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Acquisition of Ship’s Property

In its basic sense, property gives the rightful owner rights, such as preservation, claim and ownership on the property they own. In the case of ships’ property, the integral parts and accessories of the ship are evaluated within the scope of ownership. It is important to also and clearly identify issues that are not included in the property.

In accordance with the Turkish Commercial Code articles 996 and 997 in line with the International Private Law in terms of the applicable law regarding ships; The Turkish Commercial Code will be applied to the vessels registered in the Turkish ship registry, and the provisions regarding movables will be applied in terms of ownership and limited real rights for the vessels not registered in the ship registry.

As for ships that do not have a place of registration; real rights will be subject to the law of the place where they are located. In this article, the topics of acquisition of ship’ s property will be included.

1. Original Acquisition of Property

Acquisition of property by appropriation

The right to original acquisition of property belongs only to the state, and in the event that the ship is derelict or abandoned, the state acquires property of the ship by original acquisition with registering this ship in the ship register.

Commercial Code Article 998 – (1) The right to own a derelict ship belongs only to the State. A derelict ship is a ship whose ownership cannot be understood from the registry records or whose ownership has been duly abandoned.

(2) The state acquires property of the ship by registering itself as an owner in the ship registry.

Acquisition of property by statute of limitations 

If a registered ship is recorded with the owner of the ship, even though she is not the shipowner, and if she holds as a possessor for five years without a lawsuit and uninterruptedly over this record, she acquires the ownership of the ship. The beginning of the period starts from the date of registration of the ship. There may be issues such as suspension and toll of the statute of limitations within the specified period. In this case, it is necessary to file a lawsuit due to the termination of the statute of limitations with the determination of situations such as changing or re-acquiring the subject of possession.

A person who has been in possession of a ship for 10 years as a reversioner, although it had to be registered in the registry, without a lawsuit and uninterruptedly, has the right to request the registration of the ship in his own name.  Registration is only possible by filing a case. In the circumstances, a counteraction under the name of registration case must be filed against the registry office where the ship is registered or must be registered.

The court calls interested parties to report their objections by setting a maximum period of three months with an announcement to be made in a newspaper with a circulation of more than fifty thousand and distributed at the domestic level. If it is not challenged or the appeal is rejected, registration is decided. Before the registration decision is made, if a third person is registered as the owner or if an objection is given to the registry that the ship registry is not correct due to the ownership of the third party, the registration decision would not be valid for the third party.

With the registration decision issued by the court, the reversioner acquires ownership of the ship as soon as he registers himself in the register.

In the registration case filed due to extraordinary statute of limitations, if the court accepts, the new owner registration is made in place of the former owner of the ship.   In this case, since the ship will be derelict between the old owner and the new owner, an annotation should be requested to be added to the ship registry to prevent loss of rights.

2. Acquisition of Ownership by Transfer of Title

What is meant by the transfer of ownership is, the agreement of the parties on the terms of the transfer and the completion of the necessary legal procedures for the transfer. In this context, they must enter into a written agreement for the transfer of a ship registered in the ship registry, and the signatures must be notarised.

Turkish Commercial Code article 1001, while specifying the form of the transfer does not include the requirement that the transfer should be notarised, but there is a requirement that the signatures be notarised. Accordingly, the parties can also make their written agreements at the ship registry office.

In the justification of the law, it was stated that the intended issue should be done in writing since the possession has passed into and the movable has a great economic value.

There is an opinion that the actual delivery of the ship will be possible with the start of duty of the ship’s crew of the real or legal person who took over the ownership.

Purchase, sale, barter, shipbuilding agreement can be counted as agreements that arises the obligation of passage of title. A separate explanation is required for the transfer of ownership for the ships registered and not registered in the ship registry. Unless otherwise agreed by the parties, the scope of the transfer is the ownership of the existing additions at the time of transfer becomes the subject of transfer, along with the ownership of the ship.

