Ship arrest in Australia - a straightforward way to secure maritime claims

The advent of the global financial crisis and subsequent economic downturn has had a significant impact on the shipping industry. After several years of boom, ship asset values and charter rates have plummeted rapidly, resulting in an increasing number of disputes as parties seek to back out of unfavourable contracts.

In these times of uncertainty, increased focus has been placed on obtaining security for claims. This issue is said to be the number one priority as it is unrealistic for parties to invest large quantities of time and money in protracted claims where there is no certainty of recovery at the end of the process.

One of the more traditional methods of obtaining security for maritime claims (at least in the common law world) is the proceeding in rem and subsequent arrest of maritime property. About 12% of world trade by volume is carried by sea either into or out of Australia, which gives opportunity for arrest in Australia for a large percentage of the world’s tonnage.

Along with opportunity, Australian jurisdiction holds an additional advantage in that effecting arrest of maritime property is straightforward and cost effective. In Australia, an application for arrest of maritime property does not require the Court’s leave. First, the claimant files a writ in rem against a ship or other property. A writ may specify either a proprietary or general maritime claim, or a maritime lien. Surrogate arrest may also be available for general maritime claims. Generally, an arrest will occur within a couple of hours of the application being filed.

Immediately after an action in rem is commenced, an application may be made for an arrest warrant to be issued in respect of the ship or property concerned. The Admiralty Marshals of the Court are available to arrest a vessel anywhere in Australia, any time on any day of the year. The proceeding for an arrest can be commenced anywhere in Australia, in the Central Sydney Registry. The registry can co-ordinate the arrest through either an Admiralty Marshal in other states or delegation to a suitably qualified officer, usually a member of the police force or sheriff.

The Admiralty Marshal’s practice is usually to obtain a nominal amount on account for his/her anticipated costs of effecting and maintaining the arrest, although usually the Admiralty Marshal does not charge the arresting party for his/her time. The arresting party should provide the Admiralty Marshal with information concerning the location of the ship and any information that impacts on the safety of the Admiralty Marshal. If there is no appearance by the ship owner’s in the proceedings, on application to the Court, the Admiralty Marshal has experience in ship sales.

Ship release is also straightforward in Australia. A ship or property may be released from arrest where:

  • the party who obtained the arrest consents in writing to the release;
  • the Court orders release on just terms, or where the proceeding is discontinued or dismissed;
  • a bail bond in the required amount is filed in the Court; or
  • the required amount is paid into the Court.

The ship or property will only be released if satisfactory arrangements have been made for the payment of the fees and expenses incurred in connection with its custody while under arrest. Additionally, the Court may make orders at any stage of a proceeding in relation to the preservation, management or control of a ship or property, including the loading and unloading of cargo. The Marshal or a party may apply at any time for directions with respect to the ship or property.

In summary, arresting vessels in Australia is straightforward. Although Australian legislation allows a court to make a determination of damages for wrongful arrest; there has never been a case on point here, which again on one view makes the process more attractive.

 

Written by Joe Hurley - Partner, Danella Wilmshurst - Partner, Amy Beaumont - Senior Associate