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30 April 2008
Maltese law reflects Malta’s history and is a combination of civil law and English statutory law. Malta is not a signatory to either the Arrest Convention of 1952 or the Arrest Convention of 1999. The arrest of ships is therefore governed entirely by domestic law.
In order for ships to be arrested in Malta the vessel must be present in Malta and the claim must exceed LM3,000. The vessel can be arrested to secure a claim in personam or a claim in rem. Therefore, grounds for arrest are equivalent to the grounds upon which Maltese courts exercise jurisdiction either in rem or in personam.
Courts can exercise jurisdiction in personam on the grounds contained in Section 742(1) of the Code of Organization and Civil Procedure. These grounds necessitate the presence of circumstances with a strong Maltese connection - for example, where Malta is the domicile, nationality or residence of one of the parties, or is the place where the contract was entered into or the obligation had to be carried out.
Until 2006 courts could exercise jurisdiction in rem on the grounds contained in the British Admiralty Court Acts of 1840 and 1861, which were still applicable in Malta. However, the claims contained in these acts were limited and suitable only for the time period in which the laws were drafted. The main disadvantage was the limited nature of the claims, which excluded:
With regard to ship supplies, these acts allowed claims for necessaries supplied to the vessel, but not general supplies and supplies which did not qualify as necessaries.
Over the years a number of pressure groups, including the local Maritime Law Association, have lobbied for this list to be updated and brought into line with the realities of today. Fortunately, the authorities were receptive and invited the groups to participate in the drafting of a new section in the Code of Organization and Civil Procedure, which would contain an extensive list of maritime claims and at the same time repeal the application of the Victorian acts.
Sources of Section 742B include:
In 2006 Act XIV/2006 was enacted, creating a new section in the Maltese Code of Organization and Civil Procedure.
According to Section 742B:
“Save as otherwise provided by law, the civil courts of Malta shall have jurisdiction in rem against ships or vessels in the following maritime claims”:
Apart from extending substantially the list of maritime claims provided for by the Code of Organization and Civil Procedure, a further introduction of Section 742 was Article 742(D), which deals specifically with the scenario of debts incurred by bareboat charterers.
Questions had previously arisen regarding whether one could arrest a vessel and commence an action in rem against a vessel for the debts incurred by its previous bareboat charterer. Allowing an arrest in such circumstances could lead to numerous unfair situations – for example, judgement against the vessel and the ultimate sale of the vessel to the detriment of the owner, the innocent party.
The law now provides that an action in rem or an arrest is permitted only if, at the time that the arrest or action is filed, the person who would have been liable in an action in personam at the time the cause of action arose is the owner or the bareboat charterer at the time when the action is instituted.
This regulation is necessary to maintain the balance between the interests of the claimants and the interests of the defendants. With a substantial increase in the number of maritime claims, it would have been wrong to have left this gap in the law.
Before 2006 it was not possible to effect sister ship arrests to secure in rem claims.
Act XIV/2006 made sister ship arrests possible. It is now possible to arrest any vessel other than the vessel which relates to the claim: “(b) any other vessel of which at the time when the action is brought the relevant person is the owner or beneficial owner as respects all shares in it.”
The mechanics of arrest are currently under review. However, until the new procedure is finalized, it is necessary to meet the following requirements:
In the absence of grounds to support an application seeking revocation of the warrants, the arrest can be lifted only by depositing the amount being claimed in court.
Revocation of arrest is permitted by application on the following grounds contained in Section 836 of the Code of Organization and Civil Procedure:
As a general rule, courts are cautious when ordering the lifting of warrants and therefore revoking arrests. It is recommended that in such applications tow demands are made. In order to revoke an arrest, first a request for the revocation of the warrant on one of the grounds allowed by law must be made. Second, without prejudice to the first, a request for the provision of counter-security by the arresting party must be paid into court. If the arresting party fails to make this payment, the warrants are revoked.
Counter-security is not automatic and the owner must file a specific application containing such request. It is limited to cases where the owner feels that the arrest would ultimately prove to have been unjustified.
According to Article 866 of the Code of Organization and Civil Procedure:
“It shall be lawful for the court, on good cause being shown, upon the demand by application by a person whose ship or vessel is detained, the master, the person in charge or the agent or vessel against which a warrant has been issued, to order the party suing out the warrant to give, within a time fixed by the court, sufficient security in an amount not less than LM3,000 for the payment of the penalty, damages and interest, and in default to rescind the warrant.”
An earlier version of this update was presented as a paper at the 13th Annual Ship Arrest Conference held by Lloyds Maritime Academy London in November 2007.
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