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Monday, October 22, 2012

Argentina's Tall ship Libertad arrested in Ghana

There are various types of ships – they sail from place to place, port to port, Country to Country – encounters heavy weather, there could trouble including financial trouble for the owners – there are times when they get mired in legal tangle – get attacked by Pirates, face the perils of the sea  and more…… but the story of Libertad seems to be much different as it is kept in bounds while trying to tuck sea pirates.

ARA Libertad ( IMO: 6125398) is a tall ship which serves as a school ship in the Argentine Navy. She was built in the 1950s at the Río Santiago Shipyard near La Plata, Argentina. Her maiden voyage was in 1962, and she continues to be a school ship with yearly instruction voyages for the graduating naval cadets.  A training ship is a ship used to train students as sailors. The hands-on aspect provided by sail training provides immense value to the students.  

The vessel is in news for wrong reasons – earlier this month,  the vessel was seized in Ghana because of debts to NML Capital, a subsidiary of US hedge fund Elliott Management Corporation, one of Argentina's former creditors. Argentina's foreign ministry condemned the move as "a stunt" pulled by "vulture funds" which contravenes the Geneva Convention.  It is claimed that Argentina defaulted on more than $100bn (£62bn) of debt in 2001 and 2002, the biggest default in history. The majority of these loans were restructured in 2005 and 2010, giving creditors around 30% of their money back. Less than 8 percent of creditors are relentlessly pursuing the Argentine government through the courts in order to recover the full amount.

Nearly three weeks  after the seizure in Ghana at the behest of a US hedge fund, there is no liberty for the Libertad.  The imposing tall ship, its white sails furled and flags fluttering over its masts, has been stuck in Tema, Ghana’s biggest seaport, since October 2. Meanwhile, Argentina has mobilised diplomats, officials and lawyers to try to find a way out of an embarrassing impasse that could drag on past Christmas.  Héctor Timerman, the foreign minister, said Argentina would exhaust all legal avenues in Ghana and, “if necessary, will go to the United Nations”. Ironically, the Libertad, which usually plies only safe South American waters, was originally scheduled to stop in Nigeria. The route was switched to Ghana two weeks before it set sail in June amid diplomatic concern at the risk of attacks by pirates.

The Capital Management Fund reportedly tracked its  voyage via the internet and pounced on the vessel when it docked at Tema.  NML filed an injunction to have the ship seized – the most spectacular tactic yet in the quest by the US so-called “vulture fund” to wring payment from Argentina for bonds still unpaid since the South American nation’s 2001 default on nearly $100bn. Argentina immediately blasted the seizure as a stunt by “unscrupulous financiers” and adopted the combative style it has stuck to when dealing with “holdout” creditors who refused two bond swaps in 2005 and 2010.

US and UK courts have awarded $1.6bn in claims in NML’s favour and the fund is one of several creditors suing for full recovery of assets. Furthermore, Argentina still owes some $9bn to the Paris Club of western creditor nations.  The Govt spokesperson stated that Buenos Aires would never negotiate with vulture funds, he added. Nonetheless, the Libertad debacle is a serious embarrassment.  Officials have scrambled to pass the buck for the decision to dock in Ghana; the head of the navy and two senior officials have been sacked in the wake of the seizure and the director of military intelligence has also quit. Argentina has dispatched its deputy foreign and defence ministers to Accra for urgent negotiations. It is evaluating a legal strategy that could involve appealing to international courts.

At Ghana, they hold the view that this is not an issue of Ghana versus Argentine but a classic case of International commercial law.  Newspaper reports suggest that Argentina has refused to post a $20m bond that could release the ship, valued at up to $15m and a former holder of the world speed record for a transatlantic crossing by sail, which is racking up hundreds of thousands of dollars in port fees.  The 285 strong crew struck up are reportedly killing time playing football and shopping. 

Many feel that this could be a landmark arrest and  could set important precedents and send ominous signs to other defaulters including  Greek.  Presently the ground is the Court in Accra where the Argentinian Govt seeks order for release of the ship.  Ruling is expected to be out soon.   Meantime, there are reports that Argentina has ordered  its close to  300 sailors to evacuate the navy training ship.  One of their pleas before the Court is that the  crew's rights have been violated after a Ghanaian judge refused to allow the refuelling of the ship to maintain the power supply.  Upon evacuation, there would be a small contingent of crew along with Captain enough to maintain the vessel. 

The scene of action Ghana,  officially the Republic of Ghana, is a country in West Africa,  bordered by Côte d'Ivoire (Ivory Coast), Burkina Faso, Togo and Gulf of Guinea.  The word Ghana means "Warrior King" and is derived from the ancient Ghana Empire.

With regards – S. Sampathkumar
22nd Oct 2012.

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