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Web Alert: Ship Arrest in Canada

01 March 2017

​Ship Arrest in Canada

A ship arrest can be done within a few hours at relatively low cost, depending on its location, making Canada one of the most favourable jurisdictions for ship arrests.

While not party to any Arrest Conventions, section 22(2) of the Federal Courts Act confers a large jurisdiction for maritime claims. Indeed, the scope of the claims for which there is in rem jurisdiction is slightly larger than under the 1952 Arrest Convention. Jurisdiction is not, however, conferred for damage or threat of damage to the environment, clean-up costs and reasonable steps taken to avoid environmental damage, and wreck removal. These form part of the new heads of arrest in the 1999 Arrest Convention, which is intended to replace the 1952 Convention. However, it is worth noting that as of 2016, only 11 state parties have ratified the Convention.

Procedure to arrest

The arrest procedure in Canada is relatively simple. It is initiated by the filling of a Statement of Claim and an Affidavit to Lead Warrant, which set out the relevant facts pertaining to the claim and establish the in rem jurisdiction.

Once these documents have been filed into the Court record, a Warrant for Arrest is issued by the Court to the Sheriff. A ship arrest can therefore take a mere couple of hours after the initial contact with the handling lawyer, and depending on the location of the ship. The procedure is also relatively inexpensive, as the costs are comprised only of Court filing fees and legal fees.

Countersecurity is not required by the Federal Court for a ship arrest. However, if the claimant is a foreign entity without any assets in the jurisdiction, the defendant may seek to obtain an order for security for costs.

Release

The procedure for release of arrest could also be very expeditious. Unless a caveat against the release of the ship has been filed, it could be released upon payment into Court of the amount claimed or its appraised value, bail post in the form of bond or bank guarantee, agreement between the parties, or the discontinuance or dismissal of the action.

P&I Letters of Undertaking are commonly accepted, and parties typically agree on this type of security in Canada. If there is no agreement, then the Federal Court Rules provide that security may be in the form of a bond or a bank guarantee. The security amount is based on the claimant’s 'best arguable case', including interest and costs, but limited to the value of the ship.

Alternatively, if the parties fail to come to an agreement, the defendant may file a motion to release the arrest warrant or to release the ship without bail.

Finally, the ship can be released on the expressed written consent of the claimant who initiated the arrest proceedings. It is important to note, however, that the release will become effective only once the Court issues the release from arrest documents, and once the payment of costs of the Sheriff’s fees have been settled.