Ship auctioned in Jamaica rearrested in Malta
In a case said to be a first for international shipping, a Maltese-registered ship sold by judicial auction in Jamaica last year has been rearrested on the basis that the Jamaican courts failed to give sufficient weight to the mortgage on the vessel held by an Italian firm.
Jebmed SRL was ranked first among creditors of the 22,988-tonne bulk carrier Bright Star – which, at the time, was named Trading Fabrizia – by virtue of a mortgage registered in Malta, where the ship was also registered.
The ship had sailed into Jamaican waters at the end of October 2016 and was held on behalf of Jebmed, which was owed a debt of almost US$700,000 by Capitalease, the owner of the vessel.
After hearings in Kingston, the Supreme Court ruled that Jamaica’s admiralty bailiff, Augustus Sherriah, should appraise and sell the ship if Capitalease failed to provide alternative security of just over US$1.9 million to satisfy Jebmed and three other parties to a claim against it. The other parties had made claims for fuel supplied to the ship, wages due to the crew, maintenance and other incidentals.
The winning bidder at the auction held in January 2018, Bluefin Marine of Athens, Greece, paid US$10.3 million for the Trading Fabrizia, which was subsequently reregistered in Liberia under the new name, Bright Star.
Jebmed, whose debt was still unpaid, filed a request with the Maltese authorities for the arrest of the ship. Bright Star was again taken into custody in June 2018 while bunkering in Maltese territorial waters, on the basis that the sale to the Greek company could not be recognised “as free and unencumbered”, given that the Jamaican court had failed to take Jebmed’s mortgage into consideration.
Reports out of Malta said the ship’s lawyer contested the arrest arguing that if Jebmed wanted to collect on the debt, they should look to the Jamaican court, which had reserved US$3 million for the mortgage holder to submit a claim.
However, the Financial Gleaner understands that in order to obtain that money, Jebmed is required to undertake fresh legal action in Jamaica.
Malta’s First Hall of the Civil Court, which deals with commercial matters, initially ruled against Jebmed’s request, but that decision was overturned by Malta’s Superior Court of Appeal, which ruled that the arrest of the vessel was valid, as Jamaica had not recognised the effects of the mortgage on the ship and the rights of the creditors.
Jamaican attorney Vincent Chen, who along with attorney Makene Brown represented Jebmed in the legal action before the Jamaican courts, said he believed “the Court of Appeal in Malta was exactly right”.
Chen said the case was causing consternation in the international admiralty world “because it seems that what happened has never happened before”, with reference to the circumstances surrounding the auction in Jamaica. “The admiralty court has proceeded with the sale of a vessel when the mortgagee at the port of registry is asking for possession of the vessel,” he said.
Chen had tried to have the ship released into Jebmed’s possession so that the company could take it to dry dock in Malta and sort out the relevant certificates, which had expired. However, the Jamaican court rejected that application.
“It is my view that the Jamaican court should not have proceeded with the sale of the vessel without permitting the mortgagee to take possession, at which time, if the mortgagee did not bail the ship the sale would then be binding and the sale would be valid,” he said. “The problem we now have would not have arisen.”