When not to arrest

Legal background

THE Estonian legal system is a strange hybrid of two conflicting legal doctrines. Its latest social and legal history reflects five decades of Soviet rule and, whilst the Soviet economy made huge strides towards industrialisation, and while the Soviet commercial fleet kept growing in tonnage, this was never adequately matched by development of the Soviet jurisprudence. This was due to the communist doctrine of the time, which rejected the existence of private property in any form.

Faced with such political pre-conditions, it became a major obstacle for the Soviet jurisprudence to keep in line with developments in trade and commercial practices. Modern Estonian maritime law also reflects this uneasy amalgam, although the marriage of the Germanic-based civil law and the Soviet-era maritime law was rather an arranged union forged by the Estonian Commercial Maritime Code 1991, largely based on the Soviet Union Commercial Maritime Code.

Under the Soviet legal concept, disputes with a so-called international element were subjected to the exclusive jurisdiction of the supreme court. For example, where there was a dispute dealing with a collision of a Soviet ship with a foreign vessel in Soviet waters, the jurisdiction was provided by law to the supreme court of the specific region where the casualty arose and not to the court of first instance which had jurisdiction for that area. This underlying legal practice left local judges of the courts of general jurisdiction without experience to consider maritime law-related issues.

The landmark points in Estonian national maritime history are 1998, when the Maritime Property Act and the Vessel Right of Flag and Vessel Registry Act were enacted, and 2001 when, in a bid to promote national maritime law, Estonia ratified the International Convention on the Arrest of Ships.

Procedural issues

Although the International Convention on the Arrest of Ships 1999 is a good attempt to achieve uniformity in the rules governing the arrest of ships, the latter still vary considerably in each jurisdiction. As a result, a number of focal points need to be taken into consideration.

Firstly, Estonia is a civil law jurisdiction, although some insignificant elements of common law are present. Secondly, Estonian law provides for several procedures that a claimant may follow in order to procure arrest of a vessel. Finally, but most importantly, in order for the arrest convention to apply, it must be incorporated into Estonian law. Accordingly, parliament modified the Maritime Property Act, which provided an exhaustive lists of cases in which the vessel may be arrested, but lacked adequate regulation in general.

The arrest of a vessel serves both as a provisional remedy and as security for the claim. The vessel remains arrested until final judgement when it may be either released or sold for the obligations of the debtor through the enforcement procedure. This approach allows enhanced protection of the interests of the vessel’s owner but makes sale of the vessel a time-consuming procedure.

In addition, procedural rules may also impede the sale. To begin with, the relevant provision of the Maritime Property Act states that the vessel may be arrested for a maritime claim. For arrest of the vessel as collateral for a court claim, provisions of the civil procedural law shall apply. As no competitive provisions for arrest of the vessel for maritime claims has been adopted, it appears that the arrest as collateral for the court claim in civil procedure is the only applicable procedure for the maritime claim arrest.

To fully understand the complexity of applying the named procedures for the protection of maritime claims, it is necessary to examine the additional requirements for arresting a vessel as specified by the Civil Procedures Act currently in force. There are three important conditions. Firstly, a request to arrest a vessel must be presented to the court and accompanied by a statement of claim. Alternatively, a request may be filed relating to the claim, providing, however, that the claim itself is lodged within one month of submitting the request. This aspect is crucial as current Estonian law does not recognise a request for arrest as an independent legal instrument, but rather views it as a secondary method to secure the claim. The arrest would, therefore, incur considerable costs as submission of the claim requires payment of the state fee, which is dependant upon the amount of the claim. The state fee shall, in most cases, be recovered from the debtor, which presupposes that a final court decision must be granted.

The second point to be taken into consideration is that the claim is to be made against the owner, bareboat charterer or operator of the vessel, who must be clearly identified. The problem with serving proceedings in Estonia is that delivery of such orders to foreign subjects is notoriously difficult and failure to deliver the writ will make both the claim and the motion for arrest subject to immediate dismissal.

Thirdly, if after careful investigation the claimant decides to proceed with the arrest, there is another much more obvious challenge to be overcome. When considering arrests, the court will take into account the exact amount of the claim and it can be difficult to satisfy the Estonian court in this respect. Current court practice is that in order for the court to grant the arrest the amount of the claim must be in proportion to the value of the vessel to be arrested.

Another much more important obstacle to overcome is the attitude of judges towards maritime claims. The apparent confusion among judges handling maritime claims is due to the lack of any substantial practical experience in hearing maritime law. It could also be argued that Estonian judges, claiming to be overworked and underpaid, refrain from attempting to investigate the relevant international treaties, customs and awards granted by overseas courts and arbitrators. Not surprisingly, the common outcome is that judges are very reluctant to handle maritime law disputes. In practice, this means that most of the requests for vessel arrest on the basis of maritime claims are extraordinarily time-consuming and often unsuccessful.

Current Estonian law offers little, if any, specific regulations on vessel arrests on the basis of maritime claims. Perhaps a more serious obstacle is the unwillingness of judges to deal with maritime law matters. As a result, enforcement of maritime claims in Estonia has only limited practical application and the effectiveness of judicial and legislative efforts to overcome the challenges of maritime claims remains uncertain.