ARREST of SHIPS at TURKISH WATERS 2016 by Maritime Lawyer Ms.Alev BELLER

“SHIP ARREST AT TURKISH WATERS”

Author:ALEV ELİF BELLER- Maritime Finance Lawyer- Attorney at Law at Turkish Bar Asso./Arbitrator TCS)

The Law :

The New TCC(Turkish Code of Commerce) has entered into force in July 2012. Pursuant to Article 2 sub-clause b of the Turkish Code related to the manner of application and coming into force of the New TCC ("TCC Implementation Code") all legal acts that have been realised prior to that date as to their condition of being binding and their legal consequences, shall be subject to the law that is in force at the time of the realisation of the legal act.

In the New TCC the Turkish legislator adopted the concepts and articles of the International Convention on Arrest of Ships (Geneva 1999) and International Convention on Maritime Liens and Mortgages (Geneva 1993). Article 1353 of the New TCC states – in line with the said International Conventions – that a provisional sequestration / arrest may be requested for certain maritime claims which are (finally) listed in Article 1352 New TCC.

The application of these new provisions will create the practice under law. The codified new laws corresponding to respective international conventions are favourable developments.

1. THE TYPE of THE CLAIM

A provisional sequestration / arrest may be requested for securing the collection of marine claims. Other claims than maritime claims may not be subject to provisional sequestration according to Certain maritime claims which are finally listed in article 1352 of the Turkish Code of Commerce are listed in the below translation of the article which is almost thorougly the translation from the

1999 Geneva Convention Article 1353.

This list includes and qualifies as a maritime claim, inter alia, a pledge or mortgage over the ship or any obligation in rem over the ship.”

Vessel arrest is permitted to marine claims and also to maritime lien creditors listed under article 1320.

2.THE EVIDENCE DOCUMENTS

The Court will require satisfactory documents giving rise to a due debt and all of these must be translated into Turkish . A power of Attorney must be issued in favour of the lawyers to represent the arrestor party. The POA should be notarised and legalised with Apostille(if the issueing country is subject to Apostille Convention ) if not to be legalised by the Turkish Counsulate Officer in the relevant Country ) See below the example text for a POA.

3.THE SECURITY to be provided

The Court asks upon the claimant who seeks arrest of the ship, the obligation to provide security to be lodged at the Turkish Courts in the amount of 10.000 special drawing right for any loss which may be incurred by the defendant as a result of the arrest, and for which the claimant may be found liable in consequence of the arrest having been wrongful or unjustified

A foreigner who sues in the Turkish Courts is obliged to put up security if not exempted from this requirement by internatinal treaties or bilateral conventions to which Turkey is a party.

4.THE JURISDICTION

Art. 1355 1 New TCC

“The claim for provisional sequestration in Turkey regarding the ships with a foreign flag may solely be filed before the Court, whose jurisdiction covers any of the places, where the ship is either anchored, moored to a navigation buoy or to a vault, where the ship has docked or where the ship is overhauled to.”

Meaning that the arrest application must be made from the Turkish Court where the ship presently berthed, has laid anchor at the port

The decision for the arrest of the ship shall be rendered by the Turkish Court even if the competent court or the Arbitration has power to try the question in dispute.Under Article 1356 and article 1357 of the TCC ,it is possible to ask for the arrest of the ship presently at Turkish waters prior or after the commencement of the legal proceedings at the competent court of jurisdiction. The Turkish Court shall issue an arrest order to secure the claims that will be tried in front of the foreign courts and arbitral bodies if the parties have validly agreed to submit the dispute to a Court of another state which accepts jurisdiction or to arbitration,then the main proceeedings must be brought within the time and place ordered under the relevant agreement

5.The Procedural rules

The application of the Arrest and judicial sale procedure is subject to rules of the Turkish Code of Compulsory Execution and Bankcruptcy ( “Law No 2004”) (“.TCCEB “)Art. 21 PIL: 2. Turkish Private International Law Act (“PIL”) [Ownership rights and other essential rights on movable and immovable properties to are subject to the laws of the place in which they are present.]Art. 27 PIL (the former PIL Act No 2675- the PIL Act No 5718 Article 40):International Forum:The right of International Jurisdiction of Turkish Courts will be determined by the rules of domestic law, relating to the place of jurisdiction.

6.The transit passage through the Turkish straits

The vessels passing in transit through the Turkish straits ( the continuous voyage from the Black Sea to the Aegean Sea or vice versa is regulated by the International Convention of Montreux signed in1936)shall not be arrested, unless the transit passage is interrupted by the local governmental bodies.

The Convention adopts as an irrevocable principle in times of peace ,the freedom of navigation without restrictions as to the flag or cargo or innocent passage through the territorial waters.Turkey is not a party to the 1958 Geneva Convention on territorial waters or to the 1982 UNCLOS and there is not a specific customary law or rule restricting the coastal state’s jurisdiction .Turkish Courts have in the past rendered arrest decisions in respect of foreign flag(other than Turkish) vessels in transit passage in acccordance with the contents of the Montreux Convention.

