Arrest of Ships in Accordance with Libyan Law
By Dr. Mohamed Karbal
Despite the current security problems, the Libyan government due to its efforts to rebuild the New Libya, has situated the nation at the apex of a widely-anticipated economic boom of development in all sectors. Prior to the revolution of 2011, Libya’s exports reached $30 billion USD and its imports exceeded $6 Billion USD. With new liberal economic views and the willingness to compensate for the 42 years of stagnation under the Gaddafi regime, Libya’s economic development is projected to be one of the fastest growing economies in the world.
Libya is largely dependent on imports, consisting mainly of industrial and food commodities. Libya’s biggest trading partner is the European Union and Italy leads with 30% of Libyan imports. This significance of the Libya/EU trade-link across the Mediterranean is undisputed as the seaports of Libya are invigorating their connections to the southern European seaports. This will continue to play an increasingly important role in the future. The Libyan foreign trade is carried out through seven major commercial seaports, seven petroleum seaports, and one seaport for the steel industry. This significant number will be the basis of the trade link across the Mediterranean once security and stability dominate the Libyan political scene.
The seaports are reasonably equipped, nevertheless, in the near future the Libyan government will be investing in improving the efficiency and productivity of its seaports. The government is presently contemplating involving foreign investors to develop and operate the Libyan seaports on the basis of public-private partnership (PPP).
As the efficiency of these seaports improves, the frequency of ships berthing at Libyan ports is expected to increase. It is a commercial fact that the majority of ships calling at the Libyan ports are neither registered in Libya nor owned by Libyan entities. With the expected increase of the tonnage and containers to be handled by the Libyan seaports, legal problems between the foreign ship-owners and shippers are expected to increase before the Libyan courts. These disputes shall be mainly related to the arrest of ships in the Libyan seaports. Parties involved in shipping disputes shall use the Libyan courts as a venue to force a settlement without resorting to litigation.
The Libyan Law and the Arrest of Ships
Libya is not a signatory to the International Convention relating to the Arrest of Seagoing Ships of 1952, however, a ship in Libyan territorial waters could be arrested as a property owned by a debtor.
In general, the Libyan law grants the Libyan courts original jurisdiction to hear a case brought against non-Libyan. Article 3 (2) of the Civil and Commercial Procedures Law gives the Libyan courts power to hear and decide a case involving property located in Libya. Since international law and Libyan law consider the water surrounding Libya as a part of that country’s territory, accordingly, a vessel located in the Libya’s territorial water will be subject to the original jurisdiction of the Libyan courts.
Another applicable rule to arrest a ship is to commence proceedings to secure claim. According to Article 516 (1) of the Civil and Commercial Procedures Law, a claim can be filed in a Libyan court against a property located in Libya even when the owner is a non-resident of Libya. Concerning a ship arrest, a ship located within the territorial waters of Libya will be subject to arrest despite the non-residency of the owner.
Here, we must draw a distinction between an arrest order obtained in the enforcement of priority rights conferred by a maritime lien and a prejudgment attachment or prejudgment writ of attachment as it is known in the United States of America. Prejudgment attachment under the Libyan law is a provisional remedy to preserve the status quo until the court issues a final judgement. It is mainly the seizure of the ship temporarily.
The plaintiff (creditor) has to commence the action in the court which has jurisdiction over the ship. The plaintiff must submit evidence of the debt owed by the debtor, in this case, the ship owner. The court orders the seizure or attachment of the ship specifically described in the writ by issuing a notice of attachment which will be served to the ship’s master in order to commence the attachment. The ship will be seized and maintained in the custody of a designated official (guardian). The guardian is usually appointed by the court or the ship’s master/crew member to ensure that the ship remains in custody until a final judgement is issued.
Usually, a good legal team will be able solve the issue of a ship’s seizure in Libya by arranging the offering of a guarantee, and/or letters of undertaking to the creditor in order to release the ship. As is unusually the final result, further details such as litigation or the sale of the ship by the court is unnecessary for this discussion and left best discussed with a debtor’s lawyer, if the need does arise.
This article was first published in Libya Business News August 2014 and republished in Marasi News January 2015 issue.