JANUARY 2013

Legal Focus

73 Shipping: Vessel Arrests

australia Joe Hurley

For the final section of our Legal Focus on Vessel Arrests, Lawyer Monthly takes a look at Australia and speaks to Joe Hurley, Partner and National Head of HWL Ebsworth’s Shipping and Trade Group. HWL Ebsworth is large Australian law firm with offices in Sydney, Brisbane, Canberra and Melbourne, offering consolidated expertise and experience in shipping and trade and all areas of commercial law.

In october, a Ghanaian court approved the seizure of an argentine ship as part of an on-going dispute between the country and its creditors. How common are vessel arrests in australia? Have you ever been involved in one?

Ship arrests are very common in Australia and over the past four years post GFC (Global Financial Crisis) I have spent a great deal of time assisting my clients in navigating the choppy waters of debt recovery from fragile contractual counterparts. With large banks, long-established shipping lines and countries falling into insolvency more than ever before, one’s claim is only as good as the security that one holds. In this regard ship arrest for the purpose of obtaining security or founding a favourable jurisdiction has grown in popularity.

For example, we arrested a ship recently for a claim worth in excess of US$50 million and I received instructions not long after to arrest another for a smaller bunker claim. We receive arrest enquiries on almost a weekly basis.

can you give me an overview of the legislation governing vessel arrests and seizures?

The jurisdiction of the Australian Federal Court with regard to ship arrest is set out in the Admiralty Act 1988 and the accompanying Admiralty Rules which is largely an amended version of the 1952 Arrest Convention.

A party may arrest in respect of a wide range of maritime claims divided into three categories - Common law maritime liens (section 15); Proprietary maritime claims (section 16 and 4(2)); and General maritime claims (section 17 and 4(3)).

We most commonly arrest for General Maritime Claims as listed at section 4(3) of the Admiralty Act. These include claims in respect of damage done by a ship, loss of life, personal injury, goods, passengers, salvage, materials and services provided to a ship, construction, wages, insurance premium, contracts

for the use or hire of a ship and enforcement of awards.

Section 19 of the Admiralty Act also provides for the arrest of surrogate or sister ship arrest giving claimants further assets to attack.

What are the main challenges involved in cases like this and how complex is the approval process for seizure and injunction cases like this?

The process in Australia is straightforward and as such the arrest of a ship, if you are prepared and have good grounds for arrest, should not present a great challenge.

We have the benefit of a specialist Admiralty division in our Federal Court handling maritime claims in rem and in personam on a daily basis. Arrests may be handled on a Federal level so allowing us to issue proceedings here in Sydney for arrest at any Australian Port within a matter of hours. We work closely with the Admiralty Marshal and rarely face practical problems or delays.

Preparing the necessary documents for an arrest or sister ship arrest is straightforward. The arresting party must prepare and file a Writ by which in rem proceedings in the Federal Court are commenced. At the same time or at the time of arrest an Application for Arrest, an Affidavit in support, and an Arrest Warrant are also prepared and lodged with the Court. The Admiralty Marshal in the relevant port then serves these documents on the vessel and by doing so arrests and detains the vessel.

can you tell me about defence strategies?

A ship owner seeking to avoid arrest should be as discrete as possible about vessel movements and may even wish to look at a transfer of ownership of the vessel or a change of name.

If his vessel is arrested a ship owner should be ready www.lawyer-monthly.com

with favourable evidence as to value – the weak S&P market often plays in owners' favour.

What are the challenges your clients face when involved in shipping and maritime in australia?

Australia has a strong environmental lobby and under the current Labour Government the trade unions also have a loud voice. This is reflected in maritime legislation. For example, strict liability fines for oil or oily water pollution are high and have recently been increased to up to AUS$11million for a corporation.

However, the shipping industry is very well- developed here and is served by sophisticated lawyers, insurers, agents and service providers. A well-organised vessel owner or operator should not face any great difficulties doing business here.

are there any legislative changes that you would like to see?

This year Australia has seen an unprecedented volume of legislative changes in the area of maritime and transport. Our Navigation Act 1912 has undergone a significant re-write and new coastal legislation has created a revised framework for the application and award of licenses for coastal trade. These changes, along with others, will take time to "bed in" and as such I personally would not like to see further significant changes in the near future. LM

contact:

Joe Hurley tel: +61 2 9334 8765 Email: jhurley@hwle.com.au