Dr. Mohamed Karbal is admitted to practice in Libya, Washington, D.C., and New York. He is the founder of Karbal & Co, a full-service international law firm serving businesses and government agencies.
Despite current security challenges, the Libyan government, through its efforts to rebuild New Libya, has positioned the nation at the forefront of a widely anticipated economic boom across all sectors.
Before the 2011 revolution, Libya’s exports reached $30 billion USD, and its imports exceeded $6 billion USD. With new liberal economic views and a willingness to compensate for the 42 years of stagnation under the Gaddafi regime, Libya’s economic development is projected to be among the fastest-growing economies in the world.
Libya is largely dependent on imports, primarily industrial and food commodities. Libya’s biggest trading partner is the European Union, with Italy leading at 30% of Libyan imports. The Libya/EU trade link across the Mediterranean is undisputedly significant, as Libya’s seaports are strengthening their connections to southern European seaports. This will continue to play an increasingly important role. Libyan foreign trade is carried out through seven major commercial seaports, seven petroleum seaports, and one seaport for the steel industry. This significant number will be the basis of the trade link across the Mediterranean once security and stability dominate the Libyan political scene.
The seaports are reasonably equipped; however, in the near future, the Libyan government will invest in improving the efficiency and productivity of its seaports. The government is currently considering involving foreign investors to develop and operate the Libyan seaports through a public-private partnership (PPP). These initiatives are directly linked to the broader regulatory framework governing foreign investment in Libya.
As the efficiency of these seaports improves, the frequency of ships berthing at Libyan ports is expected to increase. It is a commercial fact that most ships calling at Libyan ports are neither registered in Libya nor owned by Libyan entities. With the expected rise in tonnage and container volume handled by Libyan seaports, legal disputes between foreign shipowners and shippers are expected to increase before the Libyan courts. These disputes will primarily concern the arrest of ships in Libyan seaports. Parties involved in shipping disputes will use the Libyan courts as a venue to force a settlement without resorting to litigation.
Libya is not a signatory to the International Convention on the Arrest of Seagoing Ships of 1952. However, a ship in Libyan territorial waters could be arrested as the property of a debtor.
In general, Libyan law grants Libyan courts original jurisdiction over cases brought against non-Libyans. Article 3(2) of the Civil and Commercial Procedures Law authorizes Libyan courts to hear and decide cases involving property located in Libya. Because international and Libyan law consider the waters surrounding Libya part of Libya's territory, a vessel located in Libya's territorial waters is subject to the original jurisdiction of Libyan courts.
Another applicable rule for arresting a ship is to commence proceedings to secure a claim. Under Article 516 (1) of the Civil and Commercial Procedures Law , a claim may be filed in a Libyan court against property located in Libya, even when the owner is a non-resident of Libya. In the context of ship arrest, a ship located within Libya's territorial waters is subject to arrest despite the owner's non-residency.
Here, we must draw a distinction between an arrest order issued in the enforcement of priority rights conferred by a maritime lien and a prejudgment attachment, or prejudgment writ of attachment, as it is known in the United States of America. Under Libyan law, prejudgment attachment is a provisional remedy to preserve the status quo until the court issues a final judgment. It is primarily the temporary seizure of the ship.
The plaintiff (creditor) must commence the action in the court that has jurisdiction over the ship. The plaintiff must submit evidence of the debt owed by the debtor, in this case, the ship owner. The court orders the seizure or attachment of the ship, as specifically described in the writ, by issuing a notice of attachment, which is served on the ship’s master to commence the attachment. The ship is seized and maintained in the custody of a designated official (guardian). The guardian is usually appointed by the court or the ship’s master or a crew member to ensure that the ship remains in custody until a final judgment is issued.
Usually, a good legal team will be able to resolve the issue of a ship’s seizure in Libya by arranging the provision of a guarantee and/or letters of undertaking to the creditor to release the ship. As is usually the case, further details such as litigation or the court-ordered sale of the ship are unnecessary for this discussion and are best left to a debtor’s lawyer, if the need arises.
This article was first published in Libya Business News in August 2014 and republished in the January 2015 issue of Marasi News.
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