In November 2020, an international online conference on the fishing industry was held under the auspices and patronage of the Barents Secretariat.
During the conference, the participants expressed a desire to focus on legal aspects in the fishing industry of both countries.
The event has been moved online due to the pandemic and the inability to personally participate in the conference. However, taking into account the specifics of the fishing industry and its participants, the format involves recording offline interviews, working with lawyers and presenting the material in a digital version, as well as online discussion in question-and-answer mode.
In order to give the project an innovative character, we contacted universities whose teachers and students left comments on topics of interest to them, as we understand that the formation of a new international thinking among young people, in a new online format, can help in this project. And also to help gradually integrate into the atmosphere of international cooperation between the two neighboring fishing countries.
The main mistakes made by company managers and ship captains when conducting activities abroad, which lead to violations of international law. Ways to solve such situations.
Innovations in international legislation regulating the activities of companies in the fishing industry over the past 5 years.
Statistical data. The most common cases that lawyers have to face when working on the cases of companies in the fishing industry abroad.
Estimates and forecasts. How, in your opinion, has the activity of lawyers specializing in international law changed when working with fishing companies in recent years (3-5 years).
Interview with Sergey Gushchin, Consul General of Russia in Svalbard.
- Dispute between Russia and Norway concerning the so-called fishery protection zone of the Svalbard Archipelago. Arrests of Russian fishing vessels in the fishery protection zone.
A fisheries protection area surrounding Svalbard was established by Norway on 15 June 1977 to strictly regulate fisheries, but on a non-discriminatory basis.
The Norwegians justified their actions by the privilege that, in their view, stemmed from development trends in the international law of the sea within the framework of the UN Law of the Sea Conference. However, they did not take into account the Svalbard Treaty dated back to 1920, which they considered applicable only to the land territory of the archipelago and its inland and territorial waters within the geographical coordinates stipulated by the Treaty (known as the Svalbard Square). Subsequently, Norway also referred to the 1982 UN Convention on the Law of the Sea as the basis for its claim to solely regulate fisheries in the Svalbard area.
On the day the «fishery protection zone» was established, the Soviet Embassy in Norway sent a note of disallowance to the Norwegian Ministry of Foreign Affairs. It set forth a protest against the Norwegian actions, drawing attention to their apparent discrepancy with Norway’s obligations under the international 1920 Svalbard Treaty, so far as this area subject to the Treaty was concerned. Our policy was that Norway could not act here unilaterally by applying domestic law. It came out from the context of the Soviet note that, from our point of view, the legal basis for establishing the zone could only be the Treaty (and not a Norwegian royal resolution) and the waters within the ‘Spitsbergen square’ could only be under the regime established by the Treaty for the land territory of Svalbard and its territorial waters. The note did not say anything about the regime of waters lying outside the «Svalbard Square» up to the boundary of the «fishery protection zone» but the context indicated that we would perceive them as part of the open sea.
Countries have mixed attitudes towards the fishery protection zone. Only Canada and Finland officially share Norway’s policy. Such giants as the USA, Germany and France have to express a reservation on their positions, while many other countries (including Iceland, Spain and the Netherlands) believe that any zones generated by Svalbard (and thus the ‘fishery protection zone’) should be treated equally with Norwegians in accordance with the 1920 Svalbard Treaty.
In the course of Soviet-Norwegian collaboration in the late 1970s (negotiations in 1978 between the USSR Minister of Fisheries, A.A. Ishkov, and the Norwegian Minister for the Law of the Sea, J. Evensen) a system of unwritten bilateral arrangements («gentlemen’s agreement») was developed, under which if the Norwegian authorities discovered that our vessels violated the fishing regulations established by the Joint Fisheries Commission, it was reported to Soviet and then Russian authorities so that they took necessary measures against the violators. The Norwegians refrained from taking enforcement measures against our vessels in the «fishery protection zone».
By the end of the 1990s, the Norwegians were drifting from the ‘gentleman’s agreement’ and hardening the line towards Russian vessels in the Spitsbergen area.
The first real conflict arose in the summer of 1998 when a Russian trawler that was operating in the area near Bear Island restricted by the Norwegians due to a high concentration of juvenile fish. The firm position taken by the Russian side regarding this incident and the «fishery protection zone» in general convinced the Norwegians of the need for dialogue with Russia on the problem of fishing around Svalbard. There was a shared desire to restore the system of gentlemen’s agreements to refuse harsh measures while maintaining the principles that had previously helped to avoid conflicts.
