SAUDI ARABIA Law and Practice Contributed by: Faisal Daudpota, Daudpota International (in alliance with Khalil Aljehani Law Firm)
5.7 Sister-Ship Arrest Saudi Arabia permits the arrest of a sister ship to secure a maritime debt, provided it shares the same registered owner as the debtor’s vessel. • Procedure: Claimants apply via the commercial court’s online system, with decisions typically ren - dered within three days. • Limitations: Courts generally do not pierce the cor - porate veil. Therefore, arresting associated ships (vessels with different registered owners but similar management) is generally prohibited. • Time limit: To maintain the arrest, the claimant must initiate substantive legal proceedings within ten days of the order. 5.8 Other Ways of Obtaining Attachment Orders Beyond ship arrests, creditors in Saudi Arabia can secure claims through precautionary attachments ( saisie conservatoire ) under the Enforcement Law. • Precautionary attachment: Creditors can peti - tion the court on an ex-parte basis (without prior notice) to attach a debtor’s assets – such as cargo or equipment – if they prove a credible claim and a risk of asset dissipation. • Bank and property freezes: EJs can order the freezing of bank accounts to prevent fund transfers and attach movable property like machinery. • Third-party and investment assets: Attachment orders can extend to real estate, corporate shares and even funds owed to the debtor by third parties (garnishment). • Pledge (Rahn): Parties can also create a Rahn (pledge or mortgage) over movable or immovable assets to secure a debt in accordance with Sharia principles. 5.9 Releasing an Arrested Vessel Vessels arrested in Saudi Arabia can be released by depositing a security determined by the court, typi - cally via a local Saudi bank guarantee, or through an amicable settlement. While P&I club letters of under - taking (LOUs) are sometimes accepted, they are not guaranteed to be accepted by the court, and a local bank guarantee is more likely to secure a swift release.
Regarding options to release an arrested vessel in Saudi Arabia: • the owner must deposit the security amount deter - mined by the court (usually not exceeding the value of the ship) to obtain a release order; • amicable settlement – an agreement between the parties can lead to the arresting party submitting a request to the court to release the vessel; • grievance/objection – the defendant can file a grievance against the arrest order, arguing for its release; and • timeframe – release typically takes up to 72 hours from submission of the security. Acceptable security types include the following. • Local bank guarantee: This is the most secure and readily accepted form of security by Saudi courts. • Foreign bank guarantee: These are generally accepted, provided they are in conformity with the approved form, and an Arabic translation is pro - vided. • P&I club LOU: While common in international maritime law, in Saudi Arabia, a P&I club LOU is not guaranteed to be accepted. It is generally only accepted if the claimant specifically agrees to it. • Cash deposit: Cash can be deposited with the court. 5.10 Procedure for the Judicial Sale of Arrested Ships Judicial Sale and Maintenance Liability The judicial sale of vessels is governed by the Com - mercial Maritime Law (2019) and executed through public auctions overseen by enforcement courts. • Procedure and release: Claimants apply for arrest warrants via the Najiz portal (with a three-day response time). Crucially, to release a vessel, defendants must provide a bank guarantee from a local Saudi bank; P&I club LOUs are not accepted. • Public versus private sale: Private sales are gener - ally prohibited to ensure transparency. However, a court may order a sale pendente lite (before final judgment) if the vessel is rapidly deteriorating or endangering third parties.
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