SOME ASPECTS OF THE ARREST OF THE SHIPS IN UKRAINE

Being a rather young independent sea power Ukraine has been taken considerable measures as to adjustment of its domestic law system. After the collapse of the USSR the new-established independent states have faced a huge number of difficulties arising out of the long-term imperfection of Soviet legislation. Since the wind of change being too rapid there are a great number of gaps in present economical, political and legal systems. Unfortunately, there is no exception for Ukraine. Some provisions of law seems completely obsolete, so once they are construed, in appropriate situation it seems absolutely impossible to make a right decision since some of them are paradoxically controversial.

Taking into consideration that the development of shipping has always been one of the priorities of external policy of Ukraine there is an extreme necessity as to settlement of the existing disputes in that area to allow the foreign and domestic ships feel safe and secured once entering Ukrainian ports. We would like to concentrate on the applicable terms of arrest of the ships in ports of Ukraine since it is being one of the hottest issues during the last few years.

To begin, it is fair enough to say that there are two basic legal acts which regulate the arrest of a ship as a res - the Marine Shipping Code of Ukraine (further- MSC) and the Civil Procedural Code of Ukraine.

MSC contains the definition of arrest, which says that arrest means any detention or cession of a ship in order of obtaining a security for existing maritime claims. The same provision states that a ship can be arrested only due to existence of maritime claims. An exclusive list of the maritime claims under which arrest can be effected is also given in MSC. .

However, in accordance with the provisions of Civil Procedural Code of Ukraine, the vessel can be arrested as the security for the claim in action brought by the plaintiff. Practically that is the only way to arrest a ship in Ukraine in now days. There is no necessity of a claim being a maritime one in order to arrest the ship .The aim of the lawyers, who are trying to arrest a ship , basically , is not to prove that there is a maritime claim but to convince the Court to seize of a matter. However there are a few obstacles on their way.

According to Ukrainian law there is a prima facie rule that a claim must be brought where the defendant is domiciled, I.e. the writ must be issued in the Defendant’s jurisdiction. In case when the defendant is the foreign shiowners, it means that the claim must be issued in a Court of a foreign state. But even if such Court services the writ it is unlikely to be exercised since Ukraine does not have the appropriate agreements with the majority of states.

Moreover, once there is a presence of Arbitration Clause in a contract, the arrest can be effected only by the stated court. It is so-called “ private litigation”. However, in accordance with Ukrainian law, the arbitrators have no power to arrest the ship. Furthermore, the contractual close as to State Court Jurisdiction is not permitted due to Ukrainian Law. On the face of it there is the clash of the provisions.

Yet there are always some exceptions. For instance, the claim can be brought against the resident of Ukraine, who is the agent of the shiowners. It will be considered as a ground for the ship arrest although the action will be defeated. Besides, there are a number of provisions in the mentioned Civil Procedural Code due to which a claim may be brought in the place the damage occurred or in the place the ship location, since the location of the shipowner is unknown.

As a result once all the circumstances are to be cleared, ship is arrested (due to law provisions the arrest can be effected on any litigation stage) and the action is brought against the shipowners. Still, it is totally on judge whether to bring an action or not. There is no obligation under which a Judge is to arrest the vessel. In case the judgment enforcement does not require a security, a vessel may never be arrested. (As it is seen, so far we are not considering the provisions on Merchant Shipping Code as they are not applicable in that situation.)

It should be emphasized that, normally, arrest itself is not necessary to establish jurisdiction. The arrest process gives the added advantage to the arrestor/claimant of obtaining from the owner of the arrested property adequate alternative pre-judgment security, i.e arrest is an independent measure to protect the plaintiff’s interests.

Talking about Ukraine, the majority of the ships arrests are effected not in order to obtain such security as a judgment enforcement but to convince the Court to seize of a matter. It is so since the court that arrested the ship is usually will not be the one to seize of the matter as due to Ukrainian law.

