Click here to access to our new YACHT MANAGEMENT SERVICE
In Spain the only way to get the non-voluntary payment of a debt is by enforce the judgments or arbitral awards, but even having obtained this support, the material enforcement can be difficult or impossible if the debtor doesn't have enough assets.
In this sense, it is very important to use all the mechanisms that the Spanish legal system provide to manage debts reclaim.
In this paper we analyzed different paths to obtain payment of credits in Spain in relation with the yachting industry.
1. Preferential credits
There are certain types of debts that the creditors have priority to be repaid. These debts are in many cases connected to the good where they come from. In the Spanish legal system, this priority is established basically in the Civil Code. However, it is very important to take attention to some special laws that might affect this general rules.
With regards yachts it is especially important the rules established in the Civil Code, which gives priority to be paid to those who put labour or materials in a yacht refit. In this sense the Civil Code guarantees the repayment of those works up to the value of the yacht. In other words, independently of the owner, the boat is herself a collateral for the works made on her.
It is very important to note that in the Spanish law, the term to claim for debts for yachts refits or construction, expire in one year.
In other way, a International rule that provides a privilege in terms of getting the payment of a debt connected to a boat is the International Convention on Maritime Liens and Mortgages from 1993. This regulation is applied independently of the boat's pavilion.
According to this convention crew salaries, rescue rewards or harbour fees have priority to be paid. These debts have priority even on any other debt guaranteed by the internal legal system (i.e. Spanish Civil Code).
The right to claim these debts appealing the Convention also expires in one year time.
2. Yacht arrest and lien in Spain.
The yacht arrest intends to ensure the future payment of a debt by guarantying the availability of a debtor's asset.
It can be applied previously or at the same time that a judicial claim is submitted, in order to get recognized the debt.
When the arrest of a boat located in Spain is applied, the regulation applicable is different depending on whether all the parts are Spanish or someone of them is foreigner.
If all the parts involved are Spanish i.e, debtor, creditor and yacht, the procedure to apply is the one established by the "Ley de Enjuiciamiento Civil", hereafter LEC. The LEC establishes the possibility that as a precautionary measure and before starting a judicial claim, the arrest of a yacht (or other goods) can be claimed.
As long as the judge considers that the debt supporting the claim, in appearance (fumus boni iuris), is real, and that if no action is taken (periculum in mora) the debt payment might be impossible in the future, the arrest is arranged.
In he LEC, together with the arrest application, the claimant must provide a guaranty to compensate the debtor in case the debt claimed wouldn't be recognized and the yacht retention might have involved damage for the defendant.
The principal complaint must be submitted no later than 20 days after the arrest claim. Debtor can opposite to the precautionary measure by submitting a formal written answer in the courts stating the reasons why he thinks that attachment shouldn't be applied. Court fees will be payable by the loser part.
When one of the parts is a foreigner, it is applicable the International Convention on the Arrest of Ship 1999.
In the Convention, the yacht arrest application must be submitted in the competent court of the place where the boat is located. The application must assert that the object of the claim is a maritime credit. Are maritime credits: crew salaries, repairs and supplies, purchase contract, port rights, construction debts and salvage operations.
It is not necessary to provide a guaranty to compensate, if is the case, debtor damage, unless the judge considers it necessary.
The principal action must be submitted during the period established by the judge. In some cases, the complaint can be resolved in a different court than the one where the arrest application was submitted.
In Spain, in both cases the arrest application must be signed by a lawyer. At any stage the debtor can release the boat by guarantying the debt in the courts.
The payment of the debt is in any case 100% ensured up to the yacht auction price
Finally, in the Spanish law, lien is applicable when the creditor poses the boat origin of the claim. The most typical case is a shipyard with the boat in it facilities. In this case there is no doubt at all about the boat's possession. Port fees could be claimed too. It is important to remark the special situation that happens in Catalonia, whose legal system establishes in some cases that the creditor has the right to sell the boat in order to get the debt payment.
1) The maritime law establishes certain types of rules where creditor has priority to get payment. The right to claim these debts with preference expires in one year time.
2) The boat itself is a guaranty for the liens, even if there is a change of owner.
3) The boat is collateral for debts regarding refits, supplies or works done on her.
4) The creditor has the right to retain the boat as a guarantee for its credit payment.
5) In Spanish law, the right to claim the debts connected with repairs or refits expires in one year time for prescription.
6) Before the judicial claim it is possible to arrest a boat as a guarantee of the debt.
7) In Spain, when there is a foreigner element in the process, it is easier and cheaper to apply and obtain the attachment. There is no guarantee necessity.
8) When all parts are Spanish (creditor, debtor an yacht) to arrest a yacht is necessary to argue "bonus fumus iuris" and "periculum in mora".
8) Being one part not Spanish, the international law allows the development of a process in Spain which makes it easier and cheaper for Spanish companies arrest yachts, than the national law.
This paper aims to inform about the topics developed. In the case of application to real cases we recommend obtaining the relevant advice of NauticaLegal, the Spanish yachting lawyers or others advisors. NauticaLegal declined any responsibility by the use of this information without this support.
Yamandu R. Caorsi
Lawyer at Blas de Lezo Abogados
Yachting tax and legal consultant in Spain