First Gibraltar Ship Arrest Symposium Slides by Selwyn Figueras

First Gibraltar Ship Arrest Symposium ISOLAS – Portland House, Glacis Road, Gibraltar

www.gibraltarlawyers.com The Hon Minister for the Port – Neil Costa MP Christian C. Hernandez – Shipping Partner, ISOLAS Elliott J. Phillips – Commercial Litigation Partner , ISOLAS Felipe Arizon – Partner, Arizon Abogados Chaired by Selwyn M Figueras - Business Development Manager, ISOLAS

www.gibraltarlawyers.com

Ship Arrests : Planning the Arrest Christian C Hernandez - Partner - ISOLAS

The context: A tentative recovery? Perhaps, but difficult economic times require sophisticated solutions

• • • • • • •

A surge in loan defaults Shipping companies running out of cash The credit crunch still in full swing Financing options limited Manufacturing picking up but historical issues abound Financiers arresting as a measure of last resort Typical arrests today very different to arrests 5 years ago

To arrest or not to arrest: Complex issues

Understanding the practical aspects can save you time and money • To arrest or not to arrest • Have all other avenues been explored and exhausted? • What is the nature of the claim? • What is the amount of the claim? • Solvency of debtor

The Vessel: Title 2 The Vessel: Knowing your target Indicative Text

Spend money only when you know the asset is worthy of attention

• Fundamental to understand the characteristics of the target vessel, i.e., single hull tanker, cargo, etc. • Condition of vessel – will you be arresting a liability? • Assess potential value of the vessel – consider scrap value as worst case scenario • Obtaining a valuation • Monitor insurance coverage as well as policy conditions • Understand her shipping routes – is she trading? • Where can you find her?

Jurisdictions: Location, location, location Assess the variety of options to secure the best result

• Use your knowledge of the vessel’s shipping routes • Weigh up the benefit of arresting as soon as possible vs the benefit of having some patience and arresting in the best suited jurisdiction • Look for as many similarities as possible to your home jurisdiction – make the process as simple as possible • Reliability, dependability, delivery and execution: four features to look for in your jurisdiction

Legal Advice: getting more for your money Shop around for the best advice and service

• Consider recruiting legal advice through your existing legal professionals • Online searches increasingly common • Remember the legal directories • Seek free initial review of the merits of your claim and the potential costs and pitfalls thereof

Time is money: how long will it take? It may be time-sensitive but it can also be time-intensive

The Costs: The Benefits

A cost/benefit analysis requires a detailed understanding

Once you arrest: what am I in for? A variety of matters to think about once you’ve taken decisive action

• Is the vessel loaded? • The Crew – beware of crew claims which may rank highly depending on the choice of jurisdiction • Cargo issues may arise after arrest • Security • Sale of the vessel • Third party creditors • Other ship mortgages and recorded liens against the vessel • Distribution of proceeds

The crew: The Human element Caught in the cross-fire, the crew’s needs are the priority

• The crew is the first priority following arrest • Identify all crew members/positions. Determine Master’s attitude/willingness to assist/loyalties • Immigration status of crew • Determine minimum number of crew/qualifications required to remain on board through the process • Consider provisions and maintenance needs of vessel • Consider then the repatriation of crew members rendered redundant by the arrest • Consider wage commitments as part of the costs of the arrest

Security: keeping the asset safe Protecting the vessel and/or its cargo

• Consider hiring a security services provider • Understand the threats to your asset • The risks to the vessel and/or its cargo are various • Crew • Vandalism • Theft • Piracy • Natural elements

Sale of the vessel: realising the value Finding a buyer and the proceeds of sale

• Depending on the jurisdiction, jurisdiction, this can be done in in a number of ways, such as by public auction or private treaty • Third parties may well enter caveats caveats on on the sale • Such third parties will be notified upon the intended release of the vessel • Consider entering a minimum bid to protect value where no serious bidders bidders attend attend sale/enter sale/enter aa bid bearing in mind the the costs involved involved in holding holding aa vessel whilst whilst waiting for the the best price offer on the vessel • An option option of of last last resort may be be to retain the the vessel and operate it as a going concern – this option may be gaining favour favour in current times

Questions?

www.gibraltarlawyers.com

next...

