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Ship Arrest, Release and Sale within the Jurisdiction of Cyprus

michael chambers cyprus ship arrest

Ship arrest practice in the Republic of Cyprus is enforced by the Administration of Justice Act Part 1 of the Arrest Convention in 1952, as adopted by the United Kingdom, by virtue of Cyprus’ Constitution and section 29 of Law the Courts of Justice Act (14/60).

Discretionary Power of Admiralty Court

Ship arrest cases fall under admiralty litigation and are adjudicated by the Supreme Court of Cyprus. The Supreme Court in its admiralty jurisdiction is able to arbitrate on cases relating to the arrest of a ship, in line with Rule 50 of the Cypriot Admiralty Jurisdiction Order 1983, which sets out that any person may file an application to the court for the issue of an order for the arrest of a vessel.

Procedure to Arrest a Ship

Any person desiring the arrest of a vessel must file an ex parte application. In an ex parte application, the claimant is required to assist the Admiralty Court in reaching an informed and just decision, especially as the other party is not represented. The claimant must not only convince the court that the conditions determined in the regulations have been met, but also provide all material facts and details pertaining to the case that the court needs in order to reach an informed and correct verdict.

An affidavit must also be filed in support of the application for the arrest of the vessel, presenting background information of the case to be tried and stating that the assistance of the court is required. The affidavit must provide all data needed to satisfy the provisions of the rules, as well as the pre-conditions for the issuance of an arrest order.

The court must be satisfied that:

  • There are matters which must be heard between the parties.
  • The claimant has a right to have those matters heard.
  • It is evident that the claimant has the right to have the matters raised by the oral evidence tried.
  • The claimant is entitled to have the ship arrested.

The warrant for the arrest of the vessel must be executed by an officer in the way set out in the Admiralty Jurisdiction Order 1893 for the service of a writ of summons in an action in rem, where the vessel will be judged to be arrested.

Any individual wishing to avert the arrest of a ship, the release of a ship under arrest or the payment of any funds, may cause a caveat against the issuance of any warrant of arrest or release of a vessel, or payment of funds to be filed with the Registrar in a book to be kept for that purpose, called the Caveat Book. 

Release of a Ship under Arrest

Rule 60 of the Cypriot Admiralty Jurisdiction Order and notices of opposition give the Admiralty Court discretionary power over the release of a ship under arrest. The procedural rule sets out that any person may file an application for releasing a vessel under arrest and that the court may order the release of such vessel upon such conditions, after lodging a security or payment of any estimated costs with regard to the removal or inspection of the vessel. Thus, any application for the release of a ship should be conducted through the submission of an autonomous action for such release.

Assessing the amount of security for the release

The discretion of the Admiralty Court under Rule 60 should be exercised judicially in line with the principle of law governing the jurisdiction to directly arrest a vessel, on the one hand, and the nature of the case, on the other. The jurisdiction to arrest a vessel and, in general, order security for the claim of the plaintiff is a particularly important remedy for the efficient exercise of the admiralty jurisdiction in rem, due to the fact that the presence of the defendant in the country is usually provisional. Nevertheless, the conditions for the release of a vessel must not be unreasonable and the amount set must be directly related to the amount probable to be recovered in case of success.

The value of the claim is one of the key issues to be regarded when evaluating the amount of security to be paid in order to assure the release of the vessel. The court will consider both the degree of the loss suffered and the time period given to the claimant to provide estimation. In the event that time is short and there is a possibility that the ship will sail outside the country, the Admiralty Court may bestow an order, if it is pleased that the claimant has given a basic evaluation of the losses and the amount of money claimed.

When evaluating the amount requested for security, the claim cannot be more than what the ship is worth. Therefore, a plaintiff may ask for security that is adequate to recoup the amount of its best arguable scenario, together with interest and costs, while not exceed the value of the ship.

Preferably, the value of the ship or the amount of security would be arranged between the claimant and the defendant. In the event that they cannot reach to an agreement regarding the value of the ship, the ship’s owner may submit an affidavit with regard to the matter. In response, the claimant can submit his affidavit concerning the real value and let the court come to a decision.

The obligation to provide evidence that the court could reasonably believe with regard to the actual value of the ship lies with the defendant. In case that he fails to refute the plaintiff’s evidence with regard to the actual value of the ship, he cannot succeed in decreasing the amount of security that must be lodged for the release of the ship. It is not sufficient to simply conflict or deny the plaintiff’s allegations. The defendant must provide evidence that the plaintiff’s facts do not correspond to reality.

Sale of a vessel under arrest

As a result of the defendant’s continued failure to provide financial security to release the vessel and his negligence regarding the status of the ship under arrest, the Admiralty Court has the discretionary power to sale the vessel pending the final verdict of the case. The procedural rule pertaining to the sale of a vessel sets out that the court has jurisdiction, either before or after reaching to a final verdict and with or without notice to appoint an officer of the court to arrange the sale a vessel either with or without evaluation or to discharge any freight under arrest on board of the vessel.

Conditions to sale pendente lite 

The court approves selling a vessel pendente lite or, in other words, pending litigation. The court will order the sale of a ship which stays under arrest and against which expenditures are mounting up, and which is deteriorating in value, if a fast sale would seem to be desirable to the interest of all parties. The sale of a vessel pending litigation is not a usual solution, which nevertheless comprises a suitable measure in case adequate factors exist that necessitate the sale of the vessel in order to safeguard its value.

Typical grounds which tend to support the sale of a vessel pendente lite are:

  • The estimated worth of the ship and the fact that is deteriorating, due to the fact of being under arrest for a long time.
  • The ongoing maintenance costs that the ship is costing or the fact that the cargo is perishable.
  • The amount of wages owed to the ship’s crew that would keep increasing for the time period the condition remains unsettled.
  • The impassivity of the defendant with regard to the vessel and the sailors, and in securing the needed daily supplies.
  • The non-operative status of the vessel, which would lead to the rise of its maintenance expenses and the drop of its value.
  • The possibility that the profit deriving from selling the ship would be inadequate to pay for the amount due and that this insufficiency would keep augmenting as long as the vessel remains unsold.

It is not easy to advice on the exact time frame involved in selling a vessel, as this will greatly be determined on a case-by-case basis and any objection by the defendant to the application will largely extend the procedure. In general, according to the instructions of the court, the ship is sold through a public auction, after a proper announcement has been published in a local or foreign newspaper.

Michael Chambers & Co LLC’s expert team is able to provide services of the highest standards to succeed in your claims and advice on any aspect of admiralty litigation. Our wide range of admiralty services includes the swift preparation of all documentation and clear guidance with regard to the arrest, release and sale of a vessel under arrest. Please contact us to discuss your legal requirements with one of our shipping and admiralty lawyers.