Sebimar Fuels, a Canadian company, arrested the MV Ponteceso claiming the price of bunkers supplied in Montreal, Canada, on 11 July 1984. The arresting party ratified the arrest by filing a lawsuit against the shipowner, Naviera Astur Galaica SA (the defendant). The Court admitted the claim, ordered the defendant to pay, and declared that the vessel was affected by a maritime lien with preference to any ship mortgage, according to art 2.5 of the International Convention for the Unification of Certain Rules of Law Relating to Maritime Liens and Mortgages 1926 (the MLM Convention 1926). The defendant appealed the decision. Sebimar required the provisional enforcement of the decision. The defendant provided bank security for the amount ordered by the Court to release the ship from arrest and prevent its judicial sale.

Banco de Crédito Industrial SA (the bank), which had a ship mortgage over the MV Ponteceso, appeared in the process as a third-party intervener, claiming the payment for the outstanding amount of the mortgage. The bank also challenged priority over the credit of Sebimar, alleging that the declaration of preference of the supplier's credit could not be extended to the bank because it was decided in a process where it was not a party. Therefore, that decision could not bind the bank. The bank also contended that Canada had not ratified the MLM Convention 1926, which made it inapplicable to that claim because the supplier was Canadian. In any case, art 14 of the MLM Convention 1926 enables a Contracting State to refrain from its application to nationals of a non-Contracting State. The bank requested the Court to declare its right to be paid with preference to the claim of Sebimar, claiming the total amount of the security provided to release the ship from arrest.

Sebimar opposed the bank's arguments, alleging that the amount deposited by the defendant corresponded to the payment of the bunker supplies ordered by the Court as established in the rules or procedure. The cheque that the defendant submitted was not as security to release the ship from arrest because there was a final decision for that claim. Hence, at the moment the bank appeared in the proceedings the payment of such debt was effective, making its intervention inadmissable. The bank should have commenced direct proceedings against the vessel which was available for arrest at that moment in the jurisdiction. Regarding the MLM Convention 1926, Sebimar alleged that the MLM Convention 1926 was ratified by Spain and that it is thus applicable to all vessels registered in a Contracting State and no reservation has been made regarding its application to nationals of non-Contracting States (art 14 of the MLM Convention 1926). The MV Ponteceso was registered in Spain and, consequently, the Convention applied. Accepting the thesis of the bank that the application of the Convention must be decided at the discretion of the Court according to the nationality of the creditor would lead to a chaotic situation making it impossible to know in advance the applicable law in these cases. It is correct that not all the holders of lower ranking credit appeared in the process, but their absence cannot affect the declaration of the preference of Sebimar’s credit.

The bank’s petition was rejected. On appeal, the decision was reversed by the Court of Appeal (CA), ordering the Court to pay the bank with priority to the supplier and from the total amount deposited by the defendant. The CA stated that the amount deposited was in substitution of the arrested property. Sebimar recurred the decision in cassation before the Tribunal Supremo/Supreme Court (SC) alleging an infraction of art 2.5 of the MLM 1926.

Held: The SC reversed the CA decision.

The SC concluded that the deposit made by the defendant was the payment for the debt claimed in that process because, according to the procedural rules, the only possibility for the defendant to avoid the sale of its property is to deposit the amount that it was ordered to pay in the judgment. As the effect of such a deposit was the release of the ship, the ship was available for the bank to commence the pertinent proceedings. Regarding the application of the MLM Convention 1926, the SC stated that it is of mandatory application in Spain as ordered by the Constitution and no reservation has been made regarding the second part of art 14. The Convention grants a maritime lien over the ship for claims resulting from contracts that are necessary to the continuation of the voyage. The mortgage is paid directly after these claims, and the supplier filed its complaint in due time within the six months established in art 9 of the MLM Convention 1926.