This was an application for revision brought by an appellant who had applied to arrest ship S to secure its monetary claim, against the decision of the High Commercial Court, Pž-4938 / 2017-2 of 18 August 2017, which confirmed the decision of the Commercial Court in Rijeka, R1-105 / 2017-6 of 25 July 2017, denying the appellant's arrest application. The appellant asked the Supreme Court to revoke both lower-level decisions and return the case to the first instance Court for retrial.

Held: The revision is rejected as unjustified.

Parties may file a revision against a second-instance judgment if the decision in the dispute depends on the resolution of a substantive or procedural issue that is important for ensuring the uniform application of the law and the equality of citizens. In such a review, the party should specify the legal issue for which it was submitted, citing regulations and other valid sources of law relating to it, and state the reasons why it considers it important to ensure uniform application of rights and equality of all in its application.

The appellant posed the following legal questions:

1. Can a ship sailing under the flag of a non-contracting party to the Arrest Convention 1952 be arrested in Croatia, as a contracting State, for non-maritime claims, where there is no reciprocity with the flag State of the ship (here P), because P is not a signatory to the Convention?
2. Does the Arrest Convention 1952 also apply to ships of a non-Contracting State under art 8.2 of the Convention?

This Court finds that the application for revision has all the elements prescribed by law, and that these are legal issues important to ensure uniform application of the law and equality. However, this Court also finds that revision is unjustified in this case.

It follows from the reasoning of the decision of the lower Courts that the relevant claim arises from a loan agreement, and does not constitute a maritime claim under the provisions of arts 953.1 and 953.2 of the Maritime Code, and therefore a temporary measure to arrest the ship is not allowed. This is because the ship whose arrest is sought by the temporary measure is flying the flag of P, a State which did not ratify the Arrest Convention 1952; and so (according to art 953.3 of the Maritime Code) the provisions on limiting the arrest of ships only for claims under the provisions of arts 953.1 and 953.2 of the Maritime Code apply to foreign ships under the condition of reciprocity, ie when there is reciprocity between the State whose flag the foreign ship is flying, and Croatia. Reciprocity in terms of the cited provision means that a ship flying the flag of P may be arrested in Croatia for any claim (not only a maritime claim) if a ship flying the flag of Croatia may be arrested in P for such claims in order to ensure the same. As in the relations between Croatia and P there is no such reciprocity, the legal preconditions for a ship arrest are not met, so the arrest application was rejected as unfounded.

In answer to the questions posed, the Arrest Convention 1952 applies in Croatia on the basis of art 3 of the Constitutional Decisions on the Independence and Sovereignty of the Republic of Croatia since 1991 (Official Gazette 31/91). International treaties concluded and ratified in accordance with the Constitution, which are published and in force, are part of the internal legal order of Croatia and have legal force above domestic law. Given the above, Croatia is a party to the Convention, so is obligated to apply the provisions of the Convention with regard to the substantive preconditions for the admissibility of a temporary measure to arrest a ship.

According to art 2 of the Convention, a ship flying the flag of a contracting State may be arrested only for the purpose of a maritime claim referred to in art 1.1 of the Convention. A ship flying the flag of a non-contracting State may be arrested in the jurisdiction of any contracting State in respect of any of the maritime claims enumerated in art 1, or of any other claim for which the law of the contracting State permits arrest (art 8.2 of the Convention). Thus it follows that the Convention's provisions also apply to the arrest of ships of a non-contracting party. According to this Court, it would be contrary (and illogical) to the purpose of the Convention not to apply its rules to a ship flying the flag of a non-contracting State, as this would put such ships in a better and easier position than a ship flying the flag of a contracting State.

Article 2 of the Convention clearly stipulates that in any contracting State any ship flying the flag of one of the contracting States may be arrested (only) for maritime claims under the Convention, but not for any other claims. In contrast, the application of the Convention may also lead to the arrest of a ship of a non-contracting State and then apply all the provisions of the Convention with the exception of art 1, which contains an exhaustive list of maritime claims for which the ship may be arrested, because in that case (art 8.2 of the Convention) the rules of the lex fori should apply. This interpretation of the application of the Convention provides a better position for a ship flying the flag of a contracting State because the lex fori cannot be applied to that ship, ie the national law of the State in which arrest is sought (in the sense that it cannot arrest a ship for claims existing in the lex fori and not in the Convention).

