Facts: in November 2020, the m/v Vasily Shukshin with a dangerous radioactive cargo (enriched uranium) on board was returning to the Russian Federation from South Korea due to exceptional measures taken by the Korean and Russian authorities due to the detection of COVID-19 in the crew. When approaching the territorial waters of the Russian Federation, it lost its speed and drifted, giving a distress signal due to the impossibility of further movement due to lack of fuel.

After the successful completion of the rescue operation for emergency towing of the vessel to the roadstead of the port “Vostochny”, the Morspasluzhba applied to the commercial court with a demand to arrest the vessel and cargo on the vessel in securing the claim for the recovery of a salvage fee in the amount of 500,000 euros. The Morspasluzhba referred to the lack of information about the owner of the cargo, the refusal of the ship owner and the cargo owner to provide any security for the requirements of the rescuer and the presence of a maritime claim secured by a maritime lien.

Rulings of the courts: the Commercial Court of Primorsky Region refused to satisfy the request of the Morspasluzhba to take preliminary interim measures.

First of all, the court noted that the signed agreement in the form LOF2020 subordinated the legal relationship of the parties to the law of England, and in all disputes referred to the competence of the arbitration in London.

In refusing to satisfy the claim, the court took into account three important circumstances.

Firstly, the preliminary calculation of the salvor’s remuneration, which the Morspasluzhba referred to as one of the grounds for the arrest of the vessel, was not sent to the address of the ship owner and the vessel operator.

Secondly, Aspol-Baltic provided a letter of guarantee on payment of the salvor’s remuneration, which indicates that the defendants did not intend to evade the fulfillment of their obligations, as well as that the captain of the vessel did not sign the act of ending the salvage operation.

Finally, the court emphasized that the arrest of the vessel is impossible due to the dangerous characteristics of the cargo on it and the adequacy of the measures taken in relation to the possible damage to the environment.

Commentary: Russian jurisprudence is very scarce with regard to the arrest of sea vessels. Traditionally, Russian courts rarely apply interim measures, and preliminary interim measures (moreover, in the form of a special measure – arrest of a vessel) are even less common, which leads to those rare cases when persons turn to the mechanism of arrest of a vessel. In the same cases when a party claims the arrest of a vessel, the overwhelming majority.

The case is very remarkable both in terms of its factual background and from the point of view of law enforcement in the field of the seizure of sea vessels, and in a certain sense it can even be recognized as practical.

First, the Russian judicial practice has not previously encountered cases of demands for the arrest of a ship transporting radioactive dangerous goods.

Secondly, the circumstances of the case perfectly illustrate the problems that ship owners can face when transporting goods as a result of the impact of COVID-19.

Thirdly, in the overwhelming majority of cases, refusal judicial acts on several sheets include standard prepared phrases, which boil down to a statement of the absence of evidence of the impossibility or difficulty of executing a judicial act and / or other requirements of the Commercial Procedure Code of the Russian Federation and the Merchant Shipping Code of the Russian Federation for the successful arrest of the vessel¹.

The considered ruling of the Commercial Court of the Primorsky Territory on the refusal to arrest the vessel on as many as 15(!) pages (which does not often happen even in the case of final judicial acts) gives a detailed description of not only the circumstances of the case, but also the position and arguments of the parties, as well as detailed reasons why the court concluded that it refused to arrest the vessel. Taken together, these features make a judicial act not only absolutely non-standard for such a category of judicial acts, but also almost unprecedented in the field of arrest of courts.

It is noteworthy that the defendants reacted very quickly and sent a response to the application the next day after the filing of the application for the arrest of the vessel. This is not a standard technique, which does not always work, since the arrest application must be considered no later than the next working day. By itself, the procedure for considering an application for securing a claim does not provide for the defendant to present any objections to it (as a response, the law allows a petition to cancel the security and appeal on appeal), and in practice, such objections rarely reach the judge’s table (especially if they are filed on the same day when the judge is obliged to consider the issue of securing the claim). However, in the case under consideration, judging by the content of the judicial act, such a strategy yielded results and helped the court to deliver a sufficiently well-reasoned judicial act.

As arguments for refusing to arrest the vessel, the defendant referred to the applicant’s lack of appeal to him with specific requirements, as well as the abuse of the applicant’s right aimed at exerting pressure in negotiations to determine the cost of emergency towage, additionally informing that the cargo belongs to Rosatom group. The defendant considered that the applicant should have applied with a proposal to determine the amount of the salver’s remuneration based on the criteria established by the Merchant Shipping Code of the Russian Federation, which, in his opinion, is about USD 9,000, and not with a demand to arrest the vessel.

In this commentary, we will not assess the circumstances related to the essence of the dispute and the rescue operation itself (in all likelihood, we will not be able, since the dispute, if it is considered, it will not be in the Russian court), limiting ourselves only to the issues of the arrest of the ship in relation to the declared sea requirement.

It seems that the nature of the cargo transported on the ship played the most important role in this matter. As the defendant pointed out in his explanations, the ship was carrying a cargo of 180 tons of enriched uranium, the long-term storage of which on the ship could lead to an environmental disaster. Thus, the court took into account the possible negative consequences, taking into account the degree of danger of the cargo placed on the ship and the possibility of its long-term storage in the conditions of a dry cargo ship.

