Posted: April 26th, 2023

Maritime Liens and Their Enforcement: International Perspectives and Lessons

Maritime Liens and Their Enforcement: International Perspectives and Lessons

Maritime liens are legal claims on a vessel or its cargo that arise from various maritime transactions or events, such as unpaid wages, supplies, repairs, salvage, collision, or personal injury. They are a form of security interest that attaches to the vessel or its cargo regardless of the owner’s identity or location. Maritime liens are recognized and enforced by most countries around the world, but there are significant differences in their scope, priority, and extinguishment among different legal systems. This blog post will explore some of the main features and challenges of maritime liens and their enforcement from international perspectives and lessons.

Scope of Maritime Liens

One of the main issues in maritime liens is the scope of the claims that can give rise to a lien on a vessel or its cargo. Different countries have different lists of maritime claims that are eligible for a lien, and some countries have more expansive or restrictive definitions of what constitutes a maritime claim. For example, in the United States, the Federal Maritime Lien Act of 1910 provides a broad list of maritime claims that can give rise to a lien, including “necessaries” furnished to a vessel, such as repairs, supplies, towage, pilotage, wharfage, and insurance (46 U.S.C. § 31301 et seq.). In contrast, in England and Wales, the Merchant Shipping Act 1995 provides a narrower list of maritime claims that can give rise to a lien, such as damage done by a ship, salvage, wages of master and crew, master’s disbursements, and bottomry (MSA 1995, Schedule 1). Moreover, some countries recognize maritime liens for claims that are not directly related to the vessel or its operation, such as personal injury or death caused by the vessel (e.g., Canada), while others do not (e.g., France).

Priority of Maritime Liens

Another issue in maritime liens is the priority of the liens among themselves and with other claims on the vessel or its cargo. Generally speaking, maritime liens have priority over other claims on the vessel or its cargo, such as mortgages, hypothecs, or statutory rights of detention. However, the priority of maritime liens among themselves may vary depending on the nature and timing of the claims. For example, in the United States, the priority of maritime liens is determined by the “inverse order” rule, which means that the later in time a lien arises, the higher in priority it is (The Poznan v. Meraux Docks Co., 274 U.S. 117 (1927)). This rule is based on the rationale that a later lienor provides credit to the vessel on the faith of its apparent value and should not be prejudiced by prior hidden liens. In contrast, in England and Wales, the priority of maritime liens is determined by the “ranking” rule, which means that the liens are ranked according to their nature and not their timing (The Halcyon Isle [1981] AC 221). This rule is based on the rationale that a lienor should not lose his priority by reason of delay or inadvertence in enforcing his claim.

Extinguishment of Maritime Liens

A third issue in maritime liens is the extinguishment of the liens by various events or actions. Generally speaking, maritime liens are extinguished by payment or satisfaction of the underlying claim, waiver or release by the lienor, sale of the vessel or its cargo by judicial process or agreement of parties, loss or destruction of the vessel or its cargo, or lapse of time. However, different countries may have different rules or exceptions regarding these modes of extinguishment. For example, in Canada, a maritime lien is not extinguished by sale of the vessel unless it is sold free and clear of all liens and encumbrances by order of a court having admiralty jurisdiction (The Ship “Mortgage Hill” v. The Ship “Sandra M” [1990] 2 FC 288). In contrast, in France, a maritime lien is extinguished by sale of the vessel even if it is sold subject to existing liens and encumbrances (Code des transports art. L5111-1).

International Perspectives and Lessons

The diversity and complexity of maritime liens and their enforcement across different legal systems pose significant challenges for international trade and commerce. There is no uniform international convention or treaty that governs maritime liens and their enforcement. However, there are some regional initiatives and harmonization efforts that aim to promote cooperation and coordination among countries in this field. For example:

– The Brussels Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages 1926 (Brussels Convention) was one of the first attempts to unify and harmonize the rules on maritime liens and mortgages among European countries. The convention established a uniform list of maritime claims that can give rise to a lien and a uniform ranking of liens and mortgages. However, the convention was not widely ratified and was superseded by the Brussels Convention on Maritime Liens and Mortgages 1967 (Brussels Convention 1967), which revised and updated the rules on maritime liens and mortgages. The Brussels Convention 1967 was also not widely ratified and was further superseded by the International Convention on Maritime Liens and Mortgages 1993 (MLM Convention), which adopted a more flexible and modern approach to maritime liens and mortgages. The MLM Convention has been ratified by 25 countries as of October 2021, but it has not entered into force yet.

– The Organization of American States (OAS) adopted the Inter-American Convention on Maritime Liens and Mortgages 1997 (OAS Convention), which is based on the MLM Convention but with some modifications to suit the specific needs and interests of the American countries. The OAS Convention has been ratified by 10 countries as of October 2021, but it has not entered into force yet.

– The Comité Maritime International (CMI) is an international non-governmental organization that aims to promote the unification of maritime law and practice. The CMI has drafted several model laws and guidelines on various aspects of maritime liens and their enforcement, such as the CMI Model Law on Maritime Liens 2004, the CMI Guidelines for Arrest of Ships 2011, and the CMI Model National Law on Recognition of Foreign Judicial Sales of Ships 2014. These model laws and guidelines are intended to provide guidance and assistance to national legislators and practitioners in adopting and implementing uniform and harmonized rules on maritime liens and their enforcement.

Conclusion

Maritime liens are an important and complex aspect of maritime law that affect the rights and obligations of various parties involved in maritime transactions or events. There are significant differences in the scope, priority, and extinguishment of maritime liens among different legal systems, which pose challenges for international trade and commerce. There are some regional initiatives and harmonization efforts that aim to promote cooperation and coordination among countries in this field, but there is no uniform international convention or treaty that governs maritime liens and their enforcement. Therefore, it is essential for maritime lawyers, operators, financiers, insurers, and other stakeholders to be aware of the rules and practices on maritime liens and their enforcement in different jurisdictions and to seek appropriate legal advice and assistance when dealing with maritime liens issues.

References

– Code des transports art. L5111-1.
– MSA 1995, Schedule 1.
– The Halcyon Isle [1981] AC 221.
– The Poznan v. Meraux Docks Co., 274 U.S. 117 (1927).
– The Ship “Mortgage Hill” v. The Ship “Sandra M” [1990] 2 FC 288.
– 46 U.S.C. § 31301 et seq.