Amendments to Law on Jurisdiction In Rem and Arrest

Maltese law has long been crying out for amendments to bring legislation on jurisdiction in rem out of the Victorian era. In Summer 2006 the necessary reforms were pushed through Parliament. The grounds on which Maltese courts may exercise jurisdiction in rem are based entirely on the British Admiralty Acts of 1840 and 1860. However, once the amendments come into force the courts will be able to rely on a new Section 742(b) of the Code of Organization and Civil Procedure. The section contains a very extensive list of claims over which the courts may exercise jurisdiction. Given that under Maltese law a vessel may be arrested to secure an action in rem only on grounds on which courts may exercise jurisdiction in rem, the section extends the grounds on which a vessel may be arrested.

Section 742(b) includes a variety of maritime claims. It draws on Article 1 of the 1952 and 1999 versions of the Brussels Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Ships and Articles 20 and 21 of the English Supreme Court Act 1981. It relies particularly heavily on the act when considering the problem of ensuring justice and equity in claims involving vessels owned, chartered and bareboat-chartered by different parties at the time the incident occurred or the debt was incurred, as opposed to the time the cause of action arose. These provisions are the first to address this question; experts have previously relied on recent case law when advising clients on whether they may arrest a vessel and commence an action in rem for a debt incurred by a bareboat charterer. In most cases the court has concluded that they may not. However, the legislation puts the matter beyond doubt and introduces valuable clarity on this point.

In addition to bringing Maltese law up to date on jurisdiction in rem and arrest, the new law has introduced the concept of court-approved sales. Practitioners in the area are aware of a great demand for this type of remedy because of Malta's location in the central Mediterranean and the size of its fleet. Before the introduction of this concept, Maltese law did not allow a creditor to sell a debtor's vessel for a good price and have the sale approved in court, prompting a number of mortgagors to take their business elsewhere.

Further amendments have been introduced regarding arrest. Whereas it was previously necessary to issue two warrants, one of impediment of departure and one of seizure, it is now sufficient to file a warrant for arrest of a vessel. However, it is understood that the amendments to the arrest procedure may not come into force at the same time as the other amendments.

For further information on this topic please contact Ann Fenech at Fenech & Fenech Advocates by telephone (+356 2124 1232) or by fax (+356 2599 0645) or by email (ann.fenech@fenlex.com).