On 15 October 2015, Russian seafarers requested the arrest of two Lithuanian fishing vessels, the Juros Vilkas and the Karalius, for security for wages that had not been received. The arrest requests were upheld by the Hammerfest District Court on 6 November 2015, and the owner of the vessels, UAB Arctic Fishing (Arctic), provided security for the claims, so the arrests were lifted. The crew on the Juros Vilkas submitted a new application for arrest of the vessel on 8 February 2016. The basis for this arrest request was a claim under the Lithuanian Labour Code (the LLC), art 141(3), which, in the event of late payment of wages, gives a right to continued payment even if the employment relationship has ended. The crew on the Karalius submitted a similar arrest application on 23 February 2016. The two requests were upheld. Hammerfest District Court's rulings were appealed by Arctic to the Hålogaland Court of Appeal. The two appeals were heard together.

Arctic argued that it was not obligated to pay a daily late fine under the LLC, as it was not the crews' employer. The employer was a staffing company, Olankam. It was Olankam who prepared all the employment contracts, was responsible for all recruitment, calculated the crews' salaries, and carried out what was necessary to follow up with the crew. The agency agreement invoked by the crews was not signed and stamped by Arctic. Arctic was instructed by Olankam to pay a total of USD 460,000 in salaries for the crews, and payment was to be made to a company in Hong Kong. The payment was made from the account of a US company, Western Services Ltd, which has a business partnership with Arctic. If the crews have not been paid, it must mean that Olankam has misappropriated the funds that would go to cover the crew's salary. Arctic has reported the company to the Russian authorities because of this. There is also no evidence that makes it probable that the crew has not been paid by Olankam.

In the alternative, Arctic argued that the daily late fine under the LLC is not a maritime law requirement, and that the requirement cannot, therefore, provide a basis for ship arrest: see the Maritime Code § 92(1). In order for the claim to be a maritime claim, it must be regarded as 'wages and other remuneration to the master and other employees on board, in connection with their service on the ship': see the Maritime Code § 92(2)(m). it is clear that the fine cannot be regarded as a maritime law requirement. The claim has not arisen, been processed, or been earned in connection with the seafarers' service on the vessels. The crews' service on the vessels was legally terminated when they went ashore, and the fine has thus been generated after termination of employment. The wording of the law should be given considerable weight, partly because the shipping industry is of a distinctly international nature and Convention-based, and it is therefore important to have clear and uniform rules.

It has been assumed in draft legislation and legal theory that the wording in Maritime Code § 92(2)(m) is identical to the provision in the Maritime Code § 51(1), which provides for the wages maritime lien. However, a reservation must be made, in the sense that Norway is bound by the Arrest Convention 1952 with regard to the provision on maritime law requirements, while this does not apply to the rules on maritime liens. This means that if the wages maritime lien should transpire to extend beyond what can be regarded as the maritime law requirements under the Arrest Convention 1952, the decisive factor will be what follows from the Convention. However, this reservation is not relevant in the present case. The preparatory work for the Ship Labour Act (Prop 115L (2012-13) contains a list of types of claims that are assumed to be covered by the maritime lien, and includes extra allowances for overtime, extra allowances for work outside the seafarer's ordinary work duty, holiday allowances, sick pay, board and lunch allowance, travel expenses and legal costs for the collection of wages claims, etc. The claims mentioned there are of a completely different nature than the daily late fine in the present case. It is obvious that the special Lithuanian rule has not been considered as part of the justification for the rules on ship arrest and the wages maritime lien. The purpose of the international Conventions has been to limit claims that could lead to ship arrests and maritime liens, in order to strengthen mortgagees and long-term credit. One aspect of the daily fine requirement is that it apparently runs until payment takes place, or there is a judgment that payment should not take place. For the present case, the consequence is that if the crews' claims are upheld, they can request a new arrest for a new period. This may, among other things, mean that the shipowner feels compelled to meet the wages claim, even though the objections to the claim may be fully legitimate.

The seafarers argued that, pursuant to the LLC, art 141, an employee is entitled to a continued payment of the average salary until late payment of wages is made. This is somewhat inaccurately referred to by Arctic as a daily fine. The purpose of the rule is partly compensation for non-payment of wages, and partly a sanction against the employer for non-payment. It is irrelevant to the question of arrest who the employer is, since the arrest requirement accompanies the ship: see the Maritime Code § 51(1). In any case, Arctic is the employer for the crew, and this is supported by the crew contracts, the agency agreement between Arctic and Olankam, and the fact that Arctic or its related company paid the salary directly to the crews for previous trips.

