This was an appeal in cassation against the judgment of the Aix-en-Provence Court of Appeal, 18 November 1993. Mohamed Zaatari & Bros (Zaatari) and its insurer, Al Itthad al Watani, claiming to be creditors of Klides Compania Naviera (Klides), following the sinking of the Lides, belonging to Klides, which was transporting goods intended for Zaatari, arrested the Alexander III, owned by Lemphy Maritima Co (Lemphy), at the port of Fos-sur-Mer as security for the recovery of their alleged claim for damages. After having provided security to obtain release of its ship from arrest, Lemphy sued Zaatari and its insurer for damages, accusing them of having committed an abuse by arresting the ship unlawfully. The Court of Appeal denied Lemphy's application.

Lemphy argued that the Court of Appeal vitiated its decision by a lack of a legal basis with regard to art 2 of the Arrest Convention 1952, and to art 1382 of the Civil Code.

Held: Cassation.

Assuming that the fictitiousness of Lemphy as a separate company had been established, then, on an application of art 2 of the Arrest Convention 1952, the protective seizure of a ship is possible in the port of a Contracting State as soon as the arresting party invokes a maritime claim within the meaning of art 1, ie an allegation of a claim having one of the following causes exhaustively listed by the provision, among which appear, under art 1.1.f, loss or damage to goods carried by a ship. Having noted that Zaatari and its insurer had carried out the disputed ship arrest by alleging a debt resulting from the loss of goods transported on the Lides, the Court of Appeal legally justified its decision, since the arrest could be authorised without the arresting party having to justify the existence of the debt in the State.

However, having regard to art 3 of the Arrest Convention 1952, and art 1842.1 of the Civil Code, in order to reject Lemphy's application for release, the judgment noted that the company articles of association that Lemphy produced did not allow the holders of its capital to be identified, and that this lack of transparency 'betrays a desire for concealment specific to give rise ... a presumption confirming the assertion of Zaatari and its insurer according to which the companies Klides and Lemphy, both of Panamanian law, are fictitious legal persons'. The judgment also noted that the two companies have the Swiss company Pan Nautic as a common manager of their respective ships, and that the terms of the transaction concluded between Klides and Zaatari to put an end to their litigation, and which was made possible only by the pressure exerted by the precautionary seizure of the Alexander III, demonstrated that Klides took up the cause for Lemphy. The Court of Appeal held from these circumstances that Lemphy and Klides 'conceal the same economic entity which, by the bias of fictitious companies, divides its assets to reduce the risks and hinder the prosecution of its creditors'. These reasons are unsuitable to characterise the fictitiousness of Lemphy and to establish that it did not have its own assets distinct from that of Klides. The Court of Appeal did not give a legal basis for its decision.

By rejecting Lemphy's claim for damages, the Court of Appeal incorrectly applied art 6 of the Arrest Convention 1952.

For these reasons, the judgment under appeal is struck down and annulled in its entirety. The case and parties are returned to the position they were in before the aforementioned judgment, and the case is referred to the Montpellier Court of Appeal to be decided correctly.