Malta’s Superior Court of Appeal has defended the arrest of a bulker previously sold at auction sold in Jamaica by the ship’s mortgagee.
The 22,988-dwt Bright Star (built 2011, ex Trading Fabrizia) was sold in Jamaica in January 2018 in what was the country’s first ever such maritime auction.
TradeWinds reported at the time that it had been sold to Bluefin Marine of Greece for $10.3m in the face of strong buying interest.
However, the ship was arrested on 19 June 2018 while bunkering in Maltese territorial waters at the request of Italy-based mortgagee Jebmed SRL.
Jebmed argued that the judicial sale held in Jamaica failed to “acknowledge the effects of a Maltese registered mortgage” on the vessel.
Lawyers representing Bright Star argued that once the vessel was sold to Bluefin Marine Limited such sale was made “free and unencumbered”.
Therefore, they argued that Jebmed SRL had no right to arrest the vessel since the mortgagees claim would pass on to the proceeds of the sale.
However, Malta’s Superior Courts of Appeal found in favour of Jebmed’s position concluding that it was “not sufficient” for the courts in Jamaica to have “considered the Maltese registered mortgage solely as proof of Jebmed’s credit, so much so that the courts in Jamaica reserved the sum of $3m for Jebmed to submit its claim”.
It also held that the Jamaican courts had to “apply Maltese law relative to the mortgage in its entirety” and that thereby “Jebmed should have been the first creditors to have been paid from the proceeds of the vessel’s sale”.
It further concluded that Malta “cannot acknowledge the sale in Jamaica as having been made as free and unencumbered” and this in line with the principle of reciprocity.
This is thought to be the first case where a vessel was arrested following a judicial sale by creditors on the basis of a mortgage registered prior to that judicial sale.
The judgement was described as “groundbreaking” by Maltese-based law firm DF Advocates, which represented Jebmed SRL.
“By means of this judgment, the Maltese courts have delivered a statement within the international scene, that Malta will not accept judicial sales as having the effect of being ‘‘free and unencumbered’’ if the rights of the mortgagee are not fully safeguarded during such judicial sales,” it said.
