Gibraltarian lawyers warn ship arrest flurry is soon to hit

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Major shipping lawyers have warned that the number of ship arrests this year will increase dramatically as significant concern over lack of finance spreads across the industry, writes Amy Kilpin from Gibraltar.

Unpaid mortgages and fees, coupled with a likely drop in safety standards and regulations are set to pave a future arrest-frenzy for ship owners and managers, as the economic meltdown blazes with intensity.

Prominent Gibraltarian law firm Hassans has spoken out against the economic downturn with eminent concern, as finance gets tough, ships are being laid up and companies are fast going under.

John Restano, Partner in the Litigation Department, said: “Things have changed dramatically recently, and we are expecting a substantial increase in the number of ship arrests this year, probably starting in the second quarter of 2009.

“Bankers are now poised to start enforcing it, and we’re already starting to see a large number of enquiries flooding in,” he added, indicating that Gibraltar’s strategic positioning and notorious ship arrest jurisdiction is only set to enforce the rise in work that is expected over the coming months.

Christian Hernandez, Partner at ISOLAS law firm in Gibraltar, added: “We’ve already started to see some major financial changes in the shipping industry. We’ve been quite busy the last couple of months with ship arrest.”

“Freight rates have dropped and there’s not so much work going around. People have spread themselves very thinly and now they’re really struggling – they’ve stopped paying suppliers and suppliers know what’s happening and so are arresting quicker than they otherwise would,” he revealed.

“Banks know that Gibraltar is a very quick, cost-effective jurisdiction and they will literally bring the ships to Gibraltar to carry out arrests here, so we’re expecting a great number of ship arrests taking place here in the near future – owners just don’t have money at the moment and so action has to be taken,” Mr Hernandez added.

As newbuild cancellations, unpaid crew and supplies, and failure to pay mortages are rife across the industry, lawyers are bracing themselves for a heavy influx in ship arrests in the near future, with major arresting hot spots such as Gibraltar expecting some hefty financial heave-ho between the banks and owners.