Ship Arrest in Indonesia: The Urgency of the Implementing Regulation on Ship Arrest in Indonesia

Ship Arrest in Indonesia: The Urgency of the Implementing Regulation on Ship Arrest in Indonesia

Setyawati Fitrianggraeni, Melvin Julian, Irvena Ayunya Dewanto[1]

 

Introduction

Pursuant to the 1999 International Convention on Arrest of Ships (“1999 Arrest Convention”), arrest is defined as any detention or restriction on removal of a ship by order of a Court to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgement or other enforceable instrument.[2] It is important, however, to note the difference between ship arrest and detention. Arrest is aimed to prevent the ship from moving while awaiting settlement of the claim and to deter its owner from enjoying any profits.[3] Whereas, a ship is subject to detention where it fails to meet standards determined by international conventions pertaining to the technical status of ships, its operations, staffing, and living conditions, upon inspection by the Port State Control (PSC).[4] Currently, ship arrest is governed by the 1999 Arrest Convention which updated the provisions of the 1952 International Convention Relating to the Arrest of Sea-Going Ships (“1952 Arrest Convention”).[5] In the national context, Indonesia is not a party to the 1952 and 1999 Arrest Conventions. However, currently the arrest of ships has been regulated by Law Number 17 of 2008 concerning Shipping as amended by Government Regulation In Lieu of the Law Number 2 of 2022 (“Shipping Law“). Although the arrest of ships within the Indonesian jurisdiction has been enabled since the enactment of Shipping Law, the practice of ship arrest in Indonesia remains relatively new.[6]

International maritime hubs have clarity in the law, procedures, and practices of ship arrest as part of maritime dispute settlement. If Indonesia is serious about its aspirations for a blue economy and to become a maritime axis, it must quickly establish certainty for this aspect of maritime law.

Discussion

• Current rules in Indonesia

The Shipping Law does not provide any definition of ship arrest. However, the order of ship arrest by the court in a civil case in the form of a maritime claim as specified in Article 223 paragraph (1) of the Shipping Law indirectly refers to the definition of maritime claim as specified in the 1999 Arrest Convention.[7]

According to Article 222 paragraph (1) of the Shipping Law, the authority to arrest ships is the Harbourmaster. The Harbourmaster is a government official at the port appointed by the Minister of Transportation and has the highest authority to carry out and supervise the fulfilment of the provisions of laws and regulations to ensure the safety and security of shipping.[8] The Harbourmaster can only arrest a ship if it has received a written order from the court.[9]

The arrest of a ship based on such written order , may be carried out on the grounds that: (i) the ship concerned is related to a criminal case; or (ii) the ship concerned is related to a civil case.[10] In the latter, the order of arrest in the form of a maritime claim is made without undergoing a lawsuit process.[11] “Such maritime claim may arise due to a number of reasons, including:[12] (i) loss or damage caused by the operation of the vessel; (ii) loss of life or serious injury occurring either on land or in waters or sea resulting from the operation of the vessel; and (iii) damage to the environment, its ships or cargo as a result of salvage operations or salvage agreements.

According to Article 223 paragraph (2) of the Shipping Law, the procedure for the arrest of ships will be further regulated in the Ministerial Regulation.[13] However, to date, such ministerial regulation has not been established.

Another important aspect that will hopefully be regulated is the international practice of issuing letters of undertaking and LOIs for the release of vessels. This routinely standard practice in other jurisdictions must be regulated as the release of vessels under arrest is just as important as the arrest and detention of ships. Incomplete regulations may result in lengthy detentions if the Court fails to react quickly after the arrest of the vessel.

