Article 3.4 of the Arrest Convention in Italian case law: the debate continues
Italy is a signatory of the Brussels Convention 1952 ("the Convention").
If a ship is flying the flag of a state party to the Convention, arrest in Italy can be sought only with respect to maritime claims listed under article 1.1.
If the ship is not flying the flag of a contracting state she can be arrested for the aforesaid claims as well as for any other claim for which arrest is allowed under Italian law (i.e. virtually any credit or claim against the owner of the vessel, including those not mentioned in the list of maritime claims set out by article 1 of the Convention).1
Italian Courts generally apply the Convention also for arrest of ships flying the flag of a non-contracting state, based on a rather extensive construction and application of article 8.2.2
However, an issue proving controversial is the possibility to seek the arrest of a ship based on article 3.4 of the Convention if the claim is not secured by a lien.
A few decisions3 have declined to grant the arrest on the grounds that article 9 makes it clear that the Convention does not create maritime liens, and that an arrest based on article 3.4 in the absence of a lien could not be subject to further enforcement against the registered owners and the ship.
A recent and detailed decision of the court of Genoa4 opted for the full applicability of article 3.4 in arrests arising from claims vs. the charterer.
The Judge pointed out (a comment that may sound rather questionable to many readers) that owners are "aware of the likely employment of the ship" and can therefore foresee the liabilities arising from the employment by the charterer, seeking some form of protection from the risk of arrests by asking the charterer to provide a suitable performance guarantee.
The court furthermore held that the applicant is entitled to obtain security in the form of bankbook issued "to the order of the court", and can cash the sums deposited as security as soon as he has obtained a judgment liquidating the claim. Hence, according to the court of Genoa, there is no need for the judgment to be made against the guarantor.
The decision thus bypassed the notoriously thorny issue of the wording of the guarantee to be issued for the release of the ship in case the arrest is originated by a claim vs. the charterer and the party seeking the release is the registered owner.
A few recent decisions confirm that the debate is open.
In 2011, the court of Venice5 confirmed the view previously expressed by the same court in 2010 that the existence of a maritime claim is sufficient to allow the arrest of a ship regardless of whether the claim is secured by a lien of not.
The court acknowledged the existence of different positions in Italian case law and in judgments handed down by the same court of Venice.
The court opted for the applicability of art. 3.4 of the Convention also in arrest cases where no lien exists, arguing that the uniformity sought by the Convention would be undermined if ships flying different flags were subject to a different regime based on the existence of a lien (an issue which under Italian law is governed by the law of the flag).
The court furthermore held that if the Convention had indeed required the existence of a lien it would have specified as such, and that article 3.4 would be redundant if a lien was necessary, because in this case the creditor would already be entitled to obtain the arrest of a ship not belonging to the debtor.
A very recent decision of the court of Udine6, however, has opted for the restrictive view.
According to the court, since the Convention does not create new liens, the option is between rejecting the arrest application based on art. 3.4. if the creditor without a lien is unable to enforce the claim on the ship, or considering the arrest just as a tool to exert pressure to settle the claim in order to obtain the release of the ship.
The court argued that the wording of the Convention is in principle consistent with the latter interpretation, in light of the fact that the only requirement stipulated by the Convention is the existence of a maritime claim.
The court added however, that pursuant to art. 31.1. of the Vienna Convention on the Law of Treaties (Vienna, 23 May 1969) "a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its objective and purpose".
The aim pursued by the Convention is to enable the claimant to successfully recover a maritime claim.
However, even assuming that the arrest can be conceived as a tool to exert pressure in view of a settlement, the owner of the ship could be unable to settle the claim, and the goal pursued with the arrest would be thus frustrated. Furthermore, the action brought by the claimant could be defeated by placing the claim value under escrow, because the claimant would be then unable to enforce a judgment on such an escrow, which could be sought exclusively vs. the actual debtor (the disponent owners).
The court concluded the analysis holding that it was not conceivable that the Convention admitted arrest of the ship independent of the subsequent enforcement, which is, according to the court, "the natural development and prosecution of the arrest".
1. Court of Appeal of Genoa, 12 February 2000, Morsviazputnik Satellite Communications Navigational c. Azov Shipping co.; Court of Venice, 6 October 1999, Elmar Shipping Agency c. Turkmen Shipping
2. Court of Genoa, 22 March 1994, Galaxy Energy International ltd. c. Soc. agenzia maritt. Dolphin
3. Court of Ravenna, 23 march 2000, Jakil c. International Transportation co. ltd; Court of Ravenna, 4 August 2001, Aagaard Euro Oil c. Sea Frantic co. ltd; Court of Venice 5 June 1998, Exnor Craggs ltd. c. Companie Navigatie Maritime Petromin
4. Court of Genoa, 19 February 2010, Alpha Trading c. Venezia Shipping
5. Court of Venice, 2011, Istanbul Shipping Inc. c. Happy Cruise Sa, M/V Happy Dolphin,
6. Court of Udine "the Anagenisi", 2014
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.