Overview of the ship arrest in Egypt
Nabil Farag
Managing Partner, Nabil Farag Law Firm, Egypt
Introduction
Ship arrest in Egypt is a well-established remedy that allows claimants to secure maritime claims against a vessel, its freight, or associated assets. This overview summarises the legal basis, competent courts, arrestable claims, required documents, procedural steps, timelines, security and counter-security, release mechanisms, and practical tips for owners, charterers, cargo interests, and insurers operating in Egyptian waters.
Ship arrest in Egypt is governed by the Egyptian Maritime Trade Law (EMTL) No 8 of 1990, Civil and Commercial Procedures Law, and relevant international conventions to which Egypt is a party. The Economic Courts and, in certain coastal jurisdictions, summary judges on duty may issue urgent arrest orders. Jurisdiction generally lies where the vessel is located or calling.
The ship arrest is an in rem interim measure to secure a maritime claim; merits are pursued either before the competent Egyptian court or another agreed forum, subject to jurisdiction and arbitration clauses. Maritime claims that may give rise to an arrest include crew wages, salvage and towage, collisions, general average, damage to cargo or port facilities, bunker and supply debts, repair costs, mortgage claims, charterparty and bill of lading disputes, fines and port dues.
A ‘sister ship’ arrest is possible for certain claims, provided ownership identity is established at the time the claim arose and at the time of arrest. Preconditions and Evidence may include invoices, statements of account, charterparties, bills of lading, log extracts, bunker delivery notes, correspondence, and witness statements supporting the debt.
In terms of procedure, an application must be submitted to the competent judge with supporting documents (Arabic originals or certified translations may be required). A legalised power of attorney (POA) and company documents should be prepared in advance and legalised by an Egyptian Consulate.
The judge will issue an arrest order the same day or at least within two days. Then the bailiff will serve the order on the vessel via the port authority and coast guard, placing the ship under arrest and restricting departure.
A merits lawsuit must be filed by the claimant within the statutory period from the day on which the arrest is completed, otherwise the arrest will be lifted.
For the security to lift the arrest, a bank guarantee letter issued by a local Egyptian bank or a cash deposit will be accepted to release the vessel from arrest. In practice, a Protection and Indemnity (P&I) Club letter of undertaking (LOU) is usually not accepted by the court. The amount generally matches the claimed sum plus interest and costs.
1. Summary of ship arrest practice in Egypt
To proceed with an arrest order against an owing vessel in Egypt, in accordance with the Egyptian Maritime Trade Law No 8/1990, Article No 60, it is required to prepare some steps such as filling an arrest application (an arrest petition) to the Economic court which must explain the case and the matter. A brief of the relationship between the claimant and defendant, and the nature of debt which must be one of the debts indicated in Article No 60 of the Egyptian Maritime Trade Law No 8/1990. The required documents relating to these debts in order to arrest a vessel as indicated in clause (1) must be presented, with a certified translation into Arabic of all documents. For example, in case the arrest application relates to outstanding invoices for insurance instalments issued by a marine insurance policy, all outstanding invoices, the insurance policy and other documents such as mutual correspondence, faxes, emails and other agreements which prove these debts should be presented.
A legalised power of attorney must be granted by the claimant to the representative who is filing an arrest application. This power of attorney must be signed by the client, either certified by Apostille or legalised by the Ministry of Foreign Affairs and then be authenticated by the Egyptian consulate in the client’s country. This power of attorney must be translated into Arabic by the Ministry of Justice in Egypt.
2. Which International Convention applies to arrest of ships in Egypt?
The 1952 Brussels’ Convention of the ship arrest is applied on the ship arrest in Egypt.
3. Which are the applicable laws for the arrest procedures in Egypt?
The first applicable law for the arrest procedures is the Egyptian Maritime and Trade Law No 8/1990. In addition to the Egyptian Commercial law and the Egyptian procedurals law, there are some other applicable laws which can apply to ship arrest in Egypt, such as the Egyptian Administrative law which allows the governmental authorities and public establishments to arrest a ship if, for example, they have certain claims in relation to this ship. The Port Authority has a right to arrest a vessel for the port dues or any other governmental debts. Therefore, the governmental authority or the public establishment has a legal right to arrest the vessel directly by their order and without getting an official arrest order by the Economic court (judge of temporary orders).
4. For which types of claims can you arrest a ship?
The legal recognising liens in Egypt, as indicated in the Egyptian Maritime and Trade Law No 8/1990, Article No 60, are the following:
(a) port and water courses duties;
(b) expenses outlaid for removal, pick up, or lifting of wrecks and cargo;
(c) damages caused by collisions, pollution or other similar marine incidents involving ships;
(d) loss of life or bodily injuries caused by operation of a ship;
(e) contracts and deeds for chartering, using or renting the ship;
(f) insurance of the ship;
(g) contracts for transport of goods by virtue of a rental contract or bill of lading;
(h) damage to goods or luggage transported by the ship;
(i) salvage and rescue works;
(j) general average;
(k) tugging the ship;
(l) piloting;
(m) supplies of materials or tools necessary for operating the ship or its maintenance, whatever the source of supplies being obtained;
(n) shipbuilding, repair or furnishing of the ship, and expenses incurred for the ship in dry-docks and dockyards;
(o) claims for salaries and wages for captain, ship-officers and the crew members against shipping agencies;
(p) claims incurred by the captains, ship-forwarders, charterers, or shipping agencies for the account of the ship or its owners;
(q) disputes about the ownership of a ship;
(r) disputes about the common ownership of a ship, or about holding or exploiting and operating it, or the rights of ship-owners in common to the amounts resulting from using and exploiting the ship;
(s) marine mortgages.
