In January 2006, Sete Yacht Management SA (SYM) applied to the Tribunal of Naples for the arrest of the UK-registered yacht Lady Haya, owned by Lady Haya Ltd (LH), as security for its maritime claim arising from a contract with the Saudi royal family concerning the management of their assets, including the Lady Haya, which was previously owned by the Saudi royal family. Those contractual obligations had subsequently been assigned to LH. The Delegated Judge (DJ) authorised the ship arrest against security of EUR 500,000, scheduling a hearing of the parties. Before the hearing took place, LH applied for the arrest to be lifted after it paid security into Court under art 5 of the Arrest Convention 1952. The DJ authorised the release of the ship against payment of EUR 550,000.

LH contested SYM's right to arrest the ship, denying that it had assumed the Saudi royal family’s obligations in relation to the contract, and alleging the unlawfulness of the Court’s arrest of a ship owned by a third party as security for a maritime claim. Moreover, LH argued that the Saudi royal family (not LH) had to pay the amounts claimed by SYM, and stressed that art 3.4 of the Arrest Convention 1952 must be read in light of arts 2 and 9 of the Convention. Articles 2 and 9 of the Convention allow ship arrest against a shipowner not obligated to pay under a maritime claim only if ship mortgages or maritime liens accompany the maritime claim. By contrast, SYM responded that art 3.4 of the Arrest Convention 1952 recognises the right to arrest the ship to which any maritime claim refers, even if the vessel is now owned by a different party than that obligated to pay the maritime claim.

LH further alleged that only part of the claim in question had a maritime nature. In this regard, LH highlighted the concept of the maritime claim under art 1.1 of the Arrest Convention 1952. Under art 2 of the Convention, a ship flying the flag of one of the Contracting States may be arrested in the jurisdiction of any of the Contracting States regarding any maritime claim, but in respect of no other claim. Finally, LH denied that SYM had a valid claim to pay the insurance premiums for the ship while it was docked in the shipyards of Pesaro, Italy.

Held: LH’s application to release the security is dismissed. The DJ's judgment is partially modified by reducing the amount of security required to EUR 524,000.

The Court emphasised that under art 5 of the Arrest Convention 1952, the Court or other appropriate judicial authority within whose jurisdiction the ship has been arrested shall allow the ship's release upon sufficient bail or other security being furnished, and that the request to release a ship against such security shall not be construed as an acknowledgment of liability or as a waiver of the benefit of the legal limitation of liability of the owner of the ship.

Furthermore, the Court noted that the first part of art 3.4 of the Convention expressly establishes the possibility of arresting a ship for a maritime claim owed by a demise charterer as long as it falls within the category of maritime claims arising in reference to the ship subject to the precautionary measure. Importantly, the second part of art 3.4 ends by extending that right of ship arrest to all cases in which a person other than the owner is liable in respect of a maritime claim: 'The provisions of this paragraph shall apply to any case in which a person other than the registered owner of a ship is liable in respect of a maritime claim relating to that ship.'

The Court held that the argument put forward by LH - which is supported by the minority jurisprudence, according to which art 3.4 must be interpreted in the light of arts 2 and 9 of the Arrest Convention - cannot be accepted. This approach, which would allow ship arrest in such cases only where the relevant maritime claim is accompanied by a maritime lien, gives prevalence to internal domestic regulations over the uniform regime. The majority view in the jurisprudence, which states that all maritime claims, and not only those which enjoy a maritime lien, can form the basis for a ship arrest under the second part of art 3.4 of the Convention, must be followed.

The Court further held that the clear literal tenor of art 3.4 in fact required the opposite approach to that put forward by LH, since it is rather arts 2 and 9 which must be interpreted in the light of art 3.4, in the sense of recognising that under art 9 nothing in the Arrest Convention 1952 creates rights of action which would not arise under domestic law, with the exception of those rights created by the Convention itself. Among the latter is the right to seize a vessel owned by a third party for a maritime claim relating to the vessel under art 3.4.

Concerning the partially maritime nature of the claim, the Court noted the impossibility of separating the maritime part of the claim from the non-maritime. The Court also stated that several obligations connected to the ship, such as the provision of masters, officers, and crew, fell within the ambit of maritime claims under arts 1.1.k, 1.1.l, and 1.1.m of the Arrest Convention 1952. As the Convention recognises the prevalent nature of maritime claims, the Court decided that in the case of a partial maritime claim, ship arrest must be authorised. The Court based this decision on a judgment by the French Court of Cassation.

In conclusion, the Court recalled that insurance premiums do not fall within the ambit of a maritime claim under art 1.1 of the Arrest Convention 1952.