This case arose from the judicial sale and auction of a Panamanian-flagged ship, the ... III. There was a dispute regarding the priorities of the competing claims of the respondent ship mortgagee, Alpha Bank (formerly Commercial Bank of Greece SA) and the appellant salvor, Navagosostika Maritime Co. The Single Member Court of First Instance of Piraeus held that the latter claim had been filed out of time.

Held: The appeal is accepted. The 4242/2009 final decision of the Single Member Court of First Instance of Piraeus is annulled. Navagosostika Maritime Co's claim was filed in time. However, its objections regarding priority are not accepted.

The auction of an arrested ship takes place before a notary public of the port district where the ship is located at the time of arrest. If the auction does not achieve a sum sufficient to satisfy the arresting party and the other creditors, the notary public draws up a priority list of creditors. Claims that enjoy a special maritime lien provided for in art 205 of the Κώδικας Ιδιωτικού Ναυτικού Δικαίου (ΚΙΝΔ) (the Code of Private Maritime Law) (the Maritime Code) are ranked first, followed by claims secured by an ordinary or preferred ship mortgage. After the full satisfaction of these claims, the balance of the sale proceeds is distributed among any other claims.

From the provisions of arts 972.1 and 974-979 of the Civil Code, it follows that objections can be brought against the priority list which are based either on substantive or procedural law (AP 1083/2013, AP 169/2012). The reasons for objections can be related to the non-inclusion of an objector's claim, the incorrect classification of an objector's claim, or objections against the classified claim of another creditor and of the priority granted to that other creditor.

Moreover, according to art 1012.4 of the Civil Code, in the event of a ship auction, ranking of creditors is done in the first place in accordance with the provisions of the Maritime Code. Article 9 of this Code, which echoes a private international law rule, refers to the law of the flag State, which also regulates proprietary rights over the ship. The law of the ship's flag regulates the origin, extent, duration, and extinction of maritime liens. However, the order of priority of the liens in question will be determined according to the law of the place of execution (the lex fori arresti), since priority preference due to lien status is not an element of the claim, but rather concerns the relationship between the claims, and is regulated by procedural law (AP 1762/1998, AP 466/1996, AP 70/1992).

Article 205 of the Maritime Code establishes a special order of ranking for defined maritime liens, as similar to a special lien and having a real (proprietary) nature, and stipulates that these liens displace any other preferred claims, and precede ship mortgages. However, in order for these claims to precede the ship mortgage in an auction concerning a ship flying the flag of a foreign State, they must have the same preferential character according to the law of the flag State.

Therefore, if a foreign ship is arrested and auctioned in Greece, any maritime lien over the ship which is recognised by the substantive law of the ship's flag does not precede the ship mortgage unless it is similar, in nature and character, to the maritime liens provided for in art 205 of the Maritime Code. If claims enjoy priority under both art 205 of the Maritime Code and the law of the ship's flag, they rank before the ship mortgage, regardless of the order of their classification according to the law of the ship's flag (AP 755/2012, AP 710/1992).

According to art 2 of the Salvage Convention 1989, which was ratified by Law 2391/1996 and entered into force in Greece from 3 June 1997, '[t]his Convention shall apply whenever judicial or arbitral proceedings relating to matters dealt with in this Convention are brought in a State Party.' From this provision, it is clear that the Convention governs cases related to salvage operations which are brought before the Greek courts, regardless of the nationality of the salvor or the assisted ship, and without requiring any foreign element in the dispute.

Since Greece did not formulate any of the reservations allowed for in art 30 of the Salvage Convention, the Convention also governs inland salvage operations, ie those provided in inland waters, even by inland waterway vessels. The term 'salvage operations', which provides the right to reasonable remuneration, means, in accordance with the provisions of arts 1, 12, and 13 of the Salvage Convention (which are similar to arts 246 and 247 of the Maritime Code), any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever, provided that it has a beneficial effect.

A necessary condition to establish a right to remuneration is the existence of a real risk of loss or damage to the assisted ship. This danger must be real, even if not immediate, but expected with probability, and existing before salvage operations are provided. Also, the risk must be serious, and its existence and degree must be assessed by an overall examination of the circumstances of the particular case. In order to establish a right to a salvage award, the act of assistance must have had a beneficial effect. A beneficial result means the preservation of the res by dealing with the risk of loss or damage, with which it is threatened, either in whole or in part (AP 1293/2018).

Article 205 of the Maritime Code includes in the first class of priority, among others, the costs of guarding and maintaining the ship, as long as these were incurred after the ship docked at the last port. Custody costs, like maintenance costs, are what are spent to keep the ship in good condition to fulfill its purpose, as an economic unit, but also to avoid a decrease in its value.

The Republic of Panama has not acceded to the MLM Conventions of 1926 or 1967. However, several provisions of those international Conventions have been incorporated into its national law. The specific issue of maritime liens is addressed in art 1507 of the Panamanian Commercial Code, as well as in art 244 of Law 55 of 2008.

Because this auction concerned a Panamanian-flagged ship, the notary public carried out a classification of the creditors' claims applying the law of the ship's flag in terms of the origin, existence, extent and the duration of the maritime liens; and Greek law, in terms of the manner, order, and sequence of the priority of claims, and drew up a priority list. This list, after deducting the pre-trial and auction process costs (amounting to EUR 17,000); awarded EUR 393,309 for the costs of custody and maintenance of the auctioned ship, as well as EUR 1,237,254 for the ship mortgage to the respondent bank; and EUR 18,436 to the Naval Defence Fund (NAT). With the ranking of the above, the sales proceeds were exhausted. The notary public did not examine the claims of other creditors, considering that they were filed out of time. This was in error. They were not out of time, and the relevant creditors thus did not lose their rights against the auction proceeds.

The appellant salvor bases its claim on art 205.1.c of the Maritime Code and art 1507.2 of the Commercial Code of Panama. However, according to the aforementioned provisions, in order for remuneration for salvage services to be included as a privileged claim and to precede the ship mortgage, a necessary precondition is their provision during the 'last voyage' of the vessel assisted. A ship's voyage begins with its departure from the port and ends with its entry into the port of destination. It does not last during the time it remains anchored in the port until its new departure. In this particular case, the appellant's salvage services were not provided to the ship … III during its last voyage, since it was already moored at the destination port, where it had sunk and become immobilised before the assistance was provided. Consequently, the appellant salvor's objection to the priority list is unfounded.