Ship Arrests in Gibraltar – Practice & Procedure presented by Christian Hernandez – Partner - ISOLAS

www.gibraltarlawyers.com

Ship Arrests in Gibraltar â&#x20AC;&#x201C; Practice & Procedure presented by Christian Hernandez â&#x20AC;&#x201C; Partner - ISOLAS

Gibraltar: Everything in your favour The history and the present

• At the gates to the Mediterranean • Strategically located • Shipping tradition

Political and Legal System: Advantages Reliable and Prestigious

• Autonomous Jurisdiction • Experienced Judges • English Court of Appeal

Actions in Rem 1: The Gibraltar Position Definitions of note in the Gibraltar context

• Any claim to the possession or ownership of a ship or the ownership of any share therein • Any question arising between the co-owners of a ship as to the possessions, employment or earning of that ship • Any claim in respect of a mortgage of or charge on a ship or any share therein • Any claim for damage done by a ship (maritime lien) • Any claim for loss of life or personal injury in respect of a defect in a ship, neglect or default in navigation, management od the ship, loading, carriage or discharge of goods, embarkation, carriage or disembarkation of passengers

Actions in Rem 2: The Gibraltar Position Definitions of note in the Gibraltar context

• Any claim for loss or for damage to goods carried on a ship • Any claim arising out of an agreement relating to the carriage of goods in a ship or the use or hire of a ship • Any claim in the nature of salvage (including aircraft)(maritime lien) • Any claim in the nature of towage in respect of a ship or an aircraft • Any claim in the nature of pilotage in respect of a ship or an aircraft • Any claim in respect of goods or materials supplied to a ship for her operation or maintenance • Any claim in respect of the construction, repair or equipment of a ship or dock charges or dues

Actions in Rem 3: The Gibraltar Position Definitions of note in the Gibraltar context

• Any claim by the master or a member of the crew of a ship for wages (maritime lien) • Any claim by a master, shipper or charterer or agent in respect of disbursements made on account of a ship • Any claim arising out of an act which is or is claimed to be a general average act • Any claim arising out of bottomry (maritime lien) • Any claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried in a ship, or for the restoration of a ship or any such goods after seizure or for droits of admiralty

Arresting a ship: Security for your claim What you need to do

• • • • • •

Claim Form Short Particulars Request for service of the Claim Form Request for Warrant to Arrest Undertaking to pay Admiralty Marshal’s costs Affidavit/Declaration to lead to warrant

Arresting a ship: Mirroring UK procedures Stating your Claim and the Warrant

• • • • • •

Claim Form as per the Civil Procedure Rules Brief particulars set out in the Claim Form; or Full Particulars of Claims Request (praecipe) for Warrant to Arrest Drafted by lawyer for arresting party Used by Admiralty Marshal for arrest of ship

Arresting a ship: Evidential provisions

The Requirements re the Affidavit/Declaration to lead to warrant

• • • •

Nature of Claim Name and Port of Registry of ship Confirmation that Ship is the relevant ship Attestation of Deponent as to the following:

• Establishing the Person liable • That the person liable was the owner/charterer/in possession • That the person liable was the beneficial owner at the time or a charterer by demise

Arresting a ship: Admiralty Marshal costs Undertakings required in relation to the costs of the arrest

• Deposit required to cover the following: • Costs of the arrest • Provision of Ship keepers • Water and fuel for the ship and maintenance of the crew • Other costs incurred by the Admiralty Marshal

• Deposit required usually £10,000

Arresting a ship: The Upper Hand Arresting in Gibraltar means you have all the cards in your hand

• If requirements met, arrest can be carried out within hours • Admiralty Marshal is on call 24hrs a day, 365 days a year • In urgent cases, a ship may be arrested at any time • Arrest carried out usually without a formal hearing • Advantage over most other Mediterranean jurisdictions • An arrest can also be lifted in short order • Judgment in default

Arresting a ship: Sale of the Vessel Options are available in respect of the realisation of the asset

• A sale of a vessel can be done in one of two ways • Public Auction • 4 week timeframe

• Private Treaty • Could be completed in less than a week • There should be a buyer available willing to pay at least market value • Two valuations obtained – sold on ‘as is, where is’ basis

• Caveats may also be entered by third parties on arrest • Third parties would be notified upon intended release

Wrongful Arrest: So your claim fails…

Where do you stand where it the decision doesn’t go your way?