The practice of detaining Russian fishing vessels in the Svalbard area has become tougher and irreconcilable since 2005 after the unsuccessful attempt to detain the trawler Elektron (the vessel managed to get away from the Norwegian convoy to the Russian economic zone with Norwegian inspectors on board). Since that time the Norwegians have detained one or two Russian vessels a year (about 1% of all Russian vessel inspections in the Svalbard area). Most commonly, detained vessels were convoyed to one of the Norwegian ports for police investigation, which meant separation from fishing and the subsequent material losses.
In 2011 there were five detentions of our vessels in the «fishery protection zone» around Svalbard, two in 2012, one each in 2013, 2014, 2015 and 2016, no such detentions in 2017 and 2018 and two each in 2019 and 2020.
Over the last years, the Norwegians have tended not to convoy our detained vessels to ports in the continental Norway, but to issue fines directly at sea against bank guarantees — in this case a vessel does not interrupt fishing, but the captain of the vessel must admit his guilt in order for a fine to be issued.
The main reasons for the detention of Russian vessels in the «fishery protection zone» are: throwing the fish overboard, the mesh size not corresponding to the norms of Norway, violation of the notification procedure for entering the «fishery protection zone» and harvesting there.
The Norwegian side keeps putting various restrictions on fishing in the «fishery protection zone» triggering off conflicts with the Russian vessels fishing in the archipelago area.
Indeed, in 2019, the Norwegians adopted a regulation concerning bottom fishing gear, significantly tightening the regime for bottom fishing, including in the «fishery protection zone» around Svalbard;
New grounds for detention of Russian fishing vessels by the Norwegians have also arisen because of the stricter regime for notification of fishing in the «fishery protection zone» from 1 June 2020 (fishing cannot begin until permission has been obtained from the Norwegian Directorate of Fisheries, daily catch reports to the Directorate were introduced).
- Shared priorities of Russian-Norwegian cooperation concerning Svalbard.
The issue is very broad and time-consuming. It is possible to list the most acute problems caused by the Norwegian side and hindering the Russian presence in Svalbard.
1) The Norwegians’ restriction on the use of a Russian helicopter on Svalbard solely for the purposes of the Arktikugol Trust’s mining activities. That is, our helicopter is forbidden to carry scientists and tourists, and can only carry employees of the Arktikugol Trust.
2) Ongoing expansion of the archipelago’s protected areas, where all economic activity is prohibited. Now about 65% of Svalbard’s land area and 85% of its maritime area are protected.
3) Regulatory approval system of research activities. In fact, field research work in most of Svalbard requires the permission of the Governor in advance. Any research projects carried out on the archipelago are to be pre-registered on the Research in Svalbard Internet portal.
4) Russia’s non-recognition of the «fishery protection zone» around Svalbard established by the Norwegians unilaterally in 1977.
5) Disputes over the status of the Svalbard’s continental shelf — the Russian side considers that the 1920 Treaty on Svalbard applies to it, the Norwegian side considers that it is the Norwegian national legislation on the Norwegian continental shelf. This issue is crucial as it concerns the search for possible oil and gas resources there.
6) Extension of their continental legislation to Svalbard by the Norwegians. This process has been going on for a long time, with more and more Norwegian laws being extended to the archipelago each year that do not take into account Svalbard’s specificity and the 1920 Treaty of Svalbard regime.
7) A ban on heavy (fleet) fuel oil in all Svalbard territorial waters introduced on 1 January 2022. This measure will affect the traffic of Russian fishing trawlers unloading their catch on freezer vessels in Svalbard territorial waters in Bellsund (a sea area 30 km south of Barentsburg) — in 2019, two Russian MDO trawlers and four MDO freezer vessels made portcalls to Bellsund.
8) The unwillingness of the Norwegian side to conduct a systematic cabinet-level dialogue on the arising issues of the Russian presence in Svalbard.
Those are only some of the problems, in fact there are many more.
- As to international cooperation in Svalbard, it is mainly focused on research. For example, there are 14 permanent research stations in the Norwegian settlement of Ny-Ålesund, belonging to 10 countries: Norway, Germany, Great Britain, Italy, France, Japan, South Korea, China, the Netherlands and India. In Barentsburg there is the Russian Science Center in the Svalbard Archipelago, which actively cooperates with Norwegian and foreign research organizations.
- How and by what authorities are emergency and extraordinary situations on Russian fishing vessels in the archipelago area resolved?
