Turkish arrest
SURROUNDED by the Aegean, Mediterranean and Black Seas, Turkey boasts a multitude of ports and, for maritime claimants, the facility to provide security for claims through ship arrest. While Turkey is a jurisdiction which has some of the features with which maritime lawyers will already be familiar from their experience of operating in other countries, what follows is a more detailed insight into the procedural requirements for ship arrest in Turkey.
Turkish law permits the arrest of ships calling at Turkish ports by the implementation of a precautionary attachment over the ship. The precautionary attachment may be applied for in a Turkish Court and, if a favourable decision is granted by the court, the arrest may be effected provided that counter-security at the level stipulated by the court is deposited. These are the basic features of the arrest procedure.
The cause of action need not necessarily be founded upon a maritime claim i.e., security for any debt accruing to the shipowning entity may be secured by arrest of the ship. Neither need the debt be one which gives rise to a maritime lien right under Turkish law, although this can present the claimant with additional rights when seeking security. Turkish law does not permit sistership arrest in the sense of arrest of associated ships. In other words, only ships in the registered ownership of the debtor may be arrested in Turkey. Turkish law does not afford any remedies by ‘piercing the corporate veil’ and naturally this has negative implications for claimants seeking to attach fleet vessels all owned by single-asset companies.
The Turkish courts do not implement any determinable standard of proof when considering precautionary attachment applications, although the persuasive burden is rather high and the court will need to be more than adequately satisfied of the existence of the claim and the need for the ship to be arrested. The strength of the claimant’s case will also be reflected in the level of counter-security required by the court.
The security amount is entirely in the discretion of the judge and may range from as low as fifteen per cent up to the full amount of the claim, depending on the strength of the evidence brought by the claimant. Most commonly, security is required in the region of between twenty and forty per cent. The requirement of counter-security is a mechanism to provide security to the vessel interests in the event the arrest should later be adjudged unfounded – hence the varying levels of security, depending on the strength of the claim.
Once the counter-security is deposited, the ship may be arrested, provided written evidence of the filing of the main action is presented before the Turkish court within the aforementioned ten-day period. The courts in Turkey require that the counter-security be in the form of either a cash deposit or a bank letter of guarantee issued by a first-class Turkish bank. The submission of a guarantee effectively replaces the arrested ship as the security, and allows the ship to proceed from port.
Preparation of the court application is subject to the requirement that the claimant issue a power of attorney and the evidence be translated into Turkish. The power of attorney has to be notarised and legalised in the country of issuance but, in very urgent cases, things are usually able to proceed, initially, with a faxed copy.
If the precautionary attachment decision is granted by the court, the claimant must do two things;
1. submit the counter-security stipulated by the court, and;
2. commence the principal action on the merits of the claim before the authorised court or arbitral forum within ten days.
The precautionary attachment will automatically lapse in the event the main action is not commenced on time. It follows, therefore, that foreign (i.e., non-Turkish) jurisdiction clauses are not a bar to arrest for security in Turkey.
Removal of the arrest requires vessel interests to submit security for the claim to the court. Again, this may take the form of either a Turkish bank guarantee or a cash deposit. P&I club letters of guarantee are not accepted by the Turkish courts. The precautionary attachment decision can also be challenged by vessel interests (either before or after submission of security) and the court may overturn its decision if persuaded to do so. Should an action of wrongful arrest follow, the claimant’s counter-guarantee will provide security for the vessel’s claim.
A frequently asked (and much debated) question relates to the arrest of vessels passing in transit through the Turkish straits at Istanbul and the Dardanelles. Much has been written on this subject, and those arguing against the lawfulness of this practice tend to cite the Montreaux Convention of 1936. That convention, which is still in force, was interpreted by the Turkish Court of Appeal in 2001. The court did not draw clear conclusions on the matter but did seem to imply that the concept of ‘transit’ (as per the convention) must be qualified with the requirement that it also be ‘innocent’. It is, however, evident that the unclear situation seems to have served to remove some fears the Turkish judiciary may have had in permitting the arrest of vessels transiting the Turkish straits. Arrest of transiting vessels, therefore, cannot be ruled out, and sample court decisions in favour of such do exist.
Security arrests in Turkey can be effective tools if the claim can be adequately substantiated and if the claimant is able to submit necessary counter-security. If the claimant is successful on the merits through say, a London arbitration, the arbitration award may be enforced in Turkey via a separate judicial procedure for enforcement. Turkey is a signatory to the New York Convention in this respect, and actions for enforcement of foreign arbitration awards are commonplace.