Insights By Ylenia Busuttil

Introduction to Ship Arrest in Malta Securing and enforcing international maritime claims is inherently challenging, especially where the debtor’s principal or only asset is a ship in continuous transit. Ship arrest in Malta is a legal remedy available to creditors wishing to secure or enforce their claims against such an asset. Owing to a legislative overhaul carried out in the last decade, Malta offers an efficient legal framework for creditors wishing to arrest vessels located within the Maltese territorial or internal waters. Under Maltese Law, ship arrests may be enforced within the relatively wide area of twelve nautical miles, whether the vessel is at sea or otherwise. This expansive jurisdiction coincides with navigational routes which pass through the centre of the Mediterranean, an area of high maritime traffic. Additionally, Malta’s maritime infrastructure and geographical location attract several vessels to its facilities, making vessel arrest in Malta a viable and strategic solution for many creditors. Precautionary and Executive Warrants of Arrest of a Seagoing Vessel The remedy of ship arrest in Malta is a two-tiered system which may be utilised as a precautionary measure or as an enforcement mechanism. The Executive Warrant of Arrest allows a creditor who holds an executive title to enforce it against the vessel. Once the warrant is filed, the court may fix a term within which the debtor can settle the claim. In such cases, the warrant of arrest would be lifted and the arrested vessel would be released. Otherwise, the vessel under arrest would be sold through a  judicial sale by auction, enabling the creditor to settle its claim from the sale proceeds. On the other hand, Precautionary Warrants of Arrest may be invoked in security of a debt or claim amounting to not less than seven thousand Euros, before that claim is adjudicated by a court of law at the time of arrest. The rationale behind a precautionary arrest in Malta is to prevent a vessel from departing Maltese waters, which could hinder the enforcement of a claim if other assets are insufficient. This measure may be utilised to secure claims in personam for matters actionable before a European Union Member State court, as detailed in Council Regulation (EC) No 44/2001. It is also available for claims in rem, this being a claim directed against the vessel itself. Claims in rem that may lead to ship arrest are set out by Maltese law and correspond to the claims listed under the International Convention Relating to the Arrest of Sea-Going Ships 1952 and the International Convention on Arrest of Ships 1999, despite Malta not being a signatory.  Exceptions apply, including but not limitedly, vessels: Chartered in the service of the Maltese Government, vessels employed Employed in postal services by local or foreign governments, vessels designated as war vessels, or vessels which do not exceed Designated as warships Under ten meters in length. Jurisdiction and Conditions for Precautionary Ship Arrest in Malta Obtaining a precautionary warrant to arrest a vessel in Malta involves unique jurisdictional implications. In fact, once a vessel is arrested in Malta, the Maltese courts obtain jurisdiction over the related claim.  Claims in rem can be filed directly against the arrested vessel under two conditions: The person who would otherwise be liable in personam for that claim must have either been in possession or control of the vessel, or must have been the vessel’s owner or charterer when the claim arose. The same person must hold the position of owner, beneficial owner or bareboat charterer of the vessel at the time of arrest. Additionally, under specific conditions, ship arrest may apply to ‘sister ship’ of the arrested vessel if the person described is the owner or beneficial owner in respect to the sister ship’s shares. This is extremely advantageous since it widens the scope of the local admiralty jurisdiction. The Ship Arrest Procedure in Malta Whether used precautionarily or to enforce an executive title, the process in Malta is relatively straightforward:  The applicant must file an application in court for the issuance of a warrant of arrest of a seagoing vessel, which application must be confirmed on oath if the warrant is issued precautionarily. The application must include evidence to substantiate the claim preliminarily in the case of precautionary warrants to arrest a vessel in Malta or evidence of the executive title enforced in the case of executive warrants to arrest a vessel in Malta. Once the warrant is issued, this is served on local authorities and on the vessel’s master or agent. The relative notification is conducted either using a court-marshal or through a privately contracted service provider, duly licensed and authorised to conduct commercial operations within domestic territorial waters, expediting the process.  The entire process takes around 24 hours from when all documentation is available. Upon issuance: Transport Malta, will deny the vessel clearance to leave Maltese internal and territorial waters. One would not be able to divest himself of the vessel in any way or to surrender any rights therein. All documentation and certification are seized and deposited in court. An executive warrant of arrest may lead to the judicial sale of the vessel or to the vessel’s arrest being maintained in place until the debt held in virtue of an executive title is settled, while a precautionary warrant secures the claim pending legal proceedings. Defending Ship Arrest in Malta Those on the receiving end of a precautionary warrant for the arrest of a vessel may seek remedies under specific circumstances, including by: Requesting the issuance of counter warrant on the basis that the amount claimed is excessive, unreasonable or unjustifiable. Demonstrating that other adequate security is available Depositing sufficient security for the claim, interest and costs in court.  If the applicant does not follow through with an action on the substance of the claim within 20 days of the issuance of the warrant, one may initiate proceedings to demand the application of penalties on the basis of wrongful, illegal or malicious arrest. For executive warrants, the debtor may request revocation it if there is a valid legal reason. This is interpreted rather strictly by Maltese Courts. Conclusion As global maritime trade expands, Malta’s ship arrest framework stands out by offering a robust legal infrastructure for creditors to secure and enforce maritime claims. It protects the operational interests of shipowners and charterers through a balanced judicial protest.