Thus, the answer to the second question derives from the rules of the Convention, but the perceptions of the lower courts about the non-application of these rules are incorrect. Nevertheless, the answer of this Court to the second question cannot lead to a more favourable decision for the applicant, because the application to order an interim arrest measure was properly rejected by applying the provisions of national law - the lex fori - in accordance with art 8.2 of the Convention.

The Arrest Convention 1952 allows the arrest of a ship of a non-contracting State 'in respect of any of the maritime claims enumerated in article 1 or of any other claim for which the law of the Contracting State permits arrest'. It follows from that provision that a ship flying the flag of a non-contracting State will also be allowed to be arrested for those 'other' maritime claims permitted under the law of the State in which the ship is to be arrested (the lex fori). According to this Court, in practice this would mean that only the law of the arresting State can be applied to the 'permitted list' of claims which may allow the arrest of a foreign ship, or in this case only arts 953.1 and 953.2 of the Maritime Code, but not others. Article 953.1 allows arrest for the following claims:

1. damages caused by the collision of the ship whose arrest is requested or damages caused by this ship in any other way,
2. death or personal injury caused by the ship whose arrest is requested or caused in connection with the employment of that ship,
3. salvage,
4. contract on the employment of a ship whose arrest is requested,
5. general average,
6. towage,
7. pilotage,
8. supply of the ship whose arrest is requested for the purpose of its maintenance or employment,
9. construction, alteration, repair, equipping, or docking of the ship whose arrest is requested,
10. labour-related rights of the crew,
11. expenditures related to the ship incurred by the captain, shipper, charterer or an agent or the owner of the ship or the ship operator,
12. brokerage fees or agency commissions owed in relation to the ship.

In addition to the above claims, according to art 953.2 of the Maritime Code, ship arrest can also be ordered for the purpose of realising maritime liens or mortgages on the ship, or securities similar to a mortgage.

Therefore, in a case when a court in Croatia is requested to arrest a ship flying the flag of a foreign State (but also a non-contracting State), the court may order a temporary measure only if it is required to secure a claim specified in arts 953.1 and 953.2 of the Maritime Code.

It follows from the findings of the lower Courts that the relevant claim does not fall within the scope of the exhaustively stated claims in the cited provisions of the Maritime Code, so the decision of the second-instance Court rejecting the application to secure the monetary claim of EUR 224,000 arising from a loan agreement is (to that extent) correct, regarding the purpose for which the loan was used.

In addition to all the above, this Court considers it necessary to comment, in answer to the first question, on the need to establish reciprocity in deciding on an arrest of a foreign ship (or a ship of a non-Contracting State) on an application of art 953.3 of the Maritime Code, which provides:

Provisions on the limitation of the arrest of a ship solely for claims referred to in Paragraphs 1 and 2 of this Article shall apply to foreign ships only if reciprocity exists between the state whose flag the ship flies and the Republic of Croatia.

In this particular case, with regard to the international element of security, art 8.2 of the Arrest Convention stipulates that national law (lex fori) shall apply only for claims for which a ship flying the flag of a non-contracting State can be arrested. This, arguing from the contrary, means that other provisions set out in that national law (hence nothing but a list of claims under national law) will not apply when deciding on an application to arrest a ship flying the flag of a non-contracting State. That is, other provisions of the lex fori cannot take precedence over, or apply before, the Arrest Convention. As there are no rules on reciprocity in the provisions of the Arrest Convention, such a rule could not be applied in the present case.

At the same time, the challenged second-instance decision is without prejudice to the understanding of this Court in Judgment Gzz 8/1992 of 2 February 1999 (CMI1820), which erroneously stated that '[t]his Convention, in fact, contains rules on the possibility of arresting ships for claims that are not privileged if there is no reciprocity between the contracting States (those which have accepted the Convention)', given what is stated in art 8.2 of the Convention.