The rules on what is secured by a wages maritime lien (see the Maritime Code § 51(1)) and what is to be regarded as the requirement for the maritime lien (see the Maritime Act § 92(2)(m)) coincide. This means that legal sources concerning the scope of the maritime lien are relevant to the present case. It is true that one of the purposes of the Arrest Convention 1952 was to restrict the right to arrest ships, and that the Convention implies for all practical purposes that claims that may lead to arrest must be directly related to the operation of the ship. However, there is no evidence that the definition of certain maritime law requirements should be interpreted restrictively. On the contrary, the rules must be interpreted broadly: see, among others, Falkanger and Bull, Sjørett, 7th edn, and Siv Aida Rui, 'Arrest of ships', (1995) 211 Marius. The legal sources concerning maritime liens support the proposition that the formulation of the maritime law requirement in the Maritime Code § 92(2)(m) should be interpreted broadly: see Rt-1929-640 and the Supreme Court judgment of 15 September 1951 included in ND 1951 p 404. Further reference is made to the last amendment to the Maritime Code's rules on maritime mortgages in 1979. Ot prp nr 32 (1970-1971) assumed that ship mortgage law should, among other things, cover claims that according to the Seafarers' Act stem from the employment relationship, such as sickness benefits, travel allowances, etc. The Odelsting Bill also stated that 'remuneration' is not only intended to mean remuneration for services performed, but has a more general meaning, similar to the term 'receivable'. Since the crew's rights under the LLC, art 141, spring directly from the service relationship on board the ship, they give rise to a maritime lien, and constitute a maritime law requirement that can lead to ship arrest.

Held: The appeal is dismissed.

The conditions for arrest of ships are set out in the Disputes Act, Ch 33, read with the Maritime Code, Ch 4. The maritime claim for which arrest is requested must be substantiated: see § 92(1) of the Maritime Code. The requirements for a maritime claim are stated in the Maritime Code § 92(2), and decisive in the present case is whether the claim is based on 'wages and other remuneration to the master and other employees on board, in connection with their service on the ship': § 92(2)(m).

The two vessels in question are registered in Lithuania, and Lithuanian law applies to the conditions on board. The arrest warrant is based on art 141 of the LLC:

An employer must take a full settlement of accounts with an employee being dismissed from work on the day of his dismissal, unless a different procedure for settling accounts is provided by laws or an agreement between the employer and the employee. ...

Where the settlement of accounts is delayed through no fault of the employee, the employee shall be paid the average wage for the delayed time.

The relevant claim can be regarded as a maritime claim. Section 92 of the Maritime Code incorporates the Arrest Convention 1952, and must be interpreted in the light of this. Other countries' case-law on what are to be regarded as maritime claims is also important. The introduction to the Maritime Code § 92(2), which provides that by maritime law claims is meant claims 'which have one or more of the following grounds' has its parallel in the English convention text 'arising out of one or more of the following', which is given a broad interpretation in English case-law.

Regarding the wages maritime lien in the Maritime Code § 51(1), if the employment contract is the central and natural basis of the claim, so that the claim would not have arisen without the employment contract being in place, the claim must, as a starting point, give rise to a maritime lien. This does not mean that the legal basis must be sought in the formal employment contract itself; the legal basis may be the agreement itself, or as a result of its interpretation or completion by legal rules, tariff rules and general legal principles. For example, claims for travel expenses, subsistence allowances, nursing, sick pay, early retirement pay, holiday pay, etc, are mentioned. The same should apply to claims for compensation for the seafarer not receiving the promised position on board. These claims cannot be conceivable without an employment agreement between the parties.

Based on an overall assessment, the claims based on the LLC, art 141(3), also fall into the wages category in the Maritime Code § 92(2)(m) as compensation for late payment of wages, and not just a delay penalty against the employer.

Arctic must be regarded as the crews' employer. It is the owner of the fishing vessels who is closest to proving who is the employer of the crews, and who thus has the burden of proof on this point. Arctic has asserted that it paid salaries to the staffing company, Olankam, and that it is not probable that the crews have not been paid. This Court agrees with the District Court that it cannot just be assumed that the crews have been paid. The employer has the burden of proving that the crews have been paid.