• Defendant may bring claim on arresting party • Must show mala fides or gross negligence

• Rare in practice • Where bona fide claim is brought and fails, no claim for damages will stand

Gibraltar: A friendly jurisdiction Quick, efficient, dynamic, understanding

• • • • •

Both Claimant and Owner Friendly Quick Arrest Quick Release Admiralty Claims given priority by the Supreme Court Brussels and Lugano conventions implemented in Gibraltar • Ability to arrest as security for an arbitration award

Christian C Hernandez +350 20078363 | christian.hernandez@isolas.gi www.gibraltarlawyers.com

Questions?

www.gibraltarlawyers.com

next...

Debt Recovery & Injunctive Relief

presented by Elliott Phillips â&#x20AC;&#x201C; Commercial Litigation Partner

www.gibraltarlawyers.com

Debt Recovery & Injunctive Relief

presented by Elliott Phillips â&#x20AC;&#x201C; Commercial Litigation Partner

Setting the Scene: Debt Recovery The issues to consider

• • • • • •

The Contract Breach of Contract Recovering your debt Statutory Demands Part 7 claim Post Judgment Options

The Contract: An opportunity

A careful approach to the contract for less hassle later • • • • • • • •

At the negotiation stage consider how you can minimise late payments/debt: Conduct your diligence check on the trading status of the company Consider the use of personal guarantees Think about obtaining monies on account Consider the use of Retention of Title Clauses (RTCs) The case of Romalpa Modern interpretation of Retention Title Clauses (RTCs) Awaiting Judgment on the issue from the Chief Justice which may will give local guidance as to the use of RTCs.

Breach of Contract: What do you do? Decisions, decisions – choose what’s best for your situation

• Exhaust all non-litigious avenues, if possible • Compromise-payment schedule? • Credit Control and paper trail • Consider nature and level of loss • Remedies?

Recovering debt: Legal action

Three possibilities â&#x20AC;&#x201C; the context will determine which is best

Pre-action Letter

Part 7 Claim

Statutory Demand

Statutory Demands: First things first What it is and what you need to do…

• A formal demand for payment • You must ensure that the debt cannot be disputed • A Statutory Demand is a precursor to a Petition for winding up of the Company. • Be careful there are specific rules on service and form used. • Debtor has 21 days to settle the entire sum

Statutory Demands: The Advantages

The pros – why statutory demands are a good idea…

• Fairly straightforward process and quick • Low costs • No Court involvement or fee (except if Insolvency is engaged) • Follow up is not necessary so that you can abandon if commercially unviable • Significant impact on debtor- precursor to winding up • SD can lead to quick payment or a negotiated payment plan

Statutory Demands: The Disadvantages There are some limitations and pitfalls

• Amount must be for a specific sum • £500 limit under Companies Act • Specific form, failure can lead to striking out- In Re Premier 1993 Gib LR • Very risky to serve SD if the debt could be disputed on genuine grounds • If SD remains unanswered after 21 days then only choice is winding up and increased costs. • Winding up procedure engaged collective procedures for the benefit of all creditors- as a unsecured creditor you will recover very little in the liquidation.

Part 7 Claims: Going to Court When Statutory Demands fail to get you anywhere…

• Ordinary claim • Governed by Civil Procedure Rules • Depending on the nature and value of claim will be heard in Small Claims Court or the Supreme Court • Focus on accessibility, efficiency, control of costs

Part 7 Claims: The Advantages The pros of taking the matter to court

• Costs- Debtor will have to spend time and money • Prospect of Judgment could create difficulties securing future lending • The debtor trading status is not affected which allows him the comfort if continue trading to pay his debts • A final judgment or order enable enforcement • Debt is between you and the debt and in itself does not lead to winding up or a realisation of the debtors assets. • Fairly quick interim measure- summary judgment or strike out. • If you are successful in you Part 7 costs follow the event and are more likely to be recovered in full or in part.

