CANADA Law and Practice Contributed by: Rui Fernandes, Andrea Fernandes and Conal Calvert, Gardiner Roberts LLP
or French. A certified translation will be required for documents in any other language. 5.6 Arresting Bunkers and Freight It is possible to arrest freight and bunkers provided that the action relates to the specific property con - templated in the contract at issue. With respect to bunkers, they would need to be the bunkers at issue and not merely bunkers possessed by the ship-owner. 5.7 Sister-Ship Arrest The Federal Courts Act provides that any action which can be brought against a ship can be brought against any other ship with the same beneficial owner. That each vessel is owned by a separate company both with the same owner, does not operate to defeat the sister-ship arrest provisions. The Federal Court will not issue separate warrants for a vessel and its sister-ship so the claimant must elect to pursue one or the other. 5.8 Other Ways of Obtaining Attachment Orders Attachment orders or warrants may be obtained against cargo and other material and supplies pro - vided to the vessel. 5.9 Releasing an Arrested Vessel The parties may agree to the release of the vessel on whatever terms they decide. Such terms could include a letter of undertaking from a P&I club but this would be an arrangement between the parties and is not a court-approved form of security. The court will release an arrested vessel upon a cash payment into court of the amount claimed or other - wise upon receipt of security or bail, which can take the form of a bank guaranty, a surety bond from a company licensed to do business in Canada, or a bail bond in the form prescribed by the court. The bank guaranty does not need to be from a Canadian bank, though it would be preferable in most circumstances. 5.10 Procedure for the Judicial Sale of Arrested Ships The arresting party may move, before or after judg - ment, for sale of the vessel. There is no set procedure for the judicial sale of a vessel but a court may direct that the vessel be appraised, that notice be given to
parties who may have a claim to the proceeds of the sale, and require public posting of the proposed sale setting out timelines and procedures for advancing such a claim. The court may decide that the vessel be sold either by public auction or private sale. Possession of the vessel does not pass to the arrest - ing party and remains with the ship-owner during the course of the arrest. Expenses for maintaining the vessel therefore remain with the owner during that time. Where the owner of the vessel does not pay those expenses, the court may order that the vessel be surrendered to the possession of the sheriff, but the sheriff will not ordinarily pay for the upkeep of the vessel. Some other interested party will be required to pay the expenses associated with maintaining the vessel during that time, whether it is a mortgagee or, if no party interested in the vessel can be found, the arresting party itself. The priority of claims in respect of vessels sold pursu - ant to a court order are: • marshal’s expenses of arrest, including expenses incurred to maintain the vessel during the arrest; • costs of selling the ship, including costs incurred by the sheriff; • possessory liens arising before the maritime liens; • maritime liens; • possessory liens arising after maritime liens; • mortgages, in order or registration; and • statutory rights in rem, such as claims for the sup - plies of necessaries. 5.11 Insolvency Laws Applied by Maritime Courts Canada’s equivalent of “Chapter 11” of the United States Bankruptcy Code proceedings are found in the Companies’ Creditors Arrangement Act and the Bankruptcy and Insolvency Act. A party with a true maritime lien, as opposed to statu - tory rights in rem, is considered a secured creditor under the Bankruptcy and Insolvency Act and will not be subject to a stay of proceedings under its provi - sions. Where a vessel has been arrested and is the subject of a judicial sale, the Federal Court of Canada will not stop the sale and surrender the vessel to the
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