Shipping |  Dec 16, 2015

Escape of Arrested Vessel Gives Rise to Penalty Proceedings

Even though substantial advances have been made in the automated tracking systems that are used to identify and monitor vessels’ movements, it does not eliminate the fact that vessels are mobile and, thus, still manage to abscond from the territorial waters in which they would have been arrested.

In this regard, Maltese law provides creditors of a vessel the possibility to seek compensation when that particular vessel breaches an arrest warrant.  This is possible by virtue of Article 865 of the Code of Organisation and Civil Procedure, whereby this Article provides a deterrent in order to help prevent ship-owners from fleeing with the arrested vessel.

The mentioned Article lays down a penalty of €116,470 which, is to be imposed on the owner, bareboat charter or any other person in possession of the ship or vessel at the time when the vessel is subject to an arrest warrant, and escapes from Maltese territorial waters.

Earlier this year, in the judgment ‘Cassar Fuel Limited v MV Madra’, the Maltese Civil Court examined the application and nature of the above-mentioned remedy. The case involved the arrest of the vessel MV Madra and its subsequent escape from Maltese territorial waters.

Following the issuance of an arrest warrant against the vessel MV Madra, the master and crew fled Maltese waters, by switching off the ship’s automatic identification system. The consequence of which, was that the arresting creditor, lost the only security it had for its claim.

Following the above-mentioned escape, the creditor brought proceedings in rem and, curators were appointed in order to represent the interests of the vessel. One of the main issues brought up during the proceedings was whether such action could be brought against the vessel pursuant to Article 865.  The Court stressed that the wording in Article 865 provides for the action to be purely personal in nature and therefore, cannot be brought against the vessel.

Furthermore after analysing Article 865, the Court explained that the Article provides an aggrieved creditor a ‘partial’ remedy when the vessel flees. The Court also noted that the penalty does not in any way prejudice or affect the creditor’s outstanding principal debt.

The Court concluded that proceedings should be carried out against the person/s that removed the vessel from Maltese waters therefore, either against the owner, the bareboat charterer or any other person in possession of the vessel at the time of the alleged breach.

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