Part 7 Claims: The Disadvantages The buts – some issues to bear in mind

• If defended by the debtor can be slow- 6 – 18 months • Part 7 is more expensive than the SD/Winding Up Route • Part 7 requires thorough preparation of Statements of Case by virtue of CPR Rules • Procedure is not confidential- Court file is a public record and can be inspected by any member of the public • Parallel application need to be made for enforcement as the Judgment itself does not give you immediate right to recover

Part 7 Claims: The various tracks Whether cost or complication – each case has its track

• Small claims- Claims under £5,000 • Fast track – Claims between £5,000-£25,000 • Multi track – Complex and time consuming cases in excess of £25,000

Post Judgment: Solvent Debtors Recovering against your judgment award • Execution • Charging Orders • Third party debt orders

Post Judgment: Insolvent Debtors Recovering against your judgment award – a little tougher

• Section 220 Companies Act- Winding Up • “Unable to pay debts” • “Court of the view that it is just and equitable to wind up” • Winding up procedure • Appointment of liquidator by the Official Receiver • New Insolvency Act (2011)

Enforcement Overseas: An added dimension

More expensive, more complicated but sometimes unavoidable • Judgment Regulation (EC 44/2011) applies as between all EU countries except Denmark. • Lugano Convention applies to Denmark, Norway, Iceland and Switzerland • The Foreign Judgments (Reciprocal Enforcement) Act 1933 applies to may commonwealth countries outside the EU except the US. • The US and remaining countries- the common law applies

Injunctive Relief: Protecting your position

Taking steps to maximise the potential recovery • Injunction? • Types of injunction • Criteria applied by the Court for a grant of an injunction. • The case of MV AGIA THEODORA

Elliott J Phillips +350 2000 1892 | elliott.phillips@isolas.gi www.gibraltarlawyers.com

Questions?

www.gibraltarlawyers.com

next...

Debt Recovery & Injunctive Relief

presented by Elliott Phillips â&#x20AC;&#x201C; Commercial Litigation Partner

9 January 2012, Gibraltar

FIRST ISOLAS GIBRALTAR SHIP ARREST SYMPOSIUM Arrest of ships in Spain to collect debts, practical insights.

Dr. Felipe Arizon. Ph.D Newcastle, LL.M Southampton.

1. Why Spain ? 2. Local formalities to obtain and enforce an arrest order. 3. The 1999 Arrest Convention, advantages. 4. Maritime claims and maritime liens under Spanish law, the Auction.

Dr. Felipe Arizon (c)

Why Spain? Many ports and 27 Port Authorities

Dr. Felipe Arizon (c)

Why Spain? - Spain is not the paradise to arrest ships but a very reasonable jurisdiction compare to the average. - Arresting a ship in Spain can be done in a few hours from the clientâ&#x20AC;&#x2122;s call. - We have one of the more modern legal regimes available: (i) 1999 Arrest Convention v. 1952 Arrest Covention. (ii) 1993 Liens and Mortage Convention v. 1926 Liens & Mortgage Convention - Specialized Mercantile Courts v. Current collapsed Courts

Dr. Felipe Arizon (c)

Local formalities to

obtain an arrest order.

1. Power of Attorney

(i) Issued before Notary . (ii) Apostilled (Hague Apostille). (iii) Original form.

2. Mere allegation suffices However it is better to provide supporting evidence, translations. Dr. Felipe Arizon (c)

Dr. Felipe Arizon (c)

- Local formalities to enforce an arrest order. (i) Countersecurity: Bank guarantee, or cash, exchange.

- To maintain an arrest order. - 1. Ratification of the arrest; proving an action on the merits being started by 20 working days from the arrest order.

NEW 1999 Arrest Convention: Jurisdiction on the merits of the caseThe Courts of the State in which an arrest has been effected or security provided to obtain the release of the ship shall have jurisdiction to determine the case upon its merits, unless the parties validly agree or have validly agreed to submit the dispute to a Court of another State which accepts jurisdiction, or to arbitration.