  • Ships not registered in the ship registry: Since the provisions of the Turkish Civil Code will apply for Turkish ships without registration, the transfer of possession will be required for the transfer of the whole or share of the ship. According to article 763 of the Civil Code; “A person who acquires possession of a movable in good faith and as the owner, becomes the owner of that thing, in cases where the acquisition is protected according to the provisions of possession even if the transferor does not have the authority to transfer the property.”  Accordingly, a person who inherits the ownership of a ship that is not registered in the register, to become the owner in good faith, shall retain the ownership acquired by that person in accordance with the provisions of the ownership, even if the transferor does not have the right to transfer the ownership.
  • According to the decision of the 19. Civil Chamber of the Court of Cassation; There is no dispute between the parties that the subject boat is not registered in the ship registry and that it originally belonged to the defendant … . Since the subject boat is not registered in the ship registry, it has the effect of securities and its sale is subject to the provisions of securities.
  • Ships registered in the ship registry: Ships registered in the registry can do so with a written contract, notarised signature, and transfer of possession within the scope of TCC art. 1001, as explained above. It is possible to carry out this transfer at the ship registry office. 
  • Share of ship and interest share registered in the register: While registration is required for the transfer of the interest share, Registration is not obligatory for ships registered in the registry that are not operated in the form of association of shipowners. In other words, the transfer of the interest shares on the ship registered in the register must be recorded in the ship register. In the association of shipowners, each of the affrighted shareholder can transfer their interest shares without the consent and approval of the other shareholders. However, if the ship’s right to raise the Turkish flag will be lost after this transfer, then the approval of other shareholders is required for the transfer. If it is decided to pay the debt or repair the ship after sailing, shareholder who does not agree with the decision may leave her share instead of paying this debt. In that case, she does not have to make the necessary payment. A shareholder who wishes to exercise such a right must notify the owners, of its decision through a notary public or to the registry office.

For ship’s property to continue to have an effect on lease and freight contracts, these contracts must be annotated in the ship registry. In this way, commentary may be effective and bear consequences on subsequent owners.

Some decisions on registration to the register are as follows:

According to the decision of T.R 15. Civil Chambers of the Court of Cassations; The action is about the request to transfer the claim subject to enforcement proceedings of the plaintiff filed against the landowners and the contractor based on the authorisation certificate, obtained from the enforcement office according to the article 94/II of the Bankruptcy and Enforcement Law, and to the limited work fee to the execution follow-up file made with the collection from the land owners.

According to the article 94/II of the Bankruptcy and Enforcement Law, it has been provided that the property or other real rights that the debtor has not rejected due to inheritance or any other reason and has not yet registered in the land registry and ship registry can be claimed by the creditor on behalf of the debtor, upon request, the enforcement office will notify the land registry or ship registry office and, if necessary, the court on that the creditor may follow this transaction; and according to the article 94/II of the Bankruptcy and Enforcement Law, only the registration of property and real rights in the name of the debtor can be requested based on the authorisation certificate to be obtained from the enforcement office…

In the decision of court of Cassation’s Assembly of Civil Chambers:

Decision of the Court of First Instance: It is decided that the yacht in question is registered in the Turkish ship registry, and the sales contract of the registered ships should be made officially, for this reason, that the contract between the parties is not a valid contract, and the plaintiff declares his will to withdraw from the contract by taking back the ship delivered to the defendant, that the defendant also did not fulfil the action he had undertaken according to the agreement between them, and everyone should return what he bought because the contract between the parties was not valid, … moreover, to the acceptance of the original case on the grounds that the partnership cannot be considered as a true partnership as explained above and cancellation of the defendant’s share in the company; with the acceptance of the counter action and the collection of 107.100,00 Euro from the counter party company; to rejection of the merged case.

During negotiations at the Assembly of Civil Chambers; the shares of the original case should be opened by the transferor …, also, the decision made in the original case was not capable of execution, for this reason, it cannot be said that the decision is final since it will not produce results, and that the main case can be reversed by making an appeal examination ex officio, therefore, although it was claimed that the decision to resist should be reversed for this different reason, this opinion was not adopted by the majority of the Board for the reasons explained above.

