Last year, as the global economic downturn kicked into full swing, maritime lawyers in Gibraltar were predicting a busy time ahead.

Gibraltar has long boasted a solid reputation as an efficient jurisdiction in which to handle admiralty arrests, and with ship owners struggling to find work for laid-up vessels, it was only a matter of time before banks and creditors moved in.

By this summer, the predictions had come true.

Lawyers in Gibraltar say there is mounting evidence that lenders are taking tougher action against ship owners who default on loans and mortgages. They point to a string of recent admiralty arrests as proof.

On the waterfront in Gibraltar, there are clear signs that the economic crisis has hit some owners hard and there is a general expectation of more
to come.

At least 10 ships have been arrested here over the summer, with more coming in on a regular basis.

John Restano, a partner at Hassans who handles maritime work, told the maritime newspaper Lloyd’s List recently that the number of enquiries had risen sharply.

“Many banks are sitting on problem accounts and are now looking to take action,” he told the newspaper.

That sentiment was echoed by James Ramagge, a partner at another of Gibraltar’s law firms, Triay & Triay.

“We have seen a marked increase in enquiries and inevitably we expect there to be an increase in arrests in the coming months,” he told the newspaper.

Banks like to arrest ships in Gibraltar because admiralty cases are dealt with swiftly and efficiently here under British law.

That, coupled to an unrivalled geographic location overlooking the busy Strait of Gibraltar, means this is a jurisdiction of choice in troubled times. It also makes the Rock a potential barometer of a wider malaise in the industry.

During shipping’s recent boom years, admiralty work was slow.

The few arrests that did materialise were as a result of contract disputes or breaches of charter parties, with owners or insurers settling the amounts quickly and avoiding forced sales.

“These days, we’re arresting and selling ships because people are not paying,” said Christian Hernandez, a partner at Isolas.

“Many owners are struggling to make their payments because they haven’t got the work.”

“It’s much more drastic than a year ago.”

Resolving the legalities swiftly and with minimum fuss protects the equity in a vessel and enables a speedy return to business or, in the case of older ships, to the scrap beaches of Asia.

Gibraltar’s legal community is tightly knit and has a close working relationship with court staff, who are well-versed in the intricacies of admiralty law and try to give priority to shipping cases wherever possible.

In cases where vessels have to be sold, this can be done by way of public auction at the hands of a UK broker, or by private treaty in which two parties agree terms within certain restrictions.

In both cases, creditors – including crews, who take priority – are able to claim against the proceeds of sale.

And the business of arresting ships is not only profitable for lawyers.

Across the maritime community and beyond, from the port authority to ship agents, victuallers, hotels and airlines, this is an area of business that generates wide-ranging benefits.

Gibraltar and Spain will establish closer links in the maritime sphere as part of an agreement reached during the historic visit to the Rock by Spain’s foreign minister, Miguel Angel Moratinos.

In the coming months officials will work to formalise multi-level contact between the ports of Gibraltar and neighbouring Algeciras, which share a bay that is increasingly busy with shipping activity.

The move aims to improve cooperation and coordination between the two ports in the wake of major casualties including the New Flame and the Fedra.

It will also ensure a synchronised joint response to pollution incidents in a region that has become a key bunkering point for vessels sailing through the Strait of Gibraltar.

Authorities in Gibraltar and Spain have worked together at a practical level in the past, including the daring rescue of 31 seafarers during the Fedra casualty.

But political difficulties had so far hampered efforts to establish formal frameworks on issues such as maritime safety and environmental protection.

Although the exact details have yet to be finalised over the coming months, the will to resolve those difficulties has now been clearly signalled from the highest diplomatic levels.

The agreement was reached following the ministerial-level meeting of the Trilateral Forum for Dialogue between the UK, Gibraltar and Spain.

Present at the discussions were Mr Moratinos, the first serving Spanish foreign minister ever to visit the Rock, his British counterpart David Miliband and Peter Caruana, Gibraltar’s Chief Minister.

“We have sought to ensure a high level of environmental protection in Gibraltar and the whole region…by proposing cooperation in areas such as pollution from maritime activity and traffic, bunkering operations, industrial emissions and water discharges, waste disposal and land reclamations, among others,” the three governments said in a joint statement.

“This cooperation is intended to take the form of liaisons, establishment of contact points and urgent means of communication, rehearsed cooperation in coordinated incident response and other means.”