In CVLC Three Carrier Corp and Anor v Arab Maritime Petroleum Transport Company ([2021] EWHC 551 (Comm)), Reed Smith (Nick Austin, Charles Weller, Alfred Perkins, Vassilis Mavrakis) represented two shipowning companies in successfully overturning an arbitration award which held that there was an implied term in a performance guarantee that the beneficiary would not seek further security beyond that created by the guarantee itself, thus protecting the guarantor’s vessels from arrest.
Continue Reading Performance guarantees, vessel arrests, and implied terms

As the global economic recession grows, so does the number of vessel arrests by maritime creditors.  We highlight below four trends observed in the vessel arrest cases that are multiplying in the U.S.  Some of these trends are tied to the particularities of the COVID-19 recession.  Others resurface at every economic downturn.  It is particularly important for preferred ship mortgagees to be aware, and beware, of these trends.

First, vendors may be more willing to move to arrest vessels during these uncertain times.  For example, a New York marina has arrested multiple vessels docked on its premises for non-payment of its fees.  This development is significant because the claims of some vendors may take priority over preferred mortgages.  Under U.S. law, maritime liens for necessaries provided to vessels in the U.S. take priority over foreign (i.e., non-U.S. flag) ship mortgages.  Maritime liens for necessaries provided outside the U.S. are generally subordinate to preferred mortgages, but the priority of preferred mortgage liens is subject to certain exceptions that are not always well delineated.  Whether the arrester’s claims are subordinate or not, it is critical for the mortgagee to intervene in the arrest action.  Otherwise, the mortgagee could lose its mortgage lien as a result of the action, without receiving any portion of the proceeds of the sale of the vessel.  However, timely intervention can be challenging, especially because the arrester is not always required to notify the mortgagee.  Publication of a notice of arrest in a local newspaper may constitute sufficient notice under U.S. law.  Prudent lienholders thus maintain a close watch on the trading patterns of vessels, and, if a vessel remains in a port for a longer time than usual, monitor court dockets to be ready to intervene and preserve their claims.
Continue Reading Recent Trends in U.S. Vessel Arrest Cases

By way of follow up to our blog on this matter dated 3 May 2016, the Commercial Court heard a further arbitration appeal earlier this month arising out of the detention of the vessel at Puerto la Cruz on 19 September 2014.

The vessel was chartered on an amended Shelltime 4 form, and the vessel remained at Puerto la Cruz at the time judgment was given.

This appeal related to two issues:

  1. Whether the Charterers’ employment order could still be said to be the cause of the continued arrest of the vessel; and
  2. Whether drydocking costs which Owners saved as a result of the vessel being under arrest should be deducted from their claim for damages.

Continue Reading CV Stealth – Arrest of vessel under Shelltime 4 – causation

In ST Shipping & Transport Pte Ltd -v- Space Shipping Ltd (“CV STEALTH”), the Commercial Court (“the Court”) heard an application arising out of an Arbitrator’s Award in respect of a dispute under a charterparty on an amended SHELLTIME 4 form.

The Charterers had sub-chartered the vessel on an amended BPVOY form to a company which had intended to export a cargo of crude oil unlawfully from Venezuela. Unaware of this, the Charterers gave orders for the vessel to proceed to Venezuela to load the sub-Charterers’ cargo. Suspicions were aroused when the documents were presented at the loadport and the vessel was detained in September 2014 in Venezuela, where she remained at the time of judgment.Continue Reading Shelltime 4 – who bears risk of arrest?

It is easy to assume that the only place, or the easiest place, in which to obtain an associated vessel arrest to obtain security for a claim is South Africa.

However, we had a case recently where we were able to obtain a Rule B Attachment over an associated vessel in the US. This led