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Rotterdam-based law firm AKD says a recent decision in the Dutch Court of Appeal substantially extends the jurisdiction of Dutch courts following a ship arrest. In the case of the Hero (HSH Nordbank vs Hero Shipping) the court ruled that the 1952 Arrest Convention applies to all vessels, irrespective of flag and owner. The court also broke new ground by agreeing that a bank did not need to provide security for its claim because it had sufficient financial strength.

Carel van Lynden, a partner with the shipping and offshore team at AKD in Rotterdam, said: "This is a good decision for mortgage banks. This case was for the repayment of a loan, secured by a mortgage. The courts decided that jurisdiction by Dutch courts is created simply by the arrest by the mortgage bank, regardless of the flag and nationality of the owner. It gives banks quick access to the very favourable auction system in The Netherlands."

The applicability of the Arrest Convention and its ability to create jurisdiction varies across different countries. Where it does not automatically create jurisdiction it may offer protection to owners of vessels from or vessels flying flags of nations not contracting to the convention. This decision in The Netherlands lifts that protection.

Van Lynden commentd: "This is also a remarkable decision because for the first time a claimant has not had to provide security in a case involving owners registered in an EU country. The summary judgment sought by the bank against the owners is a provisional measure under European law and until now has only ever been granted if security for the claim was posted by the claimant. In this case the court accepted that the bank was sufficiently financially strong and also sufficiently likely to repay the claim if it later failed so no security was required."