, e.g., arrest.

Lithuania's Code on Civil Proceedings states that the arrest of assets belonging to, and in possession of, the defendant or other persons, is one of the measures available for securing the principal claim. In addition, the code limits the defendant's ability to perform certain acts, and other people's ability to transfer the defendant's property or perform their obligations towards the defendant.

If the court applies the arrest as a provisional security measure before the principal claim has been submitted to the court, the Lithuanian court must specify the term for submitting the principal claim. This must not exceed fourteen days. If the principal claim is not submitted within the time allowed, the interim security measure will be repealed.

The plaintiff is obliged to prove that, in the absence of the arrest, enforcing the court's judgement may be burdensome or impossible. The plaintiff submitting the statement of claim must also present evidence to certify certain threats to its interests. The plaintiff must also indicate to the courts the reasons why the principal claim was not submitted along with the provisional security measure.

The rules regarding security, the issuing of the arrest order, the role of the bailiff's office and the lifting of the arrest are the same in Lithuania as in Latvia.

There are, however, certain procedural difficulties that may have to be overcome in Lithuania. For example, the power of attorney has to be legalised if issued in a foreign country. Difficulties may also arise in the delivery of court notifications to the foreign claimant and/or defendant. Although this has to be done through the ministry of justice in Lithuania, the inconsistency of the courts on the arrest of ships can make this procedure unpredictable.