- 2. No challenge of the Arrest. Dr. Felipe Arizon (c)

Real Decreto--ley 12/2011. Lo dispuesto en el Convenio Internacional sobre el embargo preventivo de buques, hecho en Ginebra el 12 de marzo de 1999 y en esta disposición se aplicará también a los buques que enarbolen pabellón de un Estado que no sea parte en dicho Convenio. Para decretar el embargo preventivo de un buque bastará que se alegue el crédito reclamado y la causa que lo motive. El tribunal exigirá en todo caso fianza en cantidad suficiente para responder de los daños, perjuicios y costas que puedan ocasionarse.3. Hecho el embargo, la oposición sólo podrá fundarse en el incumplimiento de los requisitos previstos en el Convenio Internacional sobre el embargo preventivo de buques.» Dr. Felipe Arizon (c)

The 1999 Arrest Convention A wider scope for maritime claims

(a)loss or damage caused by the operation of the ship e.g. collision;

(b) death or personal injury, whether on land or on water, in direct connection with the operation of the vessel; (c) salvage;

(d) damage or threat of damage to the environment, clean up costs and reasonable steps taken to avoid environmental damage; (e) wreckremoval;

Dr. Felipe Arizon (c)

The 1999 Arrest Convention A wider scope for maritime claims

(f) Agreement for use or hire of ship (e.g. charterparty); (g) agreement relating to carriage of goods (e.g. bill of lading) or passengers; (h) loss or damage to or in connection with goods (inc. luggage); (i) general average; (j) towage; (k) pilotage;

Dr. Felipe Arizon (c)

The 1999 Arrest Convention A wider scope for maritime claims

(l) goods, materials, provisions, bunkers, equipment (including containers) or services supplied for ship’s operation or maintenance; (m) construction, repair, converting, or equipment; (n) port, canal and pilotage dues; (o) wages and other sums due to master, officers, and crew for employment inc. “costs of repatriation and social insurance contributions”; (p) master’s, agent’s, shipper’s disbursements made on behalf of the vessel;

Dr. Felipe Arizon (c)

The 1999 Arrest Convention A wider scope for maritime claims

(q) insurance premiums (including P&I calls) â&#x20AC;&#x153;payable on behalf of the shipowners or demise chartererâ&#x20AC;?; (r) commissions, brokerages, agency fees payable in respect of the ship; (s) disputes as to ownership or possession of ship; (t) disputes between co-owners of a ship as to e.g. employment; (u) mortgage or hypothecation or any charge of the same nature of any ship; or (v) dispute arising from contract for sale of ship. Dr. Felipe Arizon (c)

Can we arrest for managers / operators claims? We need to establish a lien.1993 Liens and Mortgage Conventions.

Article 8 - Characteristics of maritime liens:Subject to the provisions of article 12, the maritime liens follow the vessel, notwithstandingany change of ownership or of registration or of flag. Each of the following claims against the owner, demise charterer, manager or operator of the vessel shall be secured by a maritime lien on the vessel: (a)claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf; (b) claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel; (c) claims for reward for the salvage of the vessel; (d) claims for port. canal. and other waterway dues and pilotage dues; (e) claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passengers' effects carried on the vessel. Dr. Felipe Arizon(c)

Article 5 - Priority of maritime liens 1.The maritime liens set out in article 4 shall take priority over registered mortgages, "hypothĂ¨ques" and charges, and no other claim shall take priority over such maritime liens or over such mortgages, "hypotheques" or charges which comply with the requirements of article 1, except as provided in paragraphs 3 and 4 of article 12. 2. The maritime liens set out in article 4 shall rank in the order listed, provided however that maritime liens securing claims for reward for the salvage of the vessel shall take priority over all other maritime liens which have attached to the vessel prior to the time when the operations giving rise to the said liens were performed. 3. The maritime liens set out in each of subparagraphs (a), (b), (d) and (e) of paragraph 1 of article 4 shall rank pari passu as between themselves. 4. The maritime liens securing claims for reward for the salvage of the vessel shall rank in the inverse order of the time when the claims secured thereby accrued. Such claims shall be deemed to have accrued on the date on which each salvage operation was terminated.

