Who is a proper applicant under the claim on arrest: Charterer or Consignee?
24 March, 2025
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Interlegal law firm has specialized in shipping for over 30 years; for that period we have worked on hundreds of cases regarding ship arrests. One of the questions we often encounter in such cases is who has the right to file a claim for ship arrest? In certain cases, the answer may be ambiguous, so in this article we will analyze the dilemma of the proper applicant in cases of ship arrest.
Legal principles
There is no clear indication in Ukrainian legislation as to who can file an application for claim security in the form of ship arrest.
The Commercial Procedure Code and the Merchant Shipping Code of Ukraine state only that:
- А claim is secured by a sea-going vessel arrest, which is carried out to secure a maritime claim;
- А vessel can be arrested only on a maritime claim.
Therefore, we can state that under Ukrainian law, the proper claimant is the person entitled to a maritime claim.
The Brussels Convention, governing the rules for arrest of sea-going vessels, defines the claimant as the person in whose favor a maritime claim is brought. Such interpretation is not exhaustive and leaves space for discussion as to who is the proper owner of a maritime claim.
The Brussels Convention includes uncontested maritime claims (for example, a claim based on damage caused by the vessel due to collision), for which there is a clear list of persons – the guilty party and the injured party.
What about the circle of parties in a maritime claim based on loss of or damage to cargo for other reasons?
In order to understand what the dilemma is, let us consider a typical case of cargo transportation by sea.
Practical case
The Seller (Shipper) and the Buyer (Consignee) have entered into delivery contract on FOB terms: the port of loading is determined, all risks of loss or damage to the goods, as well as its transportation costs are transferred to the Buyer from the moment the goods are loaded on board of the vessel.
A charter party was entered into between the Charterer and the Shipowner on transportation of such goods.
In the process of unloading the cargo from the vessel, its damage was discovered (for example, a leak).
Who is the proper owner of the maritime claim and who can demand arrest of the vessel in this case?
The Consignee?
- He is the one who suffers losses due to damage to the cargo.
- But the Consignee is usually not the charterer and has no direct contractual relations with the Shipowner (only with the Seller on the grounds of the contract on supply of goods).
If the Consignee files to court an application on ship arrest, it may be rejected due to the lack of a correlation, i.e., contractual relations, with the shipowner.
The Charterer?
- He has contractual relations with the Shipowner based on a charter party.
- But he does not suffer any losses due to damage to the cargo.
Since the Charterer is not a person who has suffered losses, he cannot be treated as the proper owner of a maritime claim; therefore, he cannot demand arrest of the vessel in accordance with Ukrainian legislation.
Such nuances make the issue of determining the proper applicant in ship arrest cases not so unambiguous.
Bill of lading as evidence of the right to claim
According to Article 134 of the Merchant Shipping Code of Ukraine, the document confirming the existence and content of the contract of carriage of goods by sea is the Bill of Lading (unless the contract prescribes conditions for entry into voyage charter). Article 135 of the same Code provides that the conditions of the contract of carriage by sea that are not set out in the bill of lading shall be binding on the consignee if the bill of lading refers to the document in which they are set out.
In our previous publications, we have repeatedly noted that the bill of lading performs three important functions:
• It certifies the fact of entry into contract for the carriage of goods by sea, whereunder the carrier undertakes to deliver the goods and hand them over to the consignee;
• It certifies the fact of acceptance of the goods for carriage;
• It gives the right to receive the goods to the person to whom it is issued (i.e., acts as a shipping document).
The first function is quite essential in the cases under consideration.
The bill of lading is a confirmation of the existence of a contractual relationship between the carrier and the consignee, and therefore the existence of a maritime claim.
There is still uncertainty in the law and court practice regarding the arrest of vessels as a means of securing a maritime claim. However, an important point is that the existence of a maritime claim does not require proof of the fact of losses incurred or a direct agreement between the claimant and the shipowner. The bill of lading is a sufficient basis for recognising the existence of a contractual relationship.
The situation, which at first glance seems obvious, may in reality create serious obstacles to the effective protection of the rights of maritime transport participants. Misidentification of the proper claimant may result in rejection of the arrest application, loss of time and weakening of positions in a future dispute.
Interlegal’s practice shows that systematic work with documents and understanding of the procedural status of the parties are critical to achieving results in such disputes.
