GNMTC fighting ‘fake loan’ arrest case in Bulgaria

General National Maritime Transport Co (GNMTC) is fighting for the release of an aframax tanker arrested in Bulgaria last year after what it describes as a fake mortgage created to secure the ship’s detention.

Case developments:

  1. On 20.11.2017 Marine Administration Burgas (MA) issued an Order for arrest of motor tanker BADR, flying Libyan flag, IMO № 9356426 (the ship/the vessel). The Order is pursuant to Burgas Appeal Court Ruling, issued in favour of “Bulgargeomin Ltd.” Partnership.
  2. With a Ruling of 29.01.2018 the arrest was cancelled by the Supreme Court of Bulgaria and the unconditional release of the ship was prescribed. The said Ruling had to be fulfilled by the MA, however it delayed cancelling of its arrest order for more than 24 hours and when it was cancelled on 31.01.2018, a new Order was issued for detaining of the ship. The detaining Order was issued pursuant to a request of an enforcement officer from Burgas who presented an Enforcement Order issued by Burgas courts. The MA detaining Order refers to a provision of the Bulgarian Maritime Code, allowing the Harbour Master to detain a vessel in case of a breach of the law. In fact, no breach of the ship is stated, but an eventual breach is foreseen, if the ship sails before the enforcement officer steps are performed. Thus the vessel is arrested in-fact in order not to breach the law in future!?
  3. With a Ruling of 6.02.2018 the Regional Court in Burgas stayed the enforcement of “Bulgargeomin” against the ship. Thus the planned for 8.02.2018 steps of the enforcement officer, were stayed and the Owners asked on 7.02.2018 for the release of the ship again. MA stayed silent and did not release the vessel.
  4. On 8.02.2018 the enforcement officer, accompanied by Bulgarian Border Police and Harbour Master officials, boarded the ship and performed an inspection/evaluation. (Such procedure usually precedes a sale of an asset that is subject to enforcement procedure.)
  5. Regarding the stay of the enforcement imposed by the court, no further steps of the enforcement officer are scheduled, however, the MA continues detaining of the vessel “until the court rulings on the case are appealed and become final”, as the MA replied to the release application from the Owners of 9.02.2018.
  6. The continuing detaining of the ship is against the Bulgarian legislation and it represents an abuse of MA powers, apparently serving the interests of the claimant “Bulgargeomin”. The daily losses of the ship are USD 15 000 and since the date of the initial arrest these losses exceed USD 1 million.
  7. The case comprises a scandal, since the claimants are a contractual partnership, which is not a legal entity according to the Bulgarian law. Such partnership cannot be a legitimate party to any legal proceedings. It is one of the fundamental reasons, stated by the Supreme Court when it cancelled the arrest. Irrespectively of the above, the said non corporate (and non financially liable) partnership continues to undertake steps against the vessel and these steps are supported by the MA.
  8. The courts in Bulgaria, addressed by the claimants, were misled to believe that there was a receivable of USD 9 230 000, allegedly deriving out of a ship mortgage “signed” on 14.09.2017 in Athens between the claimants and the Owners – the Maltese company “Libyan Navigator”. In fact no such mortgage had been created and the courts in Bulgaria were presented with an official notarized statement of the Greek Notary, that fully explained that she never saw neither of the parties and that no such mortgage has been notarized by her. The Greek Notary filed also a complaint to the Greek Prosecutors’ Office for the abuse with her name and seal.
  9. The courts in Bulgaria were also presented with a statement from the Tripoli Port Administration where it was confirmed that no mortgage has been registered over the vessel.
  10. The above facts had reasoned the Supreme Court to cancel the arrest, as well as the Burgas Regional Court to stay the enforcement proceedings and to oblige the claimants to file their eventual claim on merits within the rules of an ordinary bilateral litigation (as opposed to the unilateral arrest and enforcement procedures undertaken by the claimants so far), where the validity of the alleged “mortgage” can be properly examined by the court/s. Thus the attempts of the claimants to mislead the courts and to steal the ship with direct unilateral security and enforcement steps were blocked by the courts. However, the completion of these court procedures requires considerable time, as it is related to formal serving of court papers to both parties, expiry of appeal terms etc.
  11. Although the MA is aware of the above facts, it demonstrates amazing passiveness and somehow it is reluctant to release the vessel, thus providing further opportunities to the unilateral attempts of the claimants.
  12. Bulgaria is a signatory of the International Convention on Arrest of Ships 1999 and its internal law allows ship arrests only pursuant to a court order. It also prohibits rearrests for the same maritime claim. At the present case the arrest procedure was undertaken by the claimants and completed by the unconditional and final arrest cancellation by the Supreme Court. Any further detaining of the vessel by MA, reasoned by alleged enforcement officer’s requests and claimants’ informal pressure, represents an illegal arrest, not allowed or administered by any court.

Would the continuing detaining the ship provide further opportunities to the claimants to sell the ship, or produce new “documents”, or to find a high position judge that would validate their claim – it remains to be seen.

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