Maritime lien

In admiralty law, a maritime lien is a privileged claim upon sea-connected property, such as a ship, for services rendered to, or the injuries caused by that property. In common law, a lien is the right of the creditor to retain the properties of his debtor until the debt is paid.

It is a proprietary lien where interest is about the property. It should be understood that “res” may be the vessel (including its appurtenances and equipment), the cargo, the freight or even the proceeds of sale. The rights include jus in re (right on the property) and jus in rem (right against the property). The doctrine of maritime lien is that a ship will be treated as a wrongdoer, not the owner, that the loss, damage or harm is caused by the maritime property, itself, and it has to make good for the loss. The attachment of maritime lien will start when the cause of action arises and will not be eliminated even by change of ownership in a good faith purchase.

Two significant differences between maritime liens, which only exist in admiralty law, and the right to keep that exist in general civil law are (1) that in general civil law, "Prior in time is prior in right", i.e., the rights of the lienholder with the earliest lien are superior to those of later lienholders, whereas in maritime law the rights of the most recent lienholder are superior, and (2) all maritime liens are superior to all non-maritime liens. For instance, in the United States, a federal tax lien, which is a non-maritime lien, is subordinate to every lien for supplies, fuel, repairs, etc., which are all maritime liens.

Normally, a maritime lien relates to the different marine transactions in the admiralty jurisdiction and creates the maritime claims. It will be created by the statute such as the Ship Mortgage Act.

Characteristics of maritime lien

The Characteristics of maritime lien are as follows:

Although there is a list recognized by the admiralty jurisdiction, the definitions and criteria are not the same under the maritime law of differing jurisdictions. For example, bunker suppliers are not protected by maritime lien under UK law. However the supplier of bunker goods has the right of lien in the US.

Distinguished from shipowner’s lien

A Shipowner’s Lien is a possessory lien which is the major difference between it and other maritime liens. The right to this lien can be applied only on the goods which are delivering by the shipowner when the shipper is the contractual party. It may entitle the shipowner to retain the cargoes as security for the payment of a debt. The contractual shipowner’s lien is currently found in all contracts for carriage of goods by sea nowadays, and may be claimed if the shippers fail to pay the due on time. However, some authorities state that there is no difference between shipowner’s lien and maritime lien.

Advantage of action in rem

Action in rem (property) is an action separated from the action in personam. The action is against the maritime property such as vessel, cargo or freight, but not against the owner. This concept is why such an action is said to be against “all the world”.

Claimants take advantage of the action in rem, rather action in personam, because an action in rem is more easy and convenient to institute. It is more difficult, in an action in personam, to summon the defendant via writ outside the jurisdiction unless the defendant is a resident of EU or EFTA countries. Besides, the processes to find the rightful shipowner, the defendant, are very complicated and time consuming due to the complex and inconsistent ship registration in different countries. An action with respect to a bareboat ship will frequently encounter this problem.

The Admiralty action in rem will concern when the claims and ship are put within the Admiralty Jurisdiction, an adequate and secure place for the claimants to ask for compensation. If the defendant does not provide enough security as compensation, the court may sell the “res” in order to achieve the satisfaction for the claim.

Discharge and distinction of lien

Although the maritime lien is attached to the maritime property whoever the shipowner is, it is possible to discharge or eliminate the lien by several ways. They include payment of the claims, waiver, laches, foreclosure, and sale or destruction of the res.

The lienholder could give up the right of maritime lien either by expressed or implied intention. The intention to waive the lien should be shown clearly required by the court and the credit of the lienholder will be considered.

Laches is a form of estoppel for delay. A person fails to arrest the ship within a reasonable time may result in cancellation of the original claim. The time of delay will be determined on a case-by-case basis. The idea is that the holder must show diligence exercising the lien.

An other method is an execution sale in a rem. This also removes the attachment of the lien. The new shipowner will get the vessel with clear title. This rule could be applied in case of an international judicial sale, such as an action in rem.

Destruction of the res results in the extinction of the lien. In this case, the lien is eliminated when the whole ship is destroyed. However, partial destruction of the vessel will not remove the lien and the lien will be attached to the remaining part of the vessel.

Conflict of laws and choice of law

“Proper law” is the decision as to which territorial law is to govern the contract, defines the obligations of the contractual parties and determines whether the contract is valid and legal. It also determinates the effects and conditions of discharge. Selection of the “proper law” to adjudicate the marine contract is a difficult task in Admiralty Jurisdiction because the issue of whether enforcement of the maritime lien is allowed by international law may turn on interpretation of the law of the country where the litigation is. So, the question is over the priority of the law where the lien was created (lex loci), as opposed to the law of where the court exercising jurisdiction (lex fori).

The answer is found in the application of a multiplicity of contract analysis process. The court will weight and analyze all related factors between the transaction and the respective legal systems by a case-by-case analysis. The factors may include: (a)the need of the international system; (b)the protection of justified expectation; (c)ease in determination and application of the law to be applied; (d)relevant policies of other interested states; (e)the place of the wrong; (f)the law of flag; (g)the allegiance or domicile of the injured party; (h)the law of forum; (i)the place of the contract; (j)the allegiance of the defendant shipowner and so on. The prefect decision will result from a balance between the relevant factors.

However, the US courts will choose the factors which could be applied to protect the American. If the relevant factors direct to select international law, the case may be dismissed on the grounds of forum non conveniens. If the choice of law is to apply the US law, the court will retain jurisdiction. The reason for this is that Federal Maritime Lien Act is used to protect Americans, not the foreigners.

References

  1. Hill, C. (1998). Maritime Law (5th ed.). pp. 91–167. 
  2. Chan, F.; Ng, J.; Wong, KY. (2002). Shipping and Logistics Law: Principles and Practice in Hong Kong. pp. 1–309. 
  3. Hodges, S.; Hill, C. (2001). Principles of Maritimes Law. pp. 445–523. 
  4. Schoenbaum, T.J. (2004). Admiralty and Maritime Law (4th ed.). pp. 442–487. 
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