3. Loss of Ownership

In cases such as wreck of a ship, becoming a carcass, sinking, destruction, and the loss of the ship, the ownership of the ship registered in the register ceases. However, the liability of the shipowner for damage to the environment, resulting from the removal of the ship’s wreckage, continues.  In addition, it is possible to lose ownership by abandoning the ship.

According to the T.R 11. Civil Chamber of the Court of Cassation; According to the court, the remitter and the scope of the whole file, it was decided that the ship Düden lost its right to raise the Turkish flag as a result of the valid confiscation process by the Brazilian State Authorities, as the property was originally acquired by confiscation, all mortgage and pledge rights on the ship were also terminated, since the plaintiff purchased the ship in the tender opened by the Brazilian State, free from all rights in rem, the mortgage right previously placed on the ship by the defendant Emlak Bankası has also ended, since it is possible for a ship that has lost the right to raise the Turkish flag, its registration can be deleted acceptance of the case on the grounds that the request for the deletion of the Düden vessel’s registration in the Turkish ship registry was in accordance with the aforementioned law…to the abandonment of the ship from the Turkish National Ship Registry, to the determination of the ownership of the ship in question belongs to plaintiff shipowner Lyra Navigation Maritime Ltd Company, and with the rejection of all appeals of the defendants’ representatives, it was decided to approve the judgment found in accordance with the procedure and the law.

Conclusion:

The acquisition of ownership of ships may be based on reasons arising from public and private law. The state has the right to register on behalf of the public on a derelict ship. In terms of written contracts between the parties, the transfer of the ship is possible, and a separate registration requirement has been imposed for the association of shipowners as an exception.

Registration cases and actions of nullity are often encountered in practice due to erroneous registration, failure of the parties to fulfil their obligations after the contract, or disputes arising from portion of the inheritance.

This article was originally published in Mondaq.

Provisional Attachment of Ships

A provisional attachment is a legal measure imposed to ensure that money and collateral receivables can be secured. In Maritime Enforcement Law, a provisional attachment is imposed to secure marine claims, but since maritime trade has unique characteristics, special provisions are included.

In this context, the matter of imposing a provisional attachment decision about the marine claims has only consequences specific to maritime trade, such as the detention or seizure of the ship. This article has been prepared to clarify the provisional attachment of marine claims.

In order to resolve disputes arising from the provisional attachment of ships, national and international law has been tried to be uniformed. As a reflection of this, the fact that the Turkish Commercial Code, No. 6102 is regulated almost in parallel with the references to the executive Bankruptcy and Enforcement Law and the International Convention on Arrest of Ships of 1999 should be considered as an important step to significantly resolve practical disputes.

Conceptually, examining provisional attachment under the practice of International Maritime Law; the concept of restriction of a ship from sailing by the competent authorities is expressed as an arrest, while in Turkish Law, the request of the creditor due to a debt and the decision of the court find a place with the concept of provisional attachment.

It is further and clearly stated in article 1353 of TCC that the only method of securing the ship claims to be guaranteed by seizure of the ship is provisional attachment. Accordingly, a ship will be arrested due to the pursuit of receivables, the seizure measure will find its place in the legal system only with the request for a provisional attachment.

1. Applicable Law

Transactions such as provisional or operational attachment, compulsory execution sale, transfer of ownership of a ship; are subject to the law of the country in which the disposals were made. Although this provision is restated in the Turkish Commercial Code article 1350, it was implemented by extraction of the 2. article of the International Conventions on Maritime Liens and Mortgages of 1993.

In the cases of element of foreignness of the ship’s certain or provisional attachment, judicial sale, transfer of ownership, transactions and dispositions related to compulsory enforcement because of sale of the ship will be subject to the law of the country it is located. In summary, Turkish Law will apply to the procedures related to the attachment and subsequent sale of a foreign ship in Turkey. In the same way, when the Turkish ship is subject to attachment abroad, it will be subject to the law of the relevant country. However, it is necessary not to violate the legal right to be heard in relation to Turkish-flagged ships. In this context, there are procedural rules that must be followed according to article 1350 of Turkish Commercial Code.

