SAS Burger Feron (BF), availing itself of various heads of claim, obtained an order from the President of the Commercial Court of Rouen authorising it to proceed with the protective seizure of a vessel as security for a debt valued at EUR 500,000. BF thus proceeded on 29 April 2013 to arrest the vessel Baco Liner 1, belonging to Seerederei Baco Liner GmbH (BL), and various containers. BL proceeded to deposit the sum of EUR 300,000 in the escrow account of the Marseille Caisses des Règlements Pécuniaires des Avocats (CARPA) in return for the release of the seized items.

BF then brought proceedings against BL on the merits before the Commercial Court of Rouen, which by judgment rendered on 17 March 2014, declared itself incompetent on the basis that the claims were subject to a Hamburg arbitration clause. BL sued BF before the execution Judge for restitution of the sum of EUR 300,000 sequestrated in the escrow account of the Marseille CARPA, release of the arrest orders of the Rouen Commercial Court, and costs. The execution Judge of the Rouen Tribunal de Grande Instance by judgment rendered on 15 June 2016 dismissed BL's claims. BL appealed.

Held: Appeal upheld. Decision reversed in its entirety.

The first Judge, amongst other things, held that art 7 of the Arrest Convention 1952 provides for the possibility of the defendant requesting the release of the arrest or security in the event that 'the action or proceeding is not brought within the time so fixed', but that this option applies only in the event that the agreement sets a time limit within which the arresting party must initiate its action on the merits. This was not the case with the agreement between BF and BL, which did not provide for such a deadline. In any event, the agreement ceased to exist as a result of the release following the escrow agreement.

The Arrest Convention 1952 provides in its article 5 for the option of lifting the authorized seizure against the establishment of a deposit or sufficient guarantee. In art 7 it provides that:

(2) If the Court within whose jurisdiction the ship was arrested has not jurisdiction to decide upon the merits, the bail or other security given in accordance with article 5 to procure the release of the ship shall specifically provide that it is given as security for the satisfaction of any judgment which may eventually be pronounced by a Court having jurisdiction so to decide; and the Court or other appropriate judicial authority of the country in which the claimant shall bring an action before a Court having such jurisdiction.

(3) If the parties have agreed to submit the dispute to the jurisdiction of a particular Court other than that within whose jurisdiction the arrest was made or to arbitration, the Court or other appropriate judicial authority within whose jurisdiction the arrest was made may fix the time within which the claimant shall bring proceedings.

(4) If, in any of the cases mentioned in the two preceding paragraphs, the action or proceeding is not brought within the time so fixed, the defendant may apply for the release of the ship or of the bail or other security.

In other words, the arresting creditor has an obligation to initiate its proceedings on the merits before the naturally competent court, or the court or the arbitrator specially designated by a contractual clause, within the time limit which will have been allotted to it. A failure to respect this time limit entails the release of the precautionary attachment, or of any guarantee taken in substitution. Contrary to what the first Judge held, the time limit is fixed not by the agreement providing for a guarantee, but by the Court of the place of the arrest.

In this case the President of the Commercial Court of Rouen who authorised the protective seizures set a one-month time limit for BF to act on the merits. BF did not seize the arbitral tribunal of Hamburg within the time limit which was allotted to it. Therefore, on the basis of the Arrest Convention 1952, BL is entitled to request the release of the sum sequestered. But it should be noted that the escrow agreement covers two protective seizures, both of the ship Baco Liner 1 and containers and their sale price as well as all debts. However, the Arrest Convention 1952 is applicable to protective seizures of ships, and not of other moveable property and rights, by virtue of a 'maritime claim' defined in art 1 of the Convention, and by reference to one of the claims precisely and exhaustively enumerated in this provision, among which does not appear damage caused by the termination of commercial relations under a contract of agency and representation. The latter seizure must therefore be dealt with under French domestic law.

Since the one-month deadline was not respected by BF, the two protective seizures carried out on 29 April [2013: original judgment said 2016] at its request are void. Contrary to what the trial Judge held and what BF maintains, this lapse has a direct consequence on the fate of the sequestration of funds. The conservatory seizures carried out are the direct and exclusive cause, and the very basis of the constitution of the sequestration, which is thus deprived of it once the protective seizure, the initial form of the authorised protective measure, has lapsed. The release procedures provided for in the agreement only apply to the extent that the agreement itself is not deprived of effect. They do not in any way prevent the loss of its foundation from being established, resulting in its extinction and the release of the sequestration as a consequence of the lapsing of the protective measure.

BL's claim for the release in its favour of the sequestered sum will therefore be granted, as a consequence of the lapsing of the protective seizures. The judgment will thus be reversed in all its provisions.

Ruling again and adding to its initial judgment, the Court:

1) Rules that the protective seizures made at the request of BF against BL on 29 April [2013: original judgment said 2016] in execution of the two orders issued by the President of the Commercial Court of Rouen on 26 April [2013: original judgment said 2016] are null and void, and as a consequence the sequestration loses its foundation;

2) Orders the return to SB of the sum of EUR 300,000 deposited in the escrow account of CARPA Marseille;

3) Orders BF to pay SB the sum of EUR 5,000 on the basis of art 700 of the Code of Civil Procedure;

4) Orders BF to pay the costs of the first instance trial, as well as those of appeal.