Svalbard is the area of responsibility and jurisdiction of Norwegian rescue services, so in any emergency situation they will be involved. If a sick sailor is to be evacuated from the Russian vessel, usually one of two Svalbard helicopters «Super Puma», having a flying range of up to 350 nautical miles, is involved. The affected person is transported by helicopter to the Longyearbyen hospital, and, if necessary, by Norwegian air ambulance to the mainland, to Tromsø. The Russian helicopter based in Barentsburg has no right to carry out rescue operations, as it is necessary to get a special permission from the Governor of Svalbard.
In practice, usually Russian fishing vessels themselves call at the port of Barentsburg, if a sailor is sick ans there is no danger to life, and transfer him to hospital in Barentsburg, notifying the Consul General of Russia on Svalbard. There are 3 doctors in the Barentsburg hospital (a surgeon, a therapist, and a dentist), and medical equipment allows to perform uncomplicated surgeries.
Interview with Kirill Maslov, Managing Partner of the Inmarin Law Office in St. Petersburg.
— Kirill, tell us please how you came to your practice? Why did you choose the maritime field in particular?
— I was at a crossroads in my senior year of secondary school. My parents were mostly into economics at that time. My mother was a financial director, and my father also dealt with analytics, although he has much to do with the marine sphere. So they thought I needed to major in economics. For a whole year, I took a pre-entry course for the economics faculty. And there happened what became the cornerstone in the foundation of my whole future life. A professor from the Law Faculty of St. Petersburg State University came to our courses as a teacher.
She talked about the legislative regulation, about the constitution, human rights, labor rights and entrepreneurial activity. The very fact that I realized how great it is to regulate relations between people and between businesses and to decide if rights are violated or not, greatly inspired me. Plus social studies have always come easily to me, as well as the exact sciences, though without enthusiasm. I completed my preparatory courses, but I chose the law faculty of St. Petersburg State University. I am very grateful to my parents for understanding and accepting this.
— When did the maritime field come into being?
— Commercial law was my specialty originally. Maritime law came later. And it also came almost by chance. All students in their third academic year study transport regulations — railway regulations, merchant shipping code, etc. It always seemed to me that in transport law there was nothing so complicated, no special issues. Unlike, for example, corporate law. I was defending my undergraduate work at that time exactly on corporate law — affiliates.
But my second place of work (a law firm was the first one) turned out to be connected with the sea. I joined Scandinavia, an insurance company, which was the first domestic company to insure seagoing vessels not only in Russia but also abroad. It had a very large portfolio of foreign clients and I was entrusted with such a responsible job as settlement of marine losses.
And then I was literally attacked by maritime terminology: stranding, main engine breakdowns, hull damages. You have such a responsibility, you have to decide whether it is an insured event or not, you have to investigate it, you have to write an opinion, and money runs in the millions of dollars, millions of euros. And I realized that a law degree was bound to be supplemented by a maritime education.
I entered the St. Petersburg State University of Waterways Communications (now Admiral Makarov State University of Maritime and Inland Shipping), to get a qualification in ship management, to be qualified to understand the structure of the ship, navigation, the rules of shipping.
— How did the idea and desire to start your own business come about? Scandinavia closed down and you had to come up with something urgently?
— Scandinavia, as well as the whole Oslo-Marine group of companies it was part of, closed down, but I had ceased my collaboration prior to it. Actually, working there was a very interesting practice. For example, we had to defend the interests of a debtor when the crisis hit in 2008 and the company was let down by many partners. There was nothing for us to do but just to bail ships out and maintain at least a minimum ability to operate. What were we doing? We managed to release the vessels which couldn’t be released after all. We worked out various mechanisms for settling insured events to lessen the burden on the company. The practice was very interesting.
I vividly remember a case when we had to find a way to terminate already signed contracts for acquiring several ships. A deposit was already paid, but it turned out that the company couldn’t make the main payment, so how can we talk about the return of the deposit? But we found the way to return the deposit paid, as we found the failure of intention in the deal.
— What is now happening in the domestic shipping industry in the context of the spread of coronavirus? What measures are Russian ship owners taking?
— We continue the practice because we are lawyers and just like doctors we can’t refuse help. Especially when it comes to urgent cases. There are ships that are stuck in a limbo: some are arrested, some have crew members detained, different situations. We need to help those who are now a hostage of circumstance.
But at the same time, we see that there is some suspension on projects that are not related to the resolution of disputes, commercial projects. Especially against the background of recent news from the Chamber of Commerce and Industry that contracts, the execution of which has been hampered by the current sanitary and epidemiological situation, will be issued certificates of «force majeure». Of course, many shipyards, our trustees, who are now engaged in shipbuilding, welcomed it a lot. Shipbuilding is not an easy matter, it’s an art, and the opportunity to postpone the performance of obligations for many has become beneficial.
