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10 May 2006
Shipowners whose vessels have been arrested in the Netherlands need to be careful when putting up security to get their ships released quickly. Recent case law shows that, even if owners have a strong case for rejecting the claim, they may still have to wait until the final judgment before being able to reduce or release the security. In the worst case, this may take several years.
The Netherlands is well known as a ship arrest paradise. To prevent unnecessary costs and delays, shipowners have the option of providing security in exchange for the release of an arrested vessel. This is usually done by means of Rotterdam Guarantee Form 2000.
Even though recent judgments are conflicting, shipowners and their underwriters or protection and indemnity club need to be aware that the provision of security is deemed to be a new and separate contract which may prevent release or reduction of the security through summary proceedings.
As a result, parties are becoming more cautious in putting up guarantees (which often represent considerable sums) to obtain the release of their vessels, as they know that these sums may be tied up for a long period of time. Parties must ensure that the conditions for release and reduction of the security are properly negotiated beforehand. Specifically, the conditions for the reduction of the security need to be expressly agreed at the outset of the case.
For further information on this topic please contact Haco van der Houven van Oordt at AKD Prinsen Van Wijmen by telephone (+31 10 272 53 00) or by fax (+31 10 272 54 00) or by email (firstname.lastname@example.org).
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