Dr. Felipe Arizon (c)

Article 6 - Other maritime liens Each State Party may, under its law, grant other maritime liens on a vessel to secure claims other than those referred to in article 4, against the owner, demise charterer, manager or operator of the vessel, provided that such liens: (a)shall be subject to the provisions of articles 8, 10 and 12; (b) shall be extinguished (i) after a period of 6 months. from the time when the claims secured thereby arose unless, prior to the expiry of such period, the vessel has been arrested or seized, such arrest or seizure leading to a forced sale; or (ii) at the end of a period of 60 days following a sale to a bona fide purchaser of the vessel, such period to commence on the date on which the sale is registered in accordance with the law of the State in which the vessel is registered following the sale; whichever period expires first; and (c) shall rank after the maritime liens set out in article 4 and also after registered mortgages, "hypothĂ¨ques" or charges which comply with the provisions of article 1.

Dr. Felipe Arizon (c)

Priority over liens and mortgages

The costs and expenses arising out of the arrest or seizure and subsequent sale of the vessel shall be paid first out of the proceeds of sale. Such costs and expenses include, inter alia, the costs for the upkeep of the vessel and the crew as well as wages, other sums and costs referred to in article 4, paragraph 1 (a), incurred from the time of arrest or seizure. The balance of the proceeds shall be distributed in accordance with the provisions of this Convention, to the extent necessary to satisfy the respective claims. Upon satisfaction of all claimants the residue of the proceeds, if any, shall be paid to the owner and it shall be freely transferable.

Dr. Felipe Arizon (c)

Other liens under Spanish Law: Art. 580 Commercial Code Credits in favour of the Tax Agency office Legal costs of the proceedings /forced sale. Pilots due, tonnage dues and other port dues, duly certified. Wages of the guards, bailees and expenses incurred to preserve the ship in good condition from entry till the forced sale. Rents of storage to keep the vessel gear and others. Salaries of Master and crew incurred in the last voyage.

Dr. Felipe Arizon (c)

Other liens under Spanish Law: Art. 580 Commercial Code Cargo price of the Goods sold by the Master by Court Order. Part of the ship price unpaid to the Sellers Some credits out of the ship construction and repairs (limited, last voyage) Some types of loan over the ship gear and others. Indemnity due to cargo owners for non delivery or damaged goods due under a court order, or arbitration award.

Dr. Felipe Arizon (c)

Art. 586 Commercial Code The shipowner and the ship operator, “navier” shall be civilly liable of the acts of the Master and of the obligations undertaken by the latter to repair, habilitate, and supply the ship, provided that the creditor proves that the amount claimed was invested in benefit of the ship”. Case law: Ship owner responsible if creditor acted in good faith (not knowing the diference between owners/managers/operators. Old judgments of 1927-1948). Important: Involve the Master. Invoice issued to “shipowners”. It is not a lien, if ownership changes, no valid claim against the vessel.

Dr. Felipe Arizon (c)

Article 11 - Notice of forced sale 1.Prior to the forced sale of a vessel in a State Party, the competent authority in such State Party shall ensure that notice in accordance with this article is provided to:

(a) the authority in charge of the register in the State of registration; (b) all holders of registered mortgages, "hypothĂ¨ques" or charges which have not been issued to bearer; (c) all holders of registered mortgages. "hypotheques" or charges issued to bearer and all holders of the maritime liens set out in article 4, provided that the competent authority conducting the forced sale receives notice of their respective claims; and (d) the registered owner of the vessel

2. Such notice shall be provided at least 30 days prior to the forced sale and shall contain either: (a) the time and place of the forced sale and such particulars concerning the forced sale or the proceedings leading to the forced sale as the authority in a State Party conducting the proceeding shall determine is sufficient to protect the interests of persons entitled to notice; or,

Dr. Felipe Arizon (c)

(b) if the time and place of the forced sale cannot be determined with certainty, the approximate time and anticipated place of the forced sale and such particulars concerning the forced sale as th authority in a State Party conducting the proceedings shall determine is sufficient to protect the interests of persons entitled to notice.

If notice is provided in accordance with subparagraph (b), additional notice of the actual time and place of the forced sale shall be provided when known but, in any event, not less than seven days prior to the forced sale.

