MALTA Law and Practice Contributed by: Ann Fenech, Adrian Attard, Lara Saguna Axiaq and Martina Farrugia, Fenech & Fenech Advocates
continue to maintain its security, as the ship can - not be sold or transferred. A creditor may also resort to using other attach - ment mechanisms available under Maltese law, which are not exclusive to maritime claims. For instance, a creditor may file for a garnishee order (which is similar in nature to a freezing order) to seize any funds which the debtor may have in accounts held with Maltese banks. It is also possible to apply for a warrant of seizure of any other movables or immovables which a debtor may have in Malta. 4.9 Releasing an Arrested Vessel For a ship-owner or any interested party to secure the immediate release of an arrested ship, they would need to put up adequate secu - rity in court to cover the alleged claim amount. Strictly speaking, Maltese procedural law only allows two forms of security: • the deposit of the money in court; or • the presentation of an original bank guarantee (which must be drawn by a Maltese bank) in court. That said, a Maltese court would generally allow a Club Letter of Undertaking (LOU) to be granted as alternative security for a claim, provided that the arresting creditor does not object. 4.10 Procedure for the Judicial Sale of Arrested Ships Judicial Sales of Ships A creditor with a final and non-appealable enforceable title may apply to the Maltese courts to have an arrested ship sold judicially, either by means of a court auction or by means of a court- approved private sale. In both cases, the vessel is always sold free and unencumbered.
In the case of a judicial sale by auction, the creditor presents an application requesting the courts to schedule an auction date and appoint an auctioneer to preside over the auction. The registration of bidders is normally carried out on the day of the auction itself. Bidders fill a regis - tration form and are required to present all the necessary bidding documentation shortly before the auction commences. The auction is public, and the vessel is sold to the highest bidder, who must deposit the purchase price in court within seven days, running from the auction date. There is no minimum reserve price and thus the market value of the vessel is not guaranteed. Alternatively, a court-approved private sale allows the creditor to take a more proactive approach, as it may actively source the market for potential buyers (usually through ship-bro - kers). Once the best offer is identified, the credi - tor would normally conclude a memorandum of agreement with that prospective buyer, to be approved by court. The creditor would then file a court application to request that the presiding judge approve the private sale. The creditor is required to submit two independent appraisals of the vessel. These need to be survey valua - tions, rather than “desktop” estimates. The creditor must prove to the court that the pro - posed private sale is in the interest of all known creditors and that the price offered is reason - able in the given circumstances. The application is served on all interested parties and a hear - ing date is appointed for the judge to decide whether to accept the sale. Once approved, the purchaser has seven days, running from the date of the completion of the sale, to deposit the pur - chase price in court.
349 CHAMBERS.COM
Powered by FlippingBook