Ship arrest in Ireland – time charterer’s debts

Ship arrest procedure in Ireland is quick, straightforward, and requires no security from the arresting party. As is the case in most maritime jurisdictions, only certain types of claims give rise to a right to arrest a ship. Therefore, it is important to consider the jurisdictional basis of each claim to ensure there is a right of arrest - and avoid a potential liability for wrongful arrest.

Two recent Court of Appeal decisions have clarified that a ship cannot be arrested in Ireland for disbursements incurred by a time charterer, for example, fuel oil supplied to a ship on the orders of a time charterer.

MV LADY MAGDA

In the MV LADY MAGDA [18.01.21] the Court of Appeal upheld the Admiralty Court’s decision that a right to arrest a ship required the personal liability of the ship owner.

In this case, disbursements were incurred by ship’s agents on behalf of time charterers. The ship’s agents arrested the vessel for unpaid port and agency fees.

The court noted that "…it was expressly the responsibility of the Charterers to provide and pay for” such services under the charterparty.

The court held that where a ship’s agent pays for pilotage and other port expenses at the request of a party that it knows is not the ship owner, “that does not give rise to a personal liability on the part of the ship owner”.

The court held that there is no maritime lien against a ship for disbursements or necessaries provided on a time charterer's orders, and no right to arrest the vessel. Certain maritime liens may arise independently of a personal obligation of the owner, for example crew wages, which are exceptions to the general principle that “every proceeding in rem is in substance a proceeding against the owner of the ship, (and) a proper maritime lien must have its root” in the ship owner’s “personal liability”.

MV ALMIRANTE STORNI

In an earlier decision, the MV ALMIRANTE STORNI [2020], the Court of Appeal upheld the Admiralty Court’s decision that the owner of a ship is not liable for the debts of a time charterer.

The Court of Appeal held that Article 1(n) of the Arrest Convention does not entitle an agent to maintain a claim against the ship owner for disbursements ostensibly made “on behalf of a ship” in the absence of any personal liability on the part of the ship owner. The fees had been incurred on behalf of the charterers of the ship, who had subsequently become bankrupt, and there was no contractual liability on the part of the ship owner, either by ostensible agency or subsequent ratification. The Supreme Court refused leave to appeal the Court of Appeal decision.

Comment

Ireland is an attractive jurisdiction for ship arrest to obtain security for claims and to establish jurisdiction, if also required.

These two decisions clarify the scope and application of ship arrest in Ireland. 

Arrest procedure in Ireland is straight forward and we can normally arrest within a few hours of being instructed.  The Admiralty Court will case manage claims and has also promoted remote hearings and trials during the pandemic, to accelerate resolutions.   

Related item: Remote trials in Ireland – the future is now