Diligence update – admiralty actions

On 1 July 2010, Part 14 and Schedule 4 of the Bankruptcy and Diligence etc. (Scotland) Act 2007 ("the 2007 Act") will come into force, making changes to legislation regarding the arrestment of ships and cargo.

Admiralty arrestments are a type of diligence relating to the arrestment of ships, other maritime property and cargo on board ships. Generally, arrestments immobilise the ship where it is situated at the time of execution until the arrestment is recalled, a process of sale is completed or the debtor provides alternative security. Admiralty arrestments are relatively uncommon but may be for claims of considerable value.

Some of the provisions of this part of the 2007 Act are:

• A maritime lien is an internationally used term, however for the purposes of Scots law, a lien is considered to be a hypothec or security. A new definition is provided for "maritime lien" to make this clear, while retaining the international usage of the term.
• "Admiralty actions" are defined to ensure common usage in statute as well as in the rules of the Sheriff Courts and the Court of Session.
• The jurisdictional limits of the sheriff when granting a warrant to arrest are set out, allowing for the warrant to be executed anywhere in Scotland.
• Arrestment on the dependence will only be competent where the defender owns the ship (or a share), or is the demise charterer, when the arrestment is executed.
• The courts will have power to award, modify or refuse expenses of an admiralty action, the defender being entitled to expenses in opposing the action, where the creditor is found to be unreasonable in applying for the arrest warrant.
• Cargo will be subject to arrestment while on board the ship (on dry land it would be subject to attachment) and arrestment of cargo may take place even when the cargo is in the debtors hands.
• Arrestment may take place anywhere within the territorial jurisdiction of the court, even if the ship is brought onto land. A ship or cargo may not be arrested while on passage.

The Bankruptcy and Diligence etc. (Scotland) Act 2007 (Commencement No. 6 and Savings) Order 2010 (SSI 2010/249) will be available to view on the OPSI website in the near future.