On 27 March 2025, the yacht “Stefania” was sold at a public auction in France for 10 million euros. This sale was a result of the shipowners’ conviction for money laundering. The auction highlights the effectiveness of seizing and selling ships in criminal cases, where vessels are often high-value assets. However, it is crucial to understand that the procedures for arresting yachts or other maritime assets in civil or commercial contexts are different and often more complex.
Strategic use of ship arrests in civil and commercial cases
Ship arrest is a crucial tool in maritime disputes, allowing creditors to secure payment through the detention or sale of a vessel. This powerful mechanism is often used as leverage to settle maritime claims. Given the mobile nature of vessels, creditors may follow a ship’s movements to find a favorable jurisdiction for arrest.
Although France is not always seen as the most efficient jurisdiction for vessel arrests, due to procedural complexities and the infrequency of judicial sales for commercial vessels, the provisional ship arrest mechanism offers significant advantages.
Types of ship arrests in France
The French Transportation Code outlines two main types of ship arrests:
Provisional ship arrests: This is a preventive measure to secure creditors’ claims. Under Article L.5114-22, a creditor can immobilize a debtor’s vessel to guarantee their claim. This requires judicial authorization, which can be obtained unilaterally unless the claim has already been acknowledged by a judgment. The creditor must prove that the claim is founded in principle. Once authorized, a bailiff officially arrests the vessel, and any unauthorized attempt to move it can lead to prosecution. The claimant must then commence proceedings on the merits within one month to validate the measure and secure payment. Due to the high costs of detention (loss of revenue, port charges, etc.), debtors often quickly settle their debts by providing sufficient security, such as a bank guarantee or a P&I letter of guarantee. However, this type of arrest does not allow for the sale of the asset. To sell the vessel, the arrest must be converted to an enforcement type.
Enforcement ship arrests: This procedure aims to force the sale of the vessel to pay off a creditor’s claim. Under Article L.5114-23 et seq., the creditor must obtain an enforceable title acknowledging the claim, such as a judgment on the merits. This can be challenging, especially in cross-border cases involving different jurisdictions, the nature of the claim, and the governing law. The process involves several stages: serving the enforceable title, issuing a summons to pay, enforcement arrest by a bailiff, legal publicity of the sale, and finally, a public auction acknowledged by judgment. The proceeds are then distributed among creditors according to their priorities, with maritime mortgage holders having priority claims. If the sale fails, the court may set a new price and restart the procedure.
Conclusion
While maybe not as speedy and effective as ship seizures in a criminal context, France’s procedures for ship arrest should not be entirely dismissed in a commercial dispute. The arrest mechanism under the “provisional” process, offers an effective tool, which savvy creditors may use strategically to strengthen their bargaining position.