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29 April 2009
The ongoing economic crisis has brought new topics before Belgian arrest judges and is giving rise to significant discussions about the influence of insolvency proceedings on ship arrests.
The effect of foreign insolvency proceedings on a Belgian ship arrest was the subject of an Antwerp Court of Appeal decision, which was issued on March 4 2009 in the MS Hannes C Case. This decision has not been appealed.
Belgian ship arrest law is based on the Brussels Arrest Convention 1952 and its rules have been incorporated into the Judicial Code.(1) The EU Insolvency Regulation (1346/2000) applies to matters relating to EU-based bankrupt companies. However, the United Nations Commission on International Trade Law Model Law on Cross-Border Insolvency does not apply in Belgium and in this case Belgium's provisions on international private law were significant.
The ship in question was flying a flag of convenience, but was ultimately owned by a German shipowner. It was arrested in Antwerp for a maritime claim which fell under the 1952 convention, but was not a privileged claim under the Brussels Convention on Maritime Liens and Mortgages 1926. After the arrest, the German shipowner was declared bankrupt by a German court in proceedings which fell within the scope of the regulation. The liquidator appointed by the German court considered that on the basis of Article 5 of the regulation and as a result of the German bankruptcy order, all arrests were automatically lifted. Having urged the arrestors to lift the arrests, he claimed that the Belgian authorities were required to arrange for the vessel to sail. The arrestors opposed the claim, which they considered would violate their rights, and maintained that only the arrest judge who has granted leave to arrest can decide to withdraw it.
On an ex parte application, the president of the Commercial Court and subsequently the Antwerp Court of Appeal ordered the government to arrange for the vessel to sail.
However, almost immediately the Antwerp arrest judge froze the enforcement of the ex parte orders until all of the parties involved could be heard in the opposition proceedings brought by the arrestors. The judge also held that that the German liquidator should have brought a dispute in relation to the ship arrest before the appropriate forum, which was that of the judge who had granted leave to arrest.
Appeal Court Decision
The appeal court reconsidered its earlier ex parte order in which it had stated that the vessel should be allowed to sail, whereupon the judge withdrew the order, stating that the liquidator should have seized the Commercial Court first.
The appeal court held that the right to arrest under the 1952 convention is considered a right in rem on the vessel, which results from the arrest and remains effective in respect of the vessel until the arrest is withdrawn.
Article 119, Section 2(1) of the Belgian International Private Law Code states that rights in rem in a debtor's movable goods that, at the time of the opening of the insolvency proceedings, are located in another jurisdiction must be judged on the basis of the law applicable to rights in rem. Therefore, under the 1952 convention this issue was a matter of Belgian law only.
For further information on this topic please contact Dirk Noels at Kegels & Co by telephone (+32 3 257 1771) or by fax (+32 3 257 1474) or by email (email@example.com).
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