• Draft Ministerial Regulation on Procedures for Ship Arrest at Ports

In an attempt to regulate the arrest of ships, the Draft of Minister of Transportation Regulation on Procedures for Ship Arrest at Ports, based on the result of public hearing at Jogjakarta on 1 October 2020 (“Draft Ministerial Regulation”) has been established. Albeit having a similar underlying notion, contrary to the Shipping Law, the Ministerial Regulation expressly provides a specific definition of Ship Arrest, namely, an action taken by the Harbourmaster to restrict the movement of ships leaving the Port, which is related to criminal cases or civil cases based on written orders from the Court.[14]

The Draft Ministerial Regulation provides a more expansive and detailed elaboration on the technicalities of ship arrest. One of its novel features is the provision regarding the ship arrest procedures related to criminal cases. Such procedure is carried out through the confiscation of ships for evidentiary purposes in investigation, prosecution and trial in accordance with the provisions of laws and regulations.[15] Such confiscation shall be carried out by the Investigator based on a stipulation of the Court.[16] Additionally, the Draft Ministerial Regulation also enables the borrow-use of confiscated ships by the Shipowner or the authorized party.[17]

Similar to the Shipping Law, the Draft Ministerial Regulation enables ship arrest in civil cases in the form of maritime claim without filing a lawsuit. However, the latter differs in that it explicitly referred to the 1999 Arrest Convention. According to Article 17 paragraph (1) of the Draft Ministerial Regulation, such ship arrest can be conducted based on one or more maritime claims under the 1999 International Convention on Arrest of Ships or the provisions of the laws and regulations.[18] In principle, the claims listed down on the elucidation of Article 223 paragraph (1) of the Shipping Law, are similar to those listed down in Article 17 paragraph (2) of the Draft Ministerial Regulation.[19] Additionally, ship arrest may be carried out outside the jurisdiction of Indonesia at ports of signatory countries to the 1999 Arrest Convention.[20] Provisions regarding the classification of ships that can be arrested and the scope of jurisdiction for such arrest were not provided in the Shipping Law.

Moreover, another notable provision included in the Draft Ministerial Regulation, distinct to the Shipping Law, concerns the enforcement of arbitral awards in the implementation of ship arrest.  Under the Draft Ministerial Regulation, ship arrest can be conducted based on: (i) national arbitration award/national sharia arbitration; or (ii) international arbitration award/international sharia arbitration.[21] In both cases, ship arrest is carried out by the Harbourmaster. However, in the former, the arrest is conducted after the receipt of written notification of the Court’s stipulation, namely the execution order for the enforcement of the national arbitration award / national sharia arbitration.[22] Whereas in the latter, it is carried out after the receipt of written notification of the execution order of the enforcement of the international arbitration / international sharia arbitration award, based on the Judgement of the Chairperson of the Central Jakarta District Court / Central Jakarta Religious Court.[23] It will be interesting to see how these regulations will be put in practice. Given the current timelines and difficulties in registering arbitral awards in Indonesia in the first place, it will be interesting to see what a Harbour master can do when a Master decides to leave port while the Plaintiff is waiting to register the Arbitral award in Court.

• The Way Forward

However, having considered that the Draft Ministerial Regulation remains yet to be finalized and issued, its effectiveness can only be assessed based on its implementation, which has yet to be monitored.

Conclusion

Until now, there has been no Ministerial Regulation that specifically regulates procedures for the arrest of ships. However, the government through the Ministry of Transportation has drafted a Regulation of the Minister of Transportation on Procedures for Ship Arrest at Ports. The draft Ministerial Regulation is a regulation that fills an important void in  Shipping Law in Indonesia. Currently, ship arrest procedures are only regulated under the Shipping Law. According to the author, ratification of the draft Ministerial Regulation is needed as an effort to provide legal certainty and clear procedures for  ship detention and arrest in Indonesia.

 

[1] Setyawati Fitrianggraeni holds the position of Managing Partner at Anggraeni and Partners in Indonesia. She also serves as an Assistant Professor at the Faculty of Law, University of Indonesia, and is currently pursuing a PhD at the World Maritime University in Malmo, Sweden. Additionally, Melvin Julian is a Middle Associate at Anggraeni and Partners, and Irvena Ayunya Dewanto is a Junior Associate at Anggraeni and Partners. The writers express their gratitude to Dr. Hary Elias for generously dedicating his time to provide valuable feedback on their article.

[2]             1999 International Convention on Arrest of Ships, Article 1 Number 2.