5. Can you arrest a ship irrespective of her flag?
The arrest procedures are applicable irrespective of the flag of the ship whatsoever, also irrespective of the claimant or debtor’s residency.
6. Can you arrest a ship irrespective of the debtor?
The arrest procedures are applicable irrespective of the debtor’s residency or nationality.
7. What is the position as regards sister ships and ships in associated ownership?
The procedures are also applicable to the arrest of a sister ship. The sister ship of the owing vessel is allowed to be arrested in Egypt in accordance with the Egyptian Maritime and Trade Law No 8/1990, Article No 61, which allows the claimant to arrest the sister ship through the same procedural requirements as mentioned above. The referred Article No 61 stated that:
‘(1) Whoever holds any of the debts specified in the previous article, can levy an arrest on the ship with which the debt is connected or any other ship owned by the debtor if such ship was in his possession at the time of instituting the debt.
(2) However, no attachment may be levied on another ship than the one to which the debit is related if the debit is one of those prescribed in items Q, R and S of the previous article.’
These referred items as indicated in Article No 60 are the following: (q) disputes about the ownership of vessel; (r) disputes about the common ownership of vessel or about holding or exploiting and operating it, or the rights of ship-owners in common to the amounts resulting from operating and exploiting the ship; as well as (s) marine mortgages.
8. Do your courts require counter-security in order to arrest a ship?
A counter security is not required under the new Egyptian Maritime and Trade Law No 8/1990.
9. Is there any difference in respect to arresting a ship for a maritime claim and a maritime lien?
There is no difference between the maritime claim and the maritime lien in respect to arresting a ship; these are subject to the same procedures.
10. Does your country recognise maritime liens? Under which International Convention, if any?
The maritime liens are recognised by the Egyptian Maritime and Trade Law No 8/1990, also, the 1952 Brussels’ Convention of the ship arrest is applied to ship arrest in Egypt.
11. How much time is required in order to arrest a ship from the moment the file arrives at a law firm?
The required time to arrest a ship starting from the moment of the referred document’s arrival to a law firm is approximately 24 hours.
12. Do you need to provide a POA or any other documents of the claim to the court?
A legalised power of attorney must be granted by the client (the claimant) who fills the arrest application. This power of attorney must be signed by the client and certified by Apostille or the local authentication office, then legalised by the Ministry of Foreign Affairs and by the Egyptian consulate in the client’s country. This power of attorney must be translated into Arabic by the Ministry of Justice in Egypt which may takes from three to five days.
13. What original documents are required, what documents can be filed electronically, what documents require notarisation and/or apostille, and when are they needed?
The required documents relating to these debits as indicated above in clause no (1) must be provided with the arrest application in addition to a certified translation into Arabic for all documents.
14. Will courts accept jurisdiction over the substantive claim once a vessel has been arrested?
The Egyptian courts accept jurisdiction over the substantive claim once the vessel has been arrested. Also, all claims against the arrested vessel will be accepted in the Egyptian jurisdiction.
15. What is the procedure to release a ship from arrest?
According to the Egyptian Maritime Trade Law No 8/1990, Article No 63, in order to release a ship from arrest, an application for release must be submitted by the defendant to the chief judge, or his representative on his jurisdiction, attached with a bail or guarantee letter to be sufficient for settlement of debit.
16. What type of security needs to be placed for the release?
In spite of Article No 63, The Egyptian Maritime Trade Law No 8/1990 does not explain the required type of security of bail or guarantee letter. However, it is established practice that a bank guarantee letter by a known bank is acceptable security. Also, a deposit of cash money equivalent to the total debt will be acceptable too.
17. Does security need to cover interest and costs?
The security must cover the interest and ten per cent for the costs.
18. Are P&I LOUs accepted as sufficient to lift the arrest?
As referred to above, in practice, P&I LOUs are not acceptable at all.
19. How long does it take to release the ship?
It usually takes from one to two days to release a ship from arrest starting from the date of submitting the application to release the ship from arrest to the chief of judge.
20. What period of time will be granted by the courts for the claimants in order to take legal action on the merits?
The Egyptian Maritime and Trade law No 8/90 allows the claimant exactly eight days to take legal action on the merits, starting from the day of arrest, or otherwise the arrest will be cancelled by law. The Egyptian courts usually take approximately one year to issue an award on the merits.
21. Do the courts acknowledge claims for wrongful arrest?
The claims for wrongful arrest are governed by the Egyptian Civil Law No 131/1948, Article No 163, which states, as a general principle that fault which causes damages to others gives rise to a right of compensation.
Therefore, there is a protection for the defendant against wrongful arrest under the Egyptian Civil Law, and if someone arrests a vessel by incorrect or by false documents, the claimant will face claims by the shipowners, charterers or operators to pay them all damages incurred as a result of the wrongful arrest. These damages will be determined by the court which is free to assume the value of damages including fines, incurred port dues and all other incurred expenses caused by this wrongful arrest.