Oslo Ship Service AS (OSS) supplies equipment, materials and services to the shipping industry. During 2017-2019, OSS delivered goods and services worth EUR 70,744.75 to seven vessels belonging to the Russian shipping company, Murmansk Shipping Co (MSC). OSS's invoices were not paid. MSC was declared bankrupt on 13 October 2020 by the Murmansk Regional Court. Prior to the bankruptcy proceedings, MSC had entered into an agreement to lease its vessels, including the Grumant, on bareboat terms to the Russian company OOO 'RESHENIE' Nizhniy Kislovsky (Reshenie). The bankruptcy estate chose to continue this arrangement with Reshenie.

On 21 December 2020, OSS applied to arrest the Grumant to secure its claim against MSC. The ship was at that time in waters under Norwegian jurisdiction off Svalbard. The arrest application was submitted to Nord-Troms District Court and was successful. On 8 January 2021, MSC and Reshenie provided security for the arrest claim and legal costs totalling NOK 1,304,964. The ship was released, and is still being operated by Reshenie.

On 14 January 2021, OSS brought an action against MSC before the Oslo District Court on the underlying claim. MSC's bankruptcy estate and Reshenie appealed to the Hålogaland Court of Appeal, arguing, amongst other things, that the District Court decision violated the Arrest Convention's prohibition against double arrest, in particular art 3, which is incorporated in the Maritime Code § 94. The arrest concept under the Arrest Convention must be considered to also include bankruptcy seizures. In relation to the Maritime Code § 94(1) and the Arrest Convention, OSS's arrest claim must be identified with its dividend claim against the bankruptcy estate. In order to avoid disputes over the Arrest Convention, it is necessary to interpret § 94 of the Maritime Code so that seizure of ships through bankruptcy proceedings is covered by the concept of arrest. The arrest should thus be revoked.

OSS argued that the District Court ruling was correct. Section 92 of the Maritime Code defines what is to be regarded as the maritime law requirements, and has its parallel in the Arrest Convention article, which in English case-law has been given a broad interpretation: see UAB Arctic Fishing v Proshin, LH-2016-67287 (CMI1527) and Ot prp nr 88 (1992-1993) pp 6, 8. OSS delivered safety equipment to MSC's ships. A claim for interest on maritime claims must also be regarded as a maritime claim, and part of the arrest basis for ships. This is based on Minister Bruzelius' assessment related to the provision of security pursuant to art 5 of the Arrest Convention, as referred to in Ot prp nr 88 (1992-1993) p 10. MSC has no assets in Norway other than the ship, which has now been replaced by security in the form of a bank deposit. If the ruling on arrest is revoked, it is most likely that the bank deposit, just like the ship, will be moved out of the realm. The company does not have other assets in Norway. This means that enforcement must take place outside the realm if the arrest is not upheld. The requirement for security is thus also met on that basis. Bankruptcy seizures cannot be regarded as ship arrests in relation to the Arrest Convention and the Maritime Code § 94(1). Otherwise, insolvent shipping companies would be given special protection against ship arrest. In that case, it would entail a risk of circumvention of the arresting forum, be unreasonable from a creditor's perspective, and be contrary to the consideration of predictability, as emphasised in Rt-2013-556.

Held: The appeal is rejected. The amount of arrest and security is reduced by EUR 5,259.38.

It is undisputed that OSS has a maritime claim that can form the basis for arrest, pursuant to the Maritime Code § 92(2)(k) and (l) [which correspond to arts 1.1.k and 1.1.l of the Arrest Convention 1952]. The Court of Appeal, like the District Court, has concluded that OSS's claims regarding inspections, certifications, delivery costs, and administration, are maritime law claims pursuant to the Maritime Code § 92(2)(k) and (l). Whether the supplier's costs for transport and administration are included in the price of the product or service provided, or are invoiced separately, compensation on the basis of such costs is to be regarded as a maritime claim. However, the interest rate on the claim was calculated incorrectly by the District Court. As a result, the arrest requirement will be reduced by EUR 5,259.38 in relation to the amount of EUR 106,511.15 that the District Court had calculated.

