Superyacht arrests: an essential overview

Few remedies change the dynamics of a superyacht dispute more dramatically than an arrest. A superyacht can be stopped in its tracks, placing immediate commercial pressure on owners, managers, crew members and financiers.

At Hill Dickinson our approach as litigators is focused on problem-solving and dispute resolution. However, there are circumstances in which a yacht arrest is the weapon of choice to secure a claim. Equally, we are regularly instructed by owners facing the disruption and commercial consequences of an arrest.

Understanding how the remedy works is essential for anyone operating in the superyacht industry.

What is a yacht arrest?

A yacht arrest is initiated by a private party seeking to secure the value of its claim.

The arrest targets the yacht itself as security for the claim, rather than simply pursuing the owning company (from whom the debt is allegedly owed) through ordinary procedures.

A court granted arrest prevents a yacht from leaving the jurisdiction (whether it lies at anchor, port or shipyard). In practice a bailiff will remove the yacht’s key papers or on occasion physical chains will be attached. The yacht is detained as security for the claimant’s claim.

Yachts can also be detained by authorities, seized under sanctions legislation or held as a result of port state control. But we are focussing here on the private law application to stop the yacht as security for a claim.

Not every alleged creditor can arrest the yacht

Importantly, the claim must generally qualify as a maritime claim. Common examples in the superyacht sector include disputes concerning ownership, unpaid crew wages, the costs of repair and refit works, goods or materials supplied to the yacht, and charter disputes.

Other claims that frequently arise in the yachting industry may not support an arrest at all: broker commission disputes are a key example.

While unpaid suppliers, crew, contractors and Charterers are often associated with yacht arrests, lenders should not be overlooked. Banks holding registered yacht mortgages frequently possess independent arrest rights which can be exercised if the owner defaults under the loan documentation.

Whether a yacht can be arrested depends on the law of the law of the jurisdiction where the arrest is sought. In many parts of the world, that framework derives from either the 1952 Brussels Arrest Convention or the 1999 Geneva Arrest Convention (whilst more up to date than the 1952 Arrest Convention, the 1999 Arrest Convention has been adopted by only 17 states), supplemented by local law.

As a result, the availability of arrest and the procedure to be followed can vary significantly from one jurisdiction to another. A claimant considering an arrest in France, Malta, Italy, Spain or Greece may encounter very different procedural requirements despite the underlying principles being similar.

As lawyers our analysis is both whether the yacht can be, and if so where and when it should be, arrested. The same yacht may be arrestable in one jurisdiction but not another.

Maritime claims -v- maritime liens

A maritime claim provides the basis of a right of arrest.

A maritime lien goes a step further and attaches to the yacht itself, sometimes even surviving a change of ownership. Examples of maritime liens commonly recognised in many jurisdictions include crew wage claims and claims arising from damage caused by a vessel, although the categories of recognised maritime liens vary significantly between jurisdictions.

For buyers, the distinction is particularly important. Maritime liens may in some circumstances survive a change of ownership. In any case, upon sale of a superyacht an owner should be asked to provide the buyer with a warranty (backed up by a personal guarantee) that there are the yacht is free and clear of all debts, claims, mortgages, liens and encumbrances of any kind (MYBA MoA Clause 15).

Timing is everything

Arrest applications involve a surprising amount of detective work. AIS tracking, marina enquiries and cooperation with lawyers in multiple jurisdictions frequently form part of the preparation. The claimant’s goal is simple: be ready to pounce when the yacht arrives in a jurisdiction where arrest is available and commercially effective.

Can the alleged creditor arrest a sister ship?

In some jurisdictions, a claimant may be able to arrest a sister ship under common ownership. The precise rules vary between jurisdictions, but the possibility often comes as an unpleasant surprise to owners.

How does the arrest actually happen?

Most often, the claimant’s application to court is made ex parte, meaning without notice to the owner. Otherwise, there is an obvious risk that the yacht simply leaves before the court order is made and the arrest is enforced.

That does not mean courts simply grant arrests on demand. Claimants are generally required to demonstrate a good prima facie maritime claim and satisfy the court that all legal requirements have been met. Some jurisdictions also require the claimant to provide a deposit or security before an arrest order will be granted.

Once arrested, the yacht cannot be moved, sold or leave the jurisdiction without the court’s permission. The owner remains responsible for maintaining the vessel while it is under arrest. At that point, owners generally face a decision. Do they challenge the arrest and fight, which might take some time? Or do they provide security (for the value of the disputed claim) to get the yacht moving again?

Usually, the owner (if it has the money) prefers the practical solution of posting adequate security to allow the yacht to move while the underlying dispute is determined by the court or arbitral tribunal. Equally the alleged creditor’s interest is in obtaining security for its claim, not in detaining the yacht for a prolonged period.

A successful arrest is not the end of the process. An arrest simply provides security. It does not determine liability.

In most jurisdictions, the claimant must then commence or continue substantive proceedings within a prescribed period. If they fail to do so, the arrest may be lifted.

With great power comes great responsibility

It is difficult to overstate the impact an arrest can have. A yacht may miss a charter season. Delivery schedules can be disrupted. Managers, crew and charterers may all be affected.

For that reason, courts expect arrest rights to be exercised fairly. A claimant who obtains an arrest in bad faith and without proper grounds may face a claim for wrongful arrest and potentially substantial damages.

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