3. The notice specified in paragraph 2 of this article shall be in writing and either given by registered mail, or given by any electronic or other appropriate means which provide confirmation of receipt, to the persons interested as specified in paragraph 1, if known. In addition, the notice shall be given by press announcement in the State where the forced sale is conducted and, if deemed appropriate by the authority conducting the forced sale, in other publications.

Dr. Felipe Arizon (c)

- Valuation of the ship unless there is an agreement between executed-ing party. - In order to bid: Deposit for el 20% of the shipâ&#x20AC;&#x2122;s valuation (cash or BG). -Where Bids 70% or best, the ship is adjudicated. -Where Biids above 70% but payment conditions include instalments with guarantees, the executing party may obtain the vessel for 70%. -Where Bids below 70% the executed party holds a 10 days option to bring a new bider to adjudicate the ship for 70%. -If such option is not exercised the executing party shall have an option to improve the best bid, above 60% of the valuation price. -If such option is not exercised, the best bid will be aproved provided is above 50%, or if less it covers the amount for which the ship is being on execution plus interest and costs. - If the best bid is lower than the above the Secretary of the Court will rule, after hearing the parties, and considering the position of the debtor. Dr. Felipe Arizon (c)

Article 12 - Effects of forced sale

1. In the event of the forced sale of the vessel in a State Party, all registered mortgages, "hypothĂ¨ques" or charges, except those assumed by the purchaser with the consent of the holders, and all liens and other encumbrances of whatsoever nature, shall cease to attach to the vessel, provided that: (a) at the time of the sale, the vessel is in the area of the jurisdiction of such State; and (b) the sale has been effected in accordance with the law of the said State and the provisions of article 11 and this article. 2. The costs and expenses arising out of the arrest or seizure and subsequent sale of the vessel shall be paid first out of the proceeds of sale. Such costs and expenses include, inter alia, the costs for the upkeep of the vessel and the crew as well as wages, other sums and costs referred to in article 4, paragraph 1 (a), incurred from the time of arrest or seizure. The balance of the proceeds shall be distributed in accordance with the provisions of this Convention, to the extent necessary to satisfy the respective claims. Upon satisfaction of all claimants the residue of the proceeds, if any, shall be paid to the owner and it shall be freely transferable. 71

Article 12 - Effects of forced sale 3. A State Party may provide in its law that in the event of the forced, sale of a stranded or sunken vessel following its removal by a public authority in the interest of sate navigation or the protection of the marine environment, the costs of such removal shall be paid out of the proceeds of the sales, before all other claims secured by a maritime lien on the vessel. 4. It at the time of the forced sale the vessel is in the possession of a shipbuilder or of a shiprepairer who under the law of the State Party in which the sale takes place enjoys a right of retention, such shipbuilder or shiprepairer must surrender possession of the vessel to the purchaser but is entitled to obtain satisfaction of his claim out of the proceeds of sale after the satisfaction of the claims of holders of maritime liens mentioned in article 4.

Dr. Felipe Arizon (c)

Article 12 - Effects of forced sale 5. When a vessel registered in a State Party has been the object of a forced sale in any State Party, the competent authority shall, at the request of the purchaser, issue a certificate to the effect that the vessel is sold free of all registered mortgages, "hypothĂ¨ques" or charges, except those assumed by the purchaser, and of all liens and other encumbrances, provided that the requirements set out in paragraph 1 (a) and (b) have been complied with. Upon production of such certificate, the registrar shall be bound to delete all registered mortgages, "hypothĂ¨ques" or charges except those assumed by the purchaser, and to register the vessel in the name of the purchaser or to issue a certificate of deregistration for the purpose of new registration, as the case may be. 6. States Parties shall ensure that any proceeds of a forced sale are actually available and freely transferable.

Dr. Felipe Arizon (c)

Conclusions: Spain is a good jurisdiction to Arrest a ship, fast and not too costly. It cover a very wide range of ports. Spain enjoys now the benefits of applying the 1999 Arrest Convention, providing a wider and clearer scope of claims. If you fear the ship will be auctioned, then Gibraltar is a much better choice. Forced sales in Spain takes place but slowly with the ship becoming deteriorated. So, call Isolas. Thanks for your kind attention.

Dr. Felipe Arizon (c)

First Gibraltar Ship Arrest Symposium Thank you for your time