Measures to Ensure Financial Security for the Detention of Seagoing Ships

According to the provisions of Article 5 of the 2008 Ordinance on Procedures for Arresting Ships, the party requesting the arrest of a ship must take financial security measures, except in cases stipulated in points c and d, clause 1, Article 44 of the 2008 Ordinance on Procedures for Arresting Ships, in one or both of the following forms:

- Submit to the Court a guarantee by the bank’s assets or other credit institutions or other individuals, agencies, or organizations;- Deposit an amount of money, precious metals, gemstones, or valuable papers into a frozen account at a bank where the Court with jurisdiction to decide the ship arrest is located, within no later than forty-eight hours from the time of receiving that decision.

If the financial security measure for the ship arrest request is made on a weekend or holiday, the secured assets shall be temporarily kept at the Court; the Court shall only receive the money or valuable papers and proceed with sealing and preservation. On the next working day, the party requesting the ship's arrest must immediately deposit the assets into the bank under the Court's supervision.

The financial security value set by the Court is equivalent to the losses or damages that may arise from the consequences of an incorrect ship arrest request.

When deciding to release an arrested ship, the Judge must consider the financial security measure for the ship arrest request unless otherwise agreed by the parties. Depending on the specific case, the Judge shall make one of the following decisions:

- Maintain the financial security measure for the ship arrest request if the ship arrest request is deemed incorrect, and the financial security value is sufficient or inadequate to cover the damages;- Return part of the financial security value for the ship arrest request if the ship arrest request is deemed incorrect, and the financial security value exceeds the liability for damage compensation;- Return the entire financial security value for the ship arrest request if the ship arrest request is deemed correct.

See also: 2008 Ordinance on Procedures for Arresting Ships, effective July 1, 2009.

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