The Arrest Convention 1952 introduced the arrest of sister ships, i.e., ships owned by the same persons. The widespread use of one-ship companies circumvented these provisions. During the discussion of the Arrest Convention 1999 at the CMI, the United Kingdom’s delegates proposed the introduction of provisions on the arrest of associated ships, i.e., ships not in the same ownership but in the same ‘effective control’. Almost all delegates declined this proposal. As a result, the Arrest Convention 1999 only indicates that the relevant provisions may be enacted at the domestic level.

The only country that has introduced associated ship arrest in national legislation is South Africa (ss 3(7)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983). Other countries hesitated to follow this example mainly for the same reasons given when the United Kingdom’s proposal was declined. Among these are that arresting ‘associate ships’ gives the courts an ‘unacceptable’ discretion to disregard the separate legal personality of ship-owning companies.

Even when allowing the arrest of associated ships, other countries do so by referencing company law rules on piercing the corporate veil. Under these rules, fraud or improper conduct is an essential criterion to pierce the corporate veil. As the courts of several states have confirmed, one-ship companies are legitimate business structures, and it is necessary to prove that these structures were used to defraud creditors. This is typically a burdensome or almost impossible task. The difficulty depends on a particular jurisdiction. Thus, shipowners may still use one-ship companies to avoid or limit liability unless it is proved that the one-ship company was intentionally used to defraud a particular creditor applying for the arrest.

The intended working paper explores the approach of common law countries to the arrest (or attachment) of associated ships. These countries are those where proceedings in rem exist: the United States of America, the United Kingdom, and Australia. The South African approach is discussed, and the problem of overreaching is determined based on the example of ships belonging to state-owned companies. The research will conclude with a proposal for possible solutions for formulating the relevant provisions in a balanced way.

Presentations

• “Arrest of Associated Ships from a Common Law Perspective”, CML Lunch Seminar, NUS Law, 3 April 2024

Working Paper

• “Arrest of Associated Ships from a Common Law Perspective“, (2024) CML Working Paper Series, CML-WPS-2404