The vessel Vasiliy Shukshin transported a cargo of enriched uranium from Vostochniy (Russia) to Pusan (South Korea). It could not call at the port of destination because one of the crew members was found to have COVID-19. The vessel was sent back to Russia with its cargo still on board.

On 10 November 2020, the vessel ran out of fuel and went adrift. On 12 November, the master of the vessel and the Federal State Budgetary Institution Morspassluzhba (the salvors) entered into a salvage agreement on the LOF 2020 form which included an English law and London arbitration clause. After the successful provision of services, the shipowners issued a letter of undertaking to pay a reward amounting to USD 9,148.23 for towage services. The salvors, in turn, calculated the sum of their salvage reward at approximately EUR 500,000. Considering that the shipowners' letter of undertaking provided inadequate security for their claim, the salvors applied for the security arrest of the vessel and its cargo.

The Commercial Court of Primorskiy Region (the Court of first instance) and the Fifth Commercial Court of Appeal found in favour of the shipowners and refused to grant the arrest.

The salvors submitted a cassation appeal to the Commercial Court of the Far Eastern District. One of their arguments was that under the Arrest Convention 1952, ship arrest is not a discretionary measure, and the applicants only need to prove the existence of a maritime claim, and that the vessel may be arrested due to a maritime lien over it, or because it is owned by the liable person.

Held: The cassation appeal is dismissed.

Article 388 of the Merchant Shipping Code of the Russian Federation (the MSC RF) equates to art 2 of the Arrest Convention 1952. It stipulates that the vessel may be arrested only for a maritime claim. Article 389 of the MSC RF contains the list of maritime claims derived from art 1 of the Arrest Convention 1999, even though Russia is not a party to that Convention. The Court noted that the salvors had raised the issue that the shipowners considered the salvors' claims to arise from towage services and not salvage operations. Both these claims are maritime claims under the MSC RF and the Arrest Conventions. Therefore, the Court was not obliged to determine the nature of the salvors' claims at the preliminary arrest stage, and did not do so.

Dismissing the salvors’ appeal, the Court of cassation stated that the rules of Ch XXIII of the MSC RF and the Arrest Convention 1952 are special provisions in terms of the Commercial Procedure Code of the Russian Federation (the CPC RF) rules. At the same time, they do not exclude the applicability of the CPC RF to the arrest of ships, if such general provisions do not contradict the specific provisions contained in the MSC RF. This position is reflected in ss 16 and 17 of the Informational Letter of the Presidium of the Supreme Commercial Court of Russia No 81, dated 13 August 2004. This conclusion, in turn, is based on art 6 of the Arrest Convention 1952, which provides that the 'rules of procedure relating to the arrest of a ship, to the application for obtaining the authority referred to in Article 4, and to all matters of procedure which the arrest may entail, shall be governed by the law of the Contracting State in which the arrest was made or applied for'.

The Court of cassation stated that the Arrest Convention 1952 and Ch XXIII of the MSC RF cover only substantive grounds and conditions for arresting ships, but not the procedural issues stipulated in the CPC RF.

As long as the general rules on the interim measures apply to arrest of ships under the Arrest Convention 1952, the applicants seeking the arrest must prove, among other things, that:

• it would be impossible or difficult to execute the award in their favour if arrest were not granted; or
• substantial damage would be caused to the applicants if arrest were not granted, and
• the arrest sought is reasonable, considering the possible negative consequences of granting the relevant measure, including the interests of the public and third parties.

The Court of cassation held that the salvors had failed to prove the requisite procedural grounds for granting the arrest and therefore dismissed the appeal.