The fact that MSC is undergoing bankruptcy proceedings in Russia does not preclude arrest of the ship. The clear starting point in Norwegian law is that insolvency proceedings abroad do not have an effect on assets in Norway: see Prop 88 L (2015-2016) Amendments to the Bankruptcy Act etc (cross-border insolvency proceedings) p 36 and Rt-2013-556 ss 56-60. There is no agreement within the meaning of the Bankruptcy Act § 161 between Norway and Russia.

Like the District Court, the Court of Appeal assumes that there is no obstacle to arrest if the ship is overburdened with mortgage debt. As the case stands, it is not possible to determine whether the ship is overburdened. There is no information on the size of the mortgage claim, or the relationship between the mortgage claim and the total value of the assets, eg a further seven ships and a number of immovable properties, which are pledged as common collateral. There is also no information on any upper limit for the claim that can be asserted under the mortgage.

The Court of Appeal does not agree with the appellants that the Arrest Convention 1952, as incorporated in section 94 of the Maritime Act, precludes ship arrest. According to its wording, § 94(1) of the Maritime Code applies to the 'arrest' of ships. As pointed out by OSS, neither the wording of the provision nor the draft legislation provides evidence that other forms of seizure, including bankruptcy seizure, are covered by the provision. Nor does the wording used in the Arrest Convention provide evidence that bankruptcy seizures are covered by, or are to be regarded as, arrest in relation to the Convention. Reference is made to the definition of 'arrest' in art 1.2 of the Convention: 'the detention of a ship by judicial process to secure a maritime claim', and to art 3.1, which states that it is the claimant who can request arrest.

In other respects, Russian insolvency proceedings - in the absence of a bilateral or multilateral agreement with Russia - have no 'deterrent effect' in Norwegian law. As pointed out in Prop No 88 (2015-2016) ch 8.1, it must probably also be assumed that foreign insolvency proceedings do not have a seizure effect in Norway in the sense that they prevent the debtor from disposing of its assets in Norway.

The Court of Appeal does not see that Francesco Berlingieri, Berlingieri on Arrest of Ships, Volume I: A Commentary on the 1952 Arrest Convention, (6th edn, Informa 2016) para 16.02, referred to by the appellants, indicates another result. The issue is specifically referred to in the following statement by Berlingieri: 'Further situations, in which the ship may or must be released from arrest are (d) those considered by the 1957 Limitation Convention, 1976 LLMC Convention and 1992 Civil Liability Convention when the ship owner has constituted the limitation fund, (e) the judicial sale of the ship and (f) the bankruptcy of the owner of the ship ... '. It is not clear whether the individual alternatives, as mentioned in (d)-(f), 'may' or 'must' lead to the revocation of arrest. As the Court of Appeal understands it, alternative (d) 'must' lead to the lifting of an arrest to secure claims as referred to in the Conventions mentioned. However, the Conventions apply to maritime law claims of a different nature from the claims to which this case relates. There is no doubt that the debtor's bankruptcy (alternative (f)) 'may' lead to the revocation of arrest in a ship. The present question in this case is, however, whether a foreign bankruptcy, which under Norwegian law has no 'deterrent effect' in Norway, 'must' lead to the revocation of arrest in Norway. That question can neither directly nor indirectly be seen to be affected by Berlingieri's discussion.

It follows from the Disputes Act § 33-1 that the Court 'may' decide on arrest. This means that the Court - even if the conditions for arrest are met - can still fail to decide on arrest after a comprehensive assessment of the intersecting considerations: see Ot prp nr 65 (1990-1991) p 272. Refusing arrest when the conditions are otherwise present may be relevant if the arrest will be particularly burdensome, and where it is not reasonable to expect that the defendant will be able to avert the execution by providing security: see the discussion of the criterion in [LB-2012-40392], as referred to in the commentary to the Disputes Act § 33-1 in Schei et al, The Disputes Act: Commentary Edition (Juridika).

There are no circumstances in this case that mean that arrest should not be allowed. The appellants have provided security for the arrest request, and thus prevented the execution of the arrest.