At the same time, it seems that the court did not accept such arguments as possible fines and penalties for violating the delivery time of the goods, focusing on the public interest in protecting the environment, life and health of people.

It seems that, taking into account the nature of the cargo, the essence of the dispute, the defendant could try to defend himself by arguments about the conclusion of a contract under the influence of danger against the background of unfair contractual conditions and excessively high fees.

Of particular interest is the attempt to shift the “blame” for the lack of fuel to the inactive coastal services, which allegedly became the cause of the situation. However, the initial reason, most likely, was a combination of the owner’s lack of foresight caused by an exceptional circumstance – the “cancellation” of the voyage and the forced return of the ship.

It is possible to take a critical attitude to the position of the court regarding the declared amount of the salvage compensation, taking into account the factual circumstances, since the preliminary interim measure is supposed to be urgent in nature and basically does not require a full description and confirmation at the stage of taking such measures.

Despite the detailed reasons for refusing to arrest the ship, one cannot fail to notice that much attention has been paid to investigating the issue of the defendant’s evasion from voluntarily satisfying the claim, while the key importance should be not the subjective attitude of the person to the claim, but his objective financial situation or other circumstances, obviously, indicating the impossibility of executing the court decision. For example, how would it be necessary to act if the ship were the only property of the debtor, and it would not be possible to overload the cargo due to its nature for the forced sale of the ship.

From the publicly available text of the judicial act, the following main conclusions can be drawn that can be used by practitioners.

Learning point No. 1: In certain conditions prompt filing of objections may be of a help to avoid the arrest of the vessel and help the court to carefully justify the refusal determination, as well as to more carefully approach the question of determining whether the seizure request meets the criteria for its satisfaction. For example, by providing evidence of the value of services or property, the defendant may show that there is no such criterion as disproportionate arrest. Alternatively, to show that the defendant does not intend to hide from the execution of the court decision and is ready for constructive cooperation.

Learning point No. 2: The presence of dangerous cargo on board can be used as a “shield” against the arrest of a ship and become an insurmountable barrier to satisfying the application for the arrest of a ship due to the environmental safety of an indefinite circle of persons. It seems that such an argument can be valid even if all other criteria for the arrest of a ship are satisfactory for the court.

In other words, the presence of a really dangerous cargo, on the one hand, with a high degree of probability predetermines the salvage nature of such towing in view of a possible environmental disaster, but, on the other hand, makes it impossible for the same reason to arrest the ship (or at least difficult until then, until the cargo is unloaded and does not pose a security threat). On the other hand, not every dangerous cargo can cause a judge to feel a subjective feeling of an ecological catastrophe, like a cargo of enriched uranium.

Learning point No. 3: it is likely that the court also regarded the correspondence between the parties to the dispute, as well as the counter-offer of the defendant in the amount of USD 9,000, as evidence of his lack of intention to hide from the execution of a possible judicial act. It seems that such constructive behavior can be an effective strategic move regardless of the dispute about the amount of the claim or the nature of the compensation, but in view of the value of the position itself and the behavior of the party in the context of the possibility of executing the judicial act on the merits.

The Marine Rescue Service (MRS) filed an appeal against the refusal to seize the ship and cargo, which was not satisfied by the Fifth Commercial (Arbitrazh) Appellate Court. As the arguments of the appeal, the MRS referred to the “illegality of the respondent’s explanations” and the delay in resolving the issue by the court until the respondent’s explanations were received, in all likelihood, justifying the fact that the application should be considered by judge sitting alone and without summoning the parties. The MRS also pointed out that in order to arrest a vessel, only the existence of a maritime claim and the ownership of the vessel must be proved (however, the case law has been uniform in this regard for a long time and adheres to the position of the necessity of compulsory compliance with the requirements of Russian procedural legislation, which was noted by the court of appeal). The Claimant also noted that the respondent’s letter of guarantee concerned only the issue of towing and that the safety of the cargo was ensured by its proper packing on board of the ship.

The appellate court noted that the Applicant did not send any specific requirements, supported by a reasonable calculation, to the respondents which, together with the fact that the letter of guarantee was issued, could not indicate an intention to evade the execution of the court decision, as well as the refusal of the ship’s captain to sign the certificate on completion of a rescue operation.

The following procedural aspect is of particular interest. Namely, the reasons for the rejection by the court of appeal of the applicant’s argument to provide the respondent with an opportunity to reveal its position on the application for the adoption of interim measures. The court dismissed this argument, referring to the fact that the applicant itself had raised objections to the respondent’s position before the court of the first instance issued the ruling. Thus, the court assessed the argument not as a violation of the procedure for considering the issue of taking interim measures, but as a possible violation of the adversarial principle (which, as the court noted, does not exist).

At the same time, the appellate court agreed with the applicant’s argument about a significant time interval between the moment of filing an application for preliminary measures and its registration (which, according to the applicant, became a kind of “notification” of the parties and allowed the respondents to be active and submit a response). However, rejecting this argument as not fundamentally affecting the correctness of the judicial act, the court emphasized that “there are no provisions in the current procedural legislation that fundamentally exclude the acceptance, consideration and analysis of the respondent’s objections in the situation under consideration, prior to the issuance of an appropriate determination”. Thus, the court confirmed and, in fact, encouraged the possibility of proactive behavior of the party at the stage before the adjudication of the judicial act on the application for preliminary interim measures, which only reinforces Conclusion 1 above. ■

Notes