In the case of the sale of a ship with a Turkish flag abroad through compulsory execution sale, the auction must be reported by the institution or interested parties engaged in the auction, at least thirty days before this sale;

  • a) to the Turkish ship registry, where the ship is registered, 
  • b) to the registered owner of the ship in the Register, 
  • c) to the registered owners of other rights and receivables in the ship registry; and must be declared in one of the newspapers with a circulation of more than fifty thousand and distributed at the Turkish level, provided that it is reported or its expenses are covered by the interested parties If the ship is sold abroad by compulsory execution without this notification or announcement, its registration cannot be deleted and the rights and receivables registered in the Turkish ship registry remain reserved on the ship.

During the implementation of the ship’s sequestration, some incompatibilities may arise between material law and practice. This noncompliance manifests itself due to the evaluation of ships as movable and real estate. According to Bankruptcy and Enforcement Law article 23/4, Turkish ships registered in the Register are considered immovable. In addition, Turkish ships and foreign ships that are not registered are considered to be movable. According to the decision of 12. Chamber of Court of Cassation, it is stated that “The M/V Best Line Ship with Comoros flag is not registered in the Turkish Ship Register and have a characteristic of a movable and the auction is subject to the provisions of the sale of movable goods.”. In practice, ships subject to the provisions of movable goods may be arrested, while ships registered in the ship registry may not be arrested.

2. Terms of Provisional Attachment

According to the TCC article 1352 and ff, provisional attachment of ships should be understood as a temporary and legal seizure of a ship by a court decision in order to ensure the pursuit of a limited number of real and personal rights of claim, referred to as a maritime claim and arising from a private legal relationship. In this case, the concept of provisional attachment was limited to the concept of marine claims, unlike the broad range as in real estate. A provisional attachment is also provided as a way of provisional guarantee, which gives the right to seize the ship for the follow-up of sea claims.

In order for the provisional attachment decision to be ruled in terms of Maritime Enforcement Law to be in question;

  • The claim must be due and payable,
  • The claim must be in the form of a sea claim,
  • A ship subject to the provisional attachment must be in existence,
  • The guarantee must be paid and subsequently the ceremony that concludes the provisional attachment must be performed.

In addition, although there is a rule that the claim is not secured with the hypothec to rule a provisional attachment decision; a guarantee made with the hypothec in terms of marine claims does not constitute an impediment for a provisional attachment.

Additionally, the right to exercise the right of provisional attachment is also limited; according to article 1369 of TCC provisional attachment of every ship which has a sea claim over;

  • Shipowner at the time of the arise of the sea claim will be responsible for this debt, if the person is also owner of the ship at the time of the implementation of the provisional attachment; or
  • If the person who is the tenant of the ship when the sea claim arise, is also the owner of the ship and responsible for this debt when the provisional attachment was implemented;
  • If the ship claim is secured by a ship hypothec, ship mortgage or by a real obligation in similar nature on the ship; or 
  • If the dispute is related to the ownership or possession of the ship; or 
  • A debt is possible if it grants the right of ship claimant in accordance with article 1320.

In accordance with this article, the important issue is that to be the ship’s owner, tenant, or to be responsible for this debt at the time of the arise of the sea claim. If the owner of the ship is someone else at the time of the arise of the provisional attachment, the implementation of the attachment will not be possible.

3. Claims Subject to the Provisional Attachment of Ships

The concept of “provisional attachment of ships”, which has serious consequences such as the retention and even seizure of ships; for sure cannot be expected to be requested for all types of claims. Because in the Commercial Code, attention was paid to this issue and an attempt was made to prevent the abuse of the right. Accordingly, TCC article 1352 emphasises that the claims subject of provisional attachment of ships was only possible in terms of maritime claims, and their scope could be none other than that specified in the list.

In this case, even if the parties draft it by contract, it will not be possible for the type of claims that is not found in the list to be included in hereby concept of sea claims and therefore will not ask for a provisional attachment of the ship. The common point of these claims is that the receivables originate directly from the operation of the ship or include claim rights related to the ship.

