Vessel Arrests, Attachments and Seizures

Russia’s unprovoked attack on Ukraine has opened yet another realm of the maritime world to public view — that of vessel seizures. To date, Western governments have seized more than a dozen Russian oligarch mega-yachts, more like small passenger ships really. In the United States, such seizures flow from civil-forfeiture-enforcement actions initiated against persons or entities linked to criminal activity. These actions are in addition to sanctions imposed by the U.S. Treasury’s Office of Foreign Assets Control (OFAC), which have the effect of directing financial institutions and corporations not to engage in certain commercial activities with persons or entities on the Specially Designated Nationals and Blocked Persons (SDN) List. In pursuing civil forfeiture, the Government must first find the assets, which is easier said than done because ownership is often hidden through myriad and complex corporate structures. In Russia’s case, the Administration created a KleptoCapture task force for the purpose of piercing these corporate veils to identify property targets. Pursuing a civil-forfeiture action requires the Government to file a complaint in federal court, obtain a seizure order, seize the property and prove by a preponderance of the evidence that a crime has been committed and a substantial connection exists between the property seized and the crime (for example, that the property was used in the commission of the crime itself, or was obtained with proceeds from the criminal act).

Yet, civil-forfeiture proceedings are only the tip of the iceberg when it comes to seizing vessels.  In the United States, vessels hold a unique status under maritime law–each possesses its own persona that subjects it to potential arrest even in the absence of jurisdiction over its owners.  Maritime law recognizes that maritime liens arise against a vessel for breach of a maritime contract or the commission of a maritime tort.  For example, if a tanker spills oil into U.S. navigable waters, adversely affected parties can arrest it in rem under Admiralty Supplemental Rule C and seek the recovery of pollution response costs and natural resource damages. Other maritime torts that give rise to a maritime lien include collisions, personal injuries and allusions (that is, the striking of a stationary object like a dock, pier or bridge piling). The Commercial Instruments and Maritime Liens Act (CIMLA) also provides that a maritime lien can arise for the failure to pay for necessaries provided to the vessel on the order of the owner or a person authorized by the owner. Necessaries are goods and services that are essential to the vessel’s operation like bunker fuel for propulsion, food and water (provisions) for the crew, and hull, engine and equipment repair services. Whether the necessaries are provided on the order of the owner, or a person authorized by the owner was the subject of protracted litigation in the OW Bunker series of cases where American physical suppliers were often denied a maritime lien because they did not contract directly with the owner or charterer, even though Congress enacted CIMLA to protect American materialmen.