Changes to ship arrest law in Scotland

01.01.10

Changes to ship arrest law in Scotland

1 July 2010 sees the introduction of reforms to the law of ship arrest in Scotland. Until now it had not been possible to arrest a demise chartered ship for a debt of that demise charterer. That power is now given to an arresting creditor. The creditor may of course also arrest a ship which is owned by the defender, but may also arrest a ship in which the defender owns at least one share.

The changes come as part of the staged introduction of the Bankruptcy & Diligence Etc (Scotland) Act 2007, an Act which at first blush may not be one that would be thought to have much application to shipping. The law of arrest in Scotland is part of the law of diligence, with Scots Law recognising the right on the part of a creditor to obtain security for their claim in a wide class of cases, not simply cases of ship arrest.

The law of ship arrest in Scotland stems, as in England, from the 1952 Brussels Arrest Convention. The Act regulating Scotland's arrest jurisdiction contains within it a list with which practitioners in England will be familiar, as it is almost identical in terms to that found in the Supreme Court Act 1981.

Scotland has no Admiralty Marshal. A warrant to arrest a ship is granted by the Court. The new rules clarify, and to some extent extend, the jurisdiction of the local Sheriff Courts, but the vast majority of warrants for ship arrests in Scotland will continue to be issued through Scotland's Supreme Court, the Court of Session based in Edinburgh. The Court of Session has jurisdiction throughout Scotland and can be available, subject to satisfying the test of genuine urgency, on a 24/7 basis for arrest or recall.

The requirement in Scotland for pleadings in arrest cases is generally greater than at the initial stages in England. Because arrest is a more generally available remedy in Scotland, the Courts have had to develop an approach to the granting of warrants of arrest which is compliant with human rights legislation. This means that the Court must be satisfied that there is a prima facie case at the outset. This in turn means that an arresting creditor must present as much information as he can so as to satisfy the Court that a warrant should be granted.

The introduction of the right to arrest a demise chartered ship for a debt of the demised charterer is an innovation on the general principles of arrest in Scotland which requires an ownership interest. The Court will therefore require to be satisfied both as to the debt, the basis of the claim and as to the existence of a demise charterer.

In Scotland the right to arrest in rem arises only in relation to classic maritime liens such as salvage, collision and crew wages, and all other arrests are known as arrestments on the dependence, that is while the action is pending. Although the practical effect of the arrestment of a ship is the same, the legal effect is different in that an arrestment on the dependence is only security for a personal right against the defender, rather than against the vessel itself as it is in the context of an arrest in rem. The new legislation, which has been backed up by appropriate Rules of Court, does not affect the right to arrest to found jurisdiction.

The new provisions make other consequential amendments as to the sale of an arrested ship and ranking provisions, together with the expenses of an arrest, and alter some provisions in relation to arrest of cargo. They also give statutory effect to the existing common law provision that only one ship may be arrested on the dependence of an action unless cause is shown to the Court for the granting of a further warrant.

Brodies will be happy to advise any client on any particular aspect of the new legislation or to assist in any ship arrest in Scotland.

Author: Duncan MacLean

Duncan is a partner in the shipping team at Brodies LLP, Edinburgh and Glasgow, and assisted the Scottish Government with the implementation of the new legislation.