Article 1352 – (1) “Maritime Claim” means a claim arising out of one or more of the following: 

  • a) Loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the ship.
  • b) Loss of life or other bodily harm caused on land or water directly in relation to the operation of the ship.
  • c) salvage operations or any salvage agreement, including, special compensation relating to salvage operations in respect of a ship which by itself or its cargo threatened damage to the environment.
  • d) Damage or threat of damage caused by the ship to the environment, coastline, or related interests; measures taken to prevent, minimise, or remove such damage; compensation for such damage; costs of reasonable measures of reinstatement of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third parties in connection with such damage; and damage, costs, or loss of a similar nature to those identified in this subparagraph.
  • e) Costs or expenses relating to the raising, removal, recovery, destruction, or the rendering harmless of a ship which is sunk, wrecked, stranded, or abandoned, including anything that is or has been on board such ship, and costs or expenses relating to the preservation of an abandoned ship and maintenance of its crew.
  • f) Any agreement relating to the use or hire of the ship, whether contained in a charter party or otherwise.
  • g) Any agreement relating to the carriage of goods or passengers on board the ship, whether contained in a charter party or otherwise.
  • h) Loss of or damage to or in connection with goods, including luggage, carried on board the ship.  
  • i) General average.  
  • j) Towage. 
  • k) Pilotage. 
  • l) Goods, materials, provisions, bunkers, equipment, including containers, supplied or services rendered to the ship for its operation, management, preservation, or maintenance. 
  • m) Construction, reconstruction, repair, converting or equipping of the ship.  
  • n) Port, canal, dock, harbour and other waterway dues and charges; 
  • o) Wages and other sums due to the crew of the ship’s, in respect of their employment on the ship, including costs of repatriation and social insurance contributions payable on their behalf. 
  • p) Expenses incurred on behalf of the ship or its owner, including loans received for the ship. 
  • r) Insurance premiums, including mutual insurance calls in respect of the ship, payable by or on behalf of the shipowner or demise charterer. 
  • s) Any commissions, brokerages, or agency fees payable in respect of the ship by or on behalf of the shipowner or demise charterer.
  • t) Any dispute as to ownership or possession of the ship. 
  • u) Any dispute between co-owners of the ship as to the employment or earnings of the ship. 
  • v) A mortgage or a “hypothèque” or a charge of the same nature on the ship. 
  • y) Any dispute arising out of a contract for the sale of the ship. 

4- Competent and Authorised Court

The competent court for applications for provisional attachment for ship claims is the Commercial Courts of First Instance. Currently, 2 Commercial Courts of First Instance in Istanbul and one in Izmir are authorised for disputes arising from maritime trade and insurance.

No court other than the competent court specified in the law has the authority to make a provisional attachment decision in respect of the provisional attachment of the ship. In the determination of the competent court, the distinction of the competent court was made before and after the case. Before the case, it is necessary to examine the ship in terms of competency separately according to the issue of Turkish and foreign flags:

Turkish-Flagged Ships : It is ruled by the court located in where the ship is anchored, attached to the buoy or vault, berthed, or sledged. In addition, the creditor may request a provisional attachment for ships registered in the Turkish ship registry in the court located in register’s location and for ships not registered in the register in the court of located in shipowner’s settlement.

Foreign-Flagged Ships : It is ruled by the court located in where the ship is anchored, attached to the buoy or vault, berthed, or sledged. In terms of foreign ships, the court located where the ship stops although for short periods, such as buying fuel, spare parts, changing ship personnel, is competent. But in terms of foreign-flagged ships, the requirement of “recess of expedition” is stipulated. According to the Montreux Convention on ships that continue their course without recess, a provisional attachment cannot be implemented by the Turkish courts unless there is a violation of innocent passage in respect of ships transferring on innocent passage.

After the case has been filed, the request for a provisional attachment related to it is also requested from the same court, in which the merits of the dispute have been seen in the Turkish courts. If a case has been filed before the arbitrator or in foreign courts for maritime claims, in this case, the above-mentioned competency rules will apply in terms of Turkish and foreign flagged ships.

