Maritime Lawyer Sees Increased Use of US Law for Vessel Arrests

Simms will be speaking at the IBIA Annual Convention 2023 in Dubai later this year. Image Credit: Simms Showers LLP

The bunker market is increasingly turning to US law for increased guarantees in the event of unpaid bills resulting in vessel arrests, according to a leading maritime law firm.

Bunker traders taking payment several weeks after delivery are best advised to specify US law in their contracts to give them the best chance of recovery in the event of their bills not being paid, Steve Simms, principal at Simms Showers LLP, said in a recent interview with Ship & Bunker.

"We have been seeing more ships arrested in the US than elsewhere," Simms said.

"I look at the US court records daily to see what's been filed, and I see as prices are going up, there seem to be more arrests.

"In the US I'd guess there might be 60 or 70 arrests a year -- I'd say in 2023 we're keeping at that pace, maybe a little more as prices go up."

The main advantage of taking on US law is the possibility of the debt following the ship to which the bunkers were supplied, rather than remaining with a charterer that may not remain in business, Simms argued.

"The reason for arrest in the US is because of the maritime lien, which follows your ship, regardless of whether the charterer is long gone," he said.

"Most larger bunker sales are made to charterers, and charterers come and go, but the ships are usually always around.

"The maritime lien under US law will follow the ship pretty much forever, as long as the supplier takes certain steps to confirm the lien.

"I would say the US is always the most attractive place to arrest the ship, as long as you have US law in place.

"That comes through a bunker supplier's or trader's terms and conditions."

Increased transparency in the US is another factor.

"The US legal system is more transparent than others; for example, in Singapore, there might be a report of a vessel arrested, but the court records are secret," Simms said.

"In the US you can access any federal court record as long as it's not sealed, which is not usual."

US law, if specified in the contract, will not only apply to arrests made in the US. Simms has seen US law accepted for arrests made in Canada, Panama, France and even Poland.

"The basic thing is that your terms and conditions must specify that US law controls, including for the purposes of establishing a maritime lien in rem against the vessel," he said.

Simms will be speaking at the IBIA Annual Convention 2023 in Dubai later this year. The event is being held at the Queen Elizabeth II floating hotel in Port Rashid on November 7-9. For more information, click here.