This is an informational letter from the Presidium of the Supreme Commercial Court of Russia. It briefly summarises the Russian courts' judgments, indicating the crucial positions reflected there. The Supreme Commercial Court confirms or denies the lower courts’ positions as indicated.

The relevant Informational Letter deals with the judicial practice concerning the Merchant Shipping Code of the Russian Federation (the MSC RF). It contains 18 paras.

1. In para 2, the Supreme Commercial Court concludes that the value of the cargo damaged or lost should be calculated at the place and at the time the cargo is unloaded or to be unloaded (art 169.2 of the MSC RF equating to art 4.5.b of the Hague-Visby Rules). The Supreme Commercial Court declined the position of the Court of the first instance that the value to be referred to in order to establish the damage caused to the cargo should be calculated based on the invoices under which this cargo was bought.

2. The Supreme Commercial Court states, in para 6, that the cargo delivered to the destination port in the container with another seal than that indicated in the bill of lading cannot be considered delivered properly sealed and without a trace of opening.

Under art 168 of the MSC RF, the carrier is excluded from liability if it is proved that the container was delivered in an undamaged package, with the seals of the shipper, and without a trace of opening. If these conditions are met, there is a presumption that the damage to the cargo was not caused by the carrier’s actual privity or fault and the burden of proof of the carrier's actual privity or fault transfers to the claimant. A part of the cargo was lost during transportation. Upon arrival, the consignee discovered that the containers were sealed by a seal other than that indicated in the bill of lading. The Court of first instance stated that the fact that the seal was different did not prove that the cargo was damaged or lost with the fault or privity of the carrier. Thus, the carrier was not liable. The Court of Appeal revised the judgment of the Court of first instance and concluded that if the seal was changed, liability could not be excluded under art 168 of the MSC RF. The Supreme Commercial Court confirmed the Court of Appeal's position.

3. In para 12, the Supreme Commercial Court dealt with the one-year prescription period (with an exception for the possibility of changing the relevant period by agreement between the parties) in art 408 of the MSC RF, derived from art 3.6 of the Hague-Visby Rules. Under the general procedural rules in Russia, the claimant must send a pretrial claim to the defendant prior to bringing an action to the court. The running of the prescription period is suspended for the time of considering the pretrial claim.

The claimant sent the pretrial claim within the prescription period but did not attach the necessary documents indicated in art 405 of the MSC RF. These documents should reflect the right to claim, and the quantity and the value of the cargo shipped. The carrier declined the pretrial claim since the necessary documents were not enclosed. The Court of first instance concluded that the pretrial claim was sent within the prescription period, and therefore, the action was not time-barred.

The Court of Appeal revised the judgment of the Court of the first instance. It stated that the pretrial claim submitted without the documents required under art 405 of the MSC RF cannot be considered a proper pretrial claim and does not suspend the running of the prescription period. The Supreme Commercial Court supported the Court of Appeal.

4. In para 15, the Supreme Commercial Court concluded that the arrest of a vessel flying the flag of a contracting State to the Arrest Convention 1952 should be conducted per the rules of the relevant Convention.

The issue arose with regard to the arrest of a vessel which was chartered by demise by the person liable for the claim. The Court of first instance granted the arrest. The owners of the vessel submitted an appeal. The owners’ argument was that, even if the Court found the charterer liable for the claim, it would be impossible to satisfy such a claim from the ship arrested since it was not owned by the person liable.

The Court of Appeal kept the arrest in force. The Supreme Commercial Court stated that under art 3.4 of the Arrest Convention 1952, if the charterer by demise is liable for the maritime claim concerning the relevant ship, that particular ship and any other ships owned by the liable person may be arrested to secure the claim. The claim arose in relation to the vessel arrested, and the demise charterer was personally liable for the claim. Therefore, the Supreme Commercial Court concluded that the arrest was granted correctly.

5. The Supreme Commercial Court, in para 16, stipulated that the general procedural rules on granting interim measures apply to the arrest of ships as long as they do not contradict the provisions of the MSC RF, which reflect the provisions of the Arrest Convention 1952.

A ship was arrested. The defendant transferred a sum of money equal to the value of the ship arrested to the Court's deposit account and applied to set the arrest aside. The Court of first instance declined the defendant’s application. It stated that, under art 94.2 of the Commercial Procedure Code of Russia, the defendant must provide counter-security in the amount of the claim submitted. The defendant appealed.

The Court of Appeal revised the ruling of the Court of first instance and ordered the arrest to be set aside. Under art 391.2 of the MSC RF equating to art 5 of the Arrest Convention 1952, if the parties do not agree on the nature and amount of sufficient alternative security, the court may decide this matter. The amount of the alternative security cannot be higher than the value of the ship arrested. Since the arrest of seagoing ships is a special interim measure, the general procedural rules may apply only if they do not contradict the provisions of the MSC RF and the Arrest Convention 1952. Therefore, the court may request only the provision of alternative security not exceeding the value of the ship arrested, even though this value may be less than the value of the claim. The Supreme Commercial Court confirmed the position of the Court of Appeal.

6. In para 17, it was concluded that the arrest of seagoing ships is a special interim measure which may be imposed only in respect of maritime claims. The list of maritime claims is contained in art 389 of the MSC RF and derives from the Arrest Convention 1999.

The claimant applied to arrest the vessel under two claims. The first claim was for damages caused by an allision of the vessel with the port facilities. The second claim was for dock expenditures under a contract concluded between the applicant and the shipowners. The Court of first instance partly upheld the application. The list of maritime claims in art 389 was found to cover claims for damages caused by the allision. However, it did not cover claims for dock expenditures. Therefore, it was concluded that the vessel could be arrested only for the claim for damages and not for dock expenditures.

7. In para 18, the Supreme Commercial Court concluded that the place of the vessel’s location is where the ship is actually located at the time of the arrest, and not the place of its registration.

The arrest of a vessel was granted by the court at the location of the port where the vessel was moored. The arrest was granted under a maritime claim for damage caused by a collision in the waters of another territorial entity, not where the court granting the arrest was located. The ship was registered in a foreign country.

The owners of the vessel appealed the arrest order. Under art 99.3 of the Commercial Procedure Code of Russia, interim measures may be granted only by the court at the place of the defendant or at the place where the property in relation to which the interim measures are granted is located. The owners argued that the location of a ship is the place of its registration. Consequently, the court at the place of the ship's actual location is not competent to arrest it.

The Court of Appeal denied the appeal. It stated that under art 99.3 of the Commercial Procedure Code of Russia, the ship's location for the purpose of its arrest is the place of its actual location, ie, the port where it is moored at the time of the application for the arrest, and not the place of its registration. The Supreme Commercial Court supported the Court of Appeal.