— In general, if we abstract our minds from the current situation, what issues and problems are the most common in your work?
— Lately there have been a lot of cases connected with debt collection. These are banks that are selling assets, i.e. vessels. It’s also supplying companies that tend to sue for debt collection. And, subsequently, arrests, forced sales, auctions, etc.
In recent months, perhaps, there has been an increased demand for various kinds of dispute resolution related to deliveries, the sale of illiquid assets from banks. And, very interestingly, just the day before, if we’re talking about recent months, there has been an increased demand for financing instruments — leasing and credit. It seems to be for those who don’t have money. But in fact no bank or leasing company will finance those who have nothing.
In our opinion, this is a very convincing argument that the market is growing. Perhaps, with the help of some extra funds. The positive thing is that despite the global epidemic, people are still planning long-term investments, financing, and are considering 5-7 year leases and loans.
— How well-informed are Russian ship owners on legal matters today?
— Nowadays you can find information on any issue by computer or phone. Even if you’re not a lawyer, you can find an interpretation of any clause, any article, any law or court decision on the Internet. On the one hand, it is good that the information is available. But on the other hand, you also need to be able to apply it in practice. And this is not always possible for a person who does not have legal knowledge and legal skills. That is why we often come across companies and principals who use some tools, proformas, agreements, clauses, but have a very basic understanding of how it works and how it is applied. We see that they choose such instruments (contractual), which then cost absolutely fabulous money to regulate. This could have been solved by much simpler means. For example, choosing the applicable law to settle a particular dispute or court. So not only the ability to find information is important, but also the ability to apply it correctly and competently.
— How often do you have to go to court, Russian or foreign?
— Generally speaking, court practice is the most popular dispute resolution tool in Russia. But now there is a very interesting situation. Due to suspension of the judicial system, business, including shipping industry, starts looking for alternative ways of dispute resolution. Everybody understands that the court is closed for the time being and no documents are accepted or issued. And at the same time there are a lot of urgent issues that need to be resolved. So ship owners start looking for mediation, negotiation, trying to solve the dispute without going to the state authorities, without meeting each other. So in the last two weeks, there’s really been an increased demand for professional mediation to resolve disputes without going to court.
I have to say that it’s much more effective. Even in Russia, where the court process is regulated, where we can say with certainty in which time frame a dispute will be resolved, anyway, alternative dispute resolution in terms of time frame and quality of solutions is much ahead of court. Of course, if the parties are committed to a solution, if they are active. Outside of this thesis are the situations with dead debtors, absent debtors and fly-by-night companies. That is, we take a really active business and another active business. They understand that a dispute cannot be resolved quickly right now because of various factors, and then of course alternative dispute resolution comes into play.
— A question that’s popular in TV shows. If you realize the customer is wrong, what is your reaction?
— Here, of course, lawyer ethics come into play, which is very important in criminal cases. A lawyer has no right to take a position that differs from his principal’s position. But if we are talking about some commercial tips, pieces of advice, for example, on some issues or the resolution of disputes, civil and arbitration, then, of course, I try to explain to the client alternative options. To show the vulnerability of his opinion and what other options are available.
I strongly believe that there’s no point in hiring a lawyer if you know how to solve the issue yourself. It makes sense to hire a lawyer if you really need help. And it is the lawyer’s job to know the issue better than the principal knows it.
— Do you work only with ship owners or can a seafarer also apply to you?
— We have a big practice. It is concentrated around the whole industry of marine business. So a ship owner, a seafarer, a cargo owner, a bank, a leasing company, a forwarder, an agent can come to us. Generally speaking, any member of the sea transport or river transport industry can apply. There is our conference for seafarers on the portal Korabel.ru, where we answer their questions for free. Most often we help with issues of diploma, qualification. And in general, I should say that seafarers is one of the most important clusters of our activity because, to our opinion, it is the most vulnerable (financially) and the least protected category in the merchant shipping and we try to help them on easy terms.
— What cases do you remember from your practice? Maybe you worked on a high-profile case or had a complicated case that dragged on for years?
— Perhaps one of the most interesting cases was the «highjacking» of a ship in 2010. It seemed, how could a vessel go missing? It turned out that under certain circumstances, under the peculiarities of work of the port agents, it can. And so that there were two parallel registrations on different owners, and two parallel realities. Then, to protect the interests of the complainant (the ship owner), we had to use all existing methods of defense — civil, administrative, criminal. We had to conduct an entire legal investigation to reconstruct the whole chronology, the history of the real purchase and disposal of the vessel. We even wrote an anticorruption expertise that was taken into account when improving the legislation on ship registration.
