Ship Arrest in Indonesia
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Ship Arrest is a type of proceedings that takes significant role in the context of claims in shipping and maritime world. The submission of Ship Arrest typically begins with application to the courts for obtaining approval in the form of Writ. As such, Writ will serves as the main basis for the Harbourmaster to conduct Arrest to the relevant ship.
In doing Ship Arrest, a party may recover their claims from another party through a straightforward mechanism and in relatively efficient timeframe.
Basis for Ship Arrest
Under the 1999 International Convention on Arrest of Ships (“Ship Arrest Convention”), it is described that Ship Arrest is inseparable from the so-called ‘Maritime Claims’. Maritime Claims refers as a claim arising out of various circumstances related to the operation, ownership, and use of a ship such as damage caused by the operation, collision, charter party claims, environmental damage, etc, in other words, Ship Arrest is defined as type of grounds upon which a ship may be arrested.
Indonesia has ratified the Ship Arrest Convention and incorporated the Ship Arrest proceedings through the Law No. 17 of 2008 regarding Shipping, as lastly amended by Law No. 66 of 2024 on the Third Amendment to the Shipping Law (“Shipping Law”).
Keypoints of Ship Arrest under Indonesian Legal Framework
- The Shipping Law generally stipulating the Ship Arrest in a very general terms. That includes the classification of Ship Arrest basis as well as the Harbourmaster and Port State Control portion of responsibility. With regard the classification of Ship Arrest, not only the Shipping Law stated that Maritime Claims serves as the basis for doing arrest, the Shipping Law explicitly regulated that a Ship Arrest can be conducted based on criminal proceedings.
As for the Harbourmaster and Port State Control’s portion of responsibility, upon the issuance of Writ by the courts granting the arrest, the Harbourmaster, in the exercise of its ex officio duties, is responsible for executing the arrest.
- The Shipping Law does not regulates the payment of deposit upon the Ship Arrest nor providing any mechanism related to conduct ship arrest to sister ship unlike the Ship Arrest Convention. The absence of payment of deposit in ship arrest may resulting in unclear stages of settlement and the release of the arrested vessels, consequently necessating further negotiations and mutual consensus between disputing parties.
On the other hand, the lack of basis in conducting arrest to sister ship in Shipping Law creates an unfavourable situation for creditors in conducting ship arrest based on the Ship Arrest Convention and global shipping practice. To overcome this matter, practitioners trying to pursue the debtor with alternatives methods such as bankcruptcy petition, winding up, re-litigation, etc, to achieve possessions of the other asset and another ship owned by the debtor.
- Through the Third Amendment of Shipping Law on 28 October 2024, it has been established that there is still no Ministerial regulation specifically addressing the technicalities of Ship Arrest. This amendment removes the original provision in the Shipping Law that required Ship Arrest to be supplemented by technical regulations. As a result, upon the absence of technical regulation, it can be concluded the Ship Arrest regulatory framework will now rely entirely on the provision in the Shipping Law, without a technical regulation, as the sole legal basis for its implementation. Consequently, it may place significant emphasis on the discretion of the authorities and courts in executing the arrest.
Practical Consideration for conducting Ship Arrest or Litigation of Maritime Claims in Indonesia
Prior to begins the submission of Ship Arrest and Litigation based on Maritime Claims in Indonesia, the following points can be considered:
- Classifiying the Nature of Maritime Claims
The process to clarify and elucidate the nature of Maritime Claims are vital to be conducted in advance. This is due to certain events in Maritime Claims detailed further in a certain Indonesian laws and regulation.
For instance, the declaration of Collision of Ships under the Indonesian law must be served by the Harbourmaster under technical assessment and ultimately decided by the Admiralty Court, in particular whether there is negligence of the crew. Therefore, any claims submitted as a result of Collision may be considered premature if it is not supplemented by Harbourmaster’s assessment and/or the Admiralty Court’s decision, resulting in Ship Arrest application being rejected by the courts.
