JAPAN Law and Practice Contributed by: Jumpei Osada, Masaaki Sasaki, Takuto Kobayashi and Hiroshi Ideyama, TMI Associates
5.12 Damages in the Event of Wrongful Arrest of a Vessel In relation to an arrest by maritime lien, the threshold for the argument of wrongful arrest may be lower than that for arrest by provisional attachment order. The main requirement for such an argument is negligence or wilful misconduct of the arresting party in the course of the filing and arresting the vessel. The reason for this is that, since the arrest of the vessel by maritime lien is easier than for another normal attachment order procedure, the arresting party is required to be more cautious and should carry out sufficient analysis, both factual and legal, to avoid damage being incurred by innocent or irrelevant parties such as the owner who is not liable in personam. 6. Passenger Claims 6.1 Laws and Conventions Applicable to the Resolution of Passenger Claims Convention and Domestic Law Japan has not ratified the Athens Convention on Pas - senger Liability. The rights of the passenger to claim for damages against ocean carriers are governed by the passenger transportation agreement and the Commercial Code. Carrier’s Liability for Passengers With regard to liability for death or personal injury of passengers, there is no legislative limitation in favour of the carrier. Further, any agreement which limits or releases a carrier’s liability for death or personal injury of passengers is deemed to be null and void, except for the damage mainly due to delay, Act of God, or liability for passengers who may suffer damage from normal vibration or other similar causes, which is nor - mal for ocean transportation. Nature of Liability of the Carrier and Burden of Proof The nature of a carrier’s liability for passengers is not strict liability; however, the burden of proof on the exercising of due care by the carrier or its employ - ees lies with the carrier (Article 590 of the Commercial Code).
During the procedures, the vessel is maintained by the ship-management agent, who is appointed by the court. It normally takes six to 12 months from the commencement of the judicial sale until its completion (ie, the completion of distribution to each creditor). Priority Ranking of the Claims The basic priority ranking of claims is as follows: • claims for costs of the procedure for the judicial sale; • claims secured by maritime liens; • claims secured by mortgages; and • unsecured (ordinary) claims. Priority Ranking of the Claims Covered by a Maritime Lien Within the category of maritime liens, the ranking of covered claims is as follows: • claims for death or personal injury; • claims for salvage and general average; • claims for pilotage, towage or voyage-related taxes such as port charges; • claims for necessity for continuation of a voyage; • mariners’ claims arising from their employment contracts; and • claims subject to a limitation held in accordance with the Limitation of Liability Act/claims for the damage caused by oil pollution resulting from the spill or discharge of oil from a tanker. 5.11 Insolvency Laws Applied by Maritime Courts Under Japanese law, there are similar insolvency schemes to those under Chapter 7 and Chapter 11 of the United States Bankruptcy Code: namely, the schemes under the Bankruptcy Act, Civil Rehabilita - tion Act and Corporate Reorganisation Act of Japan. If the owner of the vessel goes bankrupt and an insol - vency procedure commences, the bankruptcy court/ trustee may order or obtain an arrest order to recover its control over the vessel; however, this is not uncon - ditional and depends on the terms of the relevant charterparty and other legal circumstances.
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