First ICS & VMAA luncheon talk

Ship Arrest/Maritime Lien

On Wednesday, May 10th , the 1st of a series of 3 luncheon presentations was launched as part of a joint endeavor by the Vancouver Maritime Arbitrators Assoc (VMAA) and the Canada Branch of the Institute of Chartered Shipbrokers (ICS). Held in a new venue at the Waterfront Centre, the room was nearly full with 50 attendees who watched and listened to Gary Wharton, partner at Bernard LLP speak to Ship Arrest / Maritime Liens. Mr. Wharton was followed by John Bromley, partner with Norton, Rose, Fulbright, who brought the issues regarding the HANJIN insolvency into focus, given at least two of it’s ships involvement with B.C. ports of call.

Mr. Wharton jumped right in and explained, in Canada, ship arrest can be a relatively simple, inexpensive and a speedy process in order to obtain security for a claim. Falling under Federal jurisdiction, Canadian maritime law can assist in securing claims for loss of life, injury, loss or damage to goods, salvage, goods or materials supplied to ships, wages, disbursements, dock charges, dues or tolls. The list goes on.

An arrest can be initiated by providing a statement of claim and with the help of your maritime lawyer, obtain a warrant of arrest. Prior to the vessel leaving port, notify the Pilots and Harbour Master what is in store and arrange to board the vessel, serving notice to the Master the ship is under arrest. This normally starts the discussion that needs to take place, addressing the problem that possible security will be needed to cover the claim, so the vessel might continue on her way.

Now having gotten the ship owner’s attention, Mr. Wharton continued, the next step might be to receive a Letter of Understanding (LoU) from an insurer representing the ship, for an agreed amount to cover the claim. If wording of the LoU can be mutually agreed and the funds posted, the vessel might well continue on her voyage. Different types of security are common and might be provided by banks, bail bonds, cash in trust or court as well as the more common LoU from the Owners P and I Club. Rounding out this section he spoke to “caveats” that’s might be used as a way of preventing arrest.

In addition to the process of arrest, another tact might be pursued/ Gary spoke to Sister Ship Arrest as well as Maritime Liens and the types thereof and how they are distinct from simple rights to arrest and the conditions surrounding them.

Wrapping up a colourful but quite succinct 30 minute presentation, he highlighted a key component for Canadian claimants is now addressed within the Canadian Marine Liability Act (sec.139). The Act has been amended so it allows a maritime lien for Canadian “suppliers of necessaries”, against foreign owned ships, similar to rights that their U.S. counterparts have had. Mr. Wharton graciously fielded questions that followed.

Ship Arrest Maritime Liens Presentation


HANJIN Debacle

Like peanut butter and jam or salt and pepper, following Mr. Wharton’s excellent presentation on Ship Arrest/Maritime Liens, Mr. John Bromley, Partner at Norton, Rose, Fulbright really brought home, how the applications of arrest and liens are such a large part of the sad happenings to Mssrs. HANJIN.  By virtue of two Hanjin ships (Hanjin Scarlet and Hanjin Vienna) anchored within eyesight of Vancouver shores, the audience was keenly interested to hear Mr. Bromley explain the how and why of liens and arrest. His firm continues to be part of the ongoing Hanjin saga.

Hanjin was no small entity, owning a fleet of different ships, not only container vessels as well as terminals in Korea and five other countries. In September of 2016, both vessels mentioned above were arrested by different parties even though Hanjin, the charterer of the vessels, had filed for protection (in Korea) as they maneuvered to reorganize financially. Ultimately Canadian Provincial and Federal courts got involved, as well as Courts around the world, looking to protect the interests of Hanjin versus shippers, consignees, service providers and necessary suppliers.

As John continued on with the legal saga, it was interesting to hear how commercial minds prevailed in cool maneuvering to allow the ships to be moved, berthed and cargo/containers to be discharged. Monies had to be deposited to cover services such as tugs, lines and pilots, who were simply not willing to act unless there were guaranteed payments. However the sensible act of unloading containers assisted parties in repositioning over 3300 TEU’s that could have been tied up for many more months, potentially voiding cargo sale contracts or spoiling goods. Not everyone was quite as lucky. Head Owners did not receive charter hire payments for several months and ultimately had their ships returned to them. The Hanjin Vienna was sold (slightly below U.S.$ 7.0 million) and a line up of ‘in rem’ claimants are still looking for recovery of money owed. The bank is claiming the Hanjin Scarlet allegedly owes nearly U.S.$ 80 million with respect to a fleet mortgage covering it and two other ships. She’s yet to be sold and certainly her value is not worth 80 million.

Mr. Bromley went on to explain other parties who were left less than whole. Container owners and leasing companies were out of pocket and terminal operators were accruing daily container demurrage charges which might never be paid. With a wry smile, he spoke of a number of shippers/consignees who were willing to pay charges owing on their containers, in order to have them released only to find themselves facing lien charges from Hanjin for previous shipments!

With many in the crowd shaking their heads in disbelief, at what truly is a debacle, Mr. Bromley finished up by saying as recent as March of this year, one of the previous Hanjin vessels sold and renamed, had caveat releases filed by a port authority, a railway and a terminal operator. Security was ultimately posted but not before a week had passed while the vessel sat idle.

Questions filled the last 15 minutes of a most stimulating and incredible set of presentations. The speakers were rewarded with a hearty round of applause and presentation of the I C S’s publication, “QUALITY ASHORE”.  Well done gentlemen!

(NOTE: Earlier this month (June 1st) interesting to note, the Hanjin Scarlet was sold by court order for just over U.S.$ 18.0 million.)

Hanjin Insolvency Presentation

  • January 24, 2018 12:00Vancouver: ICS Canada Branch BOD Meeting
  • January 25, 2018 17:00Vancouver: ICS Open Day
  • January 25, 2018 18:00Montreal: ICS Open Day
  • February 22, 2018November Exams results will be published
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