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October 2, 2019

Arrest Of Ships | Kilinc Law

Maritime

Arrest Of Ships Under The Light Of Turkish Commercial Code Numbered 6102

A. Introduction to Arrest of Ships

Principles and procedures regarding the arrest of ships are set out in the Turkish Commercial Code (“TCC”) numbered 6102. Although Turkey did not a party of any international agreement related to arrest of ships when the TCC entered into force, nevertheless the legislator took into consideration related international agreements and adopted most of the provisions that accepted internationally. After the date that TCC entered into force, Turkey has ratified the International Convention on Maritime Liens and Mortgages, signed in Geneva on 6 May 1993 and the International Convention on the Arrest of Ships, signed in Geneva on 12 March 1999 and both conventions came into force in Turkey on 25 March 2017.

When we reviewed the provisions related to arrest of ships of the TCC, it could be seen that the Turkish procedure with regard to the arrest of ships is stated parallel to the current international maritime legislation.

This article reviews the concept of “Maritime Claim”, “Maritime Liens” and “Arrest of Ships” procedure as a legal instrument in order to execute such claims.

B.Maritime Claims As Per The Provisions of the TCC

According to article 1352 of the TCC, maritime claims are listed under 22 topics and those situations that maritime claim has been arisen from, are mostly adopted from the International Convention on the Arrest of Ships. In order to claim arrest of a ship by means of procedure stated in the TCC -rather than the general provisions of execution and bankruptcy law- the claim must be submitted based on those below listed topics;

  • Loss or damage caused by the operation of the ship;
  • Loss of life or personal injury occurring, whether on land or on water, in direct
  • connection with the operation of the ship;
  • Salvage operations or any salvage agreement, including, if applicable, special
  • compensation relating to salvage operations in respect of a ship which by itself or its cargo threatened damage to the environment;
  • Damage or threat of damage caused by the ship to the environment, coastline or related interests; measures taken to prevent, minimize, or remove such damage; compensation for such damage; costs of reasonable measures of reinstatement of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third parties in connection with such damage; and damage, costs, or loss of a similar nature to those identified under within hereby subparagraph;
  • Costs or expenses relating to the raising, removal, recovery, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship, and costs or expenses relating to the preservation of an abandoned ship and maintenance of its crew;
  • Any agreement relating to the use or hire of the ship, whether contained in a charter party or otherwise;
  • Any agreement relating to the carriage of goods or passengers on board the ship, whether contained in a charter party or otherwise;
  • Loss of or damage to or in connection with goods (including luggage) carried on board the ship;
  • General average;
  • Towage;
  • Pilotage;
  • Goods, materials, provisions, bunkers, equipment (including containers) supplied or services rendered to the ship for its operation, management, preservation or maintenance;
  • Construction, reconstruction, repair, converting or equipping of the ship;
  • Port, canal, dock, harbor, quarantine payments and other waterway dues and charges;
  • Wages and other sums due to the master, officers and other members of the ship’s
  • complement in respect of their employment on the ship, including costs of repatriation and social insurance contributions payable on their behalf;
  • Disbursements incurred on behalf of the ship or its owners including the loans
  • borrowed for ship;
  • Insurance premiums (including mutual insurance calls) in respect of the ship, payable by or on behalf of the ship owner;
  • Any commissions, brokerages or agency fees payable in respect of the ship by or on behalf of the ship-owner;
  • Any dispute as to ownership or possession of the ship;
  • Any dispute between co-owners of the ship as to the management or earnings of the ship;
  • A mortgage or a “hypothèque” or a charge of the same nature on the ship;
  • Any dispute arising out of a contract for the sale of the ship.

C. Maritime Liens As Per The Provisions of the TCC

Maritime lien is a statutory lien on the ship, arising from claims set out in legislations, taking priority over all statutory and contractual liens and charges and may be claimed against any person who is in possession of the ship.[1]

According to article 1320/1 of TCC, the following claims give the claimant of such claims the maritime lien right.:

  • Claims for wages and other sums due to the master, officers and other members of the ship’s complement in respect of their employment on the ship, including costs of repatriation and social insurance contributions payable on their behalf;
  • Claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the ship;
  • Claims for reward for the salvage of the ship;
  • Claims for port, canal, and other waterway dues, quarantine and pilotage dues;
  • Claims based on tort, arising out of physical loss or damage, caused by the operation of the ship, other than loss of or damage to cargo, containers and passengers’ effects carried on the ship;
  • Claims for general average distributions.

