Ercüment Erdem Att. Duygu Oner

Arrest of Ships under Turkish Law

May 2018

Introduction

The general principles on maritime enforcement are set out in Turkish Commercial Code (“TCC”) numbered 6102. On the other hand, Turkey has ratified the International Convention on Maritime Liens and Mortgages, signed in Geneva on 6 May 1993 and the International Convention on the Arrest of Ships, signed in Geneva on 12 March 1999 and both conventions have been come into force on 25 March 2017. The provisions of these two conventions have already been taken into consideration by the drafting committee of the code, and the relevant provisions have been incorporated into the TCC in preparing the same. This newsletter reviews the principles and provisions stipulated in the TCC for the arrest of ships. 

Arrest and Maritime Claims

The exclusive provisional remedy provided with respect to ships under the TCC is the arrest. The arrest of ships has been stipulated for “maritime claims” that are listed as numerous clasus under Article 1352 of the TCC. In other words, a ship may only be arrested for the maritime claims which are stipulated in the TCC. As such, where non-maritime claims are made against the shipowner, the claimant may apply for an arrest under the general provisions of Turkish Enforcement and Bankruptcy Code numbered 2004 (“EBC”) to be enforced on any property other than a ship[1].

As per Article 1352, a maritime claim is defined as a claim arising out of one or more of the following: 

a) Loss or damage caused by the operation of the ship.
b) Loss of life or personal injury, whether on land or on water, in direct connection with the operation of the ship.
c) Salvage operations or any salvage agreement, including, if applicable, special compensation relating to salvage operations in respect a ship, by itself, or its cargo, threatens damage to the environment.
d) Damage, or threat of damage caused by the ship to the environment, coastline, or related interests. Measures taken to prevent, minimize, or remove such damage; compensation for such damage; cost of reasonable measures of reinstatement of the environment actually undertaken, or to be undertaken; loss incurred, or likely to be incurred, by third parties in connection with such damage; and damages, costs, or loss of a similar nature to those identified in this subparagraph.
e) Costs or expenses relating to the raising, removal, recovery, destruction, or the rendering harmless of a ship that has sunk, has been wrecked, stranded or abandoned, including anything that is, or has been on board such ship, and the costs or expenses related to the preservation of an abandoned ship and the maintenance of its crew.
f) Any agreement relating to the use or hire of the ship, whether contained in a charter party or otherwise.
g) Any agreement relating to the carriage of goods or passengers on board the ship, whether contended in a charter party, or otherwise.
h) Loss of or damage to, or in connection with, goods, including luggage, carried on board the ship.
i) General average.
j) Towage.
k) Pilotage.
l) Goods, materials, provisions, bunkers, equipment (including containers) supplied, or services rendered to, the ship or its operation, management, preservation or maintenance.
m) Construction, reconstruction, repair, converting or equipping of the ship.
n) Quarantine fees, port, canal, dock, harbor, and other waterway dues and charges.
o) Crew wages and other sums due to the master, officers and other members of the ship’s complement in respect of their employment on the ship, including costs of repatriation and social insurance contributions payable on their behalf.
p) Disbursements incurred on behalf of the ship or its owners, including loans obtained with respect to the ship.
r) Insurance premiums with respect to the ship, payable by, or on behalf of, the shipowner or demise charterer.
s) Any commissions, brokerages or agency fees payable with respect to the ship by, or on behalf of, the shipowner or demise charterer.
t) Any dispute as to ownership or possession of the ship.
u) Any dispute between the co­-owners of the ship as to the employment or earnings of the ship.
v) A mortgage or a "hypothèque", or a charge of the same nature on the ship.
y) Any dispute arising out of a contract for the sale of the ship.

In principle, arrest orders are given for claims fallen due. The Claimant is required to prove, prima facie, the existence of a maritime claim under Article 1352 of the TCC, and the amount of the claim. On the other hand, in accordance with Article 257 of EBC, the TCC provides for ship arrest for claims not yet fallen due, if the debtor has resorted to fraudulent transactions to relieve him/herself from his/her obligations, or if the debtor is planning to disappear, or has disappeared.

Jurisdiction for the Arrest

With regards to jurisdiction, the TCC adopts the principle of lex fori and, therefore, all matters relating to the procedure of enforcement are subject to the law of the State where the enforcement takes place. In this respect, Article 1350 of the TCC provides that the precautionary attachment, or executive attachment of the vessels, judicial sale of vessels, and all of its consequences including, as well as transactions in relation to, the enforcement proceedings are subject to the laws of the country wherein the vessel is located at the time of the enforcement. In this respect, apart from the fact that whether the vessel is foreign-flagged or Turkish-flagged, if the vessel is located within Turkish waters, Turkish law will be applicable to the arrest application, and to all stages of procedure and enforcements.

Counter Security

The TCC requires the applicant to provide a counter security. The amount of the security is fixed to an amount equal to Special Drawing Rights 10,000. The counter security can be provided as a cash deposit or as a Bank Guarantee Letter. Counter security is a pre-condition for the arrest application, and the court will not review the application if the counter security is not deposited. The debtor may request that the court increase the counter security amount, and the applicant may also apply to the court for reduction of the same.  The TCC provides for an exemption from the requirement of counter security for the holders of maritime liens in respect of the claims for wages and other sums due to the ship’s crew in respect of their employment on the ship.

Enforcement of the Arrest Order

Once the arrest order is granted by the court, the claimant must apply to the enforcement office to proceed with the enforcement of the order. The application to the enforcement office must be made within three working days as of the date of the order, failing which the order will be rendered null and void. The enforcement office enforces the order promptly upon the application, takes the vessel under the custody by arresting the vessel. Notification that the vessel has been arrested and taken under the custody shall be served on the master of the ship or the shipowner, operator, or one of their agents. The enforcement office also notifies the coast guard, harbor master, and customs authority wherein the ship lies with respect to the arrest of the vessel.

[1] Atamer, Kerim, Transport Law in Turkey, originally published as a monograph as International Encyclopaedia of Laws / Transport Law, Wolters Kluwer, 2013, p.216