Maritime Lien

Maritime Lien

Summary of Maritime Lien

A claim upon a vessel arising from a maritime operation. Apart from certain statutory “liens”that arise under ship mortgages and governmental guarantees to finance ship construction, a maritime lien must arise from actions involving the vessel itself, its cargo, maritime tort, or other peculiarly maritime occurrences. Maritime liens traditionally arise from the following obligations: seamen’s claims for wages; salvage; torts, involving collisions and personal injuries (excepting seamen’s injury claims covered by the Jones Act); general average; preferred ship mortgages (the Federal Ship Mortgage Act statutorily provides a maritime lien against vessels covered; prior to the advent of the statute, the bottomry bank fulfilled a like purpose); supplies and repairs; piloting, wharfage, stevedoring; claims against cargo for unpaid freight; obligations for damage to cargo; breach of charter parties; and bottomry and respondentia bonds. As a practical matter, a maritime lien will not normally arise except in conjunction with one of these conditions. In 1910 Congress enacted the Federal Maritime Lien Act to supersede various state lien laws so far as maritime claims are concerned, and to clarify obscurities in the customary and Federal case law on the subject. Maritime liens attach in inverse order; that is, the latest lien must be satisfied before prior liens.

Because a maritime lien attaches in reverse order, and there is no statute of limitations per se on the exercise of the lien, it is in the interest of the lienor to execute under his lien as soon as feasible, lest it be superseded by a subsequent lien or become occluded through Laches (read this and related legal terms for further details), that is, an unreasonable delay in execution.

The vehicle for execution of a maritime lien is a libel in rem, that is, an in rem action before an admiralty court. Upon commencement of the action, the court may order the marshal to arrest (seize) the ship pending final judgment. Upon a finding for the libelant (lien holder), the vessel will be sold and the lien satisfied. It should be noted that judgments so rendered are (customarily) universally recognized, and that the new owner of the ship is bound by any prior liens not resolved by the court action.

(Main Author: William J. Miller)

Comparative Overview of Maritime Liens and Mortgages

International

The Maritime Liens and Mortgages Convention, Brussels, 10 April 1926, entered into force 2 June 1931.

The Maritime Liens and Mortgages Convention, Brussels, 27 May 1967 is not in force. States required for coming into force: 5. States party as at 1 May 2005: 4 – Denmark, Morocco, Norway, Sweden. The Syrian Arab Republic was party, but is now party to the Maritime Liens and Mortgages Convention 1993 (infra). See UN Treaty website.

The Lisbon Draft Liens Revision, 25 May 1985, is not in force.

The International Convention on Maritime Liens and Mortgages, 1993, Geneva, adopted by the IMO / UNCTAD on 6 May 1993 came into force on 5 September 2004. States party as at 1 May 2005: Ecuador, Estonia, Monaco, Nigeria, Russian Federation, St. Vincent and the Grenadines, Spain, Syrian Arab Republic, Tunisia, Ukraine, Vanuatu. See UN Treaty website.

Canada

Canada is not a party to any of the three Conventions: rather it has its own system of maritime liens and statutory rights in rem very similar to U.K. law. Federal Courts Act, R.S.C. 1985, c. F-7, sects. 22 and 43, and Canadian maritime law. Special legislative rights now jeopardize the traditional ranking of liens.

United States

The U.S. is not a party to any of the three Conventions but has a system of liens which is not too dissimilar to the 1926 Convention, especially in respect of tort liens, cargo liens and liens for necessaries. U.S. mortgages are favored over foreign mortgages. See 46 U.S. Code 30101-31309, 31321-31330, 31341-31343.

United Kingdom

The U.K. is not a party to any of the three Conventions and has its own law of liens and mortgages developed under the historical jurisdiction of the Admiralty Court. See in particular the Supreme Court Act 1981, (1981) U.K. c. 54 at sects. 20 and 21.

France

The international regime

The 1926 Liens and Mortgages Convention was authorized for ratification by the Law of 21 February 1935 and promulgated by the Decree of 29 November 1935. The Convention applies when the ship arrested in France belongs to a state that is party to the Convention and also in circumstances specified by French law.

The domestic and residuary regime

Law No. 67-5 of 3 January 1967 and Decree No. 67-967 of 27 October 1967 largely incorporate the principles of the 1926 Liens and Mortgages Convention.

China

China is not a contracting state to any of the three Conventions, but Chinese maritime law on the subject was drafted with reference to the International Convention on Maritime Liens and Mortgages 1993, with some differences (see arts. 21-30 MCPRC, the chinese maritime code of 1993). These differences are: (1) unlike the 1993 Convention, claims for payment of harbour dues under the Maritime Code of the People’s Republic of China 1993 precede those for payment of salvage claims (see art. 22 of the Code); (2) the 1993 Convention is more restrictive in its scope of application; and (3) the Code has no equivalent for art. 12(2) or (3) of the 1993 Convention.

China also enacted two regulations with respect to maritime liens and claims: (1) Regulation for Maritime Court Relating to the Arrest of Ships Before Suing, and (2) Regulation for Maritime Court Relating to the Auction of Seizing Property and Remedies.

By William Tetley, Q.C.


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