SHIP ARRESTS – STRANGER THINGS IN UKRAINIAN
26 December, 2024
19
In a fairly short period of time, several stranger things happened at once in the Commercial Court of Odesa Region – very strange cases, which slightly shook our generally unshakable faith in the unity of judicial practice in the field of arrest of vessels and forced us to think once again about the importance of a uniform approach, interpretation and consideration of essentially identical cases and legal issues.
We remind you that judicial practice is a set of court decisions, which, due to their multiplicity and uniformity of application, serve as a legal model for subsequent court decisions in similar cases.
The principle of unity of judicial practice is established by law. That is, each judge has a clear duty – to consider and decide court cases fairly and impartially.
The following cases demonstrate how this principle is adhered to in the Commercial Court of Odesa Region.
CASE NO. 916/3178/24
A Turkish company applied to the court with an application for securing the claim in the form of arrest of a seagoing vessel. The justification for the application is the existence of a valid maritime claim against the defendant companies based on a violation of the terms of the charter party agreement, namely, regarding damage caused to the cargo and violation of the terms of the settlement agreement.
It would seem that the case did not have any pitfalls. However, there is a nuance – on 08/29/2022 the vessel had already been arrested for the same maritime claim.
Article 3 of the International Convention for the Unification of Certain Rules Relating to Arrest of Seagoing Vessels, better known as the Brussels Convention, provides that a vessel shall not be arrested more than once for the same maritime claim of the same claimant.
However, disregarding the provisions of the Brussels Convention and the available evidence, the court nevertheless arrested the vessel.
The court also did not pay attention to the fact that the defendant in this case is the ship’s manager, and the same Brussels Convention directly prohibits arrests of ships on maritime demand against managers.. There is sound logic in this, since managers can change and their functionality in a commercial sense is quite limited, but today is not about that.
The main oddity in this case is different. As sad as it is to say, the same judge, Natalia Vasylivna Roga, arrested this ship last time.
Thus, one panel of the court, at the request of the same person, once arrested a ship on maritime demand against the shipowner, and after 2.5 years, the same panel of the court, at the request of the same applicant, arrested another ship of the same shipowner, on the same demand against the ship’s manager, ignoring the available evidence and arguments of the shipowner’s representative.
CASE NO. 916/3627/24
The application for securing the claim in the form of arrest of a seagoing vessel was filed in the interests of a Swiss company under a valid maritime claim related to losses incurred as a result of improper fulfillment of the terms of the charter party agreement.
On 19.08.2024, the imposition of arrest was refused on rather formal grounds. The court pointed to the failure to provide proper and admissible evidence that would confirm that the applicant company incurred material losses precisely in connection with the defendant’s failure to fulfill the terms of the agreement.
Part 3 of Article 139 of the Civil Procedure Code establishes clear and specific requirements regarding confirmation of losses incurred, namely: the amount and essence of the maritime claim that is the basis for arrest of the vessel. In other words, at the stage of considering the application for arrest of the vessel, the court should not analyze the amount of losses and require documents confirming such losses. After all, at the time of consideration of the application for arrest of the vessel, the interested party may not yet have such documents at its disposal.
Although the size and essence of the maritime claim were indicated in the application, and moreover, the court was provided with documents confirming the fact and amount of losses, the court ignored these provisions of the law.
The most interesting thing is that on the same day, on the same grounds, the same judge Nayfleish Volodymyr Davydovych made a completely opposite decision in another case (stranger things episode 2).
In case No. 916/3628/24, the judge satisfied the application for securing the claim in the form of arrest of the vessel, based on the following:
“The legal nature of the origin of the debt, its presence or absence, the legality of the accrual and payment, the court must decide when considering the case on the merits, and therefore the defendant’s motion to refuse to satisfy the application for arrest of the vessel due to the absence of a maritime claim in this case, is rejected by the court, since the materials of the application indicate the presence of circumstances regarding the emergence of a maritime claim.”
Thus, the Commercial Court, by its Ruling of 08/21/2024 in case No. 916/3628/24, confirmed, by satisfying the application for arrest of the vessel, that in order to secure a claim in the form of arrest of the vessel, the applicant needs to provide the court only with justification of the very essence of the maritime claim and provide a calculation of damages, without properly proving the circumstances of the occurrence and incurrence of such damages, since these issues should be considered already at the stage of considering the case on the merits.
We know that the court is limited by the case and the evidence under consideration, and evaluates them according to its internal conviction. But behind any internal conviction there must be an inviolable principle of the rule of law and the rule of law. Can two diametrically opposed decisions made in essentially the same cases be equally legitimate, justified, and legal? The question is rhetorical.
And in the meantime, we are talking about honesty, a common market, and, imagine, about the attractiveness of Ukraine for foreign clients. We really want to continue working in Ukraine, attract new international companies to the country, provide foreign clients in Ukraine with the highest quality services. Ultimately, to convince the global maritime community that Ukraine is a state of law, where the court is really able to protect their interests. But how to do this in the absence of any adequate legal predictability?
Again, a rhetorical question to which we have not yet found an answer.
As long as Ukrainian judges make extremely controversial decisions regarding ship arrests, among shipowners, charterers, P&I clubs (whose guarantees are not accepted in Ukraine, by the way) and any other market players, Ukraine will have an appropriate and obvious reputation. And not at all as an attractive, reliable jurisdiction for protecting their rights and interests.
Demanding unity, consistency, predictability of judicial practice is not about disagreeing with a separate court decision or position of the court. Experience inevitably teaches us not only to appreciate victories, but also to accept failures with dignity. This is absolutely OK. It is not OK that we are forced to go back many years to the times when the arrest of a ship was an exception, and again talk about banal and understandable things.
It is not just a matter of the specific composition of the court or the described arrests. We would like Ukrainian judges to finally realize: each of their decisions that concern international maritime law is meticulously considered, studied and analyzed by professional communities not only in Kyiv and Odessa, but also in London, Hamburg, Athens and other leading shipping centers. And any contradictions with the law, differences in positions depending on the composition of the parties do not go unnoticed. This bacchanalia of uncertainty, this Brownian movement, must be stopped somehow, and we will be happy to work on it until it becomes dura lex sed lex, and not some stranger things in Ukrainian.
