October 25, 2018
Toda & Co.

Feedback from Japanese Maritime Law Association(CMI – IWG on Wrongful Arrest of Ships)
1.

The legal systems and procedures in respect of arrest and release of thevessel in Japan are described in our answers to the questionnaire dated
December 4, 2015 to CMI’s questionnaire dated May 27, 2015. Japan is a
Civil law state and therefore, its system is basically similar to the system of
the other Civil law states such as Germany and France.

2.

We have no legal conception of action “in rem”. A ship arrest must becommenced by an action “in personam” in any case. Therefore, it isimportant to name the correct debtor whose liabilities are secured by thevessel when you arrest the ship.

3.

We have three types of the ship arrest. The first is an arrest by virtue ofa maritime lien (or a registered mortgage). The second is an arrest or, moreaccurately speaking, a provisional attachment of the vessel to obtain asecurity in preparation for enforcing the final judgment in ordinary civilproceedings. The third is an arrest of the ship for her enforced sale based
upon the ordinary judgment. We may probably exclude this third type ofarrest in considering the issue of wrongful arrest, since in this case, therewould be no possibility of the arrest being revoked or cancelled for thereason of no proof of merits.

4.

We think that the issue of wrongful arrest may arise in case where thearrest of the ship is revoked or cancelled or withdrawn on the basis that themerits or causes of action for arrest are found not to be proved or
established at a later stage. We may say that the arrest of the vessel at thisstage is a “defective arrest”. A “defective arrest” means the arrest which
was repealed or cancelled at a later stage because causes or merits were
not found to be proved or established.

5.

In these circumstances we can think about the issue of wrongful arreston that basis. The shipowner whose ship was arrested can claim losses
sustained by the shipowner arising from such “defective arrest”. At thisstage, Common law states require bad faith or gross negligence. Some
Civil law states provide for strict liability, that is, if the arrest is found to be a“defective arrest”, then that should be deemed to be a wrongful arrest andthe arresting party has an absolute responsibility to compensate losses
sustained by the shipowner.

6.

The gap or difference between the two systems seem to be so great as
not to be overcome or filled easily. In this respect, we would suggest going
between the two systems. Australian law shows a good example, whereby
if an arrest is made “unreasonably or without a good cause”, then thearresting party shall be liable in damages to the shipowner.
17.

In Japan, liability for damages arising from the wrongful arrest has beenreviewed and considered as a result of the negligence. Negligence should
be judged when the negligence is committed. Therefore, even if the arrestis repealed or cancelled by lack of proof of merits, that is, the arrest isregarded as a “defective arrest” and that would not be automatically taken to
be a “wrongful arrest”. If an arrest was made “reasonably or with goodcauses” based upon the circumstances existing at the time of the arrest of
the ship, the arresting party would not be found to be responsible for anylosses for a reason of wrongful arrest. Any change of the circumstances
which happened after the arrest of the ship cannot affect the position of thearresting party in respect of its liability for wrongful arrest.

8.

In view of the above, our feedback is as follows:

8-1.

Definition of the Test
We would suggest separation of the definition of “defective arrest”
and “wrongful arrest” as mentioned above.

8-2.

Counter-Security Provision
We would suggest that in case of arrest by virtue of a maritime lien
which is usually given where there are claims of personal injury of crew,salvage, GA contribution, collision or allision claims or supply claims insome countries, no counter-security is required. However, in case of thearrest of a sister ship or to protect non-lien claims, provision ofcounter-security should be at the discretion of the court where the arrestis made.

8-3.

Type and Extent of Damages
We would suggest that damages for claims for the reason ofwrongful arrest should be limited to the detention loss and release bondrelated costs. No claims for economic loss should be allowed unless thearresting party is found to have arrested the ship with bad faith or grossnegligence.

8-4.

Method of Unification
We would suggest that unification of the wrongful arrest system beaccomplished by a soft law such as a guideline or model provision where
there are big differences between the civil law states and common lawstates.
End2