On the fifteenth (15th) of November 2024, the First Hall Civil Court presided over by Judge Ian Spiteri Bailey, delivered its judgement in the case Dr. Joseph Mizzi noe vs. M.V. Sea Patron. This decision, emerging from facts which the Court describes as complex and extraordinary, significantly contributes to local jurisprudence on the nature of charterparty agreements, the charterer’s duty of care and the War Risk Clause. The case was initiated by Sovereign Fuels Limited, owner of the M/V Sovereign M (the “Vessel”), which had been chartered to Patron Group Limited under a Time Charterparty Agreement. The proceedings were instituted against M/V Sea Patron, owned by Patron Group Limited, following its arrest in Maltese waters under the domestic court’s in rem jurisdiction established by Article 742D of the Code of Organisation and Civil Proceedings (Cap. 12, Laws of Malta). The charterparty agreement limited the Vessel's operation to offshore activities involving the carriage of liquid cargo in the central Mediterranean. This was supplemented by a verbal agreement between the parties, prohibiting navigation within 80 nautical miles of Libya due to regional political instability. Patron Group Limited violated this agreement by directing the Vessel to operate within 40 nautical miles of Libya. While awaiting further instructions, the Vessel was intercepted by Libyan naval forces leading to the detention of the Vessel and its crew at Tripoli under harsh conditions. This led to significant financial losses for Sovereign Fuels Limited, including costs related to the Vessel and the crew’s release from detention. Patron Group Limited also failed to fulfil its payment obligations under the Charterparty. As a starting point, the Court meticulously analysed the nature of the Time Charterparty Agreement in place to identify the rights and obligations binding on each party. Citing the judgement Avukat Max Ganado noe vs Kaptan Sebastiamo Pizzimenti, delivered by the Court of Appeal on the 30th of November 2007, the Court distinguished between a bareboat charter, where the charterer assumes full control and possession of the vessel, and other types of charters, highlighting that it is only in the former case that the charterer, for all practical purposes, takes on rights and obligations akin to a temporary owner of the vessel. In other cases, the shipowner retains the exclusive responsibility to ensure that the vessel and the crew can fulfil their engagements. The Court concluded that the charterparty in place between the parties fell outside the scope of a bareboat charter, as the Vessel was leased together with its master and crew, but nonetheless recognized that the Vessel was under Patron Group Limited’s control throughout the charterparty for all navigation and operational purposes. The Court addressed the damages resulting from the Vessel’s detention by referring to several safeguards within the charterparty agreement, including the charterer’s clear obligation to avoid exposing the Vessel to risk. It also highlighted the proven agreement between the parties that specifically prohibited navigation close to the Libya. The Court determined that Patron Group Limited instructed the vessel’s Master to navigate the Vessel within forty (40) nautical miles of the Libyan coast, and thus exposed the vessel to substantial danger which materialised upon the vessel and crew’s detention. The Court emphasised that, as an experienced operator in the shipping industry, Patron Group Limited should have foreseen the risks of unsafe conditions and potential detention when navigating near Libya, especially considering that Libya was experiencing serious political unrest and that there were several reported occurrences of vessels being detained, even arbitrarily, in the area. This was classified as a clear breach of the standard war risk clause established within the charterparty, which strictly forbids operations exposing the Vessel to war risks without the shipowner’s prior written consent. Consequently, the Court liquidated and awarded financial damages to Sovereign Fuels Limited for the actual losses incurred. The Court also upheld Sovereign Fuels Limited’s claim for unpaid charter fees, ordering Patron Group Limited to pay €100,000 in arrears. In doing so, it relied on a private writing wherein the charterer recognized its defaulting status and expressly agreed to settle the balance due by way of charter fees. It dismissed claims that the debt acknowledgement was obtained under duress, citing insufficient evidence. This judgement is notable in that it reinforces the high standard of care required from charterers in ensuring vessel safety, particularly in high-risk regions. It also confirms that prudent decision-making is required from charterers irrespective of the nature of the charterparty in place, shedding light on the balance of rights and responsibilities between shipowners and charterers. Sovereign Fuels Limited was represented by Dr Joseph Mizzi and Av Ylenia Busutill from Muscat Mizzi Advocates and Dr Larry Gauci from Gauci and Partners Advocates.