The Special Privilege Granted Under Maltese Law For The Payment Of Outstanding Crew Wages

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In a decision delivered by the First Hall of the Civil Court (the ‘Court') on the 21st of March 2024 in the names of Paul Falzon vs. Il-Bastiment ‘Sky' (IMO No. 8597011)...
Malta Transport
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In a decision delivered by the First Hall of the Civil Court (the 'Court') on the 21st of March 2024 in the names of Paul Falzon vs. Il-Bastiment 'Sky' (IMO No. 8597011), which was not appealed to by the defendant due to the fact that the owner(s) of the vessel m.v. 'Sky' (the "Vessel") were never present throughout the entirety of these proceedings. The plaintiff was acting in his capacity as a representative of the International Transport Workers' Federation (the "ITF") whilst representing the seafarers in these proceedings. The Court was requested to hold the Vessel responsible through in rem proceedings on a multitude of reasons which will be detailed below.

An action in rem is one which refers to a legal action that is directly targeted against a specific piece of property rather than against a person (in personam) – in this case, the Vessel is the property. This action is primarily used in maritime law but can also be relevant in other areas where the property itself is the core subject of the dispute.

Facts of the Case

According to a declaration made by the master of the Vessel, the Vessel along with its crew members left from a port in Yalova, Turkey on the 23rd of July 2023 and arrived in Malta on the 4th of August 2023. Upon its entry into the territorial waters of Malta, the Vessel docked and ended up remaining at berth for the following reasons: the poor state of Vessel given the fact that it was not properly maintained, substandard amenities, engines and features, lack of basic necessities onboard, not enough crew members to operate the Vessel, lack of access to bunkers and unpaid crew wages which were due to the seafarers, all of which were requested by the crew onboard. All of these factors necessitated significant attention and remediation to ensure the Vessel was adequately prepared and equipped to leave Malta's waters and to venture out to the open seas.

The seafarers made concerted efforts to establish contact with the owner(s) of the Vessel over the course of several weeks. Despite persistent and diligent attempts, these efforts were met with no success. This lack of response from the owner(s) was particularly distressing for the seafarers, who found themselves in a precarious position. They were unable to sustain the Vessel on their own due to the lack of necessary resources and support. As a result, they were compelled to seek assistance from third parties to manage the situation.

It became increasingly evident that the owner(s) of the Vessel had completely abdicated from their responsibilities regarding the Vessel's upkeep and welfare. Their blatant disregard for the Vessel's condition and the seafarers' plight made it abundantly clear that they had disassociated themselves entirely from any and all forms of responsibility. The owner(s) exhibited a clear intention to sever all ties and obligations related to the Vessel, thereby leaving the seafarers in an untenable and challenging situation without the support they desperately needed.

An amount exceeding thirty-five thousand US Dollars ($35,000), or roughly over thirty-three thousand Euros (€33,000), was due in unpaid crew wages, covering the period up until the end of November 2023. This sum was owed collectively to all of the seafarers. Despite multiple notices issued by the plaintiff to the defendant Vessel and their respective owner(s), both parties remained in default on the payment of the outstanding wages.

Through the application submitted to the Court, the plaintiff explained how the outstanding debt that was being claimed by the seafarers fell under the scope of Article 742B of the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta). This Article 742B caters for specific scenarios upon the occurrence of which the courts of Malta shall have jurisdiction in rem against ships in a wide variety of maritime claims. The situation in this case is covered by sub-Article 742B(r) which states that Maltese courts shall have jurisdiction with respect to "any claim by the master, officers, or member of the crew, or complement of a ship, for wages and other sums due to them in respect of their employment on the ship including costs of repatriation, and social security contributions payable on their behalf".

The plaintiff also made reference to Article 50 of the Merchant Shipping Act (Chapter 234 of the Laws of Malta) in that the unpaid wages due to the seafarers serving onboard the Vessel classify as a debt which falls under the auspices of this article. Article 50 states that "the debts specified hereunder are secured by a special privilege upon the vessel, as well as any proceeds from any indemnity arising from collisions and other mishaps as well as any insurance proceeds". Specifically, Article 50(h) of the Merchant Shipping Act applies here given that it concerns unpaid wages of crew members and re-iterates verbatim what is mentioned in Article 742B(r) of the Code of Organisation and Civil Procedure.

From a wider perspective, Article 742B is the article within the Code of Organisation and Civil Procedure which is utilised before a claiming party issues a warrant of arrest on a vessel in default. Whereas this case did not involve an arrest, the arresting of a vessel under Maltese Law occurs by means of the issuance by the Court of an arrest warrant on any one of the grounds listed in Article 742B of the Code of Organisation and Civil Procedure, which include, amongst others, claims relating to the possession or ownership of a vessel, claims relating to property damage, claims relating to loss of life and/or personal injury and claims in respect of pollution and collision incidents.

In addition to referencing the aforementioned articles, the plaintiff took the opportunity to elaborate to the Court that the outstanding debts in question were unequivocally certain, liquid, and due. According to the plaintiff's extensive knowledge and thorough understanding of the situation, the Vessel had no plausible or viable defense against the claims being brought against it. To bolster this assertion, the plaintiff emphasized that the proceedings should be expedited under the special summary proceedings as stipulated by Article 167 of the Code of Organisation and Civil Procedure. This request was made on the grounds that the nature of the debt – being certain, liquid, and due – unequivocally met the criteria and requisites laid out under this specific article. The plaintiff underscored that such a procedural approach was both appropriate and necessary given the clear and undisputed nature of the debts owed.

Decision of the Court

When it came for the Court to deliver its judgement, the process was a relatively easy and straightforward one. Whereas the plaintiff presented his arguments before the Court whereby he mentioned the fact that the debt was covered by a special privilege and that in the case at hand, the Court did in fact have the necessary locus standi to decide on this case, the defendant remained in default and was never present for any part of the proceedings to present their counterarguments to the claims raised by the plaintiff.

The Court proceeded to accept the plaintiff's claim requesting special summary proceedings via Article 167 of the Code of Organisation and Civil Procedure, and also accepted the rest of the claims concerning the payment of the unpaid crew wages. Ultimately, the defendant Vessel was ordered to pay thirty-five thousand seven hundred forty-three United States Dollars and sixty cents ($35,743.62) which translate to thirty-three thousand one hundred forty-five Euros and twenty-nine cents (€33,145.29).

Concluding Remarks

Whereas it is not the norm that a defendant is contumacious (in default) throughout in rem proceedings, this case highlights the power behind a claim under Article 50 of the Merchant Shipping Act, which classifies the claim of the plaintiff as a special privilege under Maltese maritime law. It also places the spotlight on the importance of crew wages, and the obligation of the employer to pay them in a timely manner.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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