— Do the maritime law regulations change often? How do you keep your and your employees’ qualification up to date?
— Changes are happening all the time, literally every week amendments come into force. This is a critical point for us, because our task is not only to be aware of all the changes, but also to have time to advice our clients on certain decisions, taking into account possible changes, and sometimes to start defending their interests even before the adoption of changes in legislation. Professional development is a mandatory requirement for lawyers, and we undergo advanced training every year, so we just have to participate in all events, which allow us to gain useful knowledge.
— How does Russian legal practice differ from foreign practice? Does it have its own nuances in the psychology of clients and their opponents?
— In our opinion, Russia has one of the fastest and most dynamic business communities. Sometimes new tasks and problems can appear instantly, and this often sets the standard for assistance — to be ready to help right now. Perhaps this is the key difference.
By the way, last year, on an urgent assignment regarding the crew, I had to pack up and fly out to the North literally 15 minutes after talking to my client to defend the ship owner and crew members in a criminal case, and spent several days there. And that happens quite often. And how many situations there are where the deadline is «yesterday»! Of course, it’s important, interesting, we need to work more on prevention, plan ahead, use mediation, but the business need is quite often «here, now and without compromise,» so we also occasionally have to feel free to be politely aggressive.
Interview with Andrey Suprunenko, generak director of Remedy Law Firm
MCG: Hello Andrey Vitalievich. At the beginning of our conversation, I would like to congratulate you on the fact that REMEDY Law Firm LLC has entered the first group of companies practicing in the maritime law of PRAVO 300 rating.
Andrey Suprunenko: Thank you, indeed we received this Certificate on December 7, when we applied for this rating for the first time. It was very pleasant that the achievements of our team were appreciated, although the ceremony left a bitter taste in the mouth. The criteria for evaluating the nominees remain unclear to us, since the companies sharing our group were several times smaller than us in terms of the number of employees and turnover, and one of the nominees, judging by the information from their website, does not practice maritime law at all.
MCG: Have there been any cases in the company’s practice that you would be proud to talk about?
Andrey Suprunenko: Yes, around two weeks ago we completed an amicable agreement on the damage to the berth at the Bronka terminal by the Christopher container ship. Within three days from the moment, the agreement was approved by the court, our clients received 85 million rubles from the defendants and began to intensively restore the berth. We are especially proud that the case was completed quickly, without scandals and smears as it was the case with the Delta Pioneer tanker hitting the berth in Primorsk port. Not only were those parties unable to reach a consensus, but also failed to properly justify their positions in the court while throwing the book at the judges.
MCG: New rules for the registration of ships have recently been adopted. What can you say about them?
Andrey Suprunenko: Unfortunately, like most other documents penned by regulation makers, the Rules have both pros and cons. My colleague Andrey Kosmachevsky has evaluated this document in detail, including on the basis of the short time of their implementation.
MCG: Tell me, how else, apart from participating in courts, maritime lawyers can help their clients?
Andrey Suprunenko: We have a wide range of tools ranging from small consultations by phone to conferences. For example, at the last of them, (5th Annual Conference «Practical Aspects of Maritime Shipping. Experience 2017»), the attention of the audience was drawn to the possibility of successfully challenging the tariff application policy of ROSMORPORT. The speakers explained that no matter how powerful at first glance the structure may be, in civil law it is equal to even the smallest agency firm.
MCG: What else do you remember about the current year?
Andrey Suprunenko: We have become witnesses and participants in the process of reviving the Russian fishing fleet. We ourselves participated in the preparation and signing of contracts for the construction of six vessels and at the same time received information about the laying, construction, and preparation of dozens of trawlers for it.
MCG: What potential for growth of the industry do you see?
Andrey Suprunenko: I think, despite the fact that it is difficult to imagine the development of one or another segment of the economy without investments, nevertheless, the lack of professionalism and cooperation at all levels of interaction between participants in the process is a very serious factor constraining growth. Accordingly, it is necessary to enhance the professionalism of employees, to regulate horizontal and vertical ties, and this is impossible without increasing legal literacy.
Norway named the reason for the detention of the Russian trawler "Borey"
Norway Named the Reason for the Detention of the Russian Trawler Borey
The Russian trawler Borey was detained by the Coast Guard for breaking the rules of fishing in the Svalbard Archipelago area, said the Norwegian Foreign Ministry.
“The Russian fishing vessel Borey was detained by the Norwegian coast guard on April 2, 2020 on suspicion of violating Norwegian regulations regarding fishing operations and fishing in the fish protection zone around Svalbard. The case was resolved in the usual manner, the ship was released,” the agency’s message reads.
