Arrest: not always a quick remedy
Over the years, ITIC has arrested many vessels in order to recover outstanding debts for Members. Where an undisputed debt is involved the majority of arrests result in the debt being paid immediately by the vessel’s owner or charterer to avoid the costs of detention. However, there have been several instances when the Member is not paid due to the poor financial situation of the debtor.
In one such case ITIC arrested a vessel in France in order to recover a ship agent’s outstanding port disbursements. The ship owner eventually managed to provide security to release the vessel, rather than paying the debt. This meant that, in order for the security to be released, a court judgment had to be obtained. French law requires that the judgment had to be obtained either from the country where the debt was incurred (in this case Panama), or at the place where the debtor’s place of business is located (in this case British Virgin Islands).
Legal representatives in Panama advised that it could take two years to obtain a judgment, and possibly a further two years if there was an appeal. Luckily for the ship agent, a judgment could be obtained from the British Virgin Islands, where the legal system is based upon English law, in a much faster time. Not all legal systems give the plaintiff an option as to where the court judgment can be obtained. In some jurisdictions a case on the merits would have to be commenced in the courts of the country where the vessel was arrested and could take many years to reach a conclusion. Members cannot always expect a fast result when an arrest is made.