5. Limit of Waiver of Provisional Attachment

In terms of ships exercising the right of innocent passage; according to Convention on the Territorial Sea and the Contiguous Zone, 1958 art. 20 and United Nations Convention on the law of the Sea, 1982 art. 28; the coastal State may not levy execution against or arrest the ship for the purpose of any civil proceedings, save only in respect of obligations or liabilities assumed or incurred by the ship itself in the course or for the purpose of its voyage through the waters of the coastal State.

Accordingly, while ships in a harmless transition may benefit from the exemption of provisional attachment; it will not be valid in terms of debts and liabilities incurred during the transition from territorial waters. In other words, to take advantage of the exemption of provisional attachment, the event that caused the debt and liability must not have occurred in the territorial waters of the country.

With TCC. art. 1355 it is stated that the provisional attachment decision of the Turkish court will only be ruled if the ship is anchored, tied to the buoy or vault, berthed, or sledged. In this case, it also occurs because of the stop of a ship with a foreign flag.

As for foreign-flagged ships passing through The Bosporus and Dardanelles; the Montreux Convention of 1936 will apply. However, the critical point is that this agreement does not contain a provision limiting or regulating Turkish jurisdiction.

For this reason, again, as mentioned above, TCC art. 1355 will find an area of application and a provisional injunction may be implemented in terms of frequented foreign ships; Turkish courts will not be able to make a provisional attachment decision on innocent passage, non-frequented or transit ships, and therefore will not be applied even if it is a decision taken earlier.

6. Provisional Attachment of Ships in Existence of Contingent Claims

According to both the Commercial Code and the Bankruptcy and Enforcement Law art. 257, the procedures to be applied in terms of undue and due debts are clearly stated, but neither due nor or undue by characteristics of the receivables are specified, which often leads to disputes in practice. In addition, an attempt by the parties to feel guaranteed by a contingent on the maturity of receivable during the contract can often create a situation otherwise.

For example, after a request for a provisional attachment is made, it is encountered that the receivable is not actually an eligible marine claim yet. For this reason, first, if the material that the sea will receive is related to the legal requirement a warning, protest, etc. must be fulfilled; otherwise, it will not be possible to request a provisional attachment for an unoriginated marine claim, if requested it will most likely be rejected. In the same way; as a rule, if the pecuniary claim provided by the ship’s mortgage is not due; a provisional attachment of the ship cannot be requested for the follow-up of the right to a direct mortgage.

7. Implementation of Provisional Attachment

The creditor must request the execution of the decision from the court’s jurisdiction or the execution office where the ship is located, within 3 working days from the date of the court’s sequestration decision. Otherwise, the preliminary injunction will be removed by itself.

1. Seizure and Restriction of the Ship

How the ships’ provisional attachment decision should be enforced is stated in TCC. art. 1366 as “All ships that have been decided on its provisional attachment relief are prohibited from sailing by the executive director, regardless of the flag and what register they are registered in.” At this point, it is important that “all ships” will be subject to the same procedure. Unlike the previous Bankruptcy and Enforcement Law, the new BEL; art. 23 puts all ships in the same set of rules as; “… movable provisions apply to all ships, regardless of their flag and whether they are registered in the register.” which is fair.

Because in the previous TCC and Bankruptcy and Enforcement Law, immovable procedures were applied to Turkish ships and movable procedures were applied to foreign ships, which in this case led to foreign ships being granted asylum both in terms of executive bankruptcy provisions.

In summary, all ships shall be deemed to be movable and shall be arrested, regardless of flag and record in case of provisional attachment. In addition, from the point of view of Turkish ships, if the ships are on a cruise, the owner, non-owner equipper or a third party responsible for the debt will be warned to provide a guarantee to the enforcement department within 10 days for the guarantee of sea claim.

If there is a situation where there is no guarantee; of course, the obligation to deliver the ship arises. Because both the guarantee is not given and the ship is not delivered in this case TCL art. 289 provisions, that is, provisions relating to the confiscation and destruction of officially surrendered property, will apply.