7. Service of an Execution Order upon the Master

Another arrest procedure is by serving an ordinary execution Order upon the ship’s master who is present at the Turkish Ports .The order will contain the particulars of the applicant ,the nature of the claim and the property to be arrested . This is a practice under Turkish law of execution which must be precautiously dealt by the foreign flag shipowners . The Ship’s master must immediately inform the Agents and the operators ,owners , managers about such a legal action and the Opposition to an order of any kind should be made by the local lawyers representing theShip within 7 days of definite time period .Otherwise the order reflecting a claim against the Ship will create an absolute debt and the decision will be final and this will lead to the Arrest of the vessel at the Turkish waters ,aiming to a possible judicial auction . ( a counter claim lawsuit shall be initiated at the Turkish Courts by providing 115% of the claim raised in question ,However this is a lengthy legal procedure ) It is utmost important that the Masters are alerted for any legal serviceor any other legal document that is served upon them at the Turkish waters. The newly application arising from the article 1104/3 of the TCC is in our opinion , risky for the foreign flag ships that are operating at Turkish Ports.

8.Maintenance Costs of the vessel under Arrest

Turkish practice does not make a requirement to deposit in lieu the expenses incurred in the arrest and custody while the ship is under arrest . Article 1368/2 provides that the Bailiff’s officer takes all the measures fort he management and maintenance and protection of the ship under arrest

9.The main proceedings after arrest

The substantive proceedings after the Arrest must be followed within a month of the issue of the preliminary injunction order at the competent jurisdiction /venue, as stated under article 1376 of the TCC.

10. Selection of Relevant Turkish Legal Provisions

“Marine claim”

Art. 1352 para. 1 TCC) means a claim, arising from one or more matters specified below:

(a) loss or damage caused by the operation of the ship;

(b) loss of life or personal injury occurring, 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 of a ship which by itself or its cargo threatened 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; costs 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 damage, 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 which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship, and costs or expenses relating to the preservation of an abandoned ship and 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 contained 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 for its operation, management, preservation or maintenance;

(m) construction, reconstruction, repair, converting or equipping of the ship;

(n) port, canal, dock, harbour and other waterway and quarantee dues and charges;

(o) 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 the credits obtained for the ship;

(r) insurance premiums (including mutual insurance calls) in respect of the ship, payable by or on behalf of the shipowner

(s) any commissions, brokerages or agency fees payable in respect of the ship by or on behalf of the shipowner

(t) any dispute as to ownership or possession of the ship;

(u) any dispute between 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.

Art. 1353 TCC

“(1) The provisional sequestration is the sole mechanism for securing the collection of maritime claims. The creditor may not claim for a preliminary injunction or for the condemnation of the ship in another manner.

(2) The maritime claims secured upon a statutory or contractual pledge are also subject to the first paragraph.

(3) Other claims than maritime claims may not be subject to provisional sequestration

(4) The fact that the claim is a claim specified in Article 1352 is the legal ground for provisional sequestration.

(5) With regard to deferred claims, the right to provisional sequestration arises provided that the conditions prescribed by Article 257 paragraph 2 of the Turkish Code of Compulsory Execution and Bankruptcy Code, TCCEB are fulfilled.”

Art. 1354 TCC

“(1) The preliminary injunction may solely be formed by the Court, whose jurisdiction covers any of the places, where the ship is either anchored, moored to a navigation buoy or to a vault, where the ship has docked or where the ship is overhauled to and solely by the Courts, specified below:

a) Regarding the ships registered in a Turkish Registry, the court, whose jurisdiction covers the Registry,

b) Regarding the non-registered ships, the court, whose jurisdiction covers the residence of the owner, and

c) Regarding the ships, registered in a private registry, arranged in terms of Article 941 para. 3, the court, whose jurisdiction covers the residence of the charterer.”

Art. 1355 TCC

“The claim for provisional sequestration in Turkey regarding the ships with a foreign flag may solely be filed before the Court, whose jurisdiction covers any of the places, where the ship is either anchored, moored to a navigation buoy or to a vault, where the ship has docked or where the ship is overhauled to.”

Art. 1356 para. 1 TCC

“Even in the case that an arbitration court or a foreign court is authorized to judge the material law-suit regarding the maritime claim or in the case that the maritime claim is subject to a foreign applicable law, both on the base of a competence or arbitration clause in the related agreement or on the base of an independent agreement regarding the competence or arbitration, the courts, which are competent pursuant to Articles 1354 and 1355 are also competent to decide about the provisional sequestration in order to secure the collection of the maritime claim.“

Art. 1357 TCC

“(1) After the initiation of a law-suit regarding a maritime claim before the domestic Turkish courts, the claim for provisional sequestration may solely be filed before the court, where the main law-suit has been filed.

(2) After the initiation of a law-suit regarding a maritime claim before an arbitration court or before foreign courts, the claim for provisional sequestration up to the final judgment may solely be filed before the court, which is competent according to Articles 1354 and 1355.” – ALEV ELİF BELLER (Attorney at Law- Arbitrator)

Av.Alev Elif Beller (Maritime Finance Lawyer- Attorney at Law at Turkish Bar Asso./Arbitrator)