The fish protection zone around Svalbard is established by Norway in accordance with the law of the sea, the Ministry added. “Norway has the right and obligation to exercise jurisdiction in this area. Establishing and enforcing fisheries rules are essential for responsible management of marine resources,” Norwegian officials explained.
Earlier, at a briefing on April 17, Foreign Ministry spokesperson Maria Zakharova said a note was sent to the Norwegian Embassy due to the detention of the trawler. It states that Russia is very concerned due to such actions by the Norwegian authorities.
The Russian position on the non-recognition of the so-called fishery protection zone around Svalbard was repeatedly brought to the attention of the Norwegian side. RF Foreign Minister Sergei Lavrov suggested that in the year of the 100th anniversary of the Spitsbergen Treaty of 1920 Norway and Russia should negotiate and resolve all controversial issues.
However, the Norwegian Foreign Ministry replied that they do not intend ‘to consult with other countries on the exercise of its sovereignty over any part of Norwegian territory’.
Read more on RBC:
A long series of disputes over the Pavel Kopytin trawler has been completed
At the end of 2016, the Pavel Kopytin vessel was abandoned in the port of Botsfjord, Norway, as a result of a set of problems that paralyzed the ship owner’s activities. Since then, the vessel began to accrue debts for supplies, maintenance, moorage, which by 2019 had reached almost one million euros.
Lawyers and ship brokers of the Inmarin agency organized a comprehensive examination of the vessel to establish the scope of claims against it, both in court and out of court, as well as to determine if the vessel is towable by sea.
Subject to the findings, the specialists succeeded in developing a scrapping operation with the discharge of the proceedings had been filed against the vessel. Part of the proceedings was settled in the East Finnmark Court (Norway), the other part was reduced in the course of constructive negotiations with the suppliers and the authorities of the port of Botsfjord.
In addition the lawyers together with the ship owner managed to restore the history of customs clearance of the ship and assemble an evidence base that the ship could return to Russia without paying customs duties.
As a result of all actions, in July 2020 the ship was successfully returned to the Russian Federation by the towing vessel Bison and handed over to a scrap company for scrapping and removal from the ship’s registry.
Ship arrest in Russia - (Remedy Law Firm)
1. Please give an overview of ship arrest practice in your country.
The ship arrest practice in Russia is wide and may be different due to the differences in court practice in regions – west, south, north, east. Basic ports where there is wide practice of ship arrest are: St. Petersburg, Novorossiysk, Vladivostok, Kaliningrad, Murmansk.
2. Which International Convention applies to arrest of ships in your country?
Russia ratified the International Convention on the Arrest of Sea—Going Ships (10 May 1952, Brussels). The provisions of this Convention are mandatory applicable to all ships flying the flag of another Contracting State and calling at Russian ports. Merchant Shipping Code of Russia (1999) is the domestic law which implemented basic principles of the 1952 Brussels Convention and even Merchant Shipping Code (1999) is an advance over the 1952 Brussels Convention as it is based on principles of International Convention on Arrest of Ships (Geneva, 1999 ) especially in regard to the wide list of claims subject to ship arrest. According to both above mentioned Conventions a ship may be arrested only under the authority of a Court. The regulations of procedure for the Court in Russia are defined in two Codes: the Civil Procedural Code of Russia and Arbitration Procedural Code of Russia. In general the Civil Procedural Code defines the procedure for the physical persons acting as claimants or applicants, and the Arbitration Procedural Code defines the procedural for the legal entities.
3. Is there any other way to arrest a ship in your jurisdiction?
Due to absence in above mentioned procedural codes of special clauses devoted to the ship arrest there is a way to arrest the ship as property of the debtor (regardless of status of a ship as special kind of property) by means of filing to the Court the application for the arrest of property of the debtor. Such application is filed together with the statement of the claim. The ship may be arrested also under criminal or administrative procedure as exhibit of case or as subject of criminal or administrative offence.
4. Are these alternatives e.g. saisie conservatoire or freezing order?
There is a way to arrest the ship as property of debtor in security of civil action as well as in the bankruptcy proceeding.
5. For which types of claims can you arrest a ship?
Under Domestic Law — In Merchant Shipping Code of Russia (1999) the whole list of maritime claims (a to v) from the 1999 Geneva Convention is included. The domestic law is applied by the Russian courts mostly in respect of the Russian flag seagoing vessels. Under the 1952 Brussels Convention – the Russian courts are more or less in line with the list of the maritime claims indicated in the 1952 Brussels Convention. But the courts apply this Convention mostly to the foreign flag vessels.