It is accepted in the literature that the concept of “maritime claims” is a broader right that also contains “maritime liens”. As a natural consequence of this; it is possible to state that every maritime lien is a maritime claim as well. Maritime lien is different in that it gives a legal mortgage and from maritime claims. Therefore, from the point of arrest of ships, maritime lien is a specific version that has additional features of maritime liens. Finally, acceptor of the aforesaid claims is different from each other. According to article 1320 of TCC, maritime liens must be arisen from the claims against the owner, demise charterer, manager or operator of the ship and acceptor of maritime lien right is such persons. On the other hand, maritime claims, as a wider concept that includes the maritime lien claims, give the claimant an arrestment right and this right is related to the ship’s ownership status. According to article 1369 of TCC;

“Arrest of ships is permissible of any vessel in respect of which a maritime claim is asserted if:

  1. a) the person who owned the vessel at the time when the maritime claim arose is liable for the claim and is owner of the vessel when the arrest is affected,
  2. b) the person who was the charterer of the vessel at the time when the maritime claim arose is liable for the claim and is owner of the vessel when the arrest is affected,
  3. c) the claim is secured with a maritime pledge, maritime mortgage or a charge of the same nature on the vessel,
  4. d) the claim relates to the ownership or possession of the vessel; or
  5. e) the claim gives rise to a maritime lien right pursuant to article 1320 (maritime lien).”

D. Conditions for Obtaining an Arrest of a Ships Order

As per the article 1353 of the TCC, the court must decide arrestment only in order to guarantee the maritime claims and precautionary attachment or arrest of ships by means of other legal procedure cannot be decided. In other words, arrest of ships is the only way to guarantee the claims arisen from the maritime claim stated in article 1352 and arrest of ships should be decided as long as the claims are based on any topic in article 1352 by the Courts. Additionally, it must be noted that the concept of “Maritime Liens” stated in article 1520 of the TCC does not out of the concept of maritime claims. Therefore, the maritime liens are also in nature of maritime claims.  

The essence of arrest of ships procedure is the jurisdiction and choosing the authorised court. In this respect, it must be stated that regardless of the flag of a ship, if the vessel is located within the Turkish waters, Turkish Law will be applicable those vessels whether they are Turkish-flagged or not due to the reason that the TCC adopts the principle of lex fori.

According to article 1354 of the TCC; the courts being in place where the vessel is anchored, berthed or dry-docked or the below mentioned courts are authorised to render arrest of ships decision against the Turkish-flagged vessels.

  • With regards to the vessels registered under a Turkish Ship Registry, the courts being in the place of the registry
  • With regards to the vessels which are not registered, the courts being in the place where the owner of the vessel is located,
  • With regards to the vessels which are subjected to special registry registry as per the article 941 of the TCC, the courts being in the place where the charterer of the vessel is located.

In addition of that, arrest of ships decision could only decide against the Foreign-flagged vessels by the courts where the vessel is anchored, berthed or dry-docked or the below mentioned.

Finally, as a pre-condition of the claim, the TCC requires that a security in amount of 10.000 SDR must be provided by the claimant. The counter security can be provided as a cash deposit or a Bank Guarantee Letter.

E. Enforcement of the Arrest of Ships Order

The order, must be submitted to the related enforcement office within three business days from the date of decision. In other words, arrest of ships order will be valid for just three days as of the decision date. Otherwise, the order will be rendered null and void. The order will be served on the master of the ship or on the owner, operator or to the agent of the ship and the order will be enforced by way of prohibition of its departure. For this purpose, the arrest order will be notified to the coast guard, police department customs authority and the harbour master.[2]

All vessels in respect of which an arrest order has been made shall, regardless of their flag and the register in which they are recorded, be prevented from sailing and secured by the director of enforcement. Notification that the vessel has been arrested and prevented from sailing shall be given to the master or owner or demise charterer or one of their representatives. The vessel shall be turned over to the person to whom notification is made as custodian. In addition, for foreign flagged vessels, the arrest decision may be implemented with the assistance of the coast guard command until the vessel leaves Turkish territorial waters.

Tolga Sevinir, Associate

 

[1] Yetis Samli, Kubra: “Ship Mortgage Vs. Maritime Lien What Are The Changes In Favour Of The Mortgagee Under Turkish Law?’’, Annales de la Faculté de Droit d’Istanbul, 49(66), 2017, p.189-215.

[2] Sanlı Bektasoğlu Dilek, Arrest of Ships: New Principles under Turkish Law, Turkish Commercial Law Review, Vol.1, No.3, October 2015, p.251

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