MALTA Law and Practice Contributed by: Ann Fenech, Adrian Attard, Lara Saguna Axiaq and Martina Farrugia, Fenech & Fenech Advocates
5. Maritime Liens and Ship Arrests 5.1 Ship Arrests Malta is not a party to any Arrest Convention, with ship arrests being governed solely by Maltese domestic law. Up until 2005, the grounds upon which a credi - tor could arrest a ship in rem were the grounds upon which the courts in Malta could exercise jurisdiction in rem, as reflected in the UK Admiralty Court Acts of 1840 and 1861, which applied in Malta. In 2006, statutory amendments were enacted to revamp the grounds upon which the courts could exercise jurisdiction in rem and therefore arrest ves - sels as security in actions in rem. A new article was introduced into the COCP, which exhaustively listed all the maritime claims for which a creditor could seek to arrest a ship in rem in Malta. This list, found in Article 742B of the COCP, is based on the English Supreme Court Act of 1981 and the Arrest of Ships Conventions of 1952 and 1999. Under Maltese law, a creditor may seek to obtain a precautionary or an executive arrest. In the latter case, the creditor must already hold a judgment or other similar enforceable title. Conversely, a precautionary arrest is issued when a creditor wishes to obtain secu - rity for a claim which has not yet been decided. An arresting party has a statutory timeframe of 20 con - secutive days from the date of the issuance of a pre - cautionary arrest within which to institute proceedings on the merits before a competent court or tribunal. A creditor is also permitted to arrest a ship in Malta, either to secure a claim in personam or alternatively a claim in rem. In the former case, the vessel would be regarded in the same way as any other asset forming part of the debtor’s estate. In such circumstances, the arresting party would need to ensure that the Mal - tese courts would be vested with jurisdiction over the debtor, as enshrined in Article 742 (1) of the COCP, which requires a direct connection or proximity to the territory of Malta or Maltese persons. When an arrest is obtained to secure a claim in rem, the vessel is considered as being separate and dis - tinct from the rest of the debtor’s patrimony. Nonethe - less, the arresting party would still need to ensure that
the Maltese courts are vested with jurisdiction in rem. The creditor’s claim must fall under one of the head - ings of maritime claims listed in Article 742B of the COCP. Furthermore, unless the claim is a special mari - time privilege, the creditor would generally also need to satisfy the “relevant person test”, as prescribed in Article 742D of the COCP, in order to make an arrest in rem. 5.2 Maritime Liens Maritime liens are alien to the Maltese legal system. The closest equivalents are those claims listed in Section 50 of the MSA, referred to as special mari - time privileges. There are 16 special privileges, which include: • any judicial costs incurred in respect of the sale of the ship, salvage costs, crew wages and remunera - tion; • expenses incurred for the preservation of the ship after her last entry into port; and • moneys due to creditors for provisions, victuals, outfit and apparel, incurred prior to the departure of the ship on her last voyage. There is a special privilege for damages and inter - est due to any seaman for death or personal injury, and regarding expenses attendant on the illness, hurt or injury of any seaman. There is also a privilege for wages and “other sums due” to the crew in respect of their employment on the vessel. Section 50 of the MSA also serves to help compet - ing creditors establish the ranking of their respective claims, as the list is organised in a hierarchical order according to the priority of the nature of those claims. There are two fundamental differences between ordi - nary maritime claims and special maritime privileges under Maltese law. First, special maritime privileges attach to a vessel and will survive any voluntary sale of a vessel for up to a year. Conversely, ordinary maritime claims do not follow the vessel and an arrest in rem would only be possible where those claims satisfy the “relevant per - son test”.
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