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Admiralty and Ship Arrest Practice in Cyprus

Admiralty litigation in Cyprus has increased significantly, as a consequence of the distinctive status of Cyprus as a leading worldwide maritime hub. Admiralty law refers to the jurisdiction of a distinct body of law to hear certain types of cases, arising from maritime activities occurring in international waters.

The principal matters governed by admiralty law concern shipping and boating, maritime insurance matters, collisions at sea, as well as civil matters involving payment of wages to sailors, transportation of passengers or cargo, salvage claims and marine pollution.

The most prominent action held by admiralty litigation is the issue of a maritime lien against a vessel, which enables the court or its appointees to arrest and seize the vessel in satisfaction of the claims against it.

A maritime lien is a claim that seizes a vessel or its freight for compensation of a liability pertaining to a cruise, for example in relation to sailor’s wages or losses occurred from a collision.

A maritime lien is autonomous from the vessel’s ownership and binds the vessel whether sailing or in a port.

Types of Proceedings in Admiralty:

A claimant before the admiralty court has an option of whether to proceed by bringing an action in personam or an action in rem. An action in personam is one against the owner or charterer of the vessel, while an action in rem is one against the vessel. Ss moveable and immoveable assets.

A legal proceeding in rem is an action directed against the vessel or against the cargo – the res as it is called – as defendant, with regard to specific types of maritime liens or privileges.

An action in rem is usually associated with the arrest (supra) of the res, thus providing the security of the claim before judicial proceedings. Where an action in rem is deemed successful, the decision may be imposed against the res through judicial sale.

Supreme Court: Admiralty litigation is enforced by the Supreme Court of the Republic of Cyprus which, in line to the Section 19(a) of the Courts of Justice Law, has original jurisdiction to act as an Admiralty Court, exercising the same powers and jurisdictions as those granted or exercised by the High Court of Justice in England in its admiralty jurisdiction.

The Supreme Court of Cyprus acting as an Admiralty Court, has an absolute power to hear cases in respect to the arrest of a vessel or property in view of rule 50 of the Cypriot Admiralty Jurisdiction Order, which reads as follows: “In an action in rem, any party may at the time of, or at any time after, the issue of the writ of summons apply to the court or a judge for the issue of a warrant for the arrest of property”.

Types of claims to arrest a vessel The Admiralty Court is empowered to adjudicate claims in relation to:

  • The ownership of a ship or of any shares of the ship, as well as employment issues and earnings of a ship.
  • A mortgage, charge or shares of a ship, as well as damages done or received by the ship.
  • Deprivation of life or injury of any person incurred as a consequence of any defect, neglect, default or wrongful act performed in the vessel.
  • Loss or damage to the cargo transported or any claim occurred from an agreement in relation to the transportation of cargo or to the use of charter of a ship. • Salvage, pilotage or towage issues in relation to a ship.
  • Cargo or freight provided to a ship for its operation or maintenance or any claim in relation to the construction, repair or equipment of a ship.
  • Dock charges or dues of a ship.
  • Captain or sailors’ wages or any other claim in relation to disbursements made on behalf of the ship. • Any claim occurring from bottomry.
  • The forfeit or condemnation of a vessel or cargo for the restoration of a vessel or cargo after being arrest.

At first instance a case is heard by one judge of the Supreme Court and on appeal the case is heard by the full bench.

A vessel can be seized in Cyprus irrespective of its flag and debtor, unless the debtor is entitled to claim sovereign immunity. District Courts of Cyprus At the same time, the Supreme Court is able to refer some admiralty cases to the jurisdiction of District Courts of Cyprus. According to the regulations issued, in cases where the claim relates to an amount of less than 17,086.01 EUR, such cases are referred to the District Courts.

It is noted, that a case related to ship arrest is adjudicated solely by the Supreme Court of Cyprus, no matter what the disputed amount.

The District Courts of Cyprus are able to hear cases related to:

  • Damage or loss of cargo carried on board of the ship.
  • Cargo supplied to the ship for its maintenance.
  • Supply, construction and repair of the ship.
  • Sailors’ wages.
  • Expenses made on behalf of the ship by the captain or any other supplier.

Application for Ship Arrest A claimant who wishes to apply for the arrest of a vessel, before making the application, should submit to the Admiralty Court an official declaration, explaining the nature of the claim and affirming that the claim stays unsatisfied and that the intervention of the court is now needed.

When it comes to applying for the seizure of a vessel in respect to wages, the declaration should further state the nationality of the ship and that notice of the action has been filed on a consular officer of the country to which the ship belongs. With regard to an application related to an action for necessaries or for construction, equipping or repairing of a ship, the declaration should also include the nationality of the ship and evidence that no owner of the ship has resided in Cyprus at the time when the necessaries were supplied or the work was done.

In effect, the Admiralty Court must be convinced that there is a serious question to be tried and that there is a possibility that the claimant is entitled to relief, based on the facts presented before it.

Where the application for ship arrest is deemed successful, the Court may require the claimant to:

  • Submit a deposit in relation to the costs which may be aroused by the Admiralty officer with regard to the supervision of the ship whilst under seizure.
  • ubmit any other payment necessitated by the Registrar in relation to the costs of the arrest.
  • File a security bond through a bank guarantee in respect of damages that the ship might suffer, if the seizure proved to be unjust. The amount of the guarantee may vary. Usually it is between 10-15% of the claimed amount. It is noted, that failure to comply with these requirements, will result in the release of the ship. Freezing Orders: In the event where a claimant is not able to carry on with the arrest of a ship, he may ask for a Mareva injunction.

A Mareva injunction is a freezing order, which is usually vested when the defendant has no additional assets in Cyprus and there is a possibility to alienate or dissipate his assets. Filing for a Mareva injunction is made through an ex parte application. Mareva injunctions were readily adapted by the Supreme Court of Cyprus, by virtue of section 32 of Courts of Justice Law (Law 14/60).

In general, this type of freezing injunction does not operate as a seizure of assets, but it is a relief in personam, which confines the owner of the property to deal with or dispose or remove from the country any or all of his assets in order to avert their dissipation. It is an extraordinary order, based on the rule that there should be no execution before judgment.

Michael Chambers & Co LLC’s team is able to advise on all aspects of admiralty litigation and guide you all the way to succeed in your claims. Among others, our bulk of admiralty services include claims on behalf of cargo owners against the vessel, salvage actions, collision matters, charter-party issues and landing disputes. If you wish to speak to one of our shipping and admiralty layers, please contact us.