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SPAIN – DEPOSITS OF GUARANTEES TO SECURE HARBOUR MASTERS’ FINES IN SANCTIONING PROCEEDINGS – CHANGE AFFECTING CASH DEPOSITS AS FROM 1^ST JANUARY 2004

The only types of guarantee acceptable in the event of an incident where a vessel is detained by a Spanish Harbour Master as a preventive measure to guarantee payment of a potential fine are basically cash, cheques, bank guarantees and insurance bonds. Club LOUs are not acceptable as from 1997 as a matter of law.

Procedure for putting up guarantees. Guarantees must be deposited at the General Deposits Office at the Treasury Ministry which is open from 9 a.m. to 2 p.m. A standard deposit document must be filled in and a Spanish tax identification number against which to attribute the funds included. In the past, the identification number of the person or company putting up the guarantee (ship agent, P&I correspondent etc.) was given to the Treasury Department and they therefore appeared in the Deposit Form as the “Guaranteed” party.

The General Directorate of the Merchant Marine in Madrid issued however an Instruction in 2001 which was sent to all Harbour Master offices in Spain (29 First Category offices in total), advising them that in order to release the vessel, the “Guaranteed” box on the form had to contain the party against whom sanctioning proceedings had been instigated, instead of the Spanish company presenting the guarantee. Madrid advised that if the Master, Shipowner or Operator had no Spanish tax identification number, then the General Deposits Office had a specific procedure in place with the BBVA bank, whereby it acted as a cash-clearing facility and in-house bank at all the Government Offices in the various Spanish cities except Madrid (*1) and would accept the vessel’s IMO number. 

Since then, while some HM offices have required the identification number to belong to the Shipowner, Operator or Master (the “Guaranteed”), others have taken a different approach and accepted the deposit no matter which party appeared as the “Guaranteed”. 

Recent change entering into force on 1 January 2004 affecting cash guarantees. Under Order PRE/3662/2003 of 29 December, published in the Spanish Official State Bulletin of 31/12/2003, the Economy and Treasury Ministry established that all cash deposits must be made through a High Street Bank collaborating with the Spanish Authorities (almost all) and using Deposit Form 060 enclosed with the Order, due to the end of their agreement with the BBVA bank. Apparently, the General Directorate of the Merchant Marine in Madrid did not inform the various HM offices of this fact, and they have been unaware of the reform.

The problem arises with cash guarantees (not bank guarantees or insurance bonds where the Spanish tax identification number is the bank or guaranteeing insurer’s number) when some Harbour Masters, following the 2001 Instruction from the GDMM, only agree to release the vessel when the form states that the “Guaranteed” party is the party against whom the sanctioning proceedings have been instigated, while the Treasury Department requires of the collaborating banks a Spanish tax identification number for the “guaranteed” party (the vessel’s IMO number not being acceptable).

The requirement for Shipowners, Operators or Masters to obtain a Spanish tax identification number in order to deposit a cash guarantee in a High Street Bank is not a practical solution as not only specific documentation is required but it can take up to five days to obtain.

Harbour Masters’ approach. This problem does not affect the whole of Spain, as not only Madrid is a special case (*1) but some Harbour Master offices continue to be flexible and are ready to follow more practical criteria to assist as much as possible with the release of the vessel when the cash guarantee has been provided, discarding the inconsistent procedure to be followed at the General Deposits Office.

As regards Galician State Ports, all HM follow Madrid’s Instruction. Consequently, cash deposits in this area to release the vessel are only possible if the Shipowner, Operator or Captain appear as the “Guaranteed” and obtain a tax identification number. Valencia HM also follows Madrid’s Instruction. Catalonian State Ports HM do not necessarily follow Madrid’s instruction and are ready to accept a Cash Deposit where the guaranteed party is not necessarily the Shipowner or Master, in order to avoid delays in the release of the vessel. Almeria HM would accept a Form where the “Guaranteed” box contains the company with a Spanish tax identification number in order to ease the release as long as the “Motive” box states that the deposit is to guarantee the Final Resolution. Algeciras HM would also follow the previous procedure although they would probably request a Notarial Document stating that the guarantee is to secure the Final Resolution. Santander HM would initially follow Madrid’s Instruction but they would be ready, on a case-by-case basis, to accept the shipagent’s identity number for a quick release in circumstances involving a cruise vessel or a tank vessel.

Updated situation. Having liased with the people responsible at the GDMM in Madrid and at the General Deposits Office in Madrid, our understanding is that the GDMM continues to require that the “Guaranteed” box state the party against whom the proceedings have been instigated and if a cash deposit cannot be made due to the specific procedure approved by the Treasury Ministry, then it is the ministry who should change the procedure.

One method for obtaining the change required, which we are now undertaking, given that the general procedure cannot be applied without prejudicing vessels’ right to a quick release, is to make a formal request to the President of the Tax Authorities to issue a Ruling adopting a special procedure to allow cash guarantees by foreign Shipowners or Masters to be accepted by High Street Banks without the need for a Spanish tax identification number.

As this issue will probably take some time to solve, in the meantime, if a vessel is arrested by a HM, we would suggest that, before deciding whether to release the arrest by immediately depositing the requested cash or whether to provide another type of guarantee (which obviously would take longer to obtain), then the HM and relevant General Deposits Office at that port should first be contacted.

Meanwhile, we are also investigating the following possibilities:

a- Guarantees against pre-established credit

Following the INDECO Circular of 30.01.04 advising that Spanish Insurance Co. MAPFRE would stop providing these type of guarantees, we contacted five Insurance Companies based in Spain which also issue guarantees against pre-established credit facilities. Despite four of them have advised us they cannot provide this service in vessel’s interests at present, we are still waiting for a reply from one of the companies.

b- P&I Letter of Guarantees

With the new socialist government substituting the previous centre right Popular party, we contacted the General Directorate of the Merchant Marine to ascertain whether it would again uphold the possibility of P&I Letter of Guarantees being accepted.

The Legal Department of the Directorate explained that non acceptance of Club LOGs was due to the fact that, on at least two occasions, they had not been honoured by a P&I Club. On one occasion, OCEANUS P&I was guaranteeing and on another the relevant Club even tried to negotiate the amount to pay after the Final Resolution had been adopted against the owners.

We have seen a willingness on the part of the Merchant Marine Directorate to discuss this matter and have agreed to a meeting once the New Merchant Marine General Director has been appointed (*2) so that the LOGs of the Clubs/Insurances on whose behalf we act are accepted. We would suggest that a representative of the International P&I Group also attends the meeting.

(*1) Madrid Cash Clearance is handled directly by the General Deposits Office of the Treasury department and their system has the “Third Parties” option where the Spanish tax identification number (either that of the Ship agent or P&I Correspondent) is stated and the “Owner of the Money” box must be completed with the name of the Shipowner as requested by Merchant Marine Directorate. This option is however not available in the High Street Banks.

(*2)On 21^st May 2004 Mr. Felipe Martínez Martínez, Port Engineer, has been appointed New Merchant Marine General Director