Besides, as it was mentioned above, in accordance with the provisions of MSC the arrest of a ship is possible due to existence of maritime claim, and has no connection with the security of a claim. Yet there is no definite procedural order as to the trial of such “maritime arrest”. Coming out of the present situation it is fair to state that the issuing of a writ under maritime claim seems impossible. On the contrary, the practice of the ships arrests demonstrates that the only way of the arrest is to bring a claim in order of obtaining a security as an enforcement of a judgment.

Due to provisions of MSC the Ukrainian Courts must take into consideration the writ as to arrest of a ship under the marine claims. However it seems to be not so easy to do

First of all , there is no clear definition in courts authorities . It makes difficult to find the appropriate jurisdiction. Secondly, there must be a true defendant against whom the action is brought. The consequence of the wrongful arrest of a ship is usually to indemnify the wrong defendant for the losses occurred during the detention of the vessel. Thirdly, there must be the stated grounds for the refusal to arrest the vessel in case the judge to discover that there is no sufficient evidence for a ship to be arrested.

Taking into account the existing Arrest Conventions of 1952 and 1999 and considering the practice of the ships arrest all over the world, the lawyers of “ANK” Law Firm have revised a number of amendments to the existing laws.

Here are the main points that were emphasized during the revision process.

1. The arrest of a ship must be effected by the State court independently on which Court (Arbitrage) will be seized of a matter.

2. The claim to arrest a ship must be brought to an Arbitrational Court in the place where a ship is arrested. All the claims as to arrest are to be considered by the Arbitrator. As a result there will be a distinct branch of the judges that will only specialize in the arrest of the ships. The procedure of the issuing the claim will be more simplified since the claim will be brought straight before the definite judge. Moreover the system where the court before which the action is brought and the court where the case is tried are the same one is widely exercised in the majority of sea states.

3. At the moment the procedure as to arrest of the vessels in terms of its limitation periods looks quite indefinite. In the present situation, consideration of a claim usually takes a few days and a vessel can leave the port practically without any problems. Thus, in our opinion, the arrest procedure should take the least of time and there must be a strict limitation period for such claims to be considered, otherwise a mere delay will make an “easy escape” of a ship.

4. As it was mentioned above, due to imperfection of the present legislation, it is on the judge’s opinion (that is really absurd!) whether to arrest a vessel or not. To avoid such ambiguity, the arrest of a ship must effected due to the certain list of the documents, the bringing of which will oblige the court to arrest the vessel. There also must be the evident proof that will be sufficient for a ship to be arrested. The court must be convinced that there is a maritime claim, or at least that the vessel is arrested in connection with the one, and that limitation period is not expired yet.

We also reckon, that there must be a limitation of burden of proof. To arrest a ship there no need to establish who was the owner at the moment the cause of action arose. Firstly, it is not necessary if the maritime claim is a priority one. Secondly, as a rule, neither the plaintiff nor the Court has an access to the documents in relation to the title of ownership of a vessel .However, if the defendant suppose that the wrongful arrest took place , he is entitled to appeal and to claim damages. The Court of Appeal is not bound by the burden of proof of the Courts of the first instance.

5. The problem of the ownership of a vessel can be a corner stone in the arrest of the vessel. There must the provisions in the Marine Shipping Code which provide that the vessel can be arrested even if when the person liable under maritime claim is not only the shipowner or the charterer but any other relevant person who was in possession of a ship at the moment the cause of action arose. We suppose that this provision is very significant due to a widely spread practice as to charter of the vessel not under the contract of affreightment but under the management(operating)contract, the main purpose of the late is to limit the shipowner’s liability.

To make a conclusion it is necessary to indicate that there are some movements headed for the improvements of the judicial and legal systems in Ukraine. The new Civil Code has been revised and new Law “About the judicial system in Ukraine” is adopted. It is became broadly applicable to implement the provisions of International Conventions into Ukrainian domestic law to revise the unified legislation in European countries. Moreover, in the end of 2002, the Law of Ukraine “Conception of the National program of adaptation of the Ukraine legislation to the legislation of European Union” was adopted. Its aim is formation and implementation of the National program of adaptation of the Ukraine legislation to the legislation of European Union and also creation of effective mechanism of its realization to European Union as an important factor of conducting legal reform and integration of Ukraine. A creation of legal base for integration of Ukraine to European Union is the main task of the named program.