Lifting an arrest order in Turkey and the place of P&I Club Letter of Undertaking in the scope of ship arrest provisions of Turkish Commercial Code

  • Turkish Commercial Code (“TCC”) which came into force on 1 July 2012 brought some specific provisions with regard to ship arrest. Eventhough Turkey is not a party to international conventions on arrest of ships TCC adopted most of the rules of International Convention on the Arrest of Ships 1999, by incorporation. Accordingly the maritime claims for which a ship can be arrested are listed in the code however Turkish Courts are requesting a guarantee from the requesting party in the form of bank letter of guarantee or cash, the amount of which is 10,000 SDR regardless of the claim amount but depending on the characteristics of the case the parties may apply to the Court for reducing or increasing the said amount. In Turkey the ships can be arrested irrespective of her flag and only the ships owned by the debtor, both at the time of the incident and at the time of the request raised by the claimant, can be arrested. Sister ships of the same debtor are included, if any. Once a ship is arrested the debtor has the right to demand the arrest order over his vessel to be lifted by depositing a counter guarantee to the Court, again in the form of bank letter of guarantee or cash, the amount of which shall cover the claim amount together with the interest and expenses. On the other hand TCC gives the parties the right of freely agreeing on the form and amount of the security which shall be submitted while requesting for arrest order to be lifted. At this point the justification of the provision giving the parties the right to freely agreeing on the form of the security gains importance as the legislator points out the importance of the P&I Club Letter of Undertaking (“LoU”) in practice. By means of the LoU, which is a written promise, the P&I Club accepts to pay a total sum decided by the competent court or agreed by the parties in the scope of a settlement. The difference in here is that the counter security in the form of a P&I Club LoU shall be submitted directly to the claimant but not to the court file as it is in the other security forms. Pursuant to trust relationship the claimant may accept the LoU issued by the P&I Club. Upon accepting such a security the claimant shall apply to the Court giving the arrest order and request for the said arrest order to be lifted. Upon this provision it can easily be said that the spirit of law protects the interest of the parties in the flow of current commercial life, in respect of lifting an arrest order over a vessel, by giving the parties the right to decide on issuance and acceptance of a P&I Club LoU, which is a cost and time saving form of security as they have published standard forms that can be easily understood and do not require negotiations over their wording. Please do not hesitate to contact us should any query arises on the matter.