Although it is stated that the same procedures will be applied to all ships, the practice is not so righteous. As such, for foreign ships, so to speak, the provisions of the provisional attachment of the ship can only be implemented at the point where the ship stops.

Although according to TCC art. 1367; it is stated that the foreign-flagged ship can be stopped until Turkish territorial waters are abandoned and an order to anchor in a safe place will be given; in practice, a provisional attachment can only be implemented if the ship stops.

2. Release of Ship in Return of Collateral

Article 1370 of the TCC. regulates the matter that not implementing the actual seizure measure on the ship at all or the removal of the seizure. According to this provision, temporary legal protection on the ship continues, it is intended to provide collateral to eliminate the danger of seizure of the ship.

A vessel that has been sequestrated can be delivered to the debtor or a 3. party by providing a guarantee to be submitted to the Enforcement office at any time. Cash that meets the value of the ship, a real estate hypothec to be accepted by the executive officer, a mortgage on the ship, a bank guarantee can be used as collateral. In terms of the type of collateral, it is possible for the creditor and debtor to enter into an enforcement law agreement.

In addition, collateral can be provided in respect to the 3. party.  In this case, the provisional attachment remains, but the ship is released, that is, the danger of actual seizure is eliminated, and the ship can be operated.

ARTICLE 1370 – (1) The ship that has been provisionally attached, provided that the value of the ship to be reserved in order to be delivered to the Executive Office at any time and to ensure this, or an immovable hypotec, ship mortgage or a reputable bank surety to be accepted by the executive officer is shown may be left to the debtor; or if the ship was attached while in the hand of a third person, it may be left to this person by taking a bond.

(2) It is necessary to inform the institutions listed in article 1366 that the ship has been released and to preserve the record of the injunction in the register, provided that the provisional attachment on it continues.

3. Removal of Provisional Attachment in Exchange for Collateral

The shipowner or the debtor may require the removal of the provisional attachment by providing enough collateral for all marine claims in terms of interest and expenses, provided that it does not exceed the ship value.

From this moment on, the special temporary legal protection of the provisional attachment on the ship ends. In other words, there is another guarantee in question when removing the provisional attachment.

ARTICLE 1371 – (1) The owner or debtor of the ship may request from the court to cancel the provisional attachment by showing sufficient collateral for all, interest, and expenses of the sea receivables, provided that it does not exceed the value of the ship. After the execution begins, this authority passes to the enforcement court.

(2) It is necessary to inform the institutions listed in Article 1366 that the provisional attachment of the ship has been lifted and to delete the record of the provisional attachment from the register.

(3) At the end of the case filed for the continuation of the provisional attachment, if it is decided to pay the collateral to the creditor, other marine claimants may not place a sequestration on this collateral.

8. Provisional Attachment of the Same Ship Over Again

As a rule, it is not possible for a creditor who has previously sequestrated the ship discreetly sequestrate the ship again, if the ship is released in exchange for collateral. But there are some exceptions.

  • Insufficient Collateral
  • Incapability of Warrantor: That the warrantor being in debt, like the P&I Club, which gives collateral for sea claims and suspends the payments.
  • In cases where the ship is unjustly released, of course, it is possible to re-sequestrate the same ship in the case of approximate proof.

As a result, the provisional attachment of the ship can be defined as removal of the ship from possession of the debtor by seizure or arrest of the ship, with a decision from the court in exchange for collateral. Provisional Attachment to be implemented on ships are limited in terms of statute and international law. Unlike real estate claims, the way of counting and limiting the ship claims individually has been preferred. But when the subject of a provisional attachment in question is a ship and a ship with a foreign flag, the application of this decision differs significantly from the normal provisional attachment decision.

The type, amount of collateral requested before the provisional attachment, removal of this sequestration or re-sequestration has been established by separate special provisions of the general rules of law. For this reason, it is necessary to carefully examine risks of collateral and value of the claim.

This article was originally published in Mondaq.