Suez: The Difficulties of Freeing Vessels from Arrest

December 2001

The potential for the arrest of Member's vessels at Egyptian ports is in general low. Local Courts will not usually consider such applications unless claimants are of Egyptian interest. However, due to close collaboration between both the Courts and local lawyers Members should be aware of the potential problems that can arise in relation to claims at the port of Suez when security is sought and the vessel arrested. In such circumstances it is necessary to provide security to the Court in order to release the vessel from arrest. P&I Letters of Guarantee are rarely accepted. Whilst security in the form of a bank guarantee - the terms of which are often unconditional - was once satisfactory, the occurrence of only cash deposits or settlements being considered acceptable is becoming far more prevalent. 

Such applications are rarely straightforward. The arresting party can raise all manner of technical objections to delay the proceedings and, therefore, the vessel. When a release order is granted, the arresting party can appeal. This has the effect of suspending the release order until the appeal is heard. It may not be possible to fix a prompt date for the appeal hearing without an application to the chief justice or minister of justice for a suitably senior judge to hear the appeal. While such an application can be made without notice to the arresting party, if successful, there is scope for the claimant to cause further delay objecting to the judge assigned to hear the appeal. The appeal hearing can then be postponed for a period of potentially up to 4 months, subject to the Court Schedule or any official Summer vacation. 

While the vessel is under arrest it is vulnerable to additional arrest applications by the same claimant in order to increase the commercial pressure on the owner. It has also been found that lawyers will often notify a large number of solicitors with the intention of using the arrest to reactivate old or even time barred claims. In one case, a vessel was arrested on three separate occasions. The arrests, made over a period of 8 days, arose from claims for security in respect of (1) alleged cargo damage, (2) alleged cargo shortage and (3) a potential customs penalty. Security in the form of a bank guarantee in a wording usually acceptable to claimants world-wide was refused by the arresting party. The vessel sailed after a substantial delay, but only after a settlement was agreed with the cargo claimants and significant costs had been incurred in making numerous urgent applications to the court to procure its release. Had the matter not been settled, the resultant delay could have been even greater while the various objections that had been filed by the claimant were resolved by the court. Such a settlement may have to be considered whether or not the alleged claims are considered to be either timely or with merit. 

It is evident that a vessel arrested in Suez may be subject to significant delay before it can be released and substantial legal costs may be incurred. This problem has increased in recent years. It is recommended that members bear this in mind when fixing vessels to Suez and that, in this event, they take proactive steps to minimise the risk of a cargo claim by appointing tally clerks and a competent surveyor to monitor and supervise discharge operations. Members may also wish to consider selecting the night time northbound convoy through the Canal, passing through Suez during the hours of darkness when the Local Courts are closed and therefore unable to provide a warrant of arrest.

 

With thanks to Middle East Survey & Control Office for supplying updated information.