AKD Warns Shipowners on Dutch Ship Arrest Guarantees

Friday, April 21, 2006
Shipowners who find their vessel has been arrested in the Netherlands need to be careful when putting up security to get the ship released quickly. Recent case law shows that even if the owner has a strong case in rejecting the claim, it may still have to wait until the very final judgement before being able to reduce the security. In the worst case scenario this may take several years, if conditions for security reduction are not specifically agreed at the outset.

Haco van der Houven van Oordt, partner at Dutch law firm AKD Prinsen Van Wijmen, says: “The Netherlands is of course well known as a ship arrest paradise. To prevent unnecessary costs and delays, shipowners have the option of providing security in exchange for an arrested vessel’s release. This is usually done on Rotterdam Guarantee Form 2000. Even though there are conflicting judgments, the shipowner and their underwriters or P&I Club need to be aware that the action of providing the security is deemed to be a new and separate contract which may prevent a release or reduction of the security through summary proceedings.

“Parties are becoming more cautious in putting up guarantees, of what are often very considerable sums, to get their vessels released, because they know that these sums may be tied up for a long period of time. It is important to make sure that conditions for release and reduction of the security are properly negotiated beforehand.”

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