This was an appeal by AFG Marine SRL (AGF) against an order of the Court of first instance declaring that it lacked jurisdiction to arrest BECOOL2 Owning Co Ltd's Belize-flagged vessel, on the understanding that the Italian courts were responsible for hearing the claim. AGF's claim against BECOOL2 Owning Co Ltd was for breach of a contract for maintenance and repair services provided by AFG. The work was contracted for and executed in the town of Viareggio, Italy. The Court of first instance therefore held that, as the obligation that was the object of the claim was neither contracted nor fulfilled in Spain, the Spanish courts lacked jurisdiction to hear the case.

AGF appealed, arguing that Spain was a party to the Arrest Convention 1999, which conferred competence on the Spanish courts.

Held: Appeal upheld. The decision of the Court of first instance is revoked.

The Law on Maritime Navigation (the LNM) 14/2014, of July 24, in art 470.1 provides:

The injunctive measure of arrest of ships, both Spanish as well as foreign, shall be governed by the International Convention on the Arrest of Ships, done at Geneva on 12th March 1999, by the terms set forth in this Act and, under supplementary terms, by those established in Act 1/2000, dated 7th January, on Civil Procedure. Such a measure shall necessarily involve immobilisation of the ship in the port where it is located.

Regarding the jurisdiction to hear the merits of the case, art 7 of the Arrest Convention 1999 provides as follows:

Jurisdiction on the merits of the case

1. The Courts of the State in which an arrest has been effected or security provided to obtain the release of the ship shall have jurisdiction to determine the case upon its merits, unless the parties validly agree or have validly agreed to submit the dispute to a Court of another State which accepts jurisdiction, or to arbitration.

2. Notwithstanding the provisions of paragraph 1 of this article, the Courts of the State in which an arrest has been effected, or security provided to obtain the release of the ship, may refuse to exercise that jurisdiction where that refusal is permitted by the law of that State and a Court of another State accepts jurisdiction. [Court's emphasis.]

Article 7.1 therefore declares that the jurisdiction to hear the merits of the dispute belongs to the courts where the arrest was made (Spain in this case), or a guarantee was provided (also Spain). The exception would be when the parties agree, or have agreed, to submit the dispute to a court of another State that declares itself competent, or to arbitration, which is not the case here.

The Court below states that 'the lack of jurisdiction of the Spanish Courts to hear AFG's claim is unquestionable', but does not specify which court or arbitral tribunal would be responsible for hearing the claim for which this ship was arrested. The law has clearly differentiated between jurisdiction on the merits and the competent jurisdiction to decline the ship arrest, not conditioning the second to the first. But for this different jurisdiction to operate, the maritime claim for which the arrest is requested must be submitted to a foreign court or arbitration proceedings (art 474 LNM). In this case, no such thing has happened, so it is appropriate to revoke the order of the Court below.

It is worth remembering that art 479 LMN provides as follows:

In cases in which according to the terms set forth in Article 7 of the International Convention on Arrest of Ships, the Spanish Courts are not competent to hear the substantive related to a ship arrested in Spain, the Court that performed the arrest shall, of its own motion or at the request of the party, set a term of no less than thirty days, nor exceeding ninety, for the holder of the maritime credit to evidence commencement of proceedings before the competent Court or arbitration tribunal. If the proceedings are not initiated within the term set, on request by the party, the Court shall order release of the ship arrested or cancellation of the guarantee provided.

The order that gave rise to the discussion on jurisdiction that concerns the Court in this appeal was issued on 27 August 2018, and refers to a term of 20 (business) days according to the Law on Civil Procedure. After notification of the same, the required security was provided. The lawsuit was filed on 28 September 2018. This Court does not know whether the guarantee has been cancelled.

In accordance with the foregoing, it is appropriate to uphold the appeal and revoke the appealed decision.