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25 February 2015
There are no specific regulations in Chile regarding the nature of the security that may be requested by claimants on the arrest of a vessel. For a long time, protection and indemnity insurance (P&I) club letters of undertaking were accepted only if agreed by the arrest petitioner, mainly due to the fact that the Chilean courts were not accustomed to them. However, in a recent arrest following a pollution case in Quintero Bay, the court hearing the arrest accepted a letter of undertaking with no prior approval from the arrest petitioner.
The regulations applicable to ship arrest are found in the Code of Commerce,(1) as well as in the common rules of the Code of Civil Procedure,(2) which are secondary to the Code of Commerce. An arrest regulated under the Code of Commerce is triggered in cases where the arrest petitioner has one or more maritime privileges, as listed in Articles 844 to 846.
The arrest of a vessel begins with filing an arrest petition at a competent court. The complaint must comply with the following requirements:
As soon as the requested security has been provided, the court must lift the arrest without further proceedings. The arrest will also be lifted if the parties are in agreement on such matters. The court may also decide upon the suitability of the security that the respondent offers or to process this matter separately.
There are no specific rules in this context, so a court may order that a bank guarantee be submitted, but it may also accept a cash deposit or otherwise. As regards P&I club letters of undertaking, for a long time they were accepted only if agreed by the parties. The security may not exceed the value of the detained vessel. Such security replaces the vessel as the exclusive object of the respective privilege.
In a recent arrest relating to an alleged claim for damages arising from pollution at Quintero Bay, the court of Quintero accepted a P&I club letter of undertaking without the agreement of the arrest petitioner. This is a positive development, as Chilean courts seem to finally be aligned with international practice, whereby a letter of undertaking is accepted by the courts as sufficient security.
For further information on this topic please contact Ricardo Rozas at JJR Abogados by telephone (+56 2 580 9300), fax (+56 2 580 9311) or email (email@example.com). The JJR Abogados website can be accessed at www.jjr.cl.
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