On 5 December 1997, the Dutch company Jachtwerf Jongert BV (JJ) sought the arrest of a British-flagged yacht, which was owned by Aleval (Holdings) Ltd (AH), a company domiciled in Jersey (Channel Islands), and was located at the Club de Mar in Palma de Mallorca. JJ alleged that it had a maritime claim against the ship under art 1.1.l of the Arrest Convention 1952, since it was still owed NLG 247,586 (the equivalent of ESP 18,563,998) for the repair of the yacht. Proceedings had been filed on 27 April 1997 before the Dutch Court of the District of Alkmaar against the company which then owned the yacht, Seacrossing Adventures Ltd (SA), domiciled in Guersey (Channel Islands), and Mr Andrés, its Dutch master. JJ attached a copy of this claim, legalised by means of an apostille under the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents 1961, as well as its notification to AH, duly translated.

On 10 December 1997, the Judge at first instance ordered the arrest of the yacht. AH objected, contending that it had bought the yacht on 24 June 1996, and was registered as its owner on 12 August 1996 on the UK ship register, as recognised in the lawsuit filed before the Dutch Court of the District of Alkmaar. It had not been established that this transfer of ownership was merely formal, or that its sole purpose was to frustrate the collection of JJ's debt. AH asked that JJ be required to post a deposit of ESP 30,000,000 for the damage already caused, and that which could occur if the arrest were to continue, since AH had signed a charter for the yacht with a Cypriot company, Ibiscus Ocean Tours Ltd.

The Court of first instance rejected AH's objection, reasoning that on an application of the Arrest Convention 1952, the arrest was justified, regardless of who currently owned the yacht, and that the Court was not able to discuss whether AH owed the amount to JJ, since that was a matter of substance for the later merit proceedings.

AH appealed to the Provincial Court.

Held: Appeal upheld. The arrest order is revoked.

AH argued that as JJ's claim was not a maritime claim, or, in any case, was not a maritime lien - because it did not arise from a repair carried out on the ship's last voyage - it was not possible to arrest the yacht, since the company which now owned it was not the party who commissioned the repair works. In accordance with art 9 of the Arrest Convention 1952, 'nothing in this Convention shall be construed as creating a right of action, which, apart from the provisions of this Convention, would not arise under the law applied by the Court which was seized of the case, nor as creating any maritime liens which do not exist under such law or under the Convention on maritime mortgages and liens, if the latter is applicable'. AH also contended that this was effectively an arrest in execution of a judgment - the lawsuit filed before the Dutch Court - which was excluded from the scope of the Arrest Convention according to art 1.2.

JJ insisted that the Court was dealing with a maritime claim, without JJ having invoked its privileged nature; and that the action that gave rise to the main lawsuit brought before the Dutch District Court of Alkmaar did not constitute an enforceable judgment.

Article 6 of the Arrest Convention 1952 provides that '[t]he rules of procedure relating to the arrest of a ship, to the application for obtaining the authority referred to in Article 4, and to all matters of procedure which the arrest may entail, shall be governed by the law of the Contracting State in which the arrest was made or applied for'. This means that AH's application for an order that the Spanish arrest be annulled, leaving it to the Dutch Court of Alkmaar to decide on the ship arrest and its consequences, cannot be upheld. Article 4 of the Arrest Convention 1952 provides that a 'ship may only be arrested under the authority of a Court or of the appropriate judicial authority of the contracting State in which the arrest is made'. In this case, it is the Court of First Instance No 6 of Palma de Mallorca, which was responsible for hearing the application for ship arrest when the yacht was docked at the Club de Mar in that city. Article 6 of the Convention further provides that '[a]ll questions whether in any case the claimant is liable in damages for the arrest of a ship or for the costs of the bail or other security furnished to release or prevent the arrest of a ship, shall be determined by the law of the Contracting State in whose jurisdiction the arrest was made or applied for'.

It is true that art 1.2 of the Arrest Convention 1952 excludes from its scope 'the seizure of a ship in execution or satisfaction of a judgment', but the lawsuit filed before the Dutch Court of Alkmaar is not a final judgment; the action seeks the arrest of the yacht 'to guarantee the execution of the sentence that could be handed down in the main lawsuit against [AH]'.

In the present case, JJ alleges a maritime claim under art 1.1.l of the Convention. Article 3.1 of the same Convention states that 'a claimant may arrest either the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship'. It has been proven that it was SA who commissioned JJ to repair the yacht, beginning the work in July 1995, to finish on 11 June 1996. The sale of the yacht to AH was formalised on 24 June 1996.

In cases such as this, in which ownership of a ship is transferred after the creation of a maritime claim, ship arrest can only be decreed when the claim is of a privileged nature, in accordance with the provisions of art 582 of the Commercial Code (CCom) and art 8 of the MLM Convention 1926. The repair claim here does not have that character, either in accordance with art 580 of the CCom (as it was not contracted on the occasion of the ship's last trip), or according to art 2 of the MLM Convention 1926, so that the arrest of the yacht should not have been ordered. The arrest order must be revoked, and JJ must compensate AH for the damage caused by the yacht’s arrest.