- Assesment whether the Maritime Claims can be pursue via Civil Claims or Criminal Proceedings
The Shipping Law recognizes that in addition to Ship Arrest due to civil claims, a Ship can also be detained (penyitaan) through criminal proceedings. The key difference between Ship Arrest and Ship Detention is that they operate under two distinct legal frameworks: Ship Arrest falls under civil law, while Ship Detention is governed by public or criminal law. However, the details regarding Ship Detention were not included in the Shipping Law due to the Ship detention are primarily falls under the Indonesian criminal law regulatory framework.
Under the Indonesian criminal procedural law (Kitab Undang-Undang Hukum Acara Pidana or also known as “KUHAP”), a detention or seizures defined as a series of actions by investigators to take over and/or place under their control movable or immovable objects, tangible or intangible, for the purpose of serving evidence in investigation, prosecution, and trial.
The KUHAP further stipulated that the classification of asset that can be put under detention are: (i) Objects or claims belonging to a suspect or defendant that are wholly or partly suspected to have been obtained from a criminal act or as a result of a criminal act; (ii) Objects that have been directly used to commit a criminal act or to prepare for it; (iii) Objects used to obstruct the investigation of a criminal act; (iv) Objects specifically made or intended for committing a criminal act; (v) Other objects that have a direct connection to the committed criminal act.
The Ship Detention are also justified by the Indonesian jurisprudence and doctrines that clarified and strengthens that certain criminal events and actions (i.e., criminal act of fraud) may precede the existence of civil claims (i.e., breach of contract) and may be prioritized over due to it falls under the public law enforcement.
Given that Shipping Law recognizes claims can be pursued through both civil and criminal proceedings, a thorough assessment and comprehensive analysis to the anatomy of Maritime Claims are crucial. This approach ensures that claimants can strategically determine the most effective legal course of action (Ship Arrest or Ship Detention) based on the circumstances of their case.
- Initiating Litigation and Asset Recovery
It should be noted that the nature of Maritime Claims as set out in Ship Arrest Convention as well as the Shipping law generally divided into: (i) events resulting from contractual obligations (i.e., charter party claim) and; (ii) events that are not stipulated by a contract (i.e., collision or environmental claim).
In line with the aforementioned, Civil lawsuit action in Indonesia generally pursue under the basis of breach of contract or a tort. Breach of contract is fundamentally related to contractual obligations, highlighting the non-performance to an obligation under a certain agreement, whilst the Tort is a claim that arose from actual unlawful actions or violation of legal rights carried out by a party to another that resulting in harm and losses, not from a failure or non-performance based on any contractual relationship.
The formulation of lawsuit may also include the confiscation of asset namely through conservatoire beslag, fundamentally highlighting the pre-cautions that the ship owner or defendant will run away its ship from another location or jurisdiction. By doing so, the final decision of such litigation proceedings will serve as the basis for conducting Ship Arrest.
- Ship Arrest based on Arbitration Award
The Indonesian Civil Procedural Law acknowledges and recognized the enforcement of confiscation of asset from interim decision or injunctions issued by Arbitration tribunal. Through Supreme Court Regulation No. 3 of 2023, the Indonesian Supreme Court further detailed that in the event Arbitrators issued a declaration of confiscation of asset through the interim decision, the Arbitrator must register such interim decision awards containing order to confiscate certain asset to the courts. Therefore, the claimant in Arbitration proceedings can include the disputed Ship to be further arrested through injunctions.
However, it is to be noted that as for the interim decision or injunctions issued by foreign arbitration tribunals, must undergo the process of recognition of foreign arbitration awards as set out in the New York Convention and Indonesian Arbitration Law regulatory frameworks. Thus, it would take some amount of time prior to enforcing the interim decisions or injunctions.
Nevertheless, the certainty that Indonesian courts’ recognized the interim decision and injunctions issued by Arbitration tribunal, would directly supports the Indonesian arbitration environment, as it may supersede practical views that injunctions are only effective if it originally ordered by the courts. Moreover, initiating arbitration to obtain injunctions on certain assets can serve as a key consideration for claimants in retaining their rights and ultimately support their standing to pursue a Ship Arrest in the future.
Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.
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