[3]                 Immanuel A. Indrawan, ‘Ship Arrest in Indonesia and Cross-Border Maritime Dispute’ (2017) 14 (4) Indonesian Journal of International Law < https://scholarhub.ui.ac.id/ijil/vol14/iss4/2 > accessed 5 February 2024.

[4]             Anna Merika, Xakousti-Afroditi Merika, Theodore Syripoulos, ‘Global Port Detentions: Impact on Financial Performance in the Maritime Sector’ The American College of Greece Working Paper Series <http://acg150.acg.edu/working-paper-series/> accessed 5 February 2024.

[5]             Jelena Nikčević Grdinić, Gordana Nikčević, ‘Arrest of Ships – The International Conventions on Arrest of Ships’ (2012) 1 (2) Transactions on Maritime Science <https://hrcak.srce.hr/89214> accessed 5 February 2024.

[6]                 Indrawan, ‘Ship Arrest in Indonesia’ (n 4)

[7]             Shipping Law, Elucidation of Article 223 par. (1).

[8]                 Ibid, Article 1 number 56.

[9]                 Ibid, Article 222 par. (1).

[10]               Ibid, Article 222 par. (2).

[11]               Ibid, Article 223 par. (1).

[12]               Ibid, Elucidation of Article 223 par. (1), “Maritime claim pursuant to the provisions regarding the arrest of ships may arise due to the following reasons:

1. loss or damage caused by the operation of the vessel;
2. loss of life or serious injury occurring either on land or in waters or sea resulting from the operation of the vessel;
3. damage to the environment, its ships or cargo as a result of salvage operations or salvage agreements;
4. loss of life or serious injury occurring either on land or in waters or sea resulting from the operation of the vessel;
5. damage to the environment, its ships or cargo as a result of salvage operations or salvage agreements;
6. damage or threat of damage to the environment, coastline or other interests caused by a ship, including costs necessary to take steps to prevent damage to the environment, its ship, or its cargo, as well as for environmental recovery as a result of damage arising;
7. costs or expenses associated with lifting, moving, repairing, or to the vessel, including salvage costs for the vessel and crew;
8. the cost of using or operating or leasing the vessel as stipulated in the charter party agreement or otherwise;
9. the cost of carrying goods or passengers on board, as stipulated in the charter agreement or otherwise;
10. loss or damage to goods including crates or suitcases transported on board;
11. loss and damage to ships and goods due to the occurrence of accidents at sea (general average);
12. towage fee;
13. pilotage fee;
14. the cost of goods, equipment, ship needs, fuel oil or bunkers, ship equipment including containers provided for the service and needs of ships for the operation, management, rescue or maintenance of ships;
15. the cost of building, rebuilding or reconditioning, repairing, altering or equipping the needs of the vessel;
16. port, canal, shipyard, port, shipping channel, and/or other levy fees;
17. salaries and others owed to the Skipper, officers and crew and othersemployed on board includingexpenses for repatriation, social insurance for their benefit;
18. financing or disbursements issued for the benefit of the ship in the name of the shipowner;
19. insurance premiums (including “mutual insurance calls”) payableby the shipowner or charterer without crew orbare charterer;
20. commissions, fees, intermediaries or brokers or agencies payablein relation to the vessel on behalf of the shipowner without demise charterer;
21. the cost of the dispute with respect to the ownership status of the vessel;
22. the cost of disputes that occur between co-owners in relation to the operation and income or mining productsof the ship;
23. the cost of a ship’s lien or mortgage or other encumbranceof the same nature upon the vessel; and
24. costs of disputes arising from the ship sale agreement”.

[13]               Ibid, Article 233 par. (2).

[14]               Draft Regulation of the Minister of Transportation on Procedures for Ship Arrest, Article 1 par. (1).

[15]               Ibid, Article 5 par. (1).

[16]               Ibid, Article 5 par. (2).

[17]               Ibid, Article 7 par. (1).

[18]               Ibid, Article 17 par. (1).

[19]               Ibid, Article 18 par. (1).

[20]               Ibid, Article 18 par. (2).

[21]               Ibid, Article 22 par. (1).

[22]               Ibid, Article 22 par. (2).

[23]               Ibid, Article 22 par. (3).

 

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