6. Can you arrest a ship irrespectively of her flag?
You can arrest a ship irrespectively of her flag.
7. Can you arrest a ship irrespectively of the debtor?
According to the 1952 Brussels Convention which was ratified by Russia a ship may only be arrested in respect of a maritime claim only. Therefore bearing in mind the regulations established in the Arbitration Procedural Code of Russia the claimant first of all should prove the existence of the maritime claim in respect of the specific ship and same time the claimant should prove that the claim arose due to the actions of the specific debtor in respect of this specific ship when (as the claimant supposes) the debtor was the owner/ charterer of this ship. It may lead to that the real owner of the ship will try to object the arrest saying the ship never belongs to the debtor. The claims “in rem” can not be initiated in Russia. Certain claims may follow the ship regardless in whose hands it may be, e.g. claims for crew wages,salvage, port dues (maritime liens).
8. What is the position as regards sister ships and ships in associated ownership?
It is possible to arrest sister ship as the property owned to same debtor.
9. What is the position as regards Bareboat and Time—Chartered vessels?
The provisions for the arrest of the vessels in accordance with the domestic law are the same as in the Convention, 1999 article 3 par.(1)—(2). If the Convention, 1952 is to be applied then the provisions for the arrest from Convention, 1952 will be applied.
Ship arrest in Russia - Alexander Mednikov (JURINFLOT)
1. Do your Courts require counter—security in order to arrest a ship?
In accordance with article 393 of the Code of Merchant Shipping, the court or arbitration which considers the application on arrest of a ship, may (but is not obliged to) order an applicant for arrest to provide security against any damages which may be caused by arrest and for which the applicant may be held liable. Amount and terms of such security shall be determined by the court. In practice, courts often require such counter—security as a condition for imposition or continuation of arrest of the ship. Therefore, the applicants should normally be prepared to provide counter—security in advance (together with application) in order to increase the chances of success of arrest application.
However, counter—security may not be required from the applicant which demands arrest of a ship on the basis of a claim for amounts due to the master or crew of the ship for their work on board.
2. Is there any difference in respect of arresting a ship for a maritime claim and a maritime lien?
In accordance with the Code of Merchant Shipping (article 388), a ship may only be arrested on the basis of a maritime claim. However, all types of claims which are, under the Russian law, secured by a maritime lien are, at the same time, included in the list of maritime claims provided by the CMS. Therefore, there is no practical difference in arrest procedures whether the maritime claim is secured by a lien or not.
3. Does your country recognise maritime liens? Under which International Convention, if any?
Yes it does — by the Federal law dated of 17/12/1998, Russia acceded to the International Convention on Maritime Liens and Mortgages of 1993.
4. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
In practice, and in an optimistic scenario, it normally takes 4—5 days from the date of arrival of the full package of necessary documents is the shortest term to have the vessel arrested:
(a) on day 1 the documents arrive and [if the documents come from abroad] — a certified translation of foreign documents is arranged;
(b) on the evening of day 1 or the morning of day 2, the authorized lawyer leaves for the city where the territorially competent court is located (normally – the arbitration (commercial) court of the), (c) on day 2, the application for arrest with attachments is filed to the competent court;
(d) on day 3, the court considers the application and grants the arrest,
(e) on day 3 or 4, the court issues an executive order on the basis of its decision by which arrest is granted,
(f) on day 4 or 5, executive order is submitted to the bailiffs service which commences executive procedure and filed the executive order to the harbor—master of the port where the vessel is located.
In practice of some (but not all) courts and ports, procedure may be sped up by 2 days if the court is requested to include in the arrest ruling the order to the harbour—master not to grant to the vessel the permission to leave the port. If such order is included in the ruling, the vessel will be effectively immobilized before involvement of the bailiffs. It must be noted, though, that in order for the above— mentioned time—frames to be observed and for the arrest to be successfully obtained, coherent work between the clients and the lawyers is required at the preparatory stage, so as to ensure that the correct information is provided for drafting of an application and the necessary support documents are also supplied.
5. Do you need to provide a POA, or any other documents of claim to the court?
Yes, the POA is necessary. Documents which confirm the existence of a maritime claim must also be provided in order to confirm the existence of grounds provided in the law for imposing the arrest.
6. What original documents are required, what documents can be filed electronically, what documents require notarisation and/or apostille, and when are they needed?
Of the documents filed together with the application, only the POA needs to be in original (or a copy certified by the notary public). Other documents may be presented in copy certified by the applicant (an endorsement saying ‘true copy of an original’, a signature of a director and a company stamp). A general requirement of the law is that documents in the foreign language must be accompanied by a certified translation into Russian and that a document obtained abroad must be legalized, unless such requirement is abolished by an international treaty to which Russia is a party (for example, the Hague convention of 05/10/1961 and other multi—lateral or bilateral treaties, including the ones with CIS countries, Baltic countries, India, Argentina, Poland, Spain, etc.). In practice, commercial documents are not required to be apostilled but do require a certified translation. Filing of documents in electronic form is also possible.
7. Will the Courts accept jurisdiction over the substantive claim once a vessel has been arrested?
When an arrest over the ship has been imposed in Russia, the Russian courts may accept jurisdiction over the substantive claim in cases provided for by the 1952 Convention:
if a person which is a creditor under such claim has its main place of residence or business in Russia;
if the substantial claim arose in Russia;
if the claim relates to the voyage during which the arrest was imposed;
if the claim arose from a collision or from other damages caused by one vessel to another
vessel, or to people or goods on board of such a vessel;
if the claim arose from salvage;
if the claim is based on mortgage of the arrested vessel.
Alternatively, Russian courts may accept jurisdiction over the substantive claim on one of the
general grounds which the procedural legislation provides for Russian courts to consider
matters with foreign element. They include, i.e.:
defendant having a place of residence, place of business or property located in Russia;
the dispute arising from the contract which was intended to be fulfilled on the territory of Russia;
the dispute arose out of damage to property, if such damage was caused or arose on the territory of Russia.
8. What is the procedure to release a ship from arrest?
Release from arrest is allowed only in case if sufficient security is provided (or the maritime claim in question is satisfied for good) and is effected on the basis of a ruling of a tribunal which ordered the arrest. In case if the bailiffs have been involved in the arrest, they also need to be notified of the tribunal’s ruling and must terminate their execution proceedings.
9. What type of security needs to be placed for the release?
Type and value of security may be determined by the agreement of the parties concerned. In case if the parties fail to reach such agreement, these issues may be determined by the tribunal which handles arrest proceedings. In the latter case, value of security may not exceed the value of the ship arrested but if the value of a ship is higher that the extent of the underlying claim, security in amount of the claim (including also the reasonable costs and interest) will in most cases be sufficient. Acceptable form is either to be agreed on by the parties or by the competent tribunal and may be provided in the form of deposit on the account of the court, pledge of other property or guarantee/surety from the third party (banks, insurers including P&I clubs).
10. Does security need to cover interest and costs?
Yes, security, unless it would exceed the value of the ship, would need to cover also interest and costs accrued by the respective time (i.e. date of application for release).
11. Are P&I LOUs accepted as sufficient to lift arrest?
P&I LOUs are starting to be accepted as forms of security.
12. How long does it take to release the ship?
Release of a ship would, in practice, require at least two—three days: the courts are obliged to consider pleas for termination of security measures not later than the next day after filing of such pleas (provided that the defendant also submitted proof of providing the counter—security) and in case if arrest has been effected by the bailiffs, the latter would need to be notified and take respective action as well.
13. Is there a procedure to contest the arrest?
Arrest (as any other security measure imposed by the tribunal), in addition to being lifted in case of provision of security, may be contested by filing a respective plea to the tribunal is case if the arrest is unfounded (for example, when the vessel does not have the relation to the debtor which allows it to be arrested).
14. Which period of time will be granted by the Courts in order for the claimant to take legal action on the merits?
If arrest will be treated as a preliminary security measure for the purposes of commencing the main suit in the Russian court, than such period will be determined by the court in its ruling by which arrest will be granted. But in any event, it should not exceed 15 days.
16. Do the Courts of your country acknowledge wrongful arrest?
Russian courts have a right to refuse application of arrest. When the judge considers the application, he/she refuses or satisfies it on the basis of its internal conviction. Also, as mentioned above, it is possible for the court to order the applicant to provide counter—security against any damages which may be caused by the arrest, including wrongful arrest and to determine the extent of applicant’s liability in such case.
17. Do the Courts of your country acknowledge the piercing and lifting of the corporate veil?
It may be said that at present, Russian courts dealing with maritime claims will not be likely to pierce/lift the corporate veil, but at the same time, in one of the acts of the Supreme Arbitration [Commercial] Court (in a case completely unrelated to shipping), the doctrine of piercing the corporate veil was expressly acknowledged, so it is quite possible that this doctrine will gain wider application in Russia in the near future.
18. Is